IFF Reported Sales Increase by 5%
6 Nov 2013 --- International Flavors & Fragrances Inc. (IFF) has reported that revenue for the third quarter totaled $742.3 million, an increase of 5% from $709.0 million in the third quarter of 2012. Excluding the impact of foreign currency, local currency sales increased 4%, led by 8% growth in the emerging markets.
Operating profit for the quarter totaled $141.5 million, compared with $134.2 million in the prior year. Excluding restructuring and other charges and operational improvement costs in the current quarter1, adjusted operating profit increased 7% to $144.1 million, or 19.4% of sales, up from $134.2 million, or 18.9% of sales, in the prior year.
Reported net income totaled $99.0 million, compared with $16.4 million in the third quarter of 2012. Excluding restructuring and other charges and operational improvement initiative costs from the current quarter, and a $72.4 million charge related to the Spanish tax settlement from the prior year’s results1, adjusted net income increased 14% to $100.8 million from $88.7 million in the prior year.
Reported earnings per share totaled $1.20 compared with earnings per share of $0.20 in the third quarter of 2012. Excluding restructuring and other charges from the current quarter and the Spanish tax charge from the prior year quarter1, adjusted earnings per share increased 13% to $1.22 from $1.08 per share in the third quarter of 2012.
“In the third quarter, IFF benefited from our balanced business mix and continued focus on executing our three-pillar growth strategy,” said Doug Tough, Chairman and CEO of IFF. “We are pleased with our growth momentum on both the top and bottom lines, especially in light of a more challenging comparison to the third quarter of last year. This is the sixth consecutive quarter that our gross profit margin, adjusted operating profit margin and adjusted net income as a percent of sales have all increased versus the year-ago period.”
Mr. Tough continued, “Our consolidated local currency sales growth of 4% was led by 8% growth in the emerging markets, which continue to grow at two to three times the rate of the developed markets with strong performance across both of our business units. We are also beginning to see greater stability in our Fragrance Ingredients business. Our broad and diverse portfolio of end-use product categories combined with our diverse regional footprint continues to be a source of strength for us.
“IFF’s gross margin progression this quarter reflects a continued focus on strategic initiatives, as well as a more benign raw material cost environment. As previously communicated, we continue to reinvest in our Research & Development platforms to support future growth, and to ensure a strong innovation pipeline for the near, mid and longer-term. We believe these investments will enable us to better serve our customers and provide them with new and innovative ways to drive consumer engagement.”
Mr. Tough concluded, “Looking forward, we expect to see moderate growth in the fourth quarter, given the strong growth achieved in the prior year period. We continue to expect that the Company will deliver on its long-term growth targets for the full year 2013.”
Reported net sales for the Flavors Business Unit increased 3% to $349.4 million, compared with $340.7 million in the prior year quarter. Excluding the impact of foreign currency, local currency sales also increased 3%, marking the 31st quarter of consecutive local currency sales growth for Flavors.
Flavors delivered growth in every region, led by high single-digit growth in Latin America and low single-digit growth in Greater Asia, EAME and North America.
On an end-use category basis, sales growth was led by high single-digit growth in Beverage and mid-single digit growth in Savory and Sweet, partially offset by a decline in Dairy.
Gross margins in the Flavors business increased over the prior year quarter primarily as a result of the net impact of moderating raw material costs and pricing.
Flavors segment profit increased $5 million, or 7%, to $81.1 million in the third quarter of 2013, compared to $76.1 million the prior year quarter. The segment profit margin increased 80 basis points to 23.2%, up from 22.4% in the prior year.
