NEW YORK — International Flavors & Fragrances Inc. reported a 62 percent rise in third-quarter net earnings Wednesday even as revenues fell roughly 3 percent, thanks partially to a tax benefit.
Including the tax benefit totaling 24 cents a share, IFF earned $68.6 million, or 72 cents a diluted share, in the quarter ended Sept. 30, compared with a profit of $42.3 million, or 44 cents, in the year-ago quarter. The tax benefit relates to the company’s intention to repatriate $250 million of dividends from foreign subsidiaries under the American Jobs Creation Acts of 2004.
Adjusted for the tax benefit, IFF said it would have earned 48 cents in the third quarter. That compares with adjusted earnings of 58 cents in the 2004 third quarter, which excluded sales and operating results from European fruit business assets that were sold in the second half of 2004, as well as charges related to the disposition of those assets.
Analysts had been expecting a profit of 56 cents a share in the latest third quarter.
Revenues in the quarter totaled $493.1 million in both local currencies and reported dollars, down 2.6 percent from the prior year’s $506.2 million, on a reported basis.
The company said in local currencies and dollar amounts, total fragrance sales fell 1 percent in the quarter while flavor sales were down 3 percent. Flavor sales were negatively impacted by the disposition of the company’s European fruit-preparations business, and IFF also cited lower selling prices for vanilla in North America and Europe.
“Despite a difficult operating environment during the third quarter, and results that did not meet our expectations, I am encouraged by the significant progress we have made in various areas,” said Richard A. Goldstein, chairman and chief executive officer of IFF, during a post-earnings conference call with analysts. “For example, I am pleased with the growth we are achieving with our largest accounts. Growth with these large global, regional and local customers is a key pillar of our long-term strategy.”
By region, third-quarter sales declined 5 percent in North America; fell 9 percent in local currency and 6 percent in dollars in Europe; were flat in local currency and increased 2 percent in dollars in the Asia-Pacific region; rose 10 percent in Latin America, and were up 16 percent in local currency and 17 percent in reported dollars in India.
In the nine-month period, IFF had net earnings of $177.8 million, or $1.87, compared with net profits totaling $155.2 million, or $1.63, in the same period of 2004. Total revenues were flat at $1.53 billion.
IFF said EPS in 2005 is expected to be $2.26 to $2.34, including the AJCA tax benefit. Local currency sales in 2005 are seen decreasing in the low single digits. Analysts are calling for a profit of $2.15 this year on sales of $2.02 billion.