International Flavors & Fragrances Inc. reported gains for the second quarter, with both sales and income increases.
Net income for the quarter rose 11 percent, to $116.7 million from $105.4 million a year ago. Diluted earnings per share totaled $1.46, up 13 percent from $1.29 in the year-ago period.
IFF posted net sales of $793.5 million, up 3 percent from $767.5 million in the prior-year period. Operating profit gained 11 percent, to $164.5 million from $148.8 million year-over-year.
The company’s fragrances business unit increased sales 5 percent to $414 million, with a profit increase of 10 percent to $87.6 million. Fine fragrances decreased 1 percent as strong double-digit growth in Latin America was offset by softness in North America and Europe, Africa and the Middle East, the company said.
Consumer fragrances were up 4 percent from broad growth across subcategories, including a double-digit increase in personal wash with contributions from fabric and home care. In consumer, greater Asia saw double-digit growth and North America saw single-digit growth, the company said. Fragrance ingredients increased 15 percent, including sales related to the IFF Lucas Meyer Cosmetics acquisition.
IFF’s flavors unit saw a sales increase of 2 percent, to $379.5 million, with a profit increase of 8 percent to $90.3 million. Europe, Africa and the Middle East increased 3 percent, led by high-single-digit growth in the Middle East and broader growth in Europe.
For the full year, IFF is projecting a 1.5 to 2.5 percent increase in sales; 2 to 4 percent gain in profit and 4.5 to 6.5 percent increase in earnings per share.
“As we celebrate the first anniversary of the launch of Vision 2020, we are proud of the performance we made relative to our strategic priorities,” said chairman and chief executive officer Andreas Fibig. “Since inception, we’ve seen strong currency neutral sales growth across all of our key platforms — modulation, encapsulation, delivery systems and naturals — proof that we are executing our plan and delivering industry-leading innovation to our customers. We also made strong in-roads in improving our market position in key countries, strengthening our relationships with many of our customers and actively pursuing value creation opportunities through collaborations and acquisitions.”
IFF’s Vision 2020 strategy is a plan that includes investing innovation, forming partnerships with customers and broadening the company’s portfolio through acquisitions and collaborations.
“With respect to the second quarter of 2016, we are pleased to report our performance was consistent with our expectations for all of our key financial metrics,” Fibig said. “Currency neutral sales growth of 4 percent was driven by new wins across both businesses and the benefits associated with our strategic acquisitions. Adjusted operating profit and adjusted EPS, on a currency neutral basis, both grew faster than sales led by volume growth, cost and productivity initiatives and acquisitions. We achieved these financial results as we continued to strategically reinvest in the business to drive long-term growth.”
“As we have started the year well — first half currency neutral sales grew 5 percent and currency neutral adjusted operating profit and adjusted EPS were up 7 percent and 8 percent respectively — we remain cautiously optimistic in achieving our previously stated currency neutral guidance given the continued macroeconomic uncertainty,” Fibig said.