IFF back on track?
currency conversions boosted first quarter results for the US
flavour giant International Flavors & Fragrances (IFF).
Strategies in 2003 to get the company back into profitability could
be paying off.
First quarter 2004 sales totalled $535 million, rising 15 per cent on the prior year quarter and benefitting from the strengthening of various currencies. But had exchange rates remained constant, sales would have seen single digit growth, rising by a less impressive 6 per cent on 2003.
"The actions that we have taken over the past several years to better our processes, increase efficiencies and improve customer service are clearly paying off," said Richard A. Goldstein, CEO of IFF.
In local currency terms sales of flavours dropped by 1 per cent in Europe, but the strength of the euro and pound sterling boosted the figures to a 14 per cent rise.
"The local currency performance reflects modest improvement in some of the major economies of Western Europe, most notably in France, Italy and Great Britain, offset by weaker sales in Eastern Europe, the Middle East and Africa," said the flavours firm in a statement yesterday.
Local currency sales growth was strongest in China, Thailand and Vietnam, with respective increases of 16 per cent, 29 per cent and 48 per cent. Australia, Indonesia, South Korea and Taiwan all grew in the low- to mid-single digits.
In the emerging economies of Latin America, the US firm saw modest single digit growth in the Mexican and Brazilian markets.
Performance in the region reflects improved economic conditions and the benefit of new wins in both flavors and fragrances, said the number two global flavours supplier.
The overall figures suggest the US flavours firm, recently pushed from the number one perch by Swiss competitor Givaudan, could be back on track in the $5.45 billion (€4.2bn) global flavours market.
The highly competitive flavours market saw US agri-giant Cargill joining the competition earlier this year through its first flavours acquisition in Europe, 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.
Key areas for growth include the ongoing consumer desire for natural ingredients, combined with a growing interest in more complex and authentic flavours. These factors are set to drive market demand for flavours and fragrances in the US to a value of $4.4 billion (€3.4bn) by 2007, according to a recent 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.
