The financial year 2014 recorded four quarters of negative growth for the French company, but 2015 has seen a strong return to growth, with 4% growth over the first half year (0% in the first quarter and 8% growth in Q2), said Olivier Rigaud, CEO of Naturex.
Rigaud joined as CEO on October 1st, 2014, arriving from Tate & Lyle where he served as president of its Speciality Food Ingredients division since 2010. Naturex subsequently developed its first ever five-year plan, dubbed Bright 2020, which will focus the company’s efforts in key areas (and see them transition away from other areas).
Speaking with NutraIngredients-USA at the recent IFT Annual Meeting and Expo in Chicago, Rigaud said that the market is shifting from synthetic to natural, and also away from animal to fruit and vegetables, and the company is transitioning to be positioned accordingly.
The focus will be on four main ingredient types: colors, antioxidants, phyto-actives, and specialty fruit and vegetables.
“We’re currently number four in the world for colors and antioxidants and we want to be in the top 3,” said Rigaud. “We’re currently number one for phyto-actives and we will consolidate that position. And we’re number 2 for specialty fruit and vegetables and we want the leadership position.”
Key pillars
The company has identified six key pillars for its Bright 2020 plan, including sustainability, people & culture, consumer focus, innovation and science, developing markets, and execution and simplification (see figure below).
Financial targets include reaching 8-10% organic growth by 2020, with this currently at 6-8%, he said, and an EBITDA margin of 20% (currently at 14-15%).
The company is also aiming for a free cash flow target of over 25%, which would give it the fire power to go back to acquisitions, said Rigaud.
2015 represents a pause in acquisition activity (it has made 14 acquisitions over the years), he said, as the company seeks to return to profitability and growth. “We’ll be back in acquisition mode in 2016, but we need to demonstrate we can grow. We’re at 4% for the first half of this year and that has really accelerated in the second quarter.”
“The last two acquisitions we made were outstanding,” said Rigaud [Chile Botanics and Chicago-based Vegetable Juices Inc.], “but there has been a tough challenge with the pectin acquisition in Poland.” The company will refocus the Polish operation into fruit and vegetables, he added.
Operational
The global business is currently dominated by Europe, which is about 50% of its business, followed by the US (40%) and only 10% in emerging markets, and growing the emerging market presence is important for Rigaud and Naturex, with the target is to grow that to 25%, with LATAM and Asia the key regions. “We’re investing in Chile and India, and we’re already in China,” he noted.
The company is establishing an incubator to fund start-ups and to put resources into innovation. “The aim is to have 10% of revenue from NPD,” said Rigaud.
The people & culture pillar also has its own targets. The company has been known for employing young people (Naturex itself is relatively young, only being founded in 1992), but that has led to higher than desirable turnover. Rigaud is determined to change that, and has set the target of reducing the employee attrition rate to lower than 5% for its 1700+ employees worldwide, while also improving metrics associated with safety at work.