Givaudan 2021 In a Nutshell Flipbook
Givaudan 2021 Report | 21 pages
l l e h s t u n a N 1 I 2 0 2 2021 IN A NUTSHELL
WHO WE ARE Committed to Growth, with Purpose With game-changing innovations in food and beverage and inspirational creations in the world of scent and beauty, we lead the global industry in flavour & taste, functional & nutritional ingredients, and fragrance & beauty. We are committed to driving purpose-led, long-term growth by increasing our positive impact on nature and improving people’s health and happiness. It’s a commitment to create shared value for the business, society and nature.
Who we are 11 185 69 Over locations in Creations and 16,800 52 countries research worldwide centres employees worldwide Proposed 5 dividend 6 CHF 2 m per share R&D spend CHF 66 Our two principal business activities TASTE & FRAGRANCE & WELLBEING BEAUTY Going beyond great taste Bringing you inspiring creations to create food experiences that in the world of scent and do good and feel good, for beauty through craftsmanship, body, mind and planet. creativity and passion. Givaudan – 2021 In a Nutshell
2 Our impact in 2021 Our impact in 2021 Creating growth for our 26% Women in senior business, society and the planet. management 1.4% Average base salary difference between men & women¹ –22% Reduction of recordable injury Sustainable performance review rate since 2018 For the year ended 31 December, in millions of Swiss francs, Percentage 1. Results for the Givaudan Group globally, except for environment and social data 2021 2020 change for equivalent roles and skill sets. Economic Group sales 6,684 6,322 5.7% Like-for-like sales growth 7.1% 4.0% Gross profit 2,855 2,659 7.4% as % of sales 42.7% 42.1% EBITDA¹ 1,482 1,397 6.0% as % of sales 22.2% 22.1% R&D spend 562 536 4.7% as % of sales 8.4% 8.5% Operating income 1,089 996 9.3% as % of sales 16.3% 15.8% Net income 821 743 10.5% as % of sales 12.3% 11.8% Operating cash flow 1,288 1,189 8.3% as % of sales 19.3% 18.8% SOCIAL Free cash flow 843 811 3.9% as % of sales 12.6% 12.8% Total assets 11,420 10,658 7.1% Net debt 4,394 4,040 8.8% Leverage ratio 51% 50% Share price as of last trading day of December (CHF) 4,792 3,730 28.5% Cash dividend²(CHF) 66 64 3.1% Earnings per share − basic (CHF) 89.03 80.59 10.5% 1. E BITDA defined as Earnings before interest Environmental (and other financial income (expense), net), Tax, Depreciation and Amortisation, corresponds to Absolute GHG Emissions scope 1 + 2 ³ (31%) (24%) operating income before depreciation, amortisation Absolute GHG Emissions scope 3 ³ (4%) (2%) and impairment of long-lived assets. 2. 2021 dividend subject to shareholder approval at Renewable electricity (RE 100 compliant) ³ 84% 65% the AGM on 24 March 2022. Water efficiency ⁴ (4%) N/A 3. 2020 figures restated to include acquisitions. 4. On sites facing water stress, baseline year 2020. Waste efficiency ⁵ (2%) (10%) For municipal and groundwater (m³) per tonne Social of production. 5. Tonnes of incinerated and landfill waste per tonne Number of employees as at 31 December (FTE) 16,842 15,852 6.2% of production compared to 2015. Women in total work force ⁶ 39% 39% 6. Excludes all acquisitions except Activ International in 2020 and in 2021 Activ International & drom Women in senior management 26% 25% integrated entities 7. The 2021 increase is due to the inclusion of acquisitions. Turnover rate 10% 9% Lost time injury rate ⁷ 0.34 0.25 36.0% Note: Like-for-like excludes the impact of currency, acquisitions and disposals. Givaudan – 2021 In a Nutshell
Our impact in 2021 3 Our solid track-record C of ESG ratings I Double ‘A rating’ for climate and water for three consecutive years 7.1% Sales growth LFL² CDP leader board recognition for supplier engagement (2021 6,684 CHF million score published end of Feb. 2022) sales 12.6% Free cash flow ONOM as % of sales C 2. Like-for-like excludes the impact of Awarded the EcoVadis Gold currency, acquisitions and disposals. medal, ranking us in the top 5% E of more than 75,000 businesses GHG emissions Rated as ‘low-risk’ in 2021 with –31% scope 1 + 2 ³ a score of 19.1 and a chemicals industry ranking 13 out of 480 –4% GHG emissions FTSE4Good scope 3 ³ Index Series Renewable Ranked in the top 2% in the 84% electricity FTSE4Good Index Series, among our peers 3. Compared to baseline year 2015. Included in SXI Swiss Sustainability 25 Index Since 2017 Givaudan has been rated AAA by ENVIRONMENT MSCI ESG RATINGS Givaudan – 2021 In a Nutshell
4 Highlights 2021 Highlights 2021 Throughout the year our activities helped expand our capabilities and move closer to our customers. Whether it be innovations, investments or acquisitions, we aim to create value and positive impact for our stakeholders, the economy, environment and society overall. Strengthening our global protein innovation network • Two protein innovation centres were opened in Zurich and Singapore to support our ambitions in co-creating plant-based food experiences that do good and feel good. All around the world, consumers are seeking plant-based options for health and ethical reasons. The two centres provide further opportunities with customers, start-ups and partners to co-create for the future of sustainable food. Strategic realignment of the Taste & Wellbeing portfolio • We expanded our product offering and capabilities to support customers to deliver future facing food experiences that consumers value. This realignment signals our ability to anticipate and understand our customers’ needs with a consumer end-benefit in mind. The Engaging with others to accelerate sustainable change three experience spaces identified • We’ve joined WBCSD to launch Vision 2050: Time to Transform, which provides are: Feel Good food Experiences, ambitious guidance to the business community on how to accelerate change. Does Good Food Experiences and It offers an opportunity to unlock the incredible potential of a green economy, Imagine Food Experiences. as businesses grow with their customers and act as a force for good. • And we’ve joined Together for Sustainability, a global sector supply chain initiative to assess, audit and improve supply chain sustainability practices. Givaudan – 2021 In a Nutshell
