Technology Flavors and Fragrance hit by costs
doubled its loss compared to the previous year, as the company was
hit hard by moves to increase its sales presence outside of the US
market, reports Simon Pitman.
Technology Flavors and Fragrance (TFF) had a particularly disappointing final quarter of 2004, as net sales decreased by 12 per cent to $3,042,000 from $3,465,000 for last year's comparable period. It said that the reduction in fourth quarter sales in 2004 was principally caused by product mix seasonality, compounded by temporary delays in customers' orders and shipments, which were realized in the first quarter of 2005.
Gross profit, as a percentage of sales, for the current quarter improved to 37.5 per cent from 36.7 per cent during last year's comparable quarter, which the company said was due principally to more favorable raw material costs on product shipments.
At the beginning of 2004 the company embarked upon a plan aimed at growing the scope of the business in new markets. It embarked upon this by hiring senior level sales and research and development personnel and expanding its sales and marketing activities abroad, particularly with the its newly formed Brazilian joint venture.
As a result, TFF reported that operating costs for the fourth quarter increased to $2,035,000 for the quarter from $1,618,000 in last year's fourth quarter, while the benefits of the expanded sales and marketing efforts are expected to contribute revenues during 2005.
Of the $417,000 increase in the fourth quarter operating costs, the company said that $250,000 pertains to an additional reserve for doubtful accounts relating to a key customer. Due principally to these added cost factors and the lower gross profit on lower sales for 2004, the company reported a net loss of $921,000, as compared to a net loss of $403,000 in last year's fourth quarter.
For the full financial 2004 year, net sales increased to $16,047,000 from $15,587,000 for year 2003, which TFF said was primarily due to higher volumes of existing flavor and fragrances sales and new product launches during the first half of the year.
Gross margin, as a percentage of sales, decreased slightly to 39.5 per cent for year 2004 compared to 39.9 per cent for year 2003. Total operating expenses for year 2004 increased to $7,411,000 from $6,558,000 for year 2003. TFF reported a net loss of $1,266,000 for the year 2004 as compared to a net loss of $546,000 for year 2003.
Technology Flavors & Fragrances is a provider of more than 36,000 flavor and fragrance product formulations that are used to develop customized products used in more than 1,200 products sold by more than 500 customers worldwide. Its activities in the fragrance division focus on the personal care and the fine fragrance industry, together with household products and fabric care.
