IFF Q2 Earnings Lags Est, Rev Up - Analyst Blog


International Flavors & Fragrances Inc. ( IFF ) reported second quarter 2013 adjusted earnings per share of $1.14, up 5.6% from a year-ago earnings of $1.08. Results, however, were four cents below the Zacks Consensus Estimate of $1.18.

Including one-time items, the company reported GAAP earnings per share of $1.24, up 15% year over year.


International Flavors & Fragrances generated net sales of $757.6 million in the reported quarter, up 5% year over year and above the Zacks Consensus Estimate of $753.0 million. On a constant currency basis, revenue inched up 6% year over year.

The company operates in two segments: Flavors and Fragrances.

In the second quarter 2013, revenue from the Flavors business increased 5.0% year over year, on a constant currency basis, to $374.0 million and accounted for 49% of total revenue. Revenue from the Fragrances business was roughly 51.0% of total revenue amounting to $383.6 million, up 8% on a constant currency basis.

From a geographical perspective, revenue from North America increased 2% year over year, while results from EAME were up 5%, or up 6% on a constant currency basis. Revenue from Latin America increased 7% or 10% on a constant currency basis and from Greater Asia revenue was up 7% or 8% on a constant currency basis.


International Flavors & Fragrances' gross margin in the second quarter increased by 230 basis points to 44.1% based on new business wins, effective product mix, decline in raw materials costs and exit from unprofitable businesses. Research and development expense, as a percentage of sales, increased by 70 basis points to settle at 8.5% while selling and administrative expense increased by 90 basis points to 16.5%.

Adjusted operating margin in the quarter was 19.2% compared with 18.3% in the year-ago quarter. Interest expense plummeted 21.2% to $12.9 million in the quarter.

Balance Sheet

Exiting the second quarter of 2013, International Flavors & Fragrances' cash and cash equivalents stood at $365.9 million, up 22% from $300.0 million in the previous quarter. Long-term debt, net of current portions, increased 1.9% sequentially to $932.8 million.

Cash Flow

In the second quarter 2013, International Flavors & Fragrances generated $99.3 million, up from $82.7 million in the year-ago quarter. Capital spending also escalated and totalled $30.8 million in the second quarter versus $25.1 million in the year-ago quarter.

During the second quarter 2013, International Flavors & Fragrances paid dividends amounting to $27.7 million.

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 capitalization.

The stock currently carries a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Inter Parfums Inc. ( IPAR ) and Nu Skin Enterprises Inc. ( NUS ), each with a Zacks Rank #1 (Strong Buy) while The Female Health Company ( FHCO ), comes with a Zacks Rank #2 (Buy).

FEMALE HEALTH (FHCO): Free Stock Analysis Report

INTL F & F (IFF): Free Stock Analysis Report

INTER PARFUMS (IPAR): Free Stock Analysis Report

NU SKIN ENTERP (NUS): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: FHCO , IFF , IPAR , NUS



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