Highlights 2021 5 Expanding opportunities in China • Driving innovation and supporting growth with local and regional customers in China with the opening of our new Digital Space in Shanghai. • Accessing high growth fragrance and beauty market opportunities in China through our first-of-its-kind partnership with Tmall, Alibaba’s open business-to-consumer platform, and by becoming a shareholder in Next Beauty, a leading incubator for emerging brands looking to grow in China. Creating value through our recent acquisitions • The acquisition of 25% of B.Kolormakeup & Skincare (b.kolor) expands our offerings in the consumer-packaged goods and luxury segments; • Myrissi gives us the technology to translate fragrances into colour patterns and images; • Custom Essence strengthens our access to local and regional customers and expands our capabilities in natural perfumery in North America; • DDW the Color House strengthens our global leadership in the natural colours business. Building transparency across supply chains • We’ve strengthened and expanded our responsible sourcing programme into an umbrella programme called Sourcing4Good, which is based on collaboration and knowledge sharing, experienceand expert input from suppliers, customers and partners. Our suppliers can expect more visibility and the opportunity for partnerships, while our customers will have greater access to safe, high-quality products sourced in a responsible way and increased oversight and detailed knowledge of their supply chains. Givaudan – 2021 In a Nutshell
6 Chairman’s letter A bright start to our 2025 strategy Delivering strong financial and non-financial performance while managing the ongoing impact of the global pandemic. R TE T LE S ' N MA R I HA C Givaudan – 2021 In a Nutshell
Chairman’s letter 7 we adopted virtual meetings and new ways of working with Dear shareholders, our customers. As a result, cyber security has increased in importance and, with the Board’s role to ensure robust risk 2021 was the start of our new five-year strategy cycle management, we have been strengthening our capabilities and ‘Committed to Growth, with Purpose’, and I am very pleased to preparedness in this area. share that we delivered a very strong business performance. We continued to respond with agility to the ongoing impact of At the AGM in March 2022, all Board members will stand for the global pandemic, turning challenges into opportunities. I’d re-election, including long-standing members Michael Carlos and like to thank our colleagues, customers, partners and suppliers Prof. Dr-Ing. Werner Bauer who have reached the age limitation for their great collaboration and commitment for all that we as set out in the Board regulations. We believe it is in Givaudan’s achieved. I’d also like to thank you for your commitment and best interest to keep them both on the Board to ensure good investment in Givaudan continuity during the onboarding of new Board members, given the difficulties caused by the pandemic. We will propose to the In 2021 we delivered solid topline growth of 7.1% in Swiss francs Annual General Meeting of shareholders on 24 March 2022, to and free cash flow generation of CHF 843 million or 12.6% of elect Tom Knutzen as a new Board member. We have an sales, in line with our 2025 financial targets. On the basis of experienced team in place at the Board level, and at all levels we Givaudan’s strong performance in 2021 and its continued solid continue to ensure we have the necessary competencies and the financial position, the Board of Directors will propose an right blend of expertise and experience. increase in the dividend to CHF 66.00 at the Annual General Meeting on 24 March 2022. If accepted, this will be the I’d like to thank our colleagues, twenty-first consecutive increase since our listing on the Swiss stock exchange. customers, partners and suppliers The global macro trends that we identified for our 2025 for their great collaboration strategy continue to drive our business and in many areas have and commitment for all that been strengthened by the pandemic. Our focus areas of health we achieved. and wellbeing, responsible sourcing and digitalisation are leading us to further exciting innovations, offering new ways of bringing value to our customers and meeting consumer needs. I’d like to express my heartfelt thanks and gratitude to my fellow We also continued to broaden our portfolio with strategic members of the Board of Directors, the Executive Committee acquisitions that will enable us to provide even more complete and all our colleagues worldwide for their hard work and solutions, as well as broaden our customer reach and support dedication, especially during another challenging year. I am our growth ambitions. always so impressed by the contribution and passion of everyone at Givaudan to pursue excellence in everything we do. We recognise the changing expectations on the role of businesses to meet the requirements of a wider set of Finally, I would like to share my thanks to you, our shareholders, stakeholders in financial and non-financial matters. Our ESG for your trust and continuing support. I remain confident this approach is therefore led by our purpose ambitions and targets, Company is well positioned for the future and long-term which are fully embedded in our 2025 strategy. This is how we success and will continue to create further stakeholder value will address the urgent challenges facing society such as climate through profitable, responsible growth, guided by our purpose. change and ensure our sustainable long-term performance. We hold ourselves accountable through the highest standards of I send my best wishes and health for the year ahead. reporting with the IR framework and GRI standards. For the first time, we have included the Sustainability Accounting Standards Board (SASB) mapping table and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations table in our reporting suite. Calvin Grieder Digitalisation continues to provide exciting opportunities to Chairman change the way we do business, either to provide new products and new engaging experiences for our customers or to design simpler, more agile business services. The pandemic has also accelerated the digital workplace transformation, as Givaudan – 2021 In a Nutshell
