IFF Q1 2009

IFF (New York) has announced first quarter 2009 sales of $560 million in the current year quarter compared to $597 million in the prior year period. The company attributed $27 million of the drop to the strength of the US dollar.

“In light of current global turmoil, I believe that IFF’s first quarter results were good,” said Robert Amen, chairman and CEO. “We faced multiple challenges during the quarter: economic contractions in North America and Europe, higher input costs and currency parity changes. We managed some of these issues well but we have opportunities to improve.”

Looking ahead, Amen said,“I expect the economic challenges to remain with us for several more quarters. Currency headwinds should be greater next quarter, since the dollar was at its weakest during the second quarter last year. We will continue to support our customers in creating consumer-preferred products. Equally, we will move forward on a series of initiatives to reduce our fixed and variable costs which should benefit operating margins later in 2009. IFF is fortunate to have a strong balance sheet, healthy positive cash flow and sound business fundamentals. This enables me to remain optimistic as I look ahead.”

A 2% first quarter local currency sales gain was driven by higher volumes and wins in North America as well as growth in Asia. Reported sales worldwide, however, were down 3% as a result of US dollar strength. Sales in Latin America were down. Europe was the weakest region for the company, reflecting both the economic slowdown and customer destocking. Operating profit for the division declined by $4 million to $53 million.

Fragrance sales for the period were down 5% in local currency, driven in part by destocking. Functional fragrances sales were flat year-over-year (local currency). Operating profit, meanwhile, dropped by $11 million to $36 million. The decline, according to the company, reflects lower volumes, higher input costs, weak sales mix and unfavorable exchange rate impacts totaling $5 million.

R&D expenses in the first quarter decreased 4% to $50 million, in part due to cost controls.

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