Firmenich profit up 11% on strong fragrances

FRANKFURT Reuters -- Market share gains in fine fragrances and strong demand for its food ingredients helped Switzerland's Firmenich, which has agreed to merge with DSM, deliver a near 11% jump in adjusted annual earnings on Friday.

Dutch specialty chemicals maker DSM struck back-to- back deals to sell its engineering plastics division and to combine with Firmenich to focus on the fast-growing food, fragrance and health products markets in May.

For the full year ended June 30, the company's family-controlled company said its full-year earnings before interest, tax, depreciation and amortization EBITDA, adjusted for one-offs, reached a record high of 905 million Swiss francs $946 million.

In a statement, it said its earnings were boosted by 20% growth in sugar replacement products and a business with manufacturers of plant-based proteins that more than doubled.

The shaka supply chains caused Firmenich to keep higher stocks of raw materials, causing a 5.9% drop in adjusted free cash flow, which was also hit by cost inflation.

DSM, whose leadership team will lead the combined group, reiterated its full-year profit guidance for its core business areas health, nutrition and bioscience this week.

Firmenich said on Friday it would not provide short-term earnings guidance, as DSM's adjusted EBITDA is projected to grow by a high-single digit percentage.

The merger is coming from a position of strength and I think the record year we have announced is proof that this is the case, said Gilbert Ghostine, CEO of Firmenich.

The family behind the unlisted Firmenich will get 34.5% and 3.5 billion euros $3.58 billion in cash, which is expected to be wrapped up in the first half of next year.