8 CEO interview CEO INTERVIEW I am proud to look back at a year of great achievements, in pursuit of delivering sustainable value creation for all our stakeholders. Gilles Andrier, CEO is interviewed wellbeing of our employees, ensuring we delivered for our by Givaudan employee Alice. customers, and overall remaining a resilient business. They discuss how the business Across our growth drivers and enablers, we’ve been effectively implementing our strategy, and the key themes we identified delivered in the first year of have been strengthened and proven to be the right ones, such its new strategy cycle, while as health and wellbeing, naturals, plant-based proteins, Active Beauty among many others. also managing through another I’d like to express my huge thanks and pride in all of our pandemic year. over 16,800 colleagues around the world who contributed to Givaudan’s success in 2021. A Overall, how did the business perform? GA Ambitious financial targets are central to our 2025 strategy Alice In 2021, we continued to face the challenges of the roadmap, along with the addition of purpose-linked targets evolving pandemic. How would you characterise the year? to show the progress we want to make towards our longer- Gilles Andrier Overall, it was a significant and strong year for term purpose ambitions in the areas of Creations, Nature, People us. Significant as we started out on our next five-year strategy and Communities. We aim to achieve average organic sales cycle – ‘Committed to Growth, with Purpose’ – and delivered growth of 4-5% on a like-for-like basis and an average free cash a strong financial performance while also making progress on flow of at least 12%. We grew strongly in 2021, achieving sales our purpose targets. of CHF 6,684 million, a growth of 7.1% and an average free cash flow of 12.6%. We also showed our strength in being able to deliver this against a backdrop of continuing challenges from the second We showed once again our ability to deliver industry leading, year of the pandemic. We continued to prioritise the health and purpose-led growth with a long-term perspective. All areas Givaudan – 2021 In a Nutshell
CEO interview 9 Givaudan – 2021 In a Nutshell
10 CEO interview and markets of the business performed well. It has also been A We started the implementation of our 2025 strategy encouraging to see the product segments most affected by the ‘Committed to Growth, with Purpose’. What have been some pandemic – namely Fine Fragrances, and to a lesser extent of the highlights? Active Beauty as well as foodservice in Taste & Wellbeing GA Our 2025 strategy is our five-year roadmap for how we will – experience a strong recovery. And overall, again we saw deliver sustainable value creation for all our stakeholders. Across the resilience of the business, which has been built over many our growth drivers and enablers, there were a number of years through having ‘natural hedges’, by being in every single highlights of how we are effectively implementing our strategy. market in the world, in taste and wellbeing and in fragrance and beauty, with the widest diversity of product categories, We continued to make investments in acquisitions that further and servicing a wide variety of customers. broaden our offering to our customers and strengthen our global footprint. This includes a CHF 75 million investment in A Beyond financials, we’ve included purpose-related a new extension to our Pedro Escobedo Fragrance & Beauty targets for 2025. What progress did we make here? production facility in Mexico to support growth in Latin America GA When we launched our purpose, ‘Creating for happier, and across customer segments. healthier lives with love for nature’ in November 2019, we also set out a number of ambitious targets to underpin our Taste & Wellbeing introduced its new Product Portfolio Architecture commitment to have a positive impact on Creations, Nature, (PPA), realigning its portfolio to better reflect how, through the People and Communities. This is now fully embedded in our expanded product offering and capabilities, we support customers 2025 strategy, showing how we want to grow with purpose to deliver future-facing food experiences that consumers value. and how we express our commitment to ESG. To accelerate alternative protein development, a new Protein Hub at our Zurich Innovation Centre was opened, bringing together Our ambition is that through our creations more people will customers, start-ups, academics and chefs to co-create. enjoy happier, healthier lives, and that through these creations, we will double our business by 2030. We demonstrated strong As part of our commitment to nature-conscious fragrances and growth through 2021 by delivering products that delight showing our love for nature in everything we do, Fragrance & consumers and contribute to their overall wellbeing. Beauty announced the launch of its Naturality Index™. This is a one-of-a-kind assessment tool that allows perfumers to Other highlights for 2021 included a strong focus on our climate factor-in the environmental impact of their ingredient selection positivity journey, and we have recently been recognised by bringing a new differentiating dimension to the creative process. CDP with a double A rating for leadership in climate action and Also supporting our customers to meet their sustainability water stewardship. We launched Sourcing4Good, a progressive ambitions, we introduced PlanetCaps™, an industry-leading programme which has been co-created with customers, first-to-market fragrance encapsulation innovation that specialists and internal stakeholders, to help accelerate our enables long-lasting fragrance experience in a biodegradable purpose goal to source all materials and services in a way that and bio-sourced delivery system for fabric softeners. protects people and the environment by 2030. Supporting our growth enabler – simplicity and innovation Throughout the pandemic, we’ve continued to focus on the in everything we do – our Givaudan Business Solutions health and wellbeing of our colleagues. This is part of our organisation continued helping us to be more agile and reduce ambition to improve how we care for all our people, complexity. We leveraged this platform through the challenges providing access to mental and physical health initiatives, of the pandemic to minimise the impact on our ability to tools and training. service our customers. We also continued to make progress on our long-term journey A There were further acquisitions in 2021. How do they to become a certified B Corporation, which will measure contribute to the strategic focus areas? Givaudan’s entire social and environmental performance and GA TTo support our growth ambition, our 2025 strategy is provide independent verification that we live up to our purpose. built around three key drivers. Firstly, expand the portfolio, going beyond the current portfolio of flavours and fragrances, naturals and delivery systems into nutrition, food ingredients and beauty. Secondly, focussed market strategies which is about maximising mature market opportunities while at the same time extending our high growth market leadership, particularly in China. Finally, extending customer reach particularly with the local and regional customer segment. Givaudan – 2021 In a Nutshell
