High raw material costs and lower sales take their toll on the bottom line at International Flavors and Fragrancesf (IFF).
Although sales increased 5 percent for the year ending December 31 this didn’t stop net income dropping 7 percent to $229.6m, which the company attributes to higher interest expenses.
Fourth quarter sales results suffered at the hands of an increasingly strong dollar, with total sales dropping 3 percent (a 2 percent increase in local currency).
However, commenting on the results CEO Robert M. Amen said he was ‘generally pleased’ with the company’s performance and remains ‘cautiously optimistic’ about 2009.
In particular, Mr Amen highlighted the positive performance of the flavors business that ‘continues to outperform’ the competition with a 9 percent (6 percent local currency) sales increase.
Flavor sales were up in all regions during the year with Latin American and greater Asia recording increases of 21 and 13 percent respectively.
Beverages and confectionary were highlighted as two particularly strong areas.
Overall sales totalling $1.1bn helped keep operating profits up ($198m, an $11m increase on last year) despite higher input costs and restructuring charges.
But fragrances suffer
Although fragrance sales in Greater Asia increased 14 percent, a 10 percent drop in North America pulled figures down, leading to a 2 percent increase overall (-1 percent in local currency).
Operating profit for the sector dipped to $199m, a decline of $11m, due to lower sales and high input costs, as well as restructuring charges.
“Excellent progress was made in some areas of the fragrances business, especially in Greater Asia and Fragrance Ingredients, but we have additional opportunities to improve,” said Amen.
In addition, the sector’s performance did improve in the fourth quarter, according to Amen, with operating profit up $4m due to improvements in margins and prices.