IFF Q4 results: Sweet and savory modulation portfolio sales increase by strong double-digits

15 Feb 2018

15 Feb 2018 --- International Flavors & Fragrances Inc. (IFF) has released its financial results and strategic achievements for the fourth quarter and full year ended December 31, 2017. Highlights included: Sweetness and savory modulation portfolio sales increase by strong double-digits, Middle East & Africa improved mid-single-digits, with growth in both flavors and fragrances and the company's Tastepoint grew strong double-digits.

Commenting on the results, CEO Andreas Fibig said: “2017 was another notable year in terms of progress, both strategically and in regards to our financial performance. We continued to advance the long-term strategy that will enable us to deliver strong returns for our shareholders. We successfully launched three new captive fragrance ingredients, commercialized three natural modulators, expanded our core list participation with several key accounts and launched Tastepoint by IFF. In addition, we continued to make progress towards our M&A ambition, adding nearly US$90 million in expected annualized revenue with the acquisitions of Fragrance Resources & PowderPure.

“In terms of full-year financial performance, we achieved currency neutral growth across all of our key metrics. Both business units successfully delivered solid top-line growth – with a marked acceleration in the second half of 2017. The bottom-line performance was supported by strong benefits from cost and productivity initiatives and value-enhancing acquisitions,” he noted.

Full Year 2017 Strategic Highlights:

Sweetness and savory modulation portfolio sales increased strong double-digits.
Middle East & Africa improved mid-single-digits, with growth in both flavors and fragrances.
Launched Tastepoint to serve dynamic mid-tier customers; grew strong double-digits.
Reported net sales for the full year totaled US$3.4 billion, an increase of 9 percent from US$3.1 billion in 2016.
Reported operating profit for the full year was US$581 million versus US$567 million reported in 2016, an increase of 2 percent.

Flavors Business Unit

On a reported basis, sales increased 9 percent, or US$135.6 million, to US$1.6 billion. Currency neutral sales grew 10 percent driven by growth in all categories and the contribution of sales related to the acquisitions of David Michael and PowderPure.
EAME increased 6 percent on a reported basis and 8 percent on a currency neutral basis, with growth in Central, Southern, Eastern and Western Europe as well the Middle East and Africa. Growth was achieved across all categories, led by strong performances in Dairy and Beverage.
North America improved 23 percent reflecting additional sales related to acquisitions as well as mid-single-digit growth on an organic basis. The performance was also driven by strong new wins in Savory.
Latin America increased 7 percent on a reported basis and 6 percent on a currency neutral basis led by double-digit growth in the South Cone and Andean Pact sub-regions. Growth was achieved in all categories, led by strong new wins in Savory and Dairy.
Greater Asia increased 1 percent on a reported and on a currency neutral basis, with strong double-digit growth in India and Thailand. On a category basis, growth was strongest in Beverage, Savory and Sweet.
Flavors segment profit increased 11 percent on a reported basis and 14 percent on a currency neutral basis, driven by volume growth, the contribution of acquisitions and the benefits from productivity initiatives.

For the fourth quarter, for the Flavors Business Unit:

On a reported basis, sales increased 6 percent, or US$24.2 million, to US$401.9 million. Currency neutral sales grew 5 percent, with growth in Savory, Beverage and Sweet.
EAME increased 8 percent on a reported basis and 5 percent on a currency neutral basis led by strong growth in the Middle East, Africa and Central, Southern and Eastern Europe.
North America grew 9 percent driven by strong double-digit growth in Savory as well as additional sales related to the acquisition of PowderPure.
Latin America increased 5 percent on a reported and 6 percent on a currency neutral basis led by growth in the South Cone sub-region.
Greater Asia increased 3 percent on a reported and 2 percent on a currency neutral basis principally driven by strong growth in India and the Asian region.
Flavors segment profit grew 10 percent on a reported basis and currency neutral basis, driven by volume growth and the benefits from productivity initiatives.

Fibig finalized: “As we enter 2018 – recognizing that uncertainty remains in the operating environment – we are targeting growth across all of our key financial metrics. We are doing so by taking action to accelerate sales growth in advantaged categories, deliver innovation that is truly differentiated and generate higher returns via continued cost and productivity initiatives. This, in turn, is expected to lead to currency neutral adjusted operating profit growth in line with our long-term target, absent of a two percentage point headwind related to a supply issue of a commonly used raw material, and ultimately generate strong returns for our shareholders.”