Revenue for the second quarter dropped by 11 percent compared to last year’s figures, although 7 percent of this was put down to the impact of foreign currency.
Net income for the quarter fell from $67m to $48m, of which just over $4m was related to restructuring costs, a drop of 28 percent.
Company CEO Robert M. Amen said the company was making progress to grow market share, improve margins and reduce working capital but recognized that much remained to be done.
Fragrances hit hard
Fragrances, and in particular fine fragrances, were the hardest hit during the quarter with sales down 14 percent for the business division; a drop of 7 percent in local currencies.
Within the division, fine and beauty care sales were down significantly with Europe, Africa and the Middle East reporting the biggest sales drop of 37 percent (26 percent in local currencies). Overall the segment reported a sales decline of 23 percent (16 in local currencies).
IFF put decreasing sales in fine and beauty care down to sharp declines in retail consumption and supply chain contraction.
Operating profit for the business division took a hit on the back of the drop revenues falling to $35m from $56m in the same period last year.
Of this $21m drop, $5m can be linked to restructuring costs, and the rest to unfavourable product mix, higher input costs and negative currency impacts, according to the company.
Flavor sales struggle in Europe
Flavors stood up slightly better, particularly in the Americas although European sales suffered which IFF said was due to fewer consumers buying the end products.
Flavor sales were down 7 percent but in local currencies remained constant. Operating profit for the segment stood up better than for fragrances, dropping only $2m to $55m.
However, operating profit margin improved slightly on last year’s figures, which IFF said reflected the price increases and internal cost reduction.
Looking to the future, the company said it will continue to look for ways to cut costs.
“We continue to have opportunities to improve efficiency and reduce overhead. While the macroeconomic setting is expected to remain challenging through the balance of the year, I am optimistic that we will deliver improved local currency sales and margin expansion,” said Amen.