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International Flavors & Fragrances Inc. (IFF) reported financial results for the fourth quarter and full year 2011. In the fourth quarter, revenue grew 2% over the prior year period to $644 million. Revenue in local currency also increased 2% as foreign currency had a limited impact on results. Reported diluted earnings per share (EPS) for the quarter were $0.30 compared to $0.68 in the fourth quarter 2010. EPS in the fourth quarter 2011 included an expense of $0.44 per share related to a previously announced patent litigation settlement and restructuring costs, as compared to a $0.01 per share expense related to the European restructuring in the fourth quarter 2010. Excluding these items, adjusted EPS for the fourth quarter increased 7% to $0.74 from $0.69 in the prior year quarter.
For the full year, the company reported revenue of $2.8 billion, a 6% increase over the prior year. Excluding the impact of foreign currency, revenue in local currency increased 4%. Reported EPS for the year was $3.26 compared to $3.26 for the full year 2010. EPS in 2011 included an expense of $0.48 per share related to the previously announced patent litigation settlement and restructuring efforts, while 2010 included an expense of $0.11 per share related to the European restructuring. Excluding these items, adjusted EPS for the full year 2011 increased 11% to $3.74 from $3.37 in the prior year.
“Our ability to achieve our long-term financial targets for the second consecutive year demonstrates the team’s aptitude for successfully executing our strategy and navigating through a challenging operating environment,” said IFF chairman and CEO Doug Tough. “At the beginning of 2011, we expressed optimism that IFF would continue to perform well despite ongoing macroeconomic challenges and unprecedented raw material cost increases.”
Tough added, “Thanks to the focus and dedication of the organization, we delivered progress in several key areas. We continued to leverage our geographic reach to capture the growth potential of the emerging markets, to strengthen our innovation platform to deliver differentiating products, and to maximize our portfolio to improve the underperforming areas of our business. I remain confident in our ability to continue to navigate through these uncertain times as we strive to achieve our long-term targets in 2012.”
For IFF’s flavor business unit, local currency sales in the fourth quarter increased 8% over the prior year period as double-digit growth in the emerging markets continued to drive results. In the developed markets of North America and Western Europe, growth was once again led by health and wellness initiatives. From a category perspective, growth was strongest in beverage, increasing double-digits, followed by high single-digit growth in savory, and mid-single-digit growth in dairy. For the full year 2011, local currency sales increased 9% year-over-year led by double-digit growth in the emerging markets and mid-single-digit growth in the developed markets. Overall performance was once again driven by new business wins and increased volumes with existing customers. In North America, and Europe, Africa and the Middle East (EAME), double-digit increases in both savory and beverage were the primary contributors of growth. Results in Greater Asia were strong, led by double-digit growth in beverage, confectionery and dairy. In Latin America, solid growth was achieved as confectionery and dairy each grew double digits.
For the company’s fragrance business unit, local currency sales in the fourth quarter declined 3% as growth in the emerging markets was offset by lower sales to the developed markets. In fine fragrance and beauty care, results were pressured, despite strong performances in hair care and toiletries, as fine fragrance volumes declined. Functional fragrance results were strong as new business wins and price increases drove growth across all categories. Fragrance ingredients was most challenged, as price increases to reduce the impact of higher raw material costs continued to have an adverse effect on volume. For the full year 2011, local currency sales declined 1% against a record 16% increase in the prior year. Fine fragrance and beauty care was challenged by a very strong year-ago comparison of 26%, as new business wins and higher prices were more than offset by volume declines. Functional fragrance results were solid, led by new business across all categories and higher pricing. Fragrance ingredients results declined year-over-year against an 18% year-ago comparison, as volumes were impacted by pricing actions.