International Flavors & Fragrances Inc.
) reported third-quarter 2012 adjusted earnings per share of
$1.08, a cent above the Zacks Consensus Estimate of $1.07. The
results improved 8% from the year-ago earnings of $1.00 per
GAAP earnings per share of 20 cents, including 88 cents of
restructuring & other costs, were below $1.00 earned in the
Net sales in the reported quarter were approximately $709.0
million, down 1% year over year and below the Zacks Consensus
Estimate of $726.0 million. On a constant currency basis, revenue
inched up 5% year over year.
The company operates in two segments: Flavors and
In the third quarter, revenue from the Flavors business
increased 6.0% year over year, on a constant currency basis, to
$340.7 million and accounted for 48.1% of total revenue. Revenue
from the Fragrances business was roughly 51.9% of total revenue
amounting to $368.3 million, up 5% on a constant currency
From a geographical perspective, revenue from North America
were weak and declined 1% year over year, while results from EAME
registered a decline of 6%, or up 6% on a constant currency
basis. Revenue from Latin America increased 5% or 11% on a
constant currency basis and from Greater Asia revenue was up 3%
or 6% on a constant currency basis.
Gross margin in the quarter increased by 250 basis points to
42.5% based on manufacturing efficiencies and new business wins.
Research and development expense, as a percentage of sales,
increased by 60 basis points to settle at 8.1% while selling and
administrative expense increased by 190 basis points to
Adjusted operating margin in the quarter was 18.9% compared
with 17.9% in the year-ago quarter. Interest expense plummeted
3.6% to $9.9 million in the quarter.
Exiting the third quarter, International Flavors &
Fragrances' cash and cash equivalents decreased 7.1% sequentially
to $97.2 million compared with $104.6 million in the previous
quarter. Long-term debt, net of current portions, stood at $677.0
million as against $777.4 million in the sequential quarter.
Cash flow from operating activities in the third quarter of 2012
was $7.5 million versus a cash inflow of $114.6 million in the
year-ago quarter. Capital spending was at $30.4 million versus
$29.0 million in the comparable quarter of 2011.
During the quarter, the company paid dividends totalling $25.3
International Flavors & Fragrances is one of the leading
companies engaged in the creation and manufacturing of fragrance
and flavoring products in the United States and internationally.
We believe the company's success will be driven by its
substantial geographical presence and product mix.
INTL F & F (IFF): Free Stock Analysis
To read this article on Zacks.com click here.