Ladies and gentlemen, welcome to the Givaudan 2021 Full-Year Results Conference Call and Live Webcast. I am Alice (ph) call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by Q&A session. The conference must not be recorded for publication or broadcast. At this time. It's my pleasure to hand over to Gilles Andrier, CEO. Please go ahead, sir.

Thank you. Ladies and gentlemen, good afternoon, good evening to Asia and good morning to the America. Welcome to our 2021 full year results conference call. Tom Hallam, our CFO is alongside with me on this goal. We will take you through the presentation before answering your questions at the end. The Company's news are now full-year results. We are published on our Givaudan website at 7

00 Swiss time this morning. This is where you can also find the slides for today's presentation. Along with the Company news on our website, our 2021 integrated annual report is also available. I'd like now to start going through the presentation and invite you to turn to Slide number 3 to go through our performance highlights. I'm very happy to announce the net another excellent set of figures. I'm equally proud to report that we are off to a good start to our 2025 strategic cycle as we close the first year of these five-years plan. In the current environment, these strong 2021 results demonstrates our market leadership, the resilience of our business model, and the important role we play in sustaining along with our clients in the global supply chain of key consumer product categories. I'm once again, very proud of the entire Givaudan organization for their dedication, their agility during this challenging period for the second year in a row and for enabling us to continue to support our customers to make products available to billions of consumers every day. In 2021, we reached sales of CHF6.7 billion. A growth of 7.1% on the like-for-like basis, and 5.7% in Swiss francs. Our sales growth for the full year 2021 remain clearly ahead of the market. This strong growth was supported by many levers, once again, by the good contribution of high-growth markets, the strategic focus areas as well as the acquired businesses. The continuing performance of the resident part of Givaudan representing 84% of our portfolio. And at the same time, the very strong recovery of the less resilient part, which had been impacted in 2020, namely Fine Fragrances and to a lesser extent, Food Service. Both segments, which I will further detail in this presentation. Launches of new products were at a higher level than in 2020. Our new business pipeline remained very strong in anticipation for our retail to normality and our win rates have been very healthy. We achieved an EBITDA close to CHF1.5 billion, increasing 6% over 2020. This means an EBITDA margin of 2020,.1% up from 22% in 2020. On a comparable basis, EBITDA margin was 22.5%. The free cash flow of CHF 843 million is up 4% versus 2020 and represents 12.6% of sales. At the AGM of 24th of March 2022, the Board of Directors will propose a dividend of CHF 66 per share, an increase of 3.1% year-on-year. And to complete those highlights, all our 2025 strategic focus areas are on track and has contributed to these results. Let's turn now to Slide number 4. Both divisions contributed strongly to our growth, Fragrance & Beauty reached almost CHF3.1 billion, growing 6.6% and Taste & Wellbeing, reached CHF 3.6 billion growing a record ever of 7.6%, both growth rates being on the like-for-like basis. The good growth was achieved across most product segments with a very strong performance in Fine Fragrances and Active Beauty for the Fragrance and Beauty division, as well as in beverages, savoury and snacks for the Taste & Wellbeing division. We also benefited from a regained momentum of our local and regional clients compared to 2020, whilst our sales with global customers remained on the good momentum as in 2020. Once again, all our strategic focus areas complimented by the acquisitions have contributed to our growth. To name a few, 1. high-growth markets, 2. health and wellness, 3. naturals, 4. plant-based proteins, and 5. active beauty. Let's turn now to Slide 5. On the left hand side of this slide, you can see that over the last two years of pandemic, we have been growing 5.5% on the like-for-like basis, faster than our guidance. Both divisions contributing with an average 6% for Fragrance and Beauty and 5% for Taste and Wellbeing. On the right hand side of this slide, this table was developed specifically in the context of the COVID-19 pandemic to visualize the effects of the pandemic of the portfolio of Givaudan, showing the respective growth rates of both the lower and the higher impacted businesses. So starting with the lower impacted business. With increased sanitation and many confined at home in 2020 and in 2021, we have seen the more resilient part of Givaudan which totals 84% of group sales, strongly contributing to sales growth namely, consumer products and Active Beauty, which represent 82% of Fragrance & Beauty, which grew 3.5% in 2021, delivering an average 5.8% over two years. And the core business of Taste and Wellbeing consumed essentially at home, which represents 85% of the division, continuing to grow 7.4% in 2021, which makes an average of 7.2% over two years. On the other hand, the less resilient part of the business, which represents 16% of group sales. Namely Fine Fragrances, which represents 18% of the Fragrance and Beauty Division and Food Service, representing 15% of the Taste and Wellbeing division. As you can see in this slide, the higher impacted categories have grown 16.5% for the group and are back to the level of 2019 pre -pandemic. Fine Fragrances growing 22.5% in 2021, which means a CAGR of 6.9% over two years, significantly higher than expected. And Food Service has also recovered in 2021 growing 8.8%, but both later and slower than Fine Fragrances. So as restrictions, in relation to out-of-home food and beverage consumption started to be eased in certain market. Food Service overall is still below 2019 level and is expected to continue to recover in 2022. In summary, the strong 7.1% growth for the group in 2021 has been supported by two factors. 1. a sooner and stronger than expected recovery of Fine Fragrances and 2. a sustained strong growth in 2021 of our resilient business against the strong comparable of last year. Let's now turn to Slide 6. Mature markets, which represents 57% of our sales, have significantly contributed to the growth, with a like-for-like growth of 6.3% led by the strong rebound in Europe and in North America in 2021. Meanwhile, Japan was slightly down, yet not recovering from 2020. High growth markets representing the other 43% of our sales continued to deliver the highest growth with 8.3% despite the current pandemic situation still ongoing in many large markets around the world. Latin America performed strongly led by Argentina and Mexico. The Middle East and Russia also contributed with strong growth levels, as well as the China, which maintained a double-digit growth throughout 2021. The other parts of Asia have also recovered, including Indonesia and India, while the Philippines and Thailand were generally more heavily impacted by the COVID crisis. Our size and our operations footprint gives us a unique exposure to the diversity of these high-growth markets in which we continue