The anticipated replacement of International Flavours & Fragrances (IFF)'s chairman and CEO comes at a difficult period of transition for the business.
The company, which is in the process of putting in place a management succession plan to replace chairman Richard Goldstein when he retires, recently announced a series of job losses in Europe and North America.
Some 300 positions in manufacturing, selling, research and administration functions, principally in Europe and North America, will be lost. The company said that the reductions represent 6 per cent of the company's workforce.
As a result of these actions, the company anticipates recording pre-tax restructuring charges of $25 million to $30 million, the majority of which will be recognised in the fourth quarter 2005. The remaining charges are expected to be recognised in the first half of 2006.
This follows a statement that, consistent with previous expectations, full year 2005 sales declined two per cent in comparison to the prior year in reported dollars.
"IFF has many hardworking and dedicated employees, which made this decision difficult," said Goldstein.
"However, these actions are a necessary part of our ongoing efforts to maintain and improve IFF's profitability in the economic environment in which we operate."
Goldstein plans to retire following this year's Annual Shareholder Meeting, scheduled for 9 May 2006. The company's board of directors has retained the executive search firm of Spencer Stuart to assist in identifying Goldstein's successor.
"I am confident that, with the progress we have made, IFF is well positioned to deliver long-term growth and increased value for shareholders," said Goldstein. "As a result, the board and I believe the timing is now right to put this succession plan into effect, and I look forward to working to assure a seamless transition."
Director Arthur Martinez, speaking on behalf of the board, said that IFF was thankful to Goldstein for his leadership over the past five and a half years.
"During his tenure, Dick has overseen key strategic initiatives, including the successful acquisition and integration of Bush Boake Allen, and significant investments in product development and technology, which put IFF in a strong position for the future," he said.
The company said that sales in 2005 were impacted by the disposition, in the second half of 2004, of the company's European fruit preparations business. The firm says that on an as-adjusted basis, excluding $58.3 million in sales attributable to the fruit business from 2004 results, 2005 sales would have increased 1 per cent in dollars and been flat in local currency.
The company expects to release earnings for the 2005 fourth quarter and full year on 25 January, at which time additional details regarding the restructuring charges will be provided.