IFF fourth quarter results show declining fragrance sales

By Simon Pitman

- Last updated on GMT

Related tags Revenue

Although fragrance and flavor ingredient company IFF’s fourth quarter results showed overall growth, sales in the fragrance division slide.

The company said that group sales for the period increased by 2 percent to $644m, a figure that was not affected by currency translations as local currency sales also grew by 2 percent.

However, on a reported basis, net income for the quarter fell significantly, coming in at $24.39m, compared to $55.57m for the corresponding period last year, on account of expenses relating to a litigation settlement and restructuring costs.

On a full year basis reported revenue increased by 6 percent to $2.8bn, which showed an increase of 4 percent in revenues on a local currency basis. Full year net profit on a reported basis was $266.86m, which was more or less level with the figure a year early, at $263.55m.

Contrasting stories between fragrance and sales divisions

Looking at the two business divisions, the results show a clearly contrasted story, with the flavors division reporting strong sales growth, while fragrance sales took a dive.

Local currency sales dropped by 3 percent to $321.64m, compared to $331.62m in the corresponding period of 2010. The company said that performance was hit by a big drop in sales from developing markets, whereas this decline was buoyed by stronger sales in emerging markets.

In the fine fragrance & beauty care division, the results were impacted by a decline in fine fragrance volumes, despite a strong performance in hair care and toiletries.

Functional fragrance was strong on account of new business orders, while fragrance ingredients was challenged on account of price increases that were implemented to offset higher raw material costs.

Flavors driven by health and wellness initiatives

In the flavors division, sales increased by 8 percent to $322.73m, compared to $298.24m in the corresponding quarter for 2010. The performance was driven by health and wellness initiatives in the developed markets, as well as significant gains in emerging markets.

“Thanks to the focus and dedication of the organization, we delivered progress in several key areas,” said IFF chairman and CEO Doug Tough.

“We continued to leverage our geographic reach to capture the growth potential of the emerging markets, to strengthen our innovation platform to deliver differentiating products, and to maximize our portfolio to improve the underperforming areas of our business.”

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