investing both with additional talent and new facilities to service a wide diversity of customers and markets. As in 2020, we have seen in 2021 how critical our geographical balance contributes to the natural hedges against the crisis where timing can be very progressive, with a different intensity depending on the geographies. Please now turn to Slide 7. I'd like to highlight the sales development by region for the group in more details. After many years of double-digit growth, sales in Latin America continued to perform very well at those levels. Latin America recorded another outstanding growth of 14.4% driven mainly by Argentina, Mexico, Colombia, and Brazil, volume growth and market share gains contributing to most of the growth. Sales in Asia-Pacific as mentioned earlier, recovered from 2020 despite parts of the region still being impacted by the pandemic. Overall, the growth in Asia-Pacific was 5.7% with China achieving another double-digit growth after 2020 and India and Indonesia back to growth. North America, which reopened earlier than other regions in 2021, grew at a healthy 4.8%. EME grew a record 7.8% supported by the strong recovery of various markets, particularly in France, Italy, and Spain and Germany for the mature part of Europe, Russia, and the Middle East for the high-growth parts of Europe. Let's turn now to Slide 8. The Fragrance and Beauty division grew 6.6% on the like-for-like basis, and 5.8% in Swiss francs. The sales growth was mainly driven by the rebound of the Fine Fragrances and Active Beauty businesses, which were both particularly impacted by the COVID-19 pandemic in 2020. Fine Fragrances increased by 22.5% on the like-for-like basis against a sales decline of 6% in the prior year. After the significant negative impact of the COVID-19 pandemic in 2020, sales rebounded across all regions and all customer groups driven by the high performance of the existing portfolio of perfumes and by a significant level of new wins. All regions delivered strong sales performance with both mature and high growth markets delivering double-digit growth. The Western Europe and Middle East regions had the most significant results with both recording strong double-digit growth. Consumer product sales increased by 1.5% on the like-for-like basis against the strong comparable growth of 9.1% in 2020. It was driven by an increased demand for household, health, and personal care products related to the COVID-19 pandemic. The sales growth in 2021 was achieved mainly in the high growth markets and across all customer groups. On the regional basis, Latin America reported double-digit sales growth spread across most sub-regions and led by international customers. In Asia, the sales growth was driven by local and regional customers with China delivering high single-digit growth. Europe, Africa, and the Middle East sales were flat against the high prior year comparable, whilst sales in North America declined slightly, also against a double-digit comparable growth in 2020. On a product segment basis, the sales growth was led by Fabric Care followed by Personal Care. Sales of Fragrance Ingredients and Active Beauty increased by 14.2% on a like-for-like basis. Active Beauty saw a very strong rebound in 2021 and reported a strong double-digit growth in both high growth and mature markets, most notably driven by the strong double-digit performance of the premium active ingredients. Fragrance ingredients delivered a strong single-digit growth in 2021. Now, let's turn to the next slide, Number 9. Sales of the Taste and Wellbeing division grew 7.6% on the like-for-like basis and 5.7% in Swiss francs with a moderate negative currency impact. Let me mention that this performance is today the highest ever achieved by the division since the spinoff of Givaudan in 2,000. The strong sales performance was driven by new wins and good business momentum across all regions and customer groups. Whilst the sales performance was still impacted by the pandemic across many countries. There was a continuing recovery from the 2nd quarter of 2021 onwards. As increasing vaccination rates and progressive reopening resulted in higher demand for Food Service products, which had been the most impacted business in 2020. In the meantime, in key strategic focus areas, sales increased double digit in Health and wellness, plant-based proteins and mid-single-digit in Naturals. From a segment perspective, the strong sales performance was achieved across all segments, and mainly in beverages, savory, and snacks. Sales in Asia-Pacific increased by 7.4% on a like-for-like basis. In the high growth markets, China and Malaysia delivered strong double-digit performance, followed by solid single-digit growth in Indonesia and Vietnam. And in the mature markets, the growth was driven by Singapore, Australia, and Korea. Sales in South Asia, Africa, and the Middle East increased by 6.1% on the like-for-like basis. Double-digit growth was achieved in India, Cameroon, and Nigeria. Egypt, and South Africa, which were still heavily impacted by the COVID-19 pandemic, showed mid to high-single-digit performance. Sales in Europe increased by 6.3% on the like-for-like basis. The mature markets of Italy and Ireland achieved double-digit growth, followed by mid to high single-digit growth in Germany, Belgium, and Spain. In the high growth markets, there was excellent business momentum driven by the double-digit growth in Russia and Poland. The growth was achieved in beverages, sweet goods, savory, and snacks. On a like-for-like basis, sales in North America increased by 5.8%, driven by the strong performance in the beverages and several segments. The performance was a result of new wins, a rebound in food service, and the growth of existing business in beverages, immunity products, savory, and sweet goods. Finally, sales in Latin America increased 19.3% on the like-for-like basis, led by strong double-digit volume growth in Mexico, Brazil, Colombia, Chile, and Argentina, and across all segments. Let's turn now to Slide 10. Acquisitions have been an important part of our historical growth trajectory and are all well aligned with market trends and strategic priorities. Since 2014, we have acquired 20 businesses for a total of over CHF 4.1 billion including most recently in 2021, DDW The Color House and Custom Essence in the U.S. and Myrissi in artificial intelligence. Each one with a very strong and natural strategic rationale, as well as a perfect cultural fit to Givaudan. In the case of DDW, it makes Givaudan now the leading player globally in natural colors, a space which is part of the functional ingredients market and is critical to the success of our customers. Custom Essence is a very valuable addition to our local and regional customers in the U.S. Those 20 acquisitions represent an annual yearly contribution of more than 1.6 billion Swiss francs to our group sales. We continue to aim at further value creative acquisitions to complement our core capabilities, and increase our portfolio of Naturals, Health, and Wellbeing, active beauty, integrated solutions, and local and regional clients, as well as new adjacent business areas of technologies with which we believe we can further provide value to our customers and our shareholders. With this, I'd like now to hand over to Tom, who will give you more granularity on our financial results.

