Sensient results continue upward trend

By Simon Pitman

- Last updated on GMT

Leading supplier of color and fragrances to the cosmetics industry,
Sensient Technologies, has reported a continued strong increase in
both sales and net profit, driven by strong industry sales and the
sale of a non-core investment.

The Wisconsin-based company said that its flavors and fragrance division was the main driving force behind the results, which meant that quarterly revenue climbed 7.8 percent to reach $304.3m for the second quarter ending June 30. This figure helped drive net income up 15 percent, from $18.46m, to $21.23m, making it the sixth successive quarter of positive sales and net earnings growth. For the full six months, revenue increased by 8.2 per cent to reach $589.6m, whereas earnings per share were up 10.8 percent. The sale of the non-core investment, combined with the fact that cash provided by operating activities also helped the company to cut back its debt by $30.5m during the quarter. The company said that sales from its flavors and fragrance operations, of which approximately 9 per cent are accounted for by fragrances, reported an increase of 7.7 per cent in revenue, to $202.9m. Meanwhile, sales from colors, of which sales from cosmetic ingredients such as pigments and hair dyes account for approximately 19 per cent, were up 5.6 per cent to reach $95.6m, reflecting what the company described as 'solid growth' for its cosmetic operations. The company, which is also a major supplier to the pharmaceutical industry and a provider of flavors and colors to the food industry, said that it had experienced particularly strong results across the board in developing markets, specifically in Latin America and China, but added that sales had also been strong in the United States and Europe. Sensient chairman Kenneth Manning said that the results represented record revenue and operating income for a second quarter, and added that considering current trading conditions, he believed the strong performance would continue into 2008. Indeed, the company has increased its share guidance for 2007, believing the range would increase from $1.54 - $1.56 to $1.56 - $1.59. Following the publication of the company's first quarter results back in April, Sensient made a rare rebuke aimed at industry analyst John McMillin, from the Prudential Equity Group after he incorrectly stated that the company's stock reached $30 per share in April 1997. The company pointed out that share prices never exceeded $17.69 during that month, and has gone as far as suggesting that the error was a direct attempt to make the company's financial performance look weaker. "Sensient believes Mr. McMillin made the incorrect statement about Sensient's stock price in an attempt to minimize the Company's recent success,"​ the company stated in an official release. McMillin later acknowledged the mistake but has stated in press reports that the company's stock has not performed well for nine years, whereas his initial report had stated that the company stocks had underperformed over a ten year period.

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