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Givaudan Sales Drop on Emerging-Market Currency Declines

Oct. 10 (Bloomberg) -- Givaudan SA, the world’s largest flavorings maker, reported its first decline in sales for at least six quarters as emerging-market currencies from Brazil to India dropped against the Swiss franc.

Third-quarter revenue fell 1.1 percent to 1.1 billion francs ($1.2 billion), the Vernier, Switzerland-based company said. That matched the estimate of eight analysts surveyed by Bloomberg. Excluding the effects of exchange-rate shifts, acquisitions or disposals, sales increased 3.7 percent.

Chief Executive Officer Gilles Andrier predicted in a July interview that second-half sales growth will slow, with customers growing “more cautious” in developing markets. Unilever, the No. 2 consumer-goods maker, said Sept. 30 that sales growth weakened in the third quarter amid a slowdown in developing economies, sending the shares down the most in almost two years.

“Givaudan is facing tough comparisons in the last quarter,’ and ‘‘therefore growth shall further decelerate,’’ Jean-Philippe Bertschy, an analyst at Vontobel AG in Zurich, wrote in a note to investors. ‘‘We will cut our estimates on the back of the weaker growth and higher foreign-exchange impact.’’

Stock Declines

Givaudan fell as much as 1.5 percent to 1,225 francs and was trading down 1 percent at 11:02 a.m. in Zurich, valuing the company at 11.4 billion francs. That pared the stock’s gain this year to 32 percent.

About 43 percent of the Swiss company’s sales in 2012 came from emerging markets such as India, China and Brazil. In the third quarter, ‘‘Swiss-franc sales are down because of currencies,” said Peter Wullschleger, a Givaudan spokesman.

The Indonesian rupiah dropped 16 percent versus the franc in the third quarter, while the Indian rupee fell 9.2 percent and the Brazilian real slid 3.7 percent.

“Givaudan’s sales look weaker at the first glance than they basically were,” because of the “negative impact” of exchange rates, Philipp Gamper, an analyst at Bank J. Safra Sarasin AG with a neutral recommendation on the stock, wrote in a report to investors.

Like-for-like sales grew more slowly than in the first half because of positive pricing effects in the earlier period, Wullschleger said. The company sees “no obvious reason” why fourth-quarter sales growth shouldn’t hold steady, he said.

The Swiss company reiterated a mid-term forecast of sales growth between 4.5 to 5.5 percent.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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