Net sales for the quarter ended June 30 2007 increased 8 percent to $573.7m, boosted by a week dollar. Total net income for the quarter increased by 28 percent on last year, taking the quarterly figure to $78m from $61m last year. However, a large part of this increase resulted from a beneficial tax ruling, which cut the firm's effective tax rate for the second quarter by nine percent, pushing up net income by $11m. Flavor sales grew 11 percent on last year, with sales growth driving expense absorption, said the firm. Fragrance sales rose by only six percent, impacted by lower fragrance prices and the cost of increasing production in China. This offset sales improvement in the flavors arena, leaving gross margins virtually unchanged from last year. The market was unimpressed by the results, as shares in International Flavors & Fragrances closed down 6.4 percent to $47.45 at the end of yesterday's trading. This morning shares were up to $48.03. Analysts said the poor fragrance results and the absence of guidance for 2007 accounted for yesterday's nosedive, according to Associated Press. At the end of July, IFF announced a $750m share repurchase scheme that it will have to fund, at least partially, through increased borrowing. This fact may have added to traders' concerns as they reacted negatively to the second quarter results. IFF's chairman and CEO, Robert Amen, remained upbeat about the results. Amen said: "We are pleased with the continued growth in sales, operating profit and earnings." Although the fragrance giant did not provide a financial outlook for 2007, the company's head did say: "Looking ahead, we believe we are well-positioned to continue to grow in line with our goals." IFF's financial performance has been mixed in recent years. Heavy restructuring costs led to a dip in sales in 2005, but the firm recovered strongly in 2006, posting a 15 percent increase in net income for the year.