Facing raw material cost pressures and benefiting from emerging market growth, IFF (New York) reported first quarter 2012 revenue of $711 million, a 1% decline year-over-year. (See IFF's Q4 and full-year 2011 results here.)
Operating profit declined 18% to $56 million due to raw material costs and volume declines. Gross profit, as a percentage of sales, was 40.2%, compared with 41.6% in the same period 2012.
The flavor business reported an operating profit increase of 1% to $80 million, driven by volume growth, higher pricing and cost controls. According to the company, "Overall growth can once again be attributed to a double-digit performance in the emerging markets led by Africa, Asia and the Middle East. In the developed markets of North America and Western Europe, more modest growth continued to be driven by health and wellness initiatives."
Fragrances business sales fell 4%, despite strong fine fragrance and beauty care sales. Functional fragrance results were boosted by new wins in fabric care. Fragrance ingredients sales were impacted by price increases that resulted from a need to protect margins.
"IFF continued to execute its strategy and generated results broadly in line with our expectation," says IFF chairman and CEO Doug Tough. "The diversity and strength of our category and geographic portfolios, combined with our cost discipline, helped ease the impact of rising raw material costs, softness in fragrance Ingredients, and a challenging macroeconomic environment. Going forward, we expect our business trends will improve over the course of the year as we continue to capitalize on our strong emerging market presence, healthy research and development pipeline, and profit improvement initiatives."
