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IFF results show big gains on strong fragrance sales

By Simon Pitman , 07-Feb-2013

Ingredients provider International Flavors & Fragrances has reported strong sales gains for its fourth quarter, with the flavors division propping up a softer market for flavors.

The company said that sales for the quarter rose by 6 percent to $681m, compared to $644m in the corresponding period last year, a figure that was negatively impacted by currency exchange, leading to an increase in local currency sales of 8 percent.

The results also showed that group results that the increases reflected a high level of new wins and positive volume on existing business, while its footprint in emerging markets continued to expand to account for 49 percent of fourth quarter sales.

Net income for the period almost tripled, up from $24.4m to $68.1m, but the comparison for the figure in 2011 also included an aggregate charge of $36.8m relating to a patent litigation settlement and restructuring charges.

Q4 provided a stronger finish to the year

IFF CEO Doug Tough commented that the results were a strong finish to the year, reflecting significant innovation in the portfolio and continued geographic expansion, particular in the Asia Pacific region.

“We made targeted investments to expand our footprint in the growing markets of Greater Asia, which included opening a new manufacturing facility in Singapore and a creative center in India, continuing construction on our facility in China, and initiating investments behind our recently-announced capacity expansion project in Turkey,” he said.

Breaking the fourth quarter results down, the fragrance division led the way with sales growth of 10 percent, to $354m, compared to growth of just 1 percent in the flavors division, at $326m.

Fragrance sales driven by emerging markets

Local currency fragrance sales were up 13 percent, reflecting a big rise in emerging markets, with the fragrance compounds business outshining the other categories to report a 15 percent increase in local currencies.

The smaller fine fragrance & beauty care division and the functional fragrance division reported increased local sales of 19 percent and 12 percent, respectively.

The company said that the performance in the fragrance division was down to double digit growth in Latin America, Greater Asia and North America, combined with solid growth in the EAME market.

Full year sales reflect slower start to the year

For the full year, revenue was up 1 percent to $2.8bn, which represented an increase of 4 percent in local currencies, with the fragrance division accounting for $1.4bn in sales for the year – an increase of 3 percent in local currency.

Net income for the full year was down from $269.9m in 2011 to $254.1m, a figure that included a special charge of $73m, which mostly related to a Spanish tax settlement.

“We are very well positioned in the market, and enter 2013 with a strong R&D pipeline and solid growth momentum. We have confidence in our strengths and will continue to focus on excellence in execution of our strategies,” Tough said.

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