Fragrance sales drive strong growth for IFF

By Simon Pitman

- Last updated on GMT

Fragrance sales drive strong growth for IFF

Related tags Local currency sales United states dollar

IFF has reported strong growth for its second quarter, driven mainly by an exceptional performance in the fragrance division, together with gains in all geographical regions including Europe.

The company said that second quarter sales increased by 5 per cent to $757.6m (€569.2m), compared to $721.3m for the corresponding period in 2012, while local currency sales were up by 6 per cent, which would have been 8 per cent without the negative impact of currency exchange.

Net income for the period increased by 15 percent to $102,322, reflecting an increase in sales from a broadened portfolio and more innovation together with ongoing cost reductions in the fragrance business.

Strong growth in both divisions and all geographies

“IFF achieved strong operating results this quarter, with both business units achieving double-digit growth in segment profit, due to the continued disciplined execution of our strategy,”​ said IFF CEO Doug Tough.

“By focusing on expanding our geographic reach, strengthening our innovation platform and maximizing the value of our portfolio, we achieved strong top-line growth and margin expansion.”

The fragrance division reported sales increased by 7 per cent to $383.6m, compared to $359.9m in the corresponding period last year, which represented an increase of 8 percent on a like-for-like basis not including the negative impact of currency translations.

Fragrance compounds lead the way

The dynamism in the fragrance division mainly came from compounds, which achieved a sales increase of 10 per cent during the period. The company said the increase more than offset a decline in fragrance ingredients of 1 per cent.

Within the fragrance compounds division the fine and beauty care category reported a 13 per cent increase in local currency sales, driven by double digit growth in all regions including Europe Asia and the Middle East, while functional ingredients reported local currency sales growth of 7 per cent.

The results reflected the fact that 52 percent of the fragrance compound sales came from emerging markets, while the remaining balance within the category came from developed markets

Although like-for-like sales also increased by 8 per cent in the fragrance division, demonstrating good underlying dynamics, it returned  a 4 percent increase in reported sales to $374.0m, a figure that was impacted by the exit of low-margin sales activities and foreign currency translations.

“Looking forward, we expect to be able to deliver continued momentum in the second half of the year, noting that we are entering into a more challenging period on a comparable basis. We are optimistic about our ability to deliver local currency sales, adjusted operating profit and EPS growth for the full year in line with our long term financial targets,”​ Tough said.

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