International Flavors & Fragrances Inc. (
reported second-quarter 2012 adjusted earnings per share of $1.08,
above the Zacks Consensus Estimate of $1.02. The results improved
11% from the year-ago earnings of 97 cents.
GAAP earnings per share of $1.08 increased 16% from the year-ago
earnings of 93 cents, which included 4 cents of restructuring and
Net sales in the reported quarter were $721.3 million, up 0.8%
year over year and below the Zacks Consensus Estimate of $729.0
million. On a constant currency basis, revenue inched up 4% year
The company operates in two segments: Flavors and
Revenue from the Flavors business in the second quarter
increased 8.0% year over year, on a constant currency basis, to
$361.4 million and accounted for 50.1% of total revenue. Revenue
from the Fragrances business was roughly 49.9% of total revenue
amounting to $359.9 million, flat year over year on a constant
From a geographical perspective, revenue from North America
inched up 2% year over year, while results from EAME registered a
decline of 7%, or was flat on a constant currency basis. Revenue
from Latin America increased 10% or 12% on a constant currency
basis and from Greater Asia revenue was up 5% or 7% on a constant
Gross margin in the second quarter increased by 210 basis points
to 41.8% based on manufacturing efficiencies and new business wins
as well as a 3% decline in cost of sales. Research and development
expense, as a percentage of sales, decreased by 10 basis points to
settle at 7.8% while selling and administrative expense increased
by 80 basis points to 15.6%.
Adjusted operating margin in the quarter was 18.3% compared with
16.5% in the year-ago quarter. Interest expense plummeted 11.6% to
$10.6 million in the quarter.
Exiting the second quarter, International Flavors &
Fragrances' cash and cash equivalents increased 36.8% sequentially
to $104.6 million compared with $76.5 million in the previous
quarter. Long-term debt, net of current portions, stood at $777.4
million as against $778 million in the sequential quarter.
Cash flow from operating activities in the second quarter of
2012 was $82.7 million versus a cash inflow of $37.0 million in the
year-ago quarter. Capital spending was at $25.0 million versus
$26.3 million in the comparable quarter of 2011.
During the quarter, the company paid dividends totalling $25.1
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 that the company's success will be driven by its
substantial geographical presence and product mix.
INTL F & F (IFF): Free Stock Analysis
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