CEO interview 11 We have shown once again our A With the shift to more flexible and hybrid ways of working ability to deliver industry leading, as a result of the pandemic, what is Givaudan’s approach? GA The pandemic has brought many opportunities to do purpose-led growth with a things differently, and we’ve wanted to take the learnings and long-term perspective. experiences and turn them into positives for the future. One area is flexible working. Like many businesses, we’ve seen proof of the benefits of having more flexibility while also Throughout 2021, we made a number of strategic acquisitions continuing to balance the needs of the business. The new which fully align to these key drivers. They include DDW, The ways of working adopted during the pandemic increased Color House, a US-based natural colour company. The acquisition touchpoints with colleagues and customers and helped us to enables us to become the number two global player in natural be even more inclusive. colours and continue our expansion into adjacent spaces. In support of our People purpose goal to be a place where we To expand our presence with local and regional customers, as all love to be and grow, and taking the learnings from the well as grow our capabilities in natural perfumes, we acquired pandemic, we have developed a Flexible Working Framework Custom Essence, a US-based fragrance creation house. We also and toolkit to support local HR and sites to implement locally. acquired 25% of b.kolormakeup & skincare’s shares, aligned We will continue to build on the experience and learnings of with our 2025 ambitions to keep expanding in skin care and this period to take forward with us. make-up. This builds on the other acquisitions we have made to support our local and regional strategy including Expressions A How is Givaudan approaching leadership development Parfumées, Fragrance Oils and drom, which have proven and succession planning? to be successful additions to the portfolio. Finally, we agreed GA We have a well-established leadership development a joint venture with Privi India to further strengthen our programme to nurture talent from within the Company, which manufacturing footprint in India and bolster production has been redesigned to reflect our changing business and capabilities for our global speciality fragrance ingredients. ensure we develop leaders with the right skills and behaviours for the future workplace. We also continued to make good progress with our programme to fully integrate acquired companies with Givaudan systems, With our strong focus on succession planning and the quality of processes and organisation. our leaders, where we’ve evolved our senior leadership teams in Fragrance & Beauty and Taste & Wellbeing in 2021, we’ve A We’ve identified digital innovation as a key enabler for our been able to do this from within the Company. 2025 strategy. What were some of the investments made here? GA Yes, we see digital innovation as a key enabler to keep our A Looking ahead to 2022, what will the year bring? customers at the centre of everything we do and support the GA I am excited for the year ahead as we continue to business to meet our ambitious mid- and long-term goals. implement our 2025 strategy and make progress on our purpose targets. While we anticipate further disruptions from the We acquired Myrissi to strengthen our artificial intelligence (AI) pandemic and other supply chains that are not distinct to our capabilities, so we now have an exciting AI tool capable of industry, we have robust plans in place to adapt accordingly. translating fragrances into consumer-relevant colour patterns and images as well as predicting the end consumer’s emotional We take confidence from how we have managed through the response. Helping us to capture digital opportunities for fragrance last two years in continuing to be a resilient business. We have creation in China, we entered into a partnership with Tmall, the a clear plan in place and, combined with the talent and passion Alibaba group’s open business-to-consumer (B2C) platform. of our fantastic colleagues around the world, we remain positive about the year ahead. We also opened a new Digital Space in China, one of the most digitalised of markets, allowing us to leverage transformation opportunities and to support growth with local and regional customers. The dedicated space will enable our digital innovation teams, working alongside regional and local business teams, to identify opportunities and leverage technologies to co-create the products and services of tomorrow. Givaudan – 2021 In a Nutshell
12 Driving sustainable growth and value creation Driving sustainable growth and value creation Being a sustainable business is our promise, acting as a force for good our objective. With our purpose as our guiding star, we continue to deliver sustainable value creation that benefits all our stakeholders throughout our value chain. The created and shared value goes far beyond financials, impacts positively society and the planet and contributes towards meeting the sustainable development goals. Our value creation chain UPSTREAM OUR DOWNSTREAM ACTIVITIES IMPACTS ACTIVITIES BUSINESS Sourcing Fragrance & Customers Consumers Value creation for Beauty our stakeholders Customers / Suppliers / Taste & Employees / Owners and Wellbeing investors / Local communities / Public and regulatory / Agencies GIVAUDAN PRODUCT FORMULA Givaudan – 2021 In a Nutshell
Driving sustainable growth and value creation 13 Creating for Creations happier, healthier Communities Let’s imagine lives with love Let’s imagine together with our for nature together that all customers that Let’s imagine communities through our creations together benefit by working more people will with Givaudan. enjoy happier, healthier lives. Nature People Let’s imagine together Let’s imagine together that we show our love that Givaudan is a for nature in place where we all everything we do. love to be and grow. Working to become a Our purpose Working towards sustainable development Our long-terms goals have been defined under four pillars – creations, nature, people and communities – that we can measure our progress against. It also demonstrates how sustainability is fully embedded in all aspects of our business. Our purpose is also embedded in our 5-year strategy: the growth enablers are our purpose pillars. Givaudan – 2021 In a Nutshell
