IFF reports strong sales but charges hit profits

Net sales grew by 8 percent to reach $583.3m, up from $539.1m in the corresponding quarter in 2006, a figure that reflected healthy sales growth in the fragrance division, but even stronger flavors sales growth. The sales figure was well ahead of market expectations, but the result was boosted by a weaker US dollar, which helped to drive international sales, particularly in the Euro zone. But a $5.9m charge relating to a pension curtailment loss impacted the bottom line significantly, driving net profits down by 8 percent to $58.4m, from $63.6m for the corresponding period last year. Quarterly sales growth in the company's flavors division was strong at 11 percent, pushing sales up to $256.4m. However, the performance of the group's fragrance division was not so strong, with sales climbing 6 percent to reach $326.9m, which in turn meant that profits for the division were flat compared to a year ago. Although the fragrance sales were positively impacted by an 11 percent increase in both fine fragrances and beauty care, as well as ingredient sales, the company said that the division was negatively impacted by lower selling prices for ingredients. It also said that lower functional fragrance volumes and higher material costs had impacted the division's performance. CEO Robert Amen said that he was expecting the company's fragrance division to be boosted by a continued strong performance for its fine fragrances in the next quarter. "Looking ahead, IFF is well positioned to benefit from the strong global economy and the rapid growth in consumer sectors of Asia, Latin America and Eastern Europe," he added.