Income Up at IFF Driven by Cost Cutting and Volume Growth Across its Flavors Division

10 Aug 2016 --- International Flavors & Fragrances (IFF) has reported an 11 percent increase in net income to $117m in the quarter, driven by volume growth and cost cutting across its flavors division.

IFF chief executive Andreas Fibig said the US company which makes flavors and fragrances for yogurts and ice-creams and other products remains "cautiously optimistic” that it will hit its financial targets despite the "macroeconomic uncertainty".

Total sales were up three percent to $793m in the three months ending June 30.
IFF is targeting additional sales of up to $1bn to be achieved through acquisitions as part of its business plan. Last year it acquired the Canadian personal care ingredients company Lucas Meyer.

Sales across its flavors business were up from $372m to $380m in the period, accounting for nearly half of overall sales, while profits were up eight percent to $90m. 

Sales in Europe, Middle East and Africa and the US grew across its flavors division, though they fell in Latin America. 

In the US, sales were up four percent in flavors, as it benefited from additional sales from the purchase of Philadelphia-based Ottens Flavors last year.

Overall, profits across flavors grew nine percent, helped by volume growth and cost-cutting.

Across its fragrance unit, sales were up five percent to $414m while profits were up 10 percent to $87.6m.

Sales across fine fragrances were down one percent as strong double-digit growth in Latin American was offset by softness in North America
and Europe, Middle East and Africa.

Sales across consumer fragrances grew four percent driven by sales growth across home care.

Fibig said: “With respect to the second quarter of 2016, we are pleased to report our performance was consistent with our expectations for all of our key financial metrics. Currency neutral sales growth of 4% was driven by new wins across both businesses and the benefits associated with our strategic acquisitions.”

“Adjusted operating profit and adjusted EPS, on a currency neutral basis, both grew faster than sales led by volume growth, cost and productivity initiatives and acquisitions.”

“We achieved these financial results as we continued to strategically reinvest in the business to drive long-term growth. As we have started the year well – first half currency neutral sales grew 5% and currency neutral adjusted operating profit and adjusted EPS were up 7% and 8% 
respectively – we remain cautiously optimistic in achieving our previously stated currency neutral guidance given the continued macroeconomic uncertainty.”

Shares in IFF were up 2.8 percent to $134.