14 Our 2025 strategy Our 2025 strategy Committed to Growth, with Purpose Our 2025 strategy is derived from our purpose, and sets out our Growth enablers roadmap to deliver sustainable value creation over the next five Creations years for all our stakeholders. Expanding strategic relationships with suppliers, start-ups and partners; enhancing co-creation with customers. Committed to Growth, with Purpose outlines our intention to deliver growth in partnership with our customers, achieve Nature ambitious financial targets, while also making progress on our Further embedding environmental sustainability in our product longer term purpose ambitions in the areas of creations, nature, portfolio and continuing our efforts in sourcing responsibly. people and communities. People This is supported by our ongoing journey to becoming a B Corp Nurturing a diverse and inclusive workforce; evolving workplace certified company, helping us to live up to the highest standards trends; caring for employee health and wellbeing. of being a responsible and sustainable business as we strive to be a force for good. Our certification will be the independently Communities verified proof that we are acting on our purpose goals and Bringing benefits to all communities that work with us, including successfully balancing people, planet and profit. the communities where we source and operate. Our 2025 strategy is powered by three core growth drivers Focus on and four growth enablers, and supported by our focus on Excellence, Innovation & Simplicity – Excellence, Innovation, Simplicity in everything we do. in everything we do Delivering the highest standards across our value chain, from Growth drivers operational and financial performance to the delivery of a Expand the portfolio superior customer experience. Going beyond our current portfolio to further expand into nutrition, food ingredients and beauty. Extend customer reach Embracing opportunities in today’s more fragmented customer landscape and driving growth in the local and regional customer segment. Continuing global challenges such Focussed market strategies as the pandemic and climate change Maximise mature market opportunities at the same time as make it even more important to extending our high growth market leadership. work closely with our customers to deliver solutions that help address social and environmental issues and generate value. Gilles Andrier, CEO Givaudan – 2021 In a Nutshell
Our 2025 strategy 15 Givaudan, a high performing company that is a force for good Creations Nature We create inspiring We show our love for solutions for happier, nature through impactful healthier lives Growing actions together with our customers People Communities We nurture a place where We bring benefits to all we all love to be and grow communities that work with us Excellence, innovation, simplicity in everything we do 4 – 5% GROWTH PURPOSED LINKED TARGETS > 12% FCF Environment Social Governance Fully integrated in our 2025 Strategy Givaudan – 2021 In a Nutshell
16 Expand the portfolio OUR 2025 STRATEGY GROWTH DRIVER #1 Expand the portfolio We’re expanding our traditional portfolio of flavours and fragrances, naturals and delivery systems into nutrition, food ingredients and beauty. This broader offering helps customers better respond to consumer demand for products that support health and wellbeing, positive ageing and changing lifestyles while meeting their expectations around ethical and responsible business issues. OUR STRATEGY IN ACTION Key achievements in 2021 • Expanding our offerings for the consumer- packaged goods and luxury segments with the acquisition of 25% of B.Kolormakeup & Skincare of Italy (b.kolor). • Introduced Blossom Lab™, a fully equipped mobile laboratory to help create naturals extraction techniques directly in the field. • Acquired DDW, The Color House. This will reinforce our ability to create multi-sensorial food experiences with our customers and enables us to become the number two global player in natural colours. • We advanced the development of numerous biotechnology-based ingredients with external partners. A key ingredient, developed with Manus bio, will be launched in early 2022. Givaudan – 2021 In a Nutshell
Extend customer reach 17 OUR 2025 STRATEGY GROWTH DRIVER #2 Extend customer reach The trend for smaller and local brands is driving growth in the local and regional customer segment alongside a continued potential with larger international and global customers. We want to provide more tailored approaches to meet the wider range of customer needs in this rapidly changing and more fragmented landscape. OUR STRATEGY IN ACTION Key achievements in 2021 • Opening state-of-the-art product development facilities to accelerate innovation for customers (protein centres and the Nordic Experience centre in Malmö, Sweden). • Investing CHF 75 million to expand our fragrance production at Pedro Escobedo in Mexico, to open at the end of 2023, serving all customer segments in the Latin American key growth market. • Strengthened our e-commerce offering in China through the opening of a flagship business-to-business (B2B) store on China’s leading wholesale website, 1688.com. • Acquired Custom Essence to strengthen access to local and regional customers and expand capabilities in natural perfumery in North America. Givaudan – 2021 In a Nutshell
18 Focused market strategies OUR 2025 STRATEGY GROWTH DRIVER #3 Focused market strategies We’re responding to growth forecasts in global consumption and investing in high growth markets to ensure greater proximity to our customers and develop further understanding of local consumer preferences. We plan to maximise mature market opportunities over the next five years and extend our high growth market leadership, particularly in China. OUR STRATEGY IN ACTION Key achievements in 2021 • Planning greenfield production plant in India for fragrance speciality ingredients through a joint venture with Privi Speciality Chemicals. • Partnering with Tmall to launch T-Lab source innovation laboratory, leveraging our creative fragrance solutions and production capabilities in China. • Launched our unique Advanced Tools for Modelling which uses AI to optimise food and flavour formulation and facilitate co-creation and collaboration with customers. Givaudan – 2021 In a Nutshell