Thank you, Gilles. I would also like to welcome all of you to the call. On the following slides, I would like to focus on the operating performance, the cash flow and the balance sheet of the group. Let me start with the performance highlights on Slide 12. Group sales increased this year to CHF6.7 billion, an increase of 7.1% on a like-for-like basis, and 5.7% in Swiss francs. This result includes the full-year impact of Ungerer, as well as one month of sales from DDW and Custom Essence to two companies that we acquired in December 2021. The group's EBITDA increased by 6% to 1.5000000 billion Swiss francs. And the reported EBITDA margin increased from 22.1% in 2020 to 22.2% in 2021. The underlying EBITDA increased to $ 1.5 billion CHF and a margin of 22.5% in the year compared to 22.8% in 2020. The group achieved a free cash flow of CHF843 million or 12.6% of sales. Our net debt to EBITDA was 2.97 at the end of the year, compared to 2.89 at the end of December 2020. Please turn to Slide 13, which shows the exchange rate development. This slide shows the comparison of the exchange rates of 2021 versus 2020. In the prior year, we saw the Swiss franc continued to strengthen against all major currencies in which the group operates. This resulted in unfavorable exchange rate effects in the prior year. In the current year, however, we see some relief, especially with the development of the U.S. dollar and the British pound against the Swiss francs. Overall, the impact has been limited because our operational and geographical spread continues to provide good natural hedges, and our EBITDA margin remains well protected against currency fluctuations. Please turn to Slide 14 for an overview of the operating performance of the group. The gross margin increased from 42.1% in 2020 to 42.7% in 2021 due to continued efforts to increase productivity gains and strong cost discipline. The EBITDA was CHF 1.5 billion in 2021, compared to CHF 1.4 billion in 2020. We had a number of one-off items in the year amounting to CHF 22 million Swiss francs, mostly related to the integration of the acquired companies and the optimization of our manufacturing footprint. The underlying EBITDA margin was 22.5% compared to 22.8% last year. On a high level, we estimate that we have incurred approximately 30 million of incremental cost related to COVID-19 in 2021 as we continue to focus on ensuring that we keep our customers supplied. These costs some mainly people-related. For example, temps, overtime, or related to freight and transportation. The operating income increased to 1.1 billion CHF in 2021, compared to 996 million CHF in 2020, which is an excellent increase of 9.3% versus the prior year. On the next two slides, I will spend a few minutes on the operating performance of the two divisions. If you turn to Slide 15, we will start with Fragrance and Beauty. Fragrance & Beauty recorded a sales increase of 6.6% on a like-for-like basis and 5.8% in Swiss francs, mainly driven by the excellent rebound of the Fine Fragrance business during the year. EBITDA for the division in 2021 was CHF 696 million compared to CHF 677 million in 2020. The underlying EBITDA margin was 22.6% in 2021 compared to 23.6% in 2020. The decrease in the margin is explained by the increased pressure on our supply chain costs, which I had previously referred to. If you now turn to Page 16, we will cover the performance of Taste & Wellbeing. Taste & Wellbeing recorded an outstanding sales increase of 7.6% on a like-for-like basis, and an increase of 5.7% in Swiss francs. As Gilles also mentioned, the division showed a strong recovery from the COVID-19 pandemic, especially in the second half of the year. A continued focus on internal costs and continued productivity gains increased the EBITDA by 9.2%, if we look at the local currency perspective. The division recorded an EBITDA of $786 million Swiss francs compared to CHF$720 million in the prior year. On a comparable basis, the EBITDA margin was 22.4% in 2021 compared to 22.2% in the prior year. Please turn to Slide 17, which shows the amortization of intangible assets. This slide has been updated to include the acquisitions of DDW and Custom Essence in 2021, and it gives you a perspective of the future expected amortization, most notably, the $116 million CHF expected for 2022. Please turn to Slide 18, which shows the net income. The net income before tax increased in 2021 to CHF 965 million, mainly as a result of an increase in the operating income and stable non-operating expenses despite slightly higher interest charges related to the recent acquisitions. The effective tax rate was 15% in 2021, exactly the same as in 2020. The net income was up to CHF 821 million in 2021, which is a solid double-digit increase of 10.5%. The net income margin was 12.3% in the year. Basic earnings per share was CHF 89 compared to CHF 80.59 in 2020. Please turn to Slide 19, which shows the free cash flow. In 2021, we had again, an excellent free cash flow of 12.6% of sales, very similar to the 12.8% in 2020. During 2021 Givaudan generated an absolute free cash flow of 843 million CHF francs compared to CHF 811 million in 2020, an increase of 3.9% Total net investments were CHF 247 million. And as of percentage of sales, net investments were 3.7% of sales compared to 3.4% in the prior year. The main increase in the investments was the program to implement our global IT operating systems in the acquired companies. Working capital was 24% of sales, a slight improvement compared to 24.4% in 2020. Please turn to Slide 20. Over the last 21 years, the Company has generated a cumulative CHF 10 billion of free cash flow. Including the proposed dividend for 2021, Givaudan has returned CHF 6.4 billion to shareholders in the form of either dividends or share buybacks since its spin-off in 2,000. As mentioned in previous years, this clearly underlines the strong commitment of Givaudan to return surplus cash to shareholders. Based on the continued strong cash-generation, the Board of Directors will propose an increase to the dividend to CHF 66 francs per share from CHF 64 in 2020, an increase of 3.1%. Please turn to Slide 21. This slide shows a well-balanced debt profile with interest rates, which we have locked in at attractive rates. At the end of the year, the net debt was 4.4 billion Swiss francs with a weighted average interest rate of 1.4% at the end of 2021, compared to 1.5% in 2020. Finally, please turn to Slide 22, which shows the leverage ratio and the net debt to EBITDA ratio. At the end of the year, the leverage ratio was at 51% compared to 50% at the end of 2020. The net debt to EBITDA ratio was of 2.9 times compared to 2.89 times in the prior year. With a small increase driven by the acquisitions of DDW and Custom Essence at the end of the year. With this, I would like to conclude my section of the presentation and hand back to Gilles.

