IFF reports strong first-half results, “performance was broad-based,” says CEO

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08 Aug 2018 --- International Flavors & Fragrances Inc. (IFF) has reported its financial results and strategic achievements for the second quarter ended June 30, 2018. Top-line trends remained strong in the second quarter, marking the fourth consecutive quarter of mid-single digit growth, according to IFF Chairman and CEO, Andreas Fibig.

“Performance was broad-based, as all regions and categories improved versus prior year, driven by new wins and price increases needed to compensate for raw material inflation.  In particular, we continued to see robust growth with our local and regional customers, as well as in the emerging markets – both of which grew high-single digits. Regarding bottom-line performance, we delivered a high-single-digit improvement in adjusted currency neutral EPS,” notes Fibig. 

“Based on our strong year-to-date performance and our current outlook for the balance of the year, we are reconfirming our previously stated full year currency neutral guidance.”

“We are progressing toward the completion of our combination with Frutarom announced during the second quarter. We received Frutarom shareholder approval, as well as antitrust approval in the United States and Israel and we now expect to close in the fourth quarter – earlier than our previously communicated timeline, pending the remaining regulatory approvals. The integration planning process is well underway and, after nearly three months, we are more enthusiastic than ever about the opportunities ahead of us,” he explains. 

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IFF Chairman and CEO, Andreas Fibig

“Together with Frutarom, IFF expects to deliver accelerated growth and offer our customers a stronger, more differentiated portfolio of integrated solutions, allowing us to expand beyond our core taste and scent businesses into nutrition. We continue to focus on driving differentiation via R&D, balancing our customer base by emphasizing fast-growing small and mid-sized customers and maximizing our portfolio by expanding into fast-growing and diverse adjacencies. Our combination, especially in the context of the strong performance both companies continue to deliver, is expected to result in significant value creation for our shareholders. We could not be more excited about what the future holds.”

Second quarter 2018 consolidated financial highlights
• Reported net sales for the second quarter totaled US$920 million, an increase of 9 percent from US$843 million in 2017. Excluding the impact of foreign exchange, currency neutral sales increased 5 percent over the prior year.
• Reported operating profit for the second quarter was US$155 million versus US$152 million reported in 2017, an increase of 2 percent. Excluding the impact of foreign exchange and those items that affect comparability, currency neutral adjusted operating profit decreased by 2 percent.
• Reported earnings per share (EPS) for the second quarter was US$1.25 per diluted share versus US$1.38 per diluted share reported in 2017. Excluding the impact of foreign exchange and those items that affect comparability, currency neutral adjusted EPS improved 8 percent. 

Flavors business unit 
• On a reported basis, sales increased 9 percent, or US$36.2 million, to US$450.5 million. Currency neutral sales grew 6 percent driven by growth in all categories and all regions.
• EAME increased 16 percent on a reported basis and 5 percent on a neutral currency basis, led by strong double-digit growth in Africa and the Middle East as well as mid-single-digit growth in Europe. Growth was achieved across all categories, led by strong performances in Dairy, Beverage and Savory.
• North America improved 9 percent driven by high-single-digit growth at Tastepoint and strong new wins in Beverage, Dairy and Sweet.
• Latin America increased 5 percent on a reported basis and 8 percent on a neutral currency basis led by strong double-digit growth in Argentina and Mexico. On a category basis, strong double-digit growth was achieved in Savory and Dairy as well as mid-single-digit growth in Beverage.
• Greater Asia increased 5 percent on a reported basis and 2 percent on a neutral currency basis, as softness in Indonesia and Thailand largely offset strong double-digit growth in China and India. On a category basis, growth was most substantial in Savory, Sweet and Dairy.
• Flavors segment profit increased 13 percent on a reported basis and 6 percent on a neutral currency basis, driven primarily by volume growth and the benefits from productivity initiatives.

Yesterday we reported that Frutarom shareholders had overwhelmingly approved the takeover by IFF.

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