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International Flavors & Fragrances Inc. (IFF) (New York) reported its first quarter 2011 financial results, with revenue of $714 million representing a 9% increase over the first quarter 2010. "We are pleased with our excellent start to 2011, especially given that we are comparing to a very strong year-ago performance of double-digit growth," said Doug Tough, IFF chairman and CEO. "Our top-line performance was once again driven by double-digit growth in the emerging markets. In the developed markets, strong demand for our innovative products, such as healthier and more natural offerings, drove high single-digit growth. This strong top-line performance provided operational leverage that when combined with our continued focus on cost discipline drove a double-digit increase in operating profit."
Tough continued, "While our first quarter performance was strong, our initial local currency sales levels have shown some pressure as we enter the second quarter, in light of challenging year-over-year comparisons. Nonetheless, we are optimistic that our performance in the first quarter, coupled with the opportunities we see throughout the remainder of the year, give us the confidence to achieve our long-term targets of 4–6% local currency sales growth, 7–9% percent operating profit growth and 10% plus EPS growth for the full year 2011."
For the company’s flavor business unit, local currency sales in the first quarter increased 12% from the first quarter 2010 based on double-digit growth in the beverage, savory and confectionery categories. Supporting these numbers, IFF saw new business wins in addition to increased volumes from existing customers, and in North America and Europe, Africa and the Middle East (EAME), double-digit growth in beverage and savory categories were the primary contributors to mid-teens growth. Additionally, the company also saw solid results in greater Asia, as double-digit trends in beverage and dairy continued into the first quarter. In Latin America, solid growth was achieved as confectionery and dairy each also grew by double digits. Operating profit increased 28%, or $17 million, to $79 million, in the first quarter for the flavor business and can mainly be attributed to accelerated sales growth and continued cost discipline.
In IFF’s fragrance business unit, local currency sales increased 7% in the first quarter of 2011 against a very strong comparable in the prior year period. Emerging market performance continued to grow by double digits as the company garnered new business wins across all categories. To note, double-digit growth in fine fragrance and beauty care continued for the fifth consecutive quarter, and functional fragrance results maintained with new business wins and performance in home care. Additionally, fragrance ingredients business was buoyed to growth by price initiatives. For this unit, operating profit increased by $13 million to $69 million, including a $5 million expense related to restructuring efforts in Europe in the first quarter 2010.