Thank you, Tom. So now let me now come back to the 2025 strategy and the outlook for 2022, which I will comment further in the next coming slides. So now let's turn to Slide number 24. So let me quickly remind you the main features of our 2025 strategy. The Company's 2025 ambition is to deliver sustainable value creation for all stakeholders. Givaudan dose 2025 strategy is fully in line with our focus. While placing customers at the heart of our business, supporting them to grow and create products that are differentiating for their brand and loved by consumers. The 2025 strategy is focused around three growth drivers, expand the portfolio, extend customer reach and focused market strategies. And it is supported by four growth enablers which are aligned with the Company's purpose domains, namely 1. creations, 2. nature, 3. people and 4. communities. These three growth drivers and four enablers are all underpinned by a commitment to excellence, innovation, and simplicity in everything we do. Let's turn now to Slide Number 25. Ambitious targets are an integral part of Givaudan's 2025 strategy and culture with the Company aiming to achieve organic sales growth of 4% -5% on a like-for-like basis. And the free cash flow of at least 12% both management as an average over the five-years period of the strategic cycle. In addition, the Company aims to deliver on key non-financial targets around sustainability, diversity, and safety all linked to Givaudan's purpose. As I mentioned at the start of my presentation, 2021 has been off to a good start of our strategic cycle, but a lot more needs to be done by 2025. And the environment is by definition, the critical unknown in the equation. Let's move now to Slide number 26, our 2022 outlook. We are confident in our capabilities, the quality of our portfolio, our creative strength, and our ability to build on the strong start of this strategic cycle. For 2022, visibility remains short as the pandemic is still around as we speak. As discussed in the last few months, we clearly anticipated high inflation in raw materials. We plan for raw material price increase of about 9% in 2022. As you know, we processed more than 12,000 different raw materials around the world, as most, if not all, the categories of materials are increasing. We have ongoing pricing actions to compensate for the higher input costs, which will allow us to recover the affluent value over the next 18 months. The entire organization will keep focusing on maintaining operations and supply chain performance at high levels to support our customers while keeping costs and cash discipline throughout the business. Secondly, we will continue our focus on integrating the recently acquired businesses in our Givaudan operating platform. Integration costs should be in the range of CHF 25 million in 2022. And finally, we keep focusing on implementing our broad-based ESG objectives in line with Givaudan 's toppers. With that we have arrived at the end of our 2021 Full Year Results Presentation. Ladies and gentlemen, many thanks for your attention. And now, Tom and I are looking forward to your questions.

