International Flavors & Fragrances Inc.
) reported its fourth quarter and fiscal year 2011 financial
results on February 9, 2012. Adjusted earnings per share in the
quarter increased 7% year over year to 74 cents compared with 69
cents in the year-ago quarter. Results in the reported quarter were
three cents above the Zacks Consensus Estimate of 71 cents per
GAAP EPS, including an expense of 44 cents related to the
previously announced patent litigation settlement and restructuring
costs, in the quarter was 30 cents versus 68 cents in the year-ago
In FY11, adjusted EPS came in at $3.74, reflecting an increase
of 11% year over year and a cent above the Zacks Consensus Estimate
Net sales in the fourth quarter were $644.4 million, up 2% year
over year and above the Zacks Consensus Estimate of $639 million.
On a constant currency basis, revenue increased by 2% year over
year. The increase in revenue was attributed to new business wins
and higher sales volumes in all geographical regions.
The company operates in two segments: Flavors and
Revenue from the Flavors business in the fourth quarter
increased 8.0% year over year and organically to $322.7 million and
accounted for 50.1% of total revenue. Revenue from the Fragrances
business was roughly 49.9% of total revenue amounting to $321.6
million, down 3% year over year and organically.
From a geographical perspective, revenue from North America
increased 4% year over year, while results from EAME registered an
escalation of 7%, or 2% on a constant currency basis. Revenue from
Latin America increased 2% or 1% on a constant currency basis and
from Greater Asia it soared by 10% or 6% on a constant currency
In FY11, total revenue increased 6% year over year to $2,788.0
million and surpassed the Zacks Consensus Estimate of $2,785
Gross margin in the fourth quarter decreased by 210 basis points
to 37.9% based on higher cost of sales. Research and development
expense as a percentage of sales also decreased by 100 basis points
to settle at 8.1% while selling and administrative expense
increased by 320 basis points to 20.8%.
Adjusted operating margin in the quarter was 14.1% compared with
13.4% in the year-ago quarter. Interest expense plummeted 8.6% to
$10.7 million in the quarter.
Exiting the fourth quarter, International Flavors &
Fragrances had cash and cash equivalents of approximately $88.3
million, down from $107.3 million in the previous quarter.
Long-term debt, net of current portions, was roughly $778.2 million
versus $757.1 million in the previous quarter.
Cash flow from operating activities in the fiscal year 2011 was
$189.2 million versus $315.1 million in the previous year. Capital
spending increased to $127.5 million versus $106.3 million in
During the year, the company paid dividends totaling $90.3
million and repaid long-term debt of roughly $123.7 million.
International Flavors & Fragrances is one of the leading
companies engaged in the creation and manufacturing of fragrance
and flavor 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.
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