We recently maintained a Neutral recommendation on New
International Flavors & Fragrances Inc.
), a creator and manufacturer of fragrance and flavor products.
Operations are carried out in the United States and
The main causes that kept us on the sidelines were the company's
first quarter 2012 results. Net earnings, which plummeted 3 cents
year over year to $1.00 per share; however, were in line with the
Zacks Consensus Estimate.
Revenues plummeted 1% year over year while higher cost of sales
restricted gross margin expansion. To combat the headwinds from
rising costs, the company resorted to cost reduction measures
including job cuts in the Fragrances division and other departments
of the company. This is expected to fetch $9 million in pre-tax
savings in 2012.
Moreover, the company realigned responsibilities in the
Functional Fragrances division and reallocated resources from the
developed to the emerging markets.
Management anticipates that new business wins, substantial
geographical diversifications, wide product lines, continuous
accomplishments in research and intense consumer insight will
benefit its results in the quarters ahead. Reviving global economy
seems to spur consumer spending which we believe will be a growth
driver for the flavors and fragrances industry.
The Zacks Consensus Estimate for the second quarter is $1.03,
representing a year-over-year growth of 6.33%. Estimates for the
fiscal years 2012 and 2013 are $4.01 and $4.35, reflecting annual
growth of 7.14% and 8.67%, respectively.
The company currently bears a Zacks Rank of #3, translating into
a short-term Hold rating.
INTL F & F (IFF): Free Stock Analysis
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