Consumer products maker International Flavors & Fragrances, Inc. (IFF) reported Tuesday a profit for the fourth quarter that edged down from last year despite quarterly sales growth and margin expansion, as the year-ago quarter had a significant tax benefit.
Adjusted earnings per share for the quarter grew 26%, and topped analysts' expectations by a penny.
The company, which specializes in developing perfumes as well as flavors for food and beverages, said it expects to return to local currency sales growth and improve overall profitability in fiscal 2010.
In a statement, executive vice president and chief financial officer, Kevin Berryman said, "Given the economic challenges we faced over the course of the year, we are very pleased with how we finished 2009. The combination of focused strategies, disciplined cost control, and prudent working capital management enabled us to build sales, earnings and cash flow momentum in the second half of the year."
Fourth-Quarter Results
The New York-based company reported net income of $47.45 million or $0.59 per share for the fourth quarter, lower than $48.96 million or $0.62 per share in the prior-year quarter.
The results for the latest quarter include restructuring charges of $2.89 million or $0.04 per share related to ongoing restructuring efforts in Europe, while the year-ago quarter included $8.04 million or $0.10 per share of restructuring charges, and $17.07 million or $0.22 per share of benefit from tax settlements.
Excluding items, adjusted net income for the quarter rose to $50.34 million or $0.63 per share from $39.94 million or $0.50 per share in the year-ago quarter. On average, six analysts polled by Thomson Reuters expected the company to earn $0.62 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter grew 9% to $585.63 million from $539.10 million in the same quarter last year, and topped four Wall Street analysts' consensus estimate of $574.78 million. Excluding the impact of foreign currency, revenue rose more than 2% from last year.
Segmental Details
Flavors net sales for the fourth quarter grew to $270.18 million from $250.71 million in the year-ago quarter. Segment operating profit rose to $45.91 million from $32.48 million last year, reflecting continued margin improvement initiatives and disciplined cost management. Adjusted operating profit margin improved 340 basis points to 17.4% from last year.
Net sales for fragrances totaled $315.46 million, higher than $288.40 million in the prior-year quarter, boosted by strong emerging market performance, particularly in Greater Asia and Latin America. The segment's operating profit rose to $48.71 million from $41.43 million in the year-ago quarter. Adjusted operating profit margin increased 130 basis points to 16.3%.
Other Metrics
Consolidated operating profit for the fourth quarter increased to $87.15 million from $54.79 million in the same quarter last year. Gross margin for the quarter rose 10% to $235.86 million from $214.63 million in the prior-year quarter, while gross margin percentage grew 50 basis points to 40.3% from last year's 39.8%, reflecting higher pricing, margin improvement initiatives and moderating input costs.
Research and development expenses were $47.32 million, down 8% from $51.49 million in the year-ago quarter. The company reported restructuring and other charges for the quarter of $3.70 million, lower than $12.25 million in the same quarter last year. Income tax expense for the quarter was $23.67 million, compared to income tax benefit of $9.39 million in the year-ago quarter.
The company ended the fourth quarter with cash and cash equivalents of $80.13 million, compared to $178.47 million at end of the prior-year quarter.
The company noted that it has taken important steps to strengthen product portfolio, enhance geographic growth opportunities and optimize manufacturing and supply chain footprint to further reinforce its competitive position.
Full Year Highlights
For fiscal 2009, the company reported net income of $195.53 million or $2.46 per share, lower than $229.63 million or $2.86 per share in the previous year.
Excluding items, adjusted net income for the year declined to $214.32 million or $2.69 per share from $221.08 million or $2.76 per share last year. Analysts expected the company to report earnings of $2.68 per share for fiscal 2009.
Net sales for the full year declined 3% to $2.33 billion from $2.39 billion posted in fiscal 2008. The Street was looking for full-year 2009 revenues of $2.32 billion.
Looking Ahead..."As our strategic initiatives continue to gain traction and we adapt to an ever changing economy, we believe that we are well-positioned to return to local currency sales growth and improve on our overall profitability in 2010," Berryman added.
Stock Quote
IFF closed Monday's regular trading session at $39.85, down $0.32 on a volume of 0.65 million shares, higher than the three-month average volume of 0.42 million shares. In the past 52-week period, the stock has been trading in a broad range of $24.96 to $42.90.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.