Strength in International Flavors & Fragrances’ fine fragrance and beauty care businesses helped drive a 35.2 percent jump in the firm’s profits for the first quarter ended March 31.
This story first appeared in the May 10, 2010 issue of WWD. Subscribe Today.
IFF earned $63.8 million, or 80 cents a diluted share, compared with $47.2 million, or 60 cents a share, in the year-ago quarter.
Excluding an expense of 5 cents a share from ongoing restructuring efforts in Europe, adjusted earnings per share for the quarter came in at 85 cents, beating by 3 cents average estimates of Wall Street analysts polled by Yahoo Finance.
Quarterly sales grew 16.8 percent to $653.9 million, from $559.6 million a year ago. The firm’s fragrance division accounted for more than half of revenues, with $353.7 million in sales, up 20.5 percent, while the flavors division saw $300.2 million in sales, a 12.8 percent rise.
Excluding $5 million in costs from the European restructuring initiative — specifically, the planned closures of a fragrance ingredients chemical plant in Haverhill, U.K., and a fragrance compounding facility in Drogheda, Ireland, by yearend — the fragrance division saw operating profits grow 66 percent to $61 million. IFF expects the plant closures to cost between $27 million and $29 million, yielding a targeted annual cost savings of $17 million to $20 million beginning next year.
“Fine fragrance has reversed its recent trends, growing [in the] very strong double digits,” Nicolas Mirzayantz, group president of fragrances, told analysts during a conference call Thursday. “This success can be credited…to new business and a growing market share position.”
He noted the sales of the fine fragrance and beauty care businesses grew 28 percent in local currencies, but explained: “It is important to note that a portion of this improvement can be attributed to favorable comparisons [over last year], as well as customer and retailer restocking.
“While it’s difficult to predict the effort of restocking over the balance of the year, we do not expect that these benefits will continue as our customers reach their targeted inventory levels going forward,” Mirzayantz added.
Sales of beauty care, which includes hair care and toiletries, grew by double digits, while functional fragrance and fragrance ingredients sales improved. Emerging markets such as Brazil, Russia, India and China drove results, as did the developed markets of Europe and North America, whose sales grew by double digits.