International Flavors & Fragrances' third-quarter 2014 adjusted
earnings came in at $1.32, up 8.2% year over year but in line with
the Zacks Consensus Estimate. On a constant currency basis,
revenues grew 4% driven by solid product portfolio, higher emerging
market sales and benefits from Aromor acquisition, offset partially
by a sales decline in North America. For 2014, the company
maintained its revenue growth forecast at 4-6%, including 1% growth
from Aromor. The Fragrances business is expected to grow modestly
in fourth quarter while Flavors business is likely to exhibit
strong sales momentum. However, adverse foreign currency movements
and higher costs can impede growth momentum. Thus, we maintain a
Neutral recommendation on the stock.
NY-based International Flavors & Fragrances Inc. (IFF),
together with its subsidiaries, engages in the creation and
manufacture of fragrance and flavor products in the U.S. and
internationally. The company operates in 31 countries and has
approximately 6,000 employees. It functions in two segments,
Flavors and Fragrances.
The Flavors segment (48.2% of net revenues in 2013) offers
flavor compounds to the food and beverage industries for use in
consumer products, such as processed foods, beverages, dairy, food
and confectionery products.
The Fragrances segment (51.8% of net revenues in 2013) provides
various functional fragrances like fragrance compounds for personal
care and household products, fine fragrance and beauty care,
including perfumes, colognes and toiletries and synthetic
ingredients that could be combined with other materials to create
functional and fine fragrance compounds. This segment markets its
products primarily to the cosmetics industry, including perfume and
toiletry manufacturers, and to household products industry
comprising manufacturers of soaps, detergents, fabric care,
household cleaners and air fresheners.
International Flavors & Fragrances ranks among the top four
companies in the flavors and fragrances industry in the world.
These companies, combined together, generated nearly two-thirds of
the industry's revenues in 2013.
International Flavors & Fragrances Inc. (IFF):
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