Sensient Technologies Corp.’s third-quarter earnings fell 4%, due to restructuring costs associated with initiating a broad and strategic restructuring plan, which included moving its flavor and fragrance group headquarters to Chicago.
For the quarter ended Sept. 31, the company’s net earnings fell to $31.5 million from $32.9 million a year earlier. Excluding restructuring costs, Sensient earned $35.9 million in the latest quarter. Quarterly revenue rose to $372 million from $369.4 million a year earlier, with no foreign currency translation impact, although the flavors and fragrances group revenue rose slightly to $226.3 million from $224.7 million a year earlier. Sensient is maintaining its previous guidance for 2013 diluted earnings per share, which is expected to be between $2.68 and $2.73, excluding the impact of the restructuring charge.
During a conference call with investors, Paul Manning, the company's president and COO, said Sensient faced some raw material pricing pressure for some of its natural ingredients. There were also some raw material increases on a year-over-year basis, similarly, with certain aroma chemicals.
"But I think the real story with flavors is that, this is a business that we've been transitioning. We are well on track," said Manning. "And I think that the types of products and technologies that we're now looking at, that we're executing on, we believe that, that impact and that change in mix is going to have a profound effect and profound improvement on that gross margin. And we're certainly looking to see those improvements in the coming quarters," he added.