By Laura MacInnis
GENEVA, Feb 20 (Reuters) - Swiss flavours and fragrances maker Givaudan reported a small rise in 2006 profits, missing analyst forecasts, with Japanese and North American markets dragging on sales.
The company posted net profits of 412 million Swiss francs, just 1.5 percent above its 2005 result. Analysts in a Reuters poll had expected a 4-percent rise to 423 million francs.
Givaudan shares fell 1.4 percent by 0812 GMT.
Givaudan, the world's largest maker of scents for fine fragrances and consumer products, said costlier raw materials and price pressures from consumers pinched results in 2006.
In 2007, it said it was "well positioned for another good result" following the $2.25 billion acquisition of rival Quest International from ICI Plc ICI.L in November.
"Quest's strength, particularly in fine fragrances, will complement Givaudan's capabilities and as a result, the company will become the industry leader in this important segment," the company said in its annual report.
Givaudan said the acquisition would also expand its presence in developing markets such as Latin America and China, where flavours sales outshone mature markets last year.
Givaudan's new production centre in Shanghai, opened in November, marked "a significant milestone" for the company in Asia and would help further entrench its business in China, the company said.
Overall sales rose 3.5 percent in local currencies to 2.91 billion francs, in line with consensus forecasts. Comparable operating profit for 2006 rose to 550 million francs, from 534 million francs the year before.
Within the flavour division, Givaudan said its savoury, dairy and confectionery segments showed solid growth in 2006 but beverage sales suffered, primarily in North America and Japan.
BRITNEY SPEARS
Fragrance sales were the strongest in the company's history, Givaudan said, noting the new perfumes it created last year included Midnight Fancy By Britney Spears, Old Spice Signature and Enchanted By Celine Dion.
Givaudan, which competes with the U.S. firm International Flavors and Fragrances Inc. , trades at about 17 times forecasted 2007 earnings, according to Reuters data. IFF trades on a multiple of 18.
In a separate statement, the Geneva-based company said its Givaudan Nederland Finance unit planned to issue mandatory convertible securities worth about 750 million francs.
The securities, to mature in March 2010, would convert into shares of Givaudan. Net proceds from the offering would be used for equity capital raising related to the Quest International acquisition, and for general purposes, the company said.