Profit for the world's number two flavour and fragrance company dropped by 2 per cent for the period despite a 19 per cent rise in sales in North America, with 60 jobs lost in the period bringing the total to 320 for the year. All part of restructuring plans to get the company back into profitability.
'We are seeing improvements in Latin America, most notably Brazil and Argentina, yet Mexico remains fairly weak. Southeast Asia and China continue to grow solidly, as does India. But Japan, in our estimation, remains fragile. Statistics suggest North America continues to rebound, but questions and doubts remain," said Richard Goldstein, CEO of IFF.
Sales for the year ending December 31, 2003 reached $1.9bn, increasing 5 per cent in comparison to the previous year and benefitted from stronger currencies, notably the euro, the japanese yen and sterling. But in like for like terms, had exchange rates remained constant, 2003 sales would have dropped by about 2 per cent on the year before.
In 2000 the company announced a restructuring programme designed to reap annual savings in the region of $25 million to $30 million with a slice of the savings to be ploughed back into the business. This year the group axed 320 positions, writing down pre-tax charges of $42.4 million.
Looking to 2004 a tamed optimism sees the flavours company hoping to see local currency sales rise in the low-single digits.
IFF's key competitor, Swiss firm Givaudan, also announced 300 job cuts this month, hit by the strong Swiss franc, aquisitions and higher raw material costs.
The Swiss group, that recently pushed IFF from the number one perch, will be keen to guard its position in the $5.45 billion (€4.2bn) global flavours market.
But both companies are being pursued from behind. US agri-giant Cargill made its first flavours acquisition in Europe earlier this month, when the billion dollar company purchased UK flavours firm Duckworth. Leading Danish ingredients firm Danisco also has ambitions in flavours, with clear aims to become one of the top five global flavours players.
The ongoing consumer desire for natural ingredients, combined with a growing interest in more complex and authentic flavours, will drive market demand for flavours and fragrances in the US to a value of $4.4 billion (€3.4bn) by 2007, according to a new report from US market research company Freedonia. The report estimates that the market will increase by a steady 3.5 per cent over the next three years, on the back of more expensive natural ingredients, complex flavours and a strong growth in low fat and low carbohydrate foods and beverages.