Excellence, Innovation & Simplicity – in everything we do 19 OUR 2025 STRATEGY FOCUS ON Excellence, Innovation & Simplicity – in everything we do From excellence in operational and financial performance to the delivery of a superior customer experience, we aim to deliver the highest standards across the value chain. Innovation is our lifeblood, from creating differentiating solutions that address our customers’ challenges to leading the way in areas such as biotechnology and digitalisation. At the centre of everything we do are our customers. OUR STRATEGY IN ACTION Key achievements in 2021 • Good progress in integrating recently acquired companies Differentiated on our platforms such as SAP and GBS, as well as on our customer creation, development and commercial systems. Key steps experience to support our strategy. • Launched the Aroma Kiosk, a new digital sensory insights tool, designed to connect with consumers directly, gather valuable consumer insights and recommend products in real time. • Introduced PlanetCaps™, enabling customers to solve the Industry complex feasibility equation between greenness and leading performance in fabric softeners. This cutting-edge technology solutions and will be expanded to other categories to boost sustainability. services • Partnered with BASF to launch the world’s first toxicology testing strategy without animal testing. Ensuring operational • Started a ‘silver lining’ project to find positive opportunities reliability and from the difficult pandemic situation. Five areas have efficiency been identified that will contribute to enhancing our work life and how we serve customers. Work is underway to define key initiatives and guidance that will be rolled out in the short and long term. Givaudan – 2021 In a Nutshell
20 Progress against our targets OUR 2025 STRATEGY Progress against our targets Focus area Targets Status 2021 Actions and measures Creations 7.1% Sales Average organic sales growth of 4–5% on a like-for-like basis between 2021–2025 Focusing on our strategic growth drivers, focusing on renewable, biodegradable and viable natural solutions; addressing health and wellbeing issues; expanding our portfolio; greater collaboration and co-creation; Exploiting AI and digital opportunities; increasing Free cash flow Average free cash flow of at least 12% of sales between 2021–2025 12.6% operational efficiencies. Nature Emissions OPERATIONS: Our operations’ carbon emissions (scope 1 + 2) will be cut by 70% before 2030 –31% Setting an internal carbon price; fixing site environmental targets and assessments; switching to renewable energy sources; Promoting and will be climate positive before 2040 (baseline 2015) energy efficiencies; Signing the UN pledge 'Business Ambition for 1.5°C'. SUPPLY CHAIN: Our supply chain emissions (scope 3) will be cut by 20% before 2030 and will –4% Sourcing ingredients responsibly; developing low-carbon creations; driving circularity and upcycling; optimising packaging, logistics, be climate positive before 2050 (baseline 2015) transport of goods, and business/private travel. Electricity Power 100% of our sites with renewable electricity by 2025 4% Committing to RE100 since 2015; setting site renewable electricity targets; generating electricity on site. Water Improve water efficiency by 25% on sites facing water stress by 2030 (baseline 2020) 8 –4% Driving continuous improvement using the 3R approach: 'reduce, reuse and recycle'; Identifying shared water challenges and local We will continuously improve water efficiency on all other sites flat stakeholder priorities in the watershed; implementing our wastewater standard; carrying out water risk assessments; tracking site water quantity and quality. 100% of our wastewater discharge will meet or exceed regulatory and industry standards by 2030 in progress Plastics 100% plastics circularity by 2030 in progress Becoming members of the advisory board of the Renewable Carbon Initiative (RCI); co-leading a WBCSD plastic and packaging workgroup defining a transition for B2B chemical products; reducing our plastic usage and consumption. Waste Reduce waste by 4% per tonne of product, year-on-year average (baseline 2015) –2% ¹ Applying circular principles in product design, sourcing, manufacturing and packaging; upcycling to re-use materials normally disposed of; acting on the principle of 'no waste by design'. People Diversity and We will be rated amongst the leading employers for inclusion globally before 2025 in progress Building more inclusive hiring practices: Inclusive job ads; balanced slates for hiring and promotion; hiring manager training. inclusion 50% of our senior leaders will be from high growth markets before 2030 26% Fostering inclusive leadership development: Evolving our Leadership Development programmes; Better Balance approach; managing unconscious bias at work. 50% of our senior leaders will be women before 2030 26% Caring for We will reduce our total recordable injury rate by 50% before 2025 (baseline 2018) –22% Investing in our plant and technical equipment; further developing our Responsible Care Management System; conducting periodic employee assessment of risk and control on-site; expanding our behavioural safety programme: advanced safety leadership training and safety, health comprehensive worker trainings on health and safety. and mental Everyone on our sites will have access to mental and physical health initiatives, in progress Providing access to mental and physical health initiatives, tools and training for all employees such as: Employee Assistance wellbeing tools and training before 2025 Programme ; Happier, healthier habits circles; health and wellbeing communities of practice, Communities Sourcing 100% of materials and services sourced responsibly by 2030 (baseline 2021) in progress Implementing our Sourcing4Good programme; responsible sourcing policy. responsibly Communities Ambition to improve the lives of millions of people in communities where we source and in progress Through employee activities, Green Teams and the Givaudan Foundation, develop initiatives that: respond to the needs within benefit by operate by 2030 - targets being determined communities; support activities ranging from health and education to enhancing environmental and agricultural practices. working with us 1. Absolute reduction since 2015. Givaudan – 2021 In a Nutshell
Progress against our targets 21 Focus areaTargetsStatus 2021Actions and measures Creations7.1% SalesAverage organic sales growth of 4–5% on a like-for-like basis between 2021–2025Focusing on our strategic growth drivers, focusing on renewable, biodegradable and viable natural solutions; addressing health and wellbeing issues; expanding our portfolio; greater collaboration and co-creation; Exploiting AI and digital opportunities; increasing Free cash flowAverage free cash flow of at least 12% of sales between 2021–202512.6%operational efficiencies. Nature EmissionsOPERATIONS: Our operations’ carbon emissions (scope 1 + 2) will be cut by 70% before 2030 –31%Setting an internal carbon price; fixing site environmental targets and assessments; switching to renewable energy sources; Promoting and will be climate positive before 2040 (baseline 2015)energy efficiencies; Signing the UN pledge 'Business Ambition for 1.5°C'. SUPPLY CHAIN: Our supply chain emissions (scope 3) will be cut by 20% before 2030 and will –4%Sourcing ingredients responsibly; developing low-carbon creations; driving circularity and upcycling; optimising packaging, logistics, be climate positive before 2050 (baseline 2015)transport of goods, and business/private travel. ElectricityPower 100% of our sites with renewable electricity by 20254%Committing to RE100 since 2015; setting site renewable electricity targets; generating electricity on site. WaterImprove water efficiency by 25% on sites facing water stress by 2030 (baseline 2020)8 –4% Driving continuous improvement using the 3R approach: 'reduce, reuse and recycle'; Identifying shared water challenges and local We will continuously improve water efficiency on all other sites flatstakeholder priorities in the watershed; implementing our wastewater standard; carrying out water risk assessments; tracking site water quantity and quality. 100% of our wastewater discharge will meet or exceed regulatory and industry standards by 2030in progress Plastics100% plastics circularity by 2030in progressBecoming members of the advisory board of the Renewable Carbon Initiative (RCI); co-leading a WBCSD plastic and packaging workgroup defining a transition for B2B chemical products; reducing our plastic usage and consumption. WasteReduce waste by 4% per tonne of product, year-on-year average (baseline 2015) ¹Applying circular principles in product design, sourcing, manufacturing and packaging; upcycling to re-use materials normally disposed –2% of; acting on the principle of 'no waste by design'. People Diversity and We will be rated amongst the leading employers for inclusion globally before 2025in progressBuilding more inclusive hiring practices: Inclusive job ads; balanced slates for hiring and promotion; hiring manager training. inclusion50% of our senior leaders will be from high growth markets before 203026%Fostering inclusive leadership development: Evolving our Leadership Development programmes; Better Balance approach; managing unconscious bias at work. 50% of our senior leaders will be women before 203026% Caring for We will reduce our total recordable injury rate by 50% before 2025 (baseline 2018)–22%Investing in our plant and technical equipment; further developing our Responsible Care Management System; conducting periodic employee assessment of risk and control on-site; expanding our behavioural safety programme: advanced safety leadership training and safety, health comprehensive worker trainings on health and safety. and mental Everyone on our sites will have access to mental and physical health initiatives, in progressProviding access to mental and physical health initiatives, tools and training for all employees such as: Employee Assistance wellbeingtools and training before 2025Programme ; Happier, healthier habits circles; health and wellbeing communities of practice, Communities Sourcing 100% of materials and services sourced responsibly by 2030 (baseline 2021)in progressImplementing our Sourcing4Good programme; responsible sourcing policy. responsibly Communities Ambition to improve the lives of millions of people in communities where we source and in progressThrough employee activities, Green Teams and the Givaudan Foundation, develop initiatives that: respond to the needs within benefit by operate by 2030 - targets being determinedcommunities; support activities ranging from health and education to enhancing environmental and agricultural practices. working with us 1. Absolute reduction since 2015. Givaudan – 2021 In a Nutshell
22 Financial value creation Financial value creation Givaudan Group full year sales In Fragrance & Beauty the product segments most affected in were CHF 6,684 million, an the first phases of the COVID-19 pandemic, namely Fine Fragrances and to a lesser extent Active Beauty, delivered increase of 7.1% on a like-for-like excellent double-digit growth in 2021, demonstrating strong basis and 5.7% in Swiss francs consumer demand for these product categories. when compared to 2020. In Taste & Wellbeing, there was excellent sales growth in the beverage, savoury and snacks categories, as well as in the strategic focus areas of plant-based proteins, health and wellness and naturals. In addition, there was a progressive Fragrance & Beauty sales were CHF 3,091 million, an increase of recovery in the foodservice segment, as restrictions in relation 6.6% on a like-for-like basis and 5.8% in Swiss francs. to out-of-home food and beverage consumption started to be eased in certain markets. Taste & Wellbeing sales were CHF 3,593 million, an increase of 7.6% on a like-for-like basis and 5.7% in Swiss francs. With higher input costs in 2022, the company is implementing price increases in collaboration with its customers to fully As the COVID-19 pandemic continued to have an impact on a compensate for the increases in input costs. global level, Givaudan sustained good business momentum whilst maintaining its operations and global supply chain at a Outlook high level, despite ongoing challenges in certain parts of the Visibility remains short due to ongoing impacts related to the supply chain. The strong sales growth was achieved across all COVID-19 pandemic, however, we have consistently shown our product segments and geographies, with the mature markets resilience and we remain confident in our portfolio, our creative growing at 6.3% and the high growth markets at 8.3% on a like- strengths and our strong start to the 2025 strategic cycle. Our for-like basis. business is a systemically important part of the overall food and consumer products value chain. From the onset of the COVID-19 crisis and in line with our I am very pleased with the purpose, we will continue to be strongly focused on protecting and supporting our employees, on maintaining operations and successful start that we have made supply chain performance at high level to meeting the demands into our 2025 strategic cycle, with of our customers, and taking care of the communities in which all parts of our business and our we operate. strategic focus areas contributing to the strong financial results that we have achieved in 2021. Gilles Andrier, CEO Givaudan – 2021 In a Nutshell
Financial value creation 23 Group – Sales Group – EBITDA in millions of Swiss francs in millions of Swiss francs , , , , , , , , , , 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Group – Operating income Group – Total gross investments in millions of Swiss francs in millions of Swiss francs , , 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Dividend per share and free cash flow in Swiss francs | in millions of Swiss francs 62 64 66 ¹ 56 58 60 50 54 47 36 17.6 18.8 19.5 20 20.6 21.5 22 811 843 15.4 16.3 787 6.5 7 8.1 720 703 662 549 604 597 594 512 437 340 390 273 295 289 262 203 157 145 117 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Free cash flow Dividend 1. Subject to shareholder approval at the AGM on 24 March 2022. Givaudan – 2021 In a Nutshell
