IFF reports sales growth after restructuring
indicating that the company could be coming up for air after a
tough year in 2005.
Total sales were up 11 per cent in the quarter, resulting primarily from successful new product introductions as well as volume growth. Sales for the year were up 5 per cent to $2.1bn.
The strong performance follows a wide-ranging restructuring plan, designed to cut costs, improve profits and boost the firm's business unit structure after a dip in sales in the 2005 fiscal year.
According to International Flavors and Fragrances (IFF) chairman and CEO Robert Amen, "our strategy is working and we have good momentum going into 2007" .
Net income for the quarter shot up 192 per cent compared to the same period last year, after 2005 results were dragged down by heavy restructuring charges. Excluding non-recurring items from both 2005 and 2006, IFF saw a 30 percent increase in fourth quarter net income. Full year net income rose 15 per cent to reach $223m.
However, profit remained lower than expected by the investment community, pushing down the firm's share value $0.02 yesterday to $0.48.
As of this month, IFF has separated its business into two different units in a move designed to better reflect its flavour and fragrance operations, sharpen the company's focus and accountability across the organisation, and accelerate its growth.
The reorganisation comes after last January's announcement of plans to cut costs and improve profitability, which involved slashing 300 employees - or 6 per cent of the company's total workforce - in an effort to generate $16m - $18m in annual savings.
Sales for its full year 2005 had declined 2 per cent to $1,993m compared to the previous year, with North American fragrance and flavour sales declining 1 per cent and 7 per cent respectively. European sales declined 8 per cent in the year.
At the time, IFF had said it expected 2006 local currency sales to increase in the low single digits in comparison to 2005.