IFF reported financial results for the third quarter that ended September 30, 2022.
Highlights of the report include:
- The company has determined that for the third quarter of 2022 the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.25 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the three and nine months ended September 30, 2022.
- The primary drivers of the goodwill impairment are related to ongoing increases in interest rates and lower business projections due to adverse macroeconomic impacts on volume, continued cost inflation and unfavorable foreign exchange rate fluctuations.
- Reported net sales for the third quarter were $3.06 billion, flat versus the prior-year period. On a comparable basis, currency-neutral sales increased 10% versus the prior-year period, led by double-digit growth in Nourish and Pharma Solutions.
- Loss before taxes on a reported basis for the third quarter was $(2.04) billion. Adjusted operating EBITDA for the third quarter was $612 million. On a comparable basis, currency-neutral adjusted operating EBITDA grew 3% versus the prior-year period, as strong pricing actions and productivity gains more than offset lower volumes.
- Reported earnings per share (EPS) for the third quarter was $(8.60). Adjusted EPS excluding amortization was $1.36 per diluted share.
- Cash flows from operations at the end of the third quarter was $189 million, and free cash flow defined as cash flows from operations less capital expenditures totaled $(155) million, as higher inventory value as a result of inflationary pressures more than offset strong improvements in accounts payable. Net debt to credit adjusted EBITDA at the end of the third quarter improved to 3.9x versus 4.4x in the second quarter of 2022.
IFF CEO, Frank Clyburn, said, “We delivered solid results in the third quarter in the context of a challenging operating environment. Through the ongoing efforts of our teams around the world, we successfully implemented pricing actions and generated strong productivity that drove our top and bottom-line performance. On a year-to-date basis, we are executing on our pricing, productivity and divestiture objectives, which has led to strong sales momentum, steady advancements in profitability and an overall improvement in our leverage profile. As we begin working through the fourth quarter, we are proceeding cautiously as market conditions have become more challenging. In this context, we are keenly focused on the items under our control, including advancing our innovation efforts to support our customers and driving greater cost efficiencies, to ensure we deliver on our commitments and maximize value for our shareholders.”