Solid IFF Q3 results top expectations

07 Nov 2017 --- International Flavors & Fragrances Inc. has reported financial results and strategic achievements for the third quarter ended September 29, 2017, which showed growth across the company’s categories and global markets. The New York-based company reported profits of US$110.3 million, while revenue for the ingredients producer for food cosmetics and consumer products was US$872.9 million in the period.

“We are pleased to report strong financial results in the third quarter,” says IFF Chairman and CEO Andreas Fibig. “Thanks in large part to our industry-leading innovation, the strength and diversity of our business and our recent acquisitions, we achieved growth in all our categories and regions.”

“Both businesses delivered marked improvements versus the first half led by strong new win performance as well as improved volume trends. At the same time, our focus on driving greater efficiency throughout our business via cost and productivity initiatives continued to support overall profitability.”

Outlook
Fibig adds how the outlook for the rest of the year looks solid with IFF on track to achieve previously stated estimates. 

“Based on our year-to-date performance and our current outlook for the fourth quarter, we remain optimistic that we can achieve our previously stated full year currency neutral guidance.”

“We continue to focus on the execution of our strategy to drive growth, increase differentiation and generate the return to deliver sustainable, profitable growth and maximize shareholder value.”

Q3 consolidated financial highlights
Reported net sales for the third quarter totaled US$872.9 million, an increase of 12 percent from US$777.0 million for the third quarter of 2016. Excluding the impact of foreign exchange, currency neutral sales increased 12 percent over the prior year, including approximately six percentage points related to recent acquisitions.

Reported operating profit for the third quarter was US$157.7 million versus US$124.4 million reported in 2016. Excluding the impact of foreign exchange and those items that affect comparability, currency neutral adjusted operating profit grew 7 percent, to US$167.3 million, principally driven by volume growth, acquisitions and productivity initiatives which more than offset weaker sales mix, incentive compensation and price to input costs.

Reported earnings per share (EPS) for the third quarter were US$1.39 per diluted share versus US$1.12 per diluted share reported in 2016. Excluding the impact of foreign exchange and those items that affect comparability, currency neutral adjusted EPS improved 5 percent, to US$1.47 per diluted share, as currency neutral operating profit growth, a lower effective tax rate and a year-over-year reduction in shares outstanding more than offset higher interest expense.

Q3 highlights

• Sweetness and savory modulation portfolio sales continued to grow double-digits, with strong growth across all categories, led by Sweet and Dairy.
• Tastepoint – focused on mid-tier flavor customers – grew strong double-digits, while Cosmetic Active Ingredients continued its strong growth, growing double-digits.
• Middle East & Africa improved high-single-digits, with growth in both flavors and fragrances; Expanded Flavors site in Cairo to support growth in this key market.
• Launched Re-Imagine, the program to accelerate flavor innovation and increase agility to capture unmet opportunities in the changing food and beverage market.

As reported in FoodIngredientsFirst, the company joined FReSH initiative, a project of the World Business Council on Sustainable Development, designed to accelerate transformational change in global food systems.

Flavors business unit
On a reported basis, sales increased 12 percent, or US$42.9 million, to US$409.8 million while currency neutral sales grew 12 percent. Overall growth was driven by additional sales related to the acquisition of David Michael, as well as mid-single-digit organic growth, where all categories improved year-over-year.

EAME increased 12 percent on both a reported and currency neutral basis, inclusive of additional sales related to the acquisition of David Michael, with the strongest growth in Beverage, Savory and Dairy. 

On a geographic basis, Western, Central and Southeast Europe as well as Africa and the Middle East all reported strong growth. North America grew 28 percent reflecting additional sales related to the acquisition of David Michael and PowderPure as well as high-single-digit growth on an organic basis. Growth was strongest in Savory and Beverage, both driven by new win performance.

Latin America remained constant on a reported basis and increased 1 percent on a currency neutral basis, as growth in Colombia and Argentina more than offset softness in Brazil.

Greater Asia grew 2 percent on both a reported and currency neutral basis, principally driven by growth in India and Thailand with Savory being the strongest category.

Flavors segment profit grew 18 percent on a reported basis and 19 percent on a currency neutral basis, driven by volume growth, the contribution of acquisitions, and the benefits from productivity initiatives.