Givaudan analysis

Givaudan est la plus grande entreprise de l'industrie de la parfumerie et des arômes. Elle a été fondée en 1895, acquise par Rock en 1963 puis placée à la bourse par cette dernière en 2000 (spin-off).

Its main competitors, also listed on the stock exchange, are IFF (International Flavors and Fragrances), Firmenich and Symrise.

Givaudan operates in a low-cyclical and rather defensive sector, as its customers are mainly in the food, beverage and other consumer goods sectors (e.g. cosmetics, perfumery and household products).

This is one of the reasons why our profit margins (in red) and return on equity (ROE) are not only high, but rising steadily. We're dealing with a very profitable company:

The % of shareholders' equity (50,55% in 2016) is in line with the sector average. The balance sheet is healthy, without being too impressive.

The dividend (in blue) is growing steadily and in line with earnings, even if dividend growth has slowed over the past three years:

Bien que stable, le payout ratio est élevé. Les augmentations futures de dividendes devront passer par une amélioration des bénéfices plutôt que par une expansion du ratio de distribution:

Givaudan is a flexible and innovative company that does not hesitate to invest in research. It knows how to be creative and adapt quickly to new trends and consumer needs. It knows how to grow both organically and through acquisitions.

Figures for the third quarter of 2017 proved better than expected, particularly in terms of organic growth. The share has just reached a new all-time high and is currently trading at around 2170 fr. The 2018 PER is estimated at 26, which is too high even for a company like Givaudan.

In short, Givaudan is a wonderful company with good growth potential. Unfortunately, I find the current valuation too high, which is also reflected in the dividend yield below the historical average (currently 2.6%).

That's why I sold my shares a few weeks ago and will only consider a new investment at a price of around 1900-1950 fr.