We will now begin the Q&A session. . You will hear a tone to tell that you had entered from the queue. . Participants are handsets with asking a question. . Our first question comes from the line of Ms. Lisa De Neve with Morgan Stanley. Lisa, please go ahead.

Hi. Good afternoon, Gilles and Tom. Thank you for taking my question. So you mentioned this morning that some of the price increases you have pushed through may have some impact on volumes. Can you please elaborate whether you already have seen some change in demand or elasticity from your customers? And if so, whether particular segments of your portfolio, may be a little bit more vulnerable? Perhaps given the relatively sharper inflation. So what I'm also trying to gauge here is whether you are specifically expecting from your customers to be more cautious on the ingredients they buy, the volume element of that because of the degree of inflation, or whether you're just more cautious on the end-consumer, perhaps tightening its wallet more broadly this year. Thank you.

So I guess there's been a bit of a misunderstanding or misquotation on what I said Bloomberg. So I actually never said that price increase would have an impact on our volumes. What I just said is that our clients -- we're seeing inflation across many, many different categories of products have ingredients that they are buying, not just the ones who are selling and they are increasing their prices. And I'm just saying that you could put a bit of pressure on the volumes that have absolutely no indication on any volumes declined because of that and this is just a general comment. So no specifics about us as it relates to price increase influencing our volume's growth.

That's super helpful. And my second question is, you've got it for 9% raw materials for this year, which you expect a lot in about 18 months. I mean, could you give us a bit of a rough guide of what you expect to see for pricing this year in the next 12 months. And similarly, to that, are you just pricing through raw material inflation and we're also able to achieve some of these rates, and specifically this year or laborer cost increases you may see? Thank you.

Yeah, Lisa. So just on the two points, as we've said, we expect to fully recover the impact of the raw materials with price increases over 18 months. We've done that in the past and if you look at previous cycles, we've been very consistent in terms of our ability to deliver. On the 9%, it is raw materials. In specific markets where we also have other inflationary elements, we also have pricing actions to offset, but that's very specific markets.

Thank you very much for that.

The next question comes from Heidi Vesterinen with BNP Paribas. Please go ahead.

Hi. Good afternoon. I wondered if you could talk about the pluses and minuses as we think about the 2022 margin . Can we, for example, add back the $30 million that you had talked about, which was a cost in 2021, or do you still have these costs? That's the first question. Thanks.

Heidi, I think that if you look at the cost that we have incurred, and as I mentioned it before, I mean it's temporary labor, it's overtime, it's freight and transportation. By definition, they are temporary and we should get them back. I think the timing is really out of our hands. It depends very much on when governments are lifting restrictions. I think you've got two variables. The first is when people -- the rate at which people are recovering, and the second is when governments are lifting restrictions, which is a little bit out of our out of our hands. But as we said, it's a temporary costs and we would expect to get those costs back as restrictions are lifted by governments.

And then in terms of other moving parts, are there any M&A synergies or anything else that we should be thinking about?

I mean, I think if you look at the big picture items, I mean, as we've talked about in the past, you've got the raw materials, the price pass-through, the mechanic what we would call the mechanical dilution. I mean, Gilles referred to our objective is to recover the absolute raw material impact with price increase. And then, as I said, the timing on the CHF 30 million. And then the other item is like you mentioned on acquisitions, it depends very much on our ability to integrate in the speed at which we can integrate particularly some of the later acquisitions. But I think those are the main items that you've picked out.

And then the other question is on M&A, you talked about looking for further opportunities. Your leverage is on the high side at the moment, how far are you willing to take it. please? Thanks.

Yes. Sure. Heidi, I mean, if I think if you look in historically, we've been much higher at some point. We would like to at a certain point deliver. But that's also because that gives us the flexibility and the opportunity to do acquisitions. But we feel very comfortable with anything up to, I would say 4 times net debt EBITDA. And that's what we're prepared to do I would say, if we are convinced by acquisitions. Maybe I Just also hand it to Gilles to talk about the three areas where we continue to focus in terms of M&A.

