DESPITE IFF SAVINGS, 270 COULD LOSE JOBS
NEW YORK — Eliminations of redundancies between Bush Boake Allen and its new parent company, International Flavors & Fragrances, should eventually save IFF nearly $30 million a year but cost about 270 people their jobs by the end of next month.
IFF said that, as of the end of next month, IFF will have achieved annual cost savings of approximately $30 million, primarily through head count reductions and the consolidation or elimination of duplicate facilities.
Fifty-six locations around the world, including sales offices, have been identified as performing tasks better handled at other company sites.
“Decisions have been made and action plans developed with respect to the consolidation and elimination of a substantial portion of these duplicate sites,” the company said Tuesday. “To date, the integration process has affected approximately 120 positions. Approximately 270 positions will have been eliminated by March 31, 2001.”
As a result of the reorganization announced last October, IFF ultimately expects annualized savings of $70 million as a result of the BBA acquisition and subsequent actions. About half of these should be realized in fiscal 2001. Approximately $2 million in cost savings are expected for the quarter ending March 31 with an additional $8 million expected for the second quarter of the year.
“The company continues to anticipate that portions of the cost savings will be reinvested in various aspects of the business, although a substantial portion is expected to flow through to the bottom line and to shareholders,” the company said in its statement. “Those funds to be reinvested will drive business development, enhance strategic relationships with existing customers, and support comprehensive employee training and management development programs.”
The balance should move directly to the bottom line, IFF said.
IFF said its board and management were investigating opportunities to rid the company of non-core businesses and had authorized management to divest a significant portion of the aroma chemicals operation acquired as part of BBA. This business had annual sales of about $100 million last year. Proceeds from such a sale or any others would be used to pay down debt, which stood at $1.25 billion at the end of the calendar year.
The company reaffirmed its earnings expectations of $1.42 a share, exclusive of nonrecurring charges, for 2001.