IFF Finishes 2006 Well

31/01/07 International Flavors & Fragrances Inc. has reported results for the fourth quarter and full year 2006. Net income for the 2006 fourth quarter, including $1 million in after tax restructuring charges, totaled $44 million, a 192% increase compared with the prior year quarter. The 2005 fourth quarter result of $15 million included restructuring charges of $16 million after tax. Excluding the restructuring charges from both years, net income increased 48% in the 2006 fourth quarter.

Gross profit, as a percentage of sales, improved one half percentage point compared to the prior year quarter, mainly due to higher sales. Research and Development expenses totaled 9% of sales compared to 10% in the prior year quarter. Selling, General and Administrative expenses, as a percentage of sales, were 17.6% in the current quarter compared to 18.6% in 2005. The 2005 quarter included approximately $3 million of expense relating to a product contamination issue. Other income (expense), net in the 2006 fourth quarter increased $4 million over the prior year quarter, mainly due to the a gain on sale of land, partially offset by higher exchange losses.

The effective tax rate was 28.8% compared to 29.4% in the prior year quarter. “The strong fourth quarter performance tops off a very good 2006 for IFF,” said Robert M. Amen, IFF Chairman and Chief Executive Officer. “It is very encouraging to see the fourth quarter growth in both flavors and fragrances, all driven by the excellent contribution of the people of IFF. Our strategy is working and we have good momentum going into 2007.”

Net income for 2006, including $2 million in after tax restructuring charges, totaled $223 million, a 15% increase compared with the prior year. Full year 2005 results of $193 million included restructuring charges totaling $16 million after tax, as well as a tax benefit of $25 million relating to repatriation of funds from overseas affiliates. Excluding the restructuring charges from both years and the one-time tax benefit from 2005, net income in 2006 increased 22% versus the comparable 2005 result. Gross profit, as a percentage of sales, improved one percentage point compared to the prior year, mainly from the higher sales, improved manufacturing expense absorption and favorable product mix.

Research and Development expenses totaled 8.9% of sales compared to 9.0% in the prior year. Selling, General and Administrative expenses, as a percentage of sales, were 16.8% compared to 17.0% in 2005. The 2005 figures included approximately $8 million of expense relating to a product contamination issue; 2006 results include the benefit of a $3 million insurance recovery related to this matter. Other income (expense), net in 2006 increased $7 million over the prior year, mainly due to gains on sale of assets, partially offset by higher exchange losses.