The New York-based manufacturer of artificial flavors and aromas this week announced its third quarter sales fell 3 per cent to $493.1 million compared to last year.
Net income fell 18 percent after the deduction of a substantial tax benefit relating to the repatriation of foreign earnings and restructuring charges related to the sale of it European fruit business, the company said.
The sale of the business also had a strong impact on the company's US and European flavor sales, which fell 10 and 14 percent respectively. Fragrance sales fell 2 and 3 percent respectively.
Flavour sales in Asia Pacific saw a decline of 6 percent in the quarter, though fragrance sales in the region were up 9 percent. The sale of fragrances soared 34 percent in Latin America and 21 percent in India, with fragrances up 3 percent and 15 percent respectively.
IFF's gross profit as a percentage of sales was 41.9 percent, compared to last year's 42.9 percent, something the company mainly blames on higher raw material costs that it was unable to fully recover through increased selling prices.
The company forecasts a low single digit sales decrease in the rest of the year, adding that it expects increased raw material costs to continue to impact its profit margin to the same level as in the first nine months of the year.
The ambitious Israeli flavors firm Frutarom bought IFF's European natural fruit preparations business back in August last year, just months after completing on the Swiss botanical extracts firm Emil Flachsmann.
The Tel Aviv-based maker of flavors for food and functional food industries paid €30 million for the business, giving it a firm foothold in the growing natural ingredients market.
Others changes at IFF last year also included the closure of its Dijon manufacturing facility as part of the company's ongoing plan to consolidate its flavor and fragrance operations into its larger, more specialized sites; a move IFF hopes will increase capacity utilization and further improve productivity and customer service.