International Flavors & Fragrances (New York) has reported first quarter 2008 sales of $597 million, a 5% increase over the first quarter 2007. Reported sales benefited from the weaker US dollar, mainly against the euro. Gross profit, as a percentage of sales, was 41.1% compared with 41.8% in the prior year quarter. This decrease was mainly the result of the decline in North America sales, which impacted absorption of manufacturing expenses, most notably in fragrance compounds. Product mix, mainly lower sales of fine and beauty care compounds, and some impact of higher material costs also affected margins.
Flavor sales increased 12% due to market share gains from new wins and volume growth of existing business. Growth was strong in Latin America and Asia. In comparison to first quarter 2007, fragrance sales were flat, primarily because strong growth in the Greater Asia and European regions was offset by weak demand for fragrances in North America. Fragrance ingredient sales were 6% lower due to weaker demand in North America and a planned shift in product mix to enable gross margin improvement.
Concerning this year’s outlook, IFF chairman and CEO Robert Amen said, “Despite the challenging US economic environment, which we anticipate will continue for some time, we remain confident about our growth prospects—particularly in emerging markets—and our ability to deliver on our financial goals.”