Strategic Value Creation Subtitle
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12 Strategic value creation Subtitle Strategic value creation Our vision To inspire emotion through our creations every day, everywhere, as we strive for a better tomorrow. Our mission Together with our customers, we craft memorable experiences that bring moments of delight to consumers. In this section: Our business model 14 Our value chain 16 Our capabilities 17 Our 2020 strategy 18 – Growing with our customers 19 – Delivering with excellence 23 – Partnering for shared success 25 Givaudan – 2017 Annual Report like-for-like,% excludingsales the growth impact of currency, 4.9acquisitions and disposals 11.8as a percentage% free of sales cash flow StartMISTA programme - ups started: targeted focus on delivering services to start-ups and expanding our New Product Development business model DeliverySeven additional patents systems granted and expanded six newly filed Leadership capabilities strengthenedover 600 leaders benefitted from the programme's focus on specific leadership needs Givaudan – 2017 Annual Report 14 Strategic value creation Our business model Our business model Value creation at Givaudan Capital input Value enhancing strategy Financial capital – Equity of CHF 3,538 million – Free cash flow 11.8% of sales business divisio Safeguarding our reputation Our ns – Highest ethical standards in our interaction with all our stakeholders r value cha – Our values embodied in our Principles of Ou in Conduct tra Our s tegy People and talent – Leadership development at all levels – Commitment to ensuring a diverse workforce – Annual benchmarking studies for a competitive compensation offering Vision Mission Innovation and Science & Technology – Research and development investments of CHF 424 million – Worldwide, 481 employees in Science & R . e s Technology s s – Founding partner of MassChallenge, p e o cc Switzerland n u sib s le red growth. Sha S ce Operations up ien erio per – 46 production sites in 22 countries r customer ex – Sourcing over 10,000 raw materials Flav ces ours and Fragran Internal control mechanism External Financial and macro-economic Megatrends 2017 Annual Report – our business divisions – cover flap Management Approach (103 –2, 103 – 3): Topic 201, page 14 – 15 – our vision and mission – page 12 Disclosure 413 – 1, page 15 – our value chain – page 16 – our strategy – page 18 Givaudan – 2017 Annual Report Strategic value creation Our business model 15 Value creation for our stakeholders Outcome 2017 Customers Enhancing our position in naturals capabilities with the – Delivering innovation and sustainable products to our customers acquisitions of Activ International and Vika B.V. – Responsible Sourcing Policy since 2016, and we aim to have 90% of our raw materials volume of natural origin to be sourced responsibly by 2020 Opening of new creative centre in Mexico City and – True partnership at each step of the value chain GBS centre in Kuala Lumpur – Expanding our global presence to ensure customer proximity Employees 11,170 jobs worldwide – A diversified and fairly compensated workforce empowered to impact their world – Our leaders are equipped and trained for the future through targeted leadership 600 leaders nurtured through the Leadership Senses programmes programme – Targeted technical and functional skills development and trainee programmes Since 2012, 90% of top positions are internally staffed – Strong talent and succession planning offering broad career opportunities Shareholders CHF 58.00 proposed dividend¹ – Seventeenth consecutive increase in the dividend since our listing on the Swiss stock exchange¹ CHF 20,794,035,672 market capitalisation – Increase in share price Innovators MISTA programme started: focusing on delivering – Driving cross-divisional synergies and choices across innovation portfolios services to start-ups – Creating value through innovation to support customers today and tomorrow – Establishing strategic partnerships in different innovation ecosystems – Exploring business applications enabled by new digital trends One-time investment in Sensorwake A three-year collaboration with CentraleSupélec Suppliers SOMAVA, a new joint venture agreement with Henri – Long-term partnerships and direct presence and collaboration in countries of Fraise & Fils. 100% of our Madagascar vanilla beans origin with producers and suppliers from 2017 harvest will come from this new JV – Partnering with suppliers to reduce the carbon footprint of purchased goods and services Supplier partnerships and long-term agreements to – Unlocking capabilities through supplier-enabled innovation in order to boost secure supply and reduce price volatility our mutual innovation power Communities Fair for Life certification for our clove leaf oil production – Supporting local communities from which we source through social and environmental projects Active Green Teams on 61 Givaudan sites – Local Green Teams engaged in social activities in the communities in which we A total of CHF 1,503,925 was directed to charitable operate spending for local communities – Supporting the Givaudan Foundation to safeguard the future of communities and their fragile environment Internal control mechanism Sustainability Regulation 1. Subject to shareholder approval at the AGM on 22 March 2018. Givaudan – 2017 Annual Report 16 Strategic value creation SubtitleOur value chain Our value chain Focusing on our customers Our 2020 ambition of ‘Responsible growth. Shared success.’ is a We aim to deliver innovative, common goal that is about creating and sharing success with our customers. For us, success depends on how we best place sustainable and high quality our customers at the centre of our strategy, our execution and our day-to-day activities. We seek to be recognised by our products to our customers, customers for the way we truly engage with them across all touch points in our value chain. We know the importance of creating value through a superior being able to customise to the needs of our global, international, customer experience. regional and local customers. R aw m at Customer er ef ia ri ls b orders Se e rv th ic e g s in n S in o u W r c i n g n o i t a P e r r o C d u c Customer t i o h n c partnerships r a e s e S R u p p l y g n i d n a t s r r e e d n u m u s Cash flows n o C y r e v o c s i D Finance our Returns to Re-invest operations shareholders in innovation Givaudan – 2017 Annual Report Strategic value creation Our capabilities 17 Our capabilities Delighting consumers with creative solutions Consumer Creation Innovation Operational understanding excellence We travel the minds and We are motivated every Our culture of Our global operations and lives of consumers around day to inspire delight innovation drives us to rapid speed to market make the world to create and touch consumers’ enhance our competitive us a partner of choice, uniquely relevant and emotions advantage sustainably, at our customers’ service differentiated tastes and create new horizons for wherever they may be, scents for our customers’ our business and offer whenever they need us brands leading-edge solutions to our customers Global team experts in A team of passionate Pioneering research and Global spread of operations, category understanding, flavourists and perfumers development teams with local presence allowing cultural insight and rapid speed to market sensorial decoding Close partnership with Focus on the science of our customers taste and smell Supply chain excellence, Insights across countries, addressing customers’ needs life-stages and gender Unique product palette Broad product offering for and ingredients diverse customer portfolio Sustainable sourcing of Agile global consumer- raw materials testing network Givaudan – 2017 Annual Report 18 Strategic value creation SubtitleOur 2020 strategy Our 2020 strategy Responsible growth. Shared success. Our 2020 ambition is to create further value through profitable, Our 2020 ambition is about creating responsible growth by building on the three strategic pillars of growing with our customers, delivering with excellence, and value for our stakeholders through partnering for shared success. This growth ambition translates into financial targets of an average 4 – 5% sales growth and an sustainable and responsible growth average 12 – 17% free cash flow over a five-year period by 2020. and about shared success. Two years into our strategy, we remain on track to achieve Being the partner of choice for our customers is a strategic our financial targets and continue to make strong operational ambition, and the measure of this ambition is the value we progress in each of our strategic pillars. create with customers through sustainable, responsible growth. Part of being the partner of choice is shared success with our employees, suppliers, and our partners in science and technology, all of whom are critical in delivering on this ambition. Average organic% Average free cash% Partner 4sales – growth 5 1 12flow –as % 17of sales 1 of choice Growing with Delivering Partnering for our customers with excellence shared success High growth Health and markets well-being Innovators Suppliers Excellence in execution Consumer Integrated People Communities preferred solutions products 1. Over a five-year period by 2020. Givaudan – 2017 Annual Report Strategic value creation Growing with our customers 19 Growing with our customers Leveraging capabilities to drive success Organic sales growth Success story % With4.9 customers at the heart of our business, we leverage our knowledge of markets and consumer preferences