Those are reals are very much aligned with our 2025 strategy. As you've seen in the nature of what we have acquired in the 20 companies that we acquired over the last few years. It's mainly when we look at the core business of Fragrance and Flavors, it has a lot to do with the local and regional clients. And as you've seen that with the Custom Essence, we are very happy to -- this is one of the first asset that actually we buy in the U.S. where the market of LNR licensees, one of the largest in the world, so very good to see Custom Essence combined with what we have at Givaudan and really create a false to capture growth with LNR. So LNR is one. The second one is clearly about the space beyond -- the adjacent space beyond on the Fragrance side. To bid on the activities. Activities has been really, say, a success story. We started from zero six, seven years ago. And the combination of acquisition with double-digit growth for the last seven years has led us to actually achieve our initial goal, which was to reach more than a CHF $100 million by 2020. Now we are CHF $130 million. So a great asset which is still growing in Active Beauty. So continuing in this space, as opportunities arise, there are not many, but clearly we are committed to continue growing this business, which is adjacent to Fragrance. Then it's really about on the Taste and Wellbeing side. Well, the adjacencies are actually even larger if we consider the market we are looking into. Remember in our 2025 strategy, we said that for the Taste and Wellbeing division, we are looking at additional market of CHF 14 billion of highly specialized ingredients. The starting point being Naturex. With DDW coming in that adds to our portfolio in natural colors. But we're going to still look for acquisitions in the space of those -- those ingredients, which are not necessarily flavors, but clearly highly differentiating against for our clients. So that's another one. And you've seen that we've also acquired companies in technologies, which is really an interesting artificial intelligence expertise that is helping us also on the Fragrance side. We can look into delivery systems and then anything that would help us also increase our ability to manufacture ingredients, especially on the Fragrance side, is also something to add to our chemical plants, making our own ingredients. So, and that includes biotechnology. So the different spaces we are looking into. And I would say opportunities come along, the market is still very interesting, we have a good pipeline and we remain optimistic.

Thank you.

The next question comes from the line of Matthew Yates with Bank of America. Please go ahead.

Hi. Good afternoon, gentlemen. Maybe a couple of questions, please. One for Gilles around the plant protein investments you've been making. So you've opened these two inpatient centers. I'm curious, when you do a project on investment like this, can you help us scale what the additional revenue upside is? I don't know if you've made any similar investments in the past and other areas or how incremental would you expect this to be to the CHF 100 million or so plant-based revenue you have that's growing very strongly. And the second question, maybe more towards Tom just coming back to as he was alluding to margins for next year. I'm guessing just the mechanical margin dilution from the price increases is going to be 100 basis points plus, plus there might be a lag effect in fully recovering. Can you help us, perhaps more conservatively, how much do you expecting margins to be down next year?

So I'll start with plant-based proteins. This is really an interesting area because we were, I would say, the first to really invest. And the investments you're talking about, though, it started five years ago. Already in technology, developing solutions, natural ingredients, which would be helping to make those offerings actually taste good. And not only acceptable by consumers but loved by consumers. And so investments were very much year around the innovation. And I remember we spent 9% of our sales on the resales. And that started a few years ago. So the plant-based proteins business has now reached CAGR a CHF 120 million, CHF 130 million of sales. So it has been growing strongly, very strongly. And we truly open a resource and applications center, where we actually developed solutions with our clients, in the one in Zurich. Those investments are not very big because they are already part of the Zurich innovation center that we have in Zurich, which we had invested into a while ago. But in terms of sales and growth of possibilities, as I said, we're already outdone ourselves. If we don't, how big can the market of plant-based proteins be? That's a bit the big question for sure. It can be big, but how big? If I make maybe an analogy when we invested that we started growing our Health and wellness business, which was all about making a healthy diet, let's say, food offerings and beverages, taste good. We started with innovation, taste solutions, and so far, well, 15 years ago, we had no idea about how the market, how big the market could be. And remember those solutions, we are fully incremental to Flavors, because those solutions are actually things which helped modulate the date. and they were not cannibalizing anything. They're just additive and incremental. This health and wellness businesses is roughly CHF.5 billion to CHF.6 billion of sales today. So I would be surprised that the plant-based proteins business could not be bigger than this in the next coming years. So that's what we are looking, but this is all -- the unknown is all about how acceptable those solutions can be by consumers. And so we contribute to that, but we are not the only ones to contribute to that. Because as you know, we're not, for example, in the proteins base, we are just helping, we're just part -- part of the solution, but not of the full solution. So but maybe Tom, you answer the thing about the mechanical dilution. Yeah.

Yes. Thanks, Gilles. Matthew, as we said, over the long term or if you look at what we've done historically, we have fully compensated for raw material increase with price increase. The other thing to bear in mind is that we have a certain churn in our portfolio. Roughly, 10% to 15% of our portfolio is changing every year. And this portfolio, every time we, let's say, have this churn, we have the opportunity to re-price as well. The other thing that I think you really need to look at and think about is we have a very consistent track record on our free cash flow. And if you look at what we've done over the last few years are very consistent, 12% or above 12% free cash flow as a percentage of sales and that's part of our long-term guidance as So, well.

Your next question comes from the line of Charles Eden with . Please go ahead.

