IFF Reports Second Quarter 2008 Results

31 Jul 2008

31/07/08 International Flavors & Fragrances Inc., a leading global creator of flavors and fragrances for consumer products, announced results for the second quarter 2008. On a GAAP basis, earnings per share (EPS) were $0.83 in the 2008 second quarter, versus $0.87 in the prior year quarter. Second quarter 2008 adjusted earnings per share after special items were $0.81, a 13 percent increase versus the $0.72 earned in the prior year quarter on a comparable basis.

The 2008 second quarter results included employee separation costs of $3.4 million or $0.03 per share, and a $3.9 million or $0.05 per share benefit from favorable tax rulings with respect to prior periods. The 2007 second quarter results included a pre-tax gain on a land sale of $5.3 million or $0.04 per share, as well as a $10 million or $0.11 per share benefit from favorable tax rulings with respect to prior periods.

Operating profit for the quarter was 16.0 percent of sales, including employee separation costs, compared to 17.9 percent in the prior year period.

“The four percent local currency sales growth during the second quarter keeps us on track to deliver on our long-term revenue and EPS goals,” said Robert M. Amen, IFF’s Chairman and CEO. “While North America continues to be a challenge, total Company revenue benefited from growth in the Greater Asia and Latin America regions where sales grew 20 percent or more. Our non-U.S. sales in the second quarter amounted to 75 percent of total revenue, with more than one-third coming from the world's emerging markets.”

Mr. Amen continued, “Our teams remain focused on creating innovative and consumer-preferred flavors and fragrances that help our customers grow their brands, especially in the emerging markets where demand for consumer goods is outpacing GDP growth.”

Second quarter 2008 sales were $636 million, up 11 percent from the prior year period. Reported sales benefited from the generally weaker U.S. dollar, mainly against the Euro; at comparable exchange rates, sales would have increased 4 percent over the 2007 quarter.

Flavors Business Unit

The 15 percent growth in Flavors sales resulted from both market share gains and volume increases of existing business. Growth in Latin America was particularly strong with Flavors sales up 36 percent in the quarter. Greater Asia posted sales growth of 22 percent. Excluding the impact of currencies, Flavors sales were up 8 percent.

Fragrances Business Unit

Fragrances sales increased 8 percent on a reported basis and 1 percent excluding the impact of currencies – a significant improvement over first quarter 2008 results. Looking at total second quarter reported revenue by geographic region, Fragrances sales grew 18 percent in Greater Asia, 15 percent in Europe and 14 percent in Latin America. These gains offset an 11 percent decline in North America.