International Flavors & Fragrances Inc.
) reported third-quarter 2013 adjusted earnings per share of
$1.22, up 13.0% from the year-ago earnings of $1.08. Results were
4 cents above the Zacks Consensus Estimate of $1.18.
Including one-time items, the company reported GAAP earnings
per share of $1.20, up from 20 cents in the year-ago quarter.
International Flavors & Fragrances generated net sales of
$742.3 million in the reported quarter, a 4.7% year-over-year
growth driven by increased demand in emerging markets. However,
revenues marginally missed the Zacks Consensus Estimate of $744.0
million. On a constant currency basis, revenues inched up 4% year
By segments, in third-quarter 2013, revenues from the
business increased 3% year over year to $349.4 million and
accounted for 47% of total revenue. Revenues from the
business were roughly 53.0% of total revenue amounting to $392.9
million, up 7% year over year.
On a geographical basis, revenues from North America were flat
year over year, while results from Europe, Africa and Middle East
(EAME) rose 7% (up 3% on a constant currency basis). Revenues
from Latin America increased 6% (up 8%) and Greater Asia revenues
were up 6% (up 8%).
International Flavors & Fragrances' gross profit margin in
the third quarter increased 131 basis points (bps) to 43.8% based
on new strategies, favorable volume, sales mix and raw material
costs. Research and development (R&D) expense, as a
percentage of sales, expanded 72 bps to settle at 8.9%. Selling
and administrative expense, as a percentage of sales, increased
46 bps to 15.9%.
Adjusted operating margin in the quarter was 19.4% compared
with 18.9% in the year-ago quarter. Interest expense shot up
17.3% to $11.6 million in the quarter.
Exiting the third quarter of 2013, International Flavors &
Fragrances' cash and cash equivalents stood at $343.1 million,
down 6.2% from $365.9 million in the previous quarter. Long-term
debt increased marginally to $933.5 million compared with the
In the nine months ended Sep 30, 2013, the company generated
cash from operating activities of $257.3 million, up from $137.6
million in the year-ago comparable period. Capital spending also
widened and totaled $86.4 million in the first nine months of
2013 versus $84.2 million in the prior-year period.
Going forward, the company expects to witness moderate
year-over-year growth in the fourth quarter of 2013. Continued
investments in R&D are expected to boost margins in the
International Flavors & Fragrances is one of the leading
companies engaged in the creation and manufacture of fragrance
and flavoring products in the United States and internationally.
The company currently has a $6.8 billion market
The stock currently carries a Zacks Rank #4 (Sell). Other
stocks to watch out for in the industry include
HB Fuller Co.
). All of these stocks carry a Zacks Rank #2 (Buy).
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