Hi. Good afternoon. Thanks for taking my questions. First one, just sticking with pricing. Can you just confirm the contribution in pricing in Q4? If there was any. Sorry, if you already described that or I missed it. And staying with pricing, are you able to comment on the level of pricing contribution that you expect to 2022, which has already been agreed with customers. And how much, if any, is still left to be contractionally agreed. So that's my first question and then my second question is, just on Fragrance & Beauty. It looks like there was some softness in North America in the fourth quarter. Is that simply a function of the strong double-digit great comp from Q4 2020? Or have you seen some softness in consumer demand in that market sequentially as well? Those are my two questions. Thank you.

So I'll start the other way around. Basically, North America, the softness that you're seeing has the entirely to do with comparables which were very high in 2020 for consumer products. Actually in 2021, the consumer products sales in North America for local and results actually was very good. So it's really more with the global that we had some decline. And that was against the very high comparable of growth with globals in North America in 2020. So this is all about comparables, no specifics about softness or anything. North America of role has been fueled by the rebound of Fine Fragrances obviously, but also by – as you've seen, the very good growth that we have in Taste and Wellbeing. As it relates to pricing, we have essentially no price increase in the fourth quarter. As you know, the raw mats were basically flat over 2021. So there is no reasons or argument to increase prices during, during 2021. But obviously, as we were seeing the raw materials creeping up and increasing as we are negotiating contracts in the fourth quarter of 2021. We have already developed plans and approached many clients to us to basically implement price increase on both sides on both divisions. And I would say as a difference to 2011, where in fact the sales was very sudden at the end of 2010, we were not that prepared In 2011 to pass on price increase and that timeline was actually quite big, 3-6months, if I remember. We've learned from the past and I can tell you we have improved from that standpoint. The organization is really very much committed to work with our clients and to pass on all those price increases. I can't tell you -- I don't want to disclose any -- where we stand the negotiations with our clients, but we are making very good progress. And don't forget, it comes also in an environment where everything is increasing. So that's basically what we can say. We are committed to recover the absolute value in 18 months. I mean, during the 18 months, starting now, obviously.

Very Good. Thank you for that.

Next question comes from the line of Daniel Buerki with Zürcher Kantonalbank. Please go ahead.

Hello. Good afternoon. I would have two questions. The first one on synergies. You will book CHF 25 million of integration costs. What is the timing of the synergies in 2022, 2023? and multi-unit is to expect if you could give a number and then the second one on Latin America a. It's still great growth there, but there was a certain slowdown in the fourth quarter. You see anything changing in this growth market for you.

So I'll start with Latin America and maybe Tom will -- so, basically in Latin America, I'm not saying that that has a lot to do with again, comparables. We actually had a very strong growth in the fourth quarter of 2020, essentially because of the launch of a very big Fragrance being launched in Latin America. So that's really made a huge spike in our Q4 2020, especially for Fragrance, which created a very high comparable for Q4 2021, especially for the Fragrance. So again, no signals as we see softness in Latin America. And obviously this launch was total -- has been rolled over in 2021. But the effect in oil is now, where we have the comparable, so essentially no thing. This is really explained by these comparable and the single launch which was very, very big.

Daniel, just on the synergies and the integration cost, as you probably noticed, even in 2021, we had lower integration cost than we had originally communicated to you, simply because as as you've seen as well from our numbers, our facilities, we're operating at full capacity and it's very difficult on top of that to come with footprint optimization. So I think based on where we are today, it's going to be more backend loaded both from a, from an integration cost perspective and also from a synergy perspective. So hopefully that gives you some details on that.

Thank you.

Next question is from James Targett from Berenberg. Please go ahead.

Hello. Good afternoon. My first question is on the volume outlook for 2022. You did about 6.5% volumes in 2021 and even on a two-year average basis, about a 5.5% volume growth, sort of two years. So I'm just wondering kind of where why you're more cautious on 22 if we getting back within the guidance. So the mid-term guided range, you've mentioned expecting material, price less. Is it just normalization of volume levels in certain categories, as we exited pandemic? Or is that something else we should be thinking about? And then, my second question is, on -- back on the inflation, input cost inflation. Could you give us an idea of how much these other areas of inflation, like freights and energy, etc. could be in 2022, on top of that 9% cost inflation that you've called out. And what kind of visibility do you have in there? Like, what proportion of how much of these obvious inflation is currently hedged store or locked-in at the stage? Thank you.

Your first comment on the pricing elasticity, I think I resolved already to the first question, Mike, being a bit misquoted when media Bloomberg to name it. We're not overly cautious on volume growth. We're just saying that's with an inflation it's general -- common that with an inflationary environment price increase and so forth, maybe no volumes might be -- might be softened. But as we see it, there is no indication of any softness. We still have a high comparable. That's the only thing that we can say with 7.1%. We are committed to a 4% to 5% growth. We are on track where we just struck to 5.5%. Obviously, we'll have the, let's say, material price increase in our sales growth coming on top of the volume growth. We just need to say that there is still some yes, some lack of visibility as it relates to the pandemic. But on the other hand, you saw that during the pandemic on one 2020, we grew 4%. And secondly, our pandemic, we grew 7.1%. So we should, we should be okay during 2022.

