IFF Posts Double-Digit Earnings Growth In Q2

Tough: “IFF’s growth this quarter was driven by our Flavors business, which achieved high single-digit local currency growth in every region and 8% growth overall, on top of 8% growth in the prior year, reflecting the balanced and consistent nature of this business."

9 Aug 2012 --- International Flavors & Fragrances Inc. (IFF) has reported that revenue for the second quarter totaled $721.3 million, an increase of 1% from $715.6 million in the second quarter of 2011. Excluding the impact of foreign currency, local currency sales increased 4%. On a like-for-like basis, which excludes the exit of low-margin sales activities in Flavors, local currency sales increased 5%. Net income totaled $88.6 million or $1.08 per diluted share for the second quarter, compared with net income of $76.2 million or $0.93 in the second quarter of 2011. Excluding restructuring and other charges, which accounted for $0.04 per share in the second quarter of 2011, adjusted EPS increased 11% to $1.08, up from $0.97 in the second quarter of 2011.

“We are pleased with our performance this quarter,” said Doug Tough, Chairman and Chief Executive Officer of IFF. “We delivered solid top-line growth and even stronger double-digit EPS growth, despite the challenges presented by the ongoing difficulties in Western Europe and volume declines in Fragrance Ingredients. Our performance against this backdrop underscores the strength and diversity of our portfolio and geographic reach, as well as our ability to drive manufacturing efficiencies and control operating costs. As expected, increases in raw material costs are beginning to moderate and price realization has improved, resulting in margin expansion and operating profit growth.”

“IFF’s growth this quarter was driven by our Flavors business, which achieved high single-digit local currency growth in every region and 8% growth overall, on top of 8% growth in the prior year, reflecting the balanced and consistent nature of this business. Our Fragrances Compounds business increased by 6% overall, led by strong growth in Latin America and Greater Asia, which offset continued softness in Ingredients.”

Mr. Tough concluded, “We continue to be cautiously optimistic in our outlook, given the lagging economic growth and uneven recovery cycle. Although we achieved solid momentum in both Flavors and Fragrance Compounds, we believe we will continue to face a weak economic environment in Western Europe and softness in Fragrance Ingredients. Longer term, we see significant growth opportunities for the business and believe we are well positioned to achieve our long-term goals.”

Reported revenue for the Flavors Business Unit increased 5% to $361.4 million, compared with $345.4 million in the second quarter of 2011. Excluding the impact of foreign currency, local currency sales increased 8% on top of the 8% growth reported in the second quarter of 2011. This marks the 26th quarter of consecutive local currency sales growth for Flavors. On a like-for-like basis, which excludes the exit of low-margin sales activities, local currency sales increased 9% in the quarter, led by North America, which achieved like-for-like growth of 12%, and Greater Asia, which achieved like-for-like growth of 10%. The North America and EAME regions achieved local currency sales growth of 8% and 7% respectively, due in part to the Company’s focus on health and wellness initiatives, which increased sales. On a category basis, Beverage achieved double-digit local currency sales growth, with more than half of the growth coming from the North American region. Dairy, Sweet and Savory also achieved overall growth. Segment profit increased 14% to $80.6 million in the second quarter of 2012, up from $71.0 in the prior year quarter, driven by strong volume growth, price realization and favorable sales mix, that more than offset higher raw material costs and investments in R&D. Operating profit margin increased 170 basis points to 22.3% from 20.6%, reflecting improved operating leverage.