International Flavors & Fragrances Inc. (NYSE: IFF), a leading global creator of flavors and fragrances for consumer products, today reported financial results for the fourth quarter and full year ended December 31, 2012.
Fourth Quarter 2012 Results
- Reported revenue increased $37 million or 6% to $681 million from $644 million in the prior year quarter. Excluding the impact of foreign currency (by translating current and prior year sales at the same exchange rates), local currency sales increased 8% reflecting a high level of new wins and positive volume on existing business. Our expanding footprint in emerging markets accounted for 49% of fourth quarter sales.
- On a like-for-like (LFL) basis, which excludes the exit of Flavors low-margin sales activities, local currency sales increased 10%.
- Net income for the quarter totaled $68.1 million, or $0.83 per share, compared with net income of $24.4 million or $0.30 per share in the prior year quarter. Net income in the fourth quarter of 2011 included an aggregate charge of $36.8 million, or $0.44 per share, related to a patent litigation settlement and restructuring and other charges.
- Excluding the patent litigation settlement and restructuring charges from the prior year’s results, adjusted net income increased 11% to $68.1 million from $61.1 million in the prior year quarter, and adjusted earnings per share (EPS) increased 12% to $0.83 per share from $0.74 per share in the prior year quarter.
Full Year 2012 Results
- Reported revenue for the full year increased 1% to $2.8 billion. Local currency sales increased 4% for the full year, reflecting accelerated momentum throughout the year. On a like-for-like basis, sales increased 5%. The emerging markets accounted for 47% of full year sales.
- Net income for the full year totaled $254.1 million, or $3.09 per share, compared with net income of $266.9 million or $3.26 per share in the prior year. Net income for the full year includes special charges of $73.4 million, or $0.89 per share, almost all of which is related to the previously-announced Spanish tax settlement. Net income for the prior year included an aggregate charge of $39.3 million, or $0.47 per share, related to a patent litigation settlement and restructuring and other charges.
- Excluding these charges from operating results, adjusted net income increased 7% to $327.5 million from $306.2 million and full year adjusted EPS increased 6% to $3.98 from $3.74.
- Cash flows from operations for the full year were $333.1 million, or 11.8% of sales, compared with $189.2 million, or 6.8% of sales in the prior year. Cash flow from operations for 2012 includes a $105.5 million cash outflow arising from the Spanish tax settlement, and for 2011 includes a $40 million payment for a patent litigation settlement. Excluding these items, the Company’s cash flow from operations nearly doubled in 2012.
Management CommentaryDoug Tough, Chairman and CEO, said, “We had a strong finish to the year, driven by our diverse product portfolio, expanding geographic footprint and commