Swiss fragrance and flavour maker Givaudan on Wednesday posted a slowdown in end-year sales, putting further strain on margins in a year marked by high input costs and supply chain disruptions.

The group, which has so far passed the steep cost increases on to customers including cosmetics firms and drinks makers, suffered from slowing sales in the latter half of 2022, driven by a decline in its flavours business in North America.

Group sales increased by 5.3 percent on a like-for-like basis to 7.1 billion Swiss francs ($7.7 billion) in 2022, but grew only 2.9 percent on the same basis in the final quarter.

North American sales fell 5.4 percent to 1.9 billion francs in the year, with a 6.4 percent drop in the flavors division.

Givaudan’s finance chief Tom Hallam said North American customers were cutting their safety stocks as supply chains improved, but doubts about consumer sentiment in 2023 still had an impact on sales in the region.

Hallam added the group planned to keep passing on costs, with raw material inflation expected to be 5 percent this year.

Givaudan’s core earnings (EBITDA) were broadly flat against the prior year at 1.48 billion francs, while its comparable EBITDA margin fell to 20.9 percent from 22.5 percent.

“Especially compared to Symrise, Givaudan managed better through the ‘very challenging operating environment’ with more a focus on the bottom-line,” Baader Helvea analysts said in a note to investors.

Givaudan and German rival Symrise are the runners-up behind IFF Inc in the market share ranking for fragrances, flavors and ingredients for food and cosmetics.

Symrise on Monday reported a lower-than-expected 2022 EBITDA margin due to an impairment.

Givaudan’s annual profit rose 4.2 percent to 856 million francs, beating analysts’ forecast of 806 million, while sales and EBITDA margin were slightly below expectations.

The Geneva-based group proposed a dividend of 67 francs per share, 1.5 percent higher than last year.

The shares were down 0.7 percent at 0836 GMT.

By Jagoda Darlak

Learn more:

Givaudan Invests $80 Million Expanding Mexican Production

One of the world’s largest manufacturers of fragrances and active cosmetic ingredients, Givaudan, will invest 75 million Swiss francs ($80 million) to support its growth in Latin America by expanding its Pedro Escobedo production plant located in Querétaro, Mexico.