IFF reports strong Q1 growth aided by fine fragrance and beauty

By Simon Pitman

- Last updated on GMT

Particularly strong growth in both the emerging markets and fine fragrance and beauty have helped International Flavors & Fragrances to achieve revenue of $714m in the first quarter of this year; nine per cent up on the same period of last year.

In the fragrances business sales were up from​$353.7m to $375.7m, which represented an increase of 6 percent in reported terms and 7 percent in local currencies, given the positive impact of currency translation.

The company underlined the fact that revenue growth for fragrances came despite tough comparisons on strong market growth in the corresponding period last year.

Emerging markets and beauty lead the way

The improvement in the fragrance division came mainly from double-digit gains in the emerging markets, together with further double-digit gains in the fine fragrance and beauty division – results that were driven mainly by new business.

Growth in both functional fragrance and fragrance ingredients was described as ‘solid’, driven by pricing initiatives in the ingredients segment and business wins for functional fragrance.

The fragrance business unit operating profit increased by $13m to $69m in the first quarter, results that reflected a $5m expense related to restructuring in Europe in the first quarter of last year.

Excluding restructuring, adjusted operating profit grew 13 percent, or $8m, reflecting volume growth, higher pricing, the benefits from the European facilities rationalization and cost control.

Total net income for the combined fragrance and flavors business increased from $63.7m to $84.0m, which represented growth of 20.3 percent.

Long-term targets

Doug Tough, chairman and chief executive officer, said: "We are pleased with our excellent start to 2011, especially given that we are comparing to a very strong year-ago performance of double-digit growth.

"Our top-line performance was once again driven by double-digit growth in the emerging markets. In the developed markets, strong demand for our innovative products, such as healthier and more natural offerings, drove high single-digit growth. This strong top-line performance provided operational leverage that when combined with our continued focus on cost discipline drove a double-digit increase in operating profit​."

Despite local currency sales levels coming under pressure at the beginning of the second quarter, Tough remained bullish about the prospects for the remainder of the year. “…we are optimistic that our performance in the first quarter, coupled with the opportunities we see throughout the remainder of the year, give us the confidence to achieve our long-term targets of four to six per cent local currency sales growth, seven to nine per cent operating profit growth and 10 percent plus EPS growth for the full year 2011​," he said.

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