UPDATE 2-Givaudan gives upbeat 5-year targets

* Aims to outperform the market over the next five years

* Says will cut 270 jobs in the UK and in Switzerland
* Aims to return 60 pct of free cash flow to shareholders

* Confirms 2010 goals

* Shares up 1.2 pct, outperform European peers

(Adds analyst comments, shares, further details)

By Catherine Bosley and Silke Koltrowitz

ZURICH, Aug 31 (BestGrowthStock) – Swiss fragrance and flavour maker
Givaudan (GIVN.VX: ) gave upbeat mid-term guidance on Tuesday and
said growth in emerging markets should lift sales at a faster
rate than competitors.

The company aims to increase organic sales by 4.5 to 5.5
percent annually over the next five years, outperforming the
estimated 2 to 3 percent growth of the sector, it said, adding
that half its sales should come from emerging markets by 2015.

Givaudan said it would seek to improve annual free cash flow
to 14 to 16 percent of sales by 2015, continue to achieve
industry-leading earnings before interest, tax, depreciation and
amortisation (EBITDA) margin and would return more than 60
percent of free cash flow to shareholders once it had reached a
leverage ratio of 25 percent, it said.

“These are convincing midterm targets for Givaudan,” ZKB
analyst Daniel Buerki said in a note. “The target for free cash
flow and returns to shareholders is very attractive and shows
Givaudan, on top of credible topline growth, is also a
value-story.”

Shares in Givaudan, which competes with Germany’s Symrise
(SY1G.DE: ) and American company International Flavors &
Fragrances (IFF.N: ), had risen 1.2 percent by 1017 GMT,
outperforming a flat Stoxx 600 European chemicals index(.SX4P: ).

The company said it was on track to grow sales more than 5
percent in local currencies this year and to achieve its goal of
returning to a 22.7 percent EBITDA margin, the level prior to
its 2007 acquisition of UK-based fragrance and flavour maker
Quest International.

Givaudan’s flavours, made to improve the taste of foods like
chicken and cheese, have held up well during the crisis and its
fragrances, used in perfumes of upscale fashion houses Dior and
Prada, rebounded strongly in the first half. [ID:nLDE66P0QL]

The company would invest 170 million Swiss francs in a
savoury flavours factory in Hungary, it said.

Givaudan, which employs around 8,500 people, would cut 150
job in the UK and 120 in Switzerland as it moved production to
Hungary, a company spokesman told Reuters.

It would spend around 75 million francs in restructuring
costs, of which up to two thirds would fall in 2010 and the rest
in 2011, it said.

While some employees would be offered jobs elsewhere and
others would retire early, redundancies were inevitable, he
said.

(Editing by Dan Lalor and David Cowell)
($1 = 1.023 Swiss francs)

UPDATE 2-Givaudan gives upbeat 5-year targets