IFF has released its third quarter 2020 results with net sales reaching $1.27 billion, flat when compared to the prior year period.
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In Q3, fine fragrance and food service, impacted most as a result of the COVID-19 pandemic, improved relative to their second quarter performance, yet declined 14% on a currency neutral basis or 15% on a reported basis.
The rest of the portfolio, excluding fine fragrance and food service was solid, growing 3% on both a currency neutral and reported basis.
For the scent segment, profit increased 15% on a reported basis and 20% on a currency neutral basis led primarily by higher sales volume and strong benefits of productivity initiatives. As well as sales, which increased 4% to $502.8 million, and 4% on a currency neutral basis.
Consumer fragrance growth remained strong, increasing double-digits both on a reported and currency neutral basis, with growth across nearly all sub-categories.
Fine fragrance experienced a marked sequential improvement versus the second quarter, yet declined mid-teens on a reported and currency neutral basis due to the temporary disruptions of consumer access to retail markets related to COVID-19.
Fragrance ingredients returned to growth in the third quarter led by double-digit growth in cosmetic actives, both on a reported and currency neutral basis.
As for the taste taste segment, profit decreased 16% on a reported basis. Sales decreased 2% to $765.2 million, or declined 1% on a currency neutral basis.
Food service, while improved versus the second quarter, experienced continued pressure, declining double-digits on a reported and currency neutral basis.
The rest of the portfolio excluding food service was solid, growing low single-digits on a currency neutral basis and flat on a reported basis. From a geographic perspective, North America increased double-digits, with growth in nearly all categories.
In EAME, growth was challenged primarily by pressures in Savory Solutions while Latin America and Greater Asia continued to be impacted by COVID-19.
IFF executive vice president and CFO, Rustom Jilla commented, “From a profitability perspective, we have also seen a sequential improvement in the third quarter even as we continued to incur higher pandemic related operating costs. The focus on cash remained intense with lower working capital days and higher free cash flow, both sequentially and versus the prior year. Looking ahead to the fourth quarter, while the level of COVID-19 uncertainty remains too high to provide guidance, we face a roughly 400 basis point sales headwind solely as a result of 2019’s fourth quarter which included an additional week of sales.”
Andreas Fibig concluded, “We also made great progress towards our combination with DuPont Nutrition and Biosciences. To date, we have received antitrust clearance in nearly all markets, obtained overwhelming approval from our shareholders and, in conjunction with N&B successfully completed the permanent financing, including a $6.25 billion senior notes offering at attractive interest rates. While there are a few remaining items, including outstanding regulatory approvals, we continue to expect to complete the merger in the first quarter of 2021.”