And just on the other items, I think that if you look -- and again, particularly the impact in 2021, most of the items you referred to were impacting actually in 2021. So from this point, we don't expect any significant -- more inflation on these items. So that's -- and I think if you look generally yet, the outlook from many companies around things like freight transportation, I think they are relatively comfortable with these cost for 2022. It's more really around raw material inflation.

Thank you.

Our next question comes from the line of Georgina Fraser with Goldman Sachs. Please go ahead.

Hi. Good afternoon and thank you for taking my question. I've just got one. Around your comments on the Active Beauty success story, can you confirm the very strong growth rate that you saw during 2021? And maybe give us some insights into what was driving that. Is it innovation led new markets? Or market share gains? Thanks.

So Active Beauty, we grew in the range of a high double-digit growth, as I said, we achieved, I think close to a CHF 130 million. This is very much, I would say, combination of a few things. The first thing is that over the last, as I said, over the last 6-7 years, we have made three main acquisitions. So you also Naturex and then a couple of others, minimal, which over time allowed us actually to have a very reach and diversified portfolio. The second thing is that we have been able to invest, to invest into capacity, but also into innovation to be able to service the market which has been growing. And at with our reasonable offering around the world. And the third thing is that the adjacency to our Fragrance business where our clients are the same helped very much in the way we interact with clients and we can leverage the client's relationship that we have on the Fragrance side. Combine d with the discipline of Givaudan to make the business growing, sustainable, and profitable, I would say that it's been a bit the formulation of -- the formula of success for Active Beauty. So we are really happy with this business. And as I said, if we find other acquired -- Dies to be acquired, which could complement these folks load that would be even better.

Great. And just to confirm, those sounded like some quite sustainable trends that you were describing. So to think that those growth rates will continue into 2022 or was there anything on sustainable nature during 2021.

Yes. I took -- to mention, obviously, don't forget on on skincare activity, the end markets are also doing -- doing very well. That's been -- our growth has been supported by the end market, obviously. But I would say this whole Active Beauty business, reflects the fall trend that you're referring to around the wellness around Wellbeing, which is also translated on the Taste and Wellbeing business where, for example, immunity products that we have seen growing very much in the U.S., especially in 2020 and 2021, is also supported by a high demand and the offering that we have around that. So everything around health, well-being, outside and inside are really supporting those segments. So now we take the last question, Operator. We'll take the last question.

The last question for today comes from the line of Charles Bentley with Jefferies. Please go ahead.

Good morning and thanks for taking my question. So I wanted to ask on the raw material outlook, can you explain where the 9% is based on -- I know you have a lot of visibility on inventories. You're assuming that pricing is flat or down from there, have you baked in any downside? How much confidence you have in that number? And then secondly, just on volumes, as you've alluded to, you had a couple of very strong, volume-driven last two years. What's your ambition on a on in 2022? Is 2% a good result? Is flat a good result? How would you say it? Thank you.

So essentially, on the raw materials, the gain retail rate, we buy a multitude of them. 12 thousand of them which end up in very different applications as you know, because now with Fragrance Flavors, the adjacent spaces the usage is very different. They are nature is also very different. You have natural products, highly specialized natural products, adjustment, rose, Mimosa, as much as large commodities going from orange features and so forth. But then you have also chemically derived the Fragrance raw materials coming from which are being influenced of by growth by energy and the crude oil, which are even, if we are very at the multiple-stage away from the crude oil, the price of oil is still influencing those products. So you have many categories, which behave in many different ways. The fact is, that still -- even though all those categories have very different natures and behaviors, they all are going up, essentially. Because of the demand, the demand, which is around the world, which has been fueled by the rebound that we have seen in 2021. Not only for Givaudan, but the whole industry, our clients, our competitors, and so forth. There has been a surge in the demand, which has certainly put pressure on those prices for this year. In terms of the way we approach purchasing, depending on the nature of those products. You have sometimes products which are both, both on the spot basis because those are commodities you have others which where you have long-term contracts. Others which are only one crop per year, So the timing of those contracts are very different. The tactics and strategies are very different. And so basically, we try to cover as much as possible, but at the same time, not too low in certain categories because if some of those categories go down, for example, in a few months, we don't want to be caught also with high prices. So this is, basically, the whole complexity. We have a 9% guidance for this year. This is the best of our knowledge. And we have good confidence that the contracts in place will basically allow us to have all those raw materials available because the priority, don't forget, is also to be able to service our clients. And so that we can have a seamless supply chain to them so that they can sell their products. Products with a missing fragrance and the missing flavor doesn't taste or doesn't look good. So our priorities to service our clients. So that's the best that we can say we are committed again, to recover the absolute amount of those RawMat increase. Okay, so this -- that was the last question. I'd like to thank you for all your questions. And we look forward to our annual -- virtual annual -- it will be a virtual annual Investors Conference on the 12th of April, as we published our Q1 2022 sales. Thank you very much. Have a good afternoon.

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