IFF Q4 Profits Dip, Revenue Higher
In the developed markets, a strong performance in Beverage was more than offset by weakness in Confectionery and Savory in Europe and Dairy in North America. Similar to the third quarter 2009, sales in Latin America were mixed, as the loss of non-strategic business continued to impact results.
10 Feb 2010 --- International Flavors & Fragrances Inc., a leading global creator of flavors and fragrances for consumer products, announced financial results for the fourth quarter and full year 2009. In the fourth quarter, revenue grew nine percent over the prior year period to $586 million. Excluding the impact of foreign currency, revenue in local currency increased over two percent. Reported earnings per share (EPS) were $0.59, compared to $0.62 for the fourth quarter 2008. EPS in 2009 included an expense of $0.04 per share related to ongoing restructuring efforts in Europe, while fourth quarter 2008 included a benefit of $0.12 per share associated with prior year tax settlements, net of restructuring charges. Excluding these items, adjusted EPS for the fourth quarter increased 26 percent to $0.63 versus $0.50 in the prior year quarter.
For the full year, the Company reported revenue of $2.3 billion, a three percent decrease over the prior year. Excluding the impact of foreign currency, revenue in local currency remained constant. Reported EPS for the year was $2.46, compared to $2.86 for the full year 2008. EPS in 2009 included an expense of $0.23 per share related to restructuring charges and employee separation costs, while 2008 included a benefit of $0.10 per share associated with an insurance recovery and benefits from prior period tax settlements, net of restructuring charges, employee separation costs and shared services implementation costs. Excluding these items, adjusted EPS for the full year 2009 decreased three percent to $2.69 versus $2.76 in the prior year, as strong second half performance substantially minimized the impact of first half weakness.
"Given the economic challenges we faced over the course of the year, we are very pleased with how we finished 2009," said Kevin Berryman, Executive Vice President and Chief Financial Officer. "The combination of focused strategies, disciplined cost control, and prudent working capital management enabled us to build sales, earnings and cash flow momentum in the second half of the year. We took important steps to strengthen our product portfolio, enhance our geographic growth opportunities and optimize our manufacturing and supply chain footprint to further reinforce our competitive position."
"As our strategic initiatives continue to gain traction and we adapt to an ever changing economy, we believe that we are well-positioned to return to local currency sales growth and improve on our overall profitability in 2010," Berryman continued.
For the Flavors Business Unit local currency sales in the fourth quarter increased one percent over the comparable 2008 period. Growth can be attributed to a solid performance in Greater Asia as higher volumes and new wins in Beverage and Dairy drove results. In the developed markets, a strong performance in Beverage was more than offset by weakness in Confectionery and Savory in Europe and Dairy in North America. Similar to the third quarter 2009, sales in Latin America were mixed, as the loss of non-strategic business continued to impact results.
Operating profit increased by $13 million to $46 million including a $1 million charge related to restructuring efforts in Europe. Excluding this charge and $3 million related to restructuring costs in the prior year period, adjusted operating profit was very strong, increasing 34 percent, or $12 million, to $47 million. This increase was mainly driven by continued success in margin improvement initiatives and disciplined cost management. As a result, adjusted operating profit margin improved to 17.4 percent versus 14.0 percent in the prior year period.
On a local currency basis, Flavor sales for 2009 increased two percent over the prior year. Greater Asia, Latin American and North America delivered solid growth resulting from new wins and price increases that more than offset weak economic conditions. Local currency sales in Europe remained constant as the economic slowdown and inventory reductions by our customers impacted our results.
Operating profit increased by $10 million to $208 million including a $1 million charge related to restructuring efforts in Europe. Excluding this charge and $4 million related to restructuring costs in the prior year, adjusted operating profit increased $8 million as pricing,ongoing cost discipline and margin improvement initiatives more than offset higher input costs and unfavorable currency parity. As a result, adjusted operating profit margin improved 90 bps to 19.3 percent.