24 Effective and transparent governance Effective and transparent governance Ethical and fair business practices are englobed in our Code of Conduct which all employees must sign. Governance of ESG aspects are fully integrated into our Board and Executive committee management processes and agendas. BOARD OF DIRECTORS Responsible for the ultimate direction, strategic supervision and control of the management of the Company, including reviewing the overall progress and direction of the company purpose. 4 COMMITTEES • • • Audit Compensation Nomination & Governance Innovation EXECUTIVE COMMITTEE Led by the CEO. Responsible for all areas of operational management that the Board has delegated to it, including decisions on the direction and commitments related to our purpose. 7 MEMBERS • • • Chief Executive Officer Chief Financial Officer President Taste & Wellbeing • • President Fragrance & Beauty Head of Global HR and Evironment Health & Safety • Head of Global Procurement and Sustainability Head of GBS Businesses & Management tools Stakeholders Partners and advisors functions • Ambitions • Constant engagement • Partnering with experts • Constant engagement • Policies / Principles of with internal and external and external bodies for with employees of the Conduct stakeholders collaboration on key businesses and functions • Risk management / • Directing our business matters such as purpose, precautionary principle efforts towards the broader sustainablity, innovation • Corporate Governance needs of our relevant and more • External assessments stakeholder groups Givaudan – 2021 In a Nutshell
Effective and transparent governance 25 BOARD OF EXECUTIVE COMPENSATION GOOD CORPORATE DIRECTORS COMMITTEE CITIZENSHIP 8 members 7 members • Our compensation policies • Principles of Conduct are an essential component • Ethics and Compliance years average years average of our employee value Programme 6.4 6.6 proposition and a key driver tenure tenure of both individual and • Human Rights Policy business performance • Responsible Sourcing 5 nationalities nationalities • Compensation of Board of Policy/Sourcing4Good represented 6represented Directors and the Executive programme 3 women woman Committee is subject to 1 annual shareholder approval SHARES • Separation of roles • Responsible for the • The Performance Share between the Chairman of day-to-day management Plan (PSP) is designed to the Board and Chief of the Company reward executives and key • One single class of shares Executive Officer, in line • Average of 20 years talent who significantly • One share = one vote with 'Swiss Code of Best experience in the company influence the longterm Practice for Corporate success of the business and Governance' principle 19. • One of the longest standing our purpose ambitions. • Ultimate strategic CEO in the industry supervision and control of the management of the Company, including Enterprise Risk Management approach • All board members re- elected on an annual basis Performance Share Plan for top 500 employees • 100% independent members 20% 80% Non financial Financial targets targets 10% Social targets 10% Environmental targets Givaudan – 2021 In a Nutshell
26 Our global presence Our global presence Our size and our operations footprint give us a unique exposure to the diversity of high growth NORTH AMERICA markets in which we continue to 13 Production sites invest with additional talent and new facilities to service the wide 19% of employees diversity of our customers. Our geographical balance continues to contribute to natural hedges against impacts such as the COVID-19 pandemic. Givaudan's presence LATIN in numbers AMERICA 185 sites worldwide, in 52 countries 9 Production sites 79 production sites 14% of employees 69 creation and research centres > 16,800 employees (FTE) > 11,780 customers at a global level > 126,460 products sold per year Givaudan – 2021 In a Nutshell
Our global presence 27 EUROPE 31 Production sites 41% of employees SOUTH ASIA, MIDDLE ASIA PACIFIC EAST AND AFRICA 17 Production sites 9 Production sites 19% of employees 8% of employees Givaudan sites Givaudan headquarters, Vernier, Switzerland Givaudan – 2021 In a Nutshell
28 Our reporting suite Our reporting suite The 2021 Integrated Annual 2021 in a Nutshell offers a concise summary of our Integrated Report is the primary report to Annual Report. The full Governance, Compensation and Financial reports are available in a separate PDF. The GRI Sustainability shareholders and offers a holistic Report is prepared in accordance with the GRI Standards Core option and externally assured by EY. We also include a TCFD explanation of our value creation, table and a SASB Standards mapping table in our reports. The financial and non-financial indexes of our GRI, SASB and TCFD disclosures can also be found as separate documents on www.givaudan.com/online annual capitals and performance. report/downloads. Our website hosts the online Integrated Annual Report. Readers are advised to consult our entire reporting suite to get a complete overview. 2021 Integrated Annual 2021 Integrated Annual Report Report Online version Available in English Available in English PDF from 28 January 2022 from 28 January 2022 Print from 24 March 2022 2021 Governance, 2021 GRI Sustainability Compensation and Financial 2021 In a Nutshell Report Report Available in English, French and German Available in English Available in English PDF in English from 28 January 2022 PDF from 28 January 2022 PDF from 28 January 2022 Print and language versions from 24 March 2022 Givaudan – 2021 In a Nutshell
Givaudan SA Chemin de la Parfumerie 5 1214 Vernier, Switzerland General information T + 41 22 780 91 11 Media and investor relations T + 41 22 780 90 53 Share registry Computershare Schweiz AG Postfach 4601 Olten, Switzerland T + 41 62 205 77 00 Share information Symbol: GIVN Security number: 1064593 ISIN: CH0010645932 l l e h s t u n a N 1 I 2 0 2 Concept, design, consulting and realisation: PETRANIX Corporate and Financial Communications AG www.PETRANIX.com 2021 In a Nutshell is published in English. All trademarks mentioned enjoy legal protection. Printed in Switzerland by Neidhart + Schön Print AG, www.nsgroup.ch This report may contain forward-looking information. Such information is subject to a variety of significant uncertainties, including scientific, business, economic and financial factors. Therefore actual results may differ significantly from those presented in such forward-looking statements. Investors must not rely on this information for investment decisions. Picture credits: Givaudan, Shutterstock © Givaudan SA, 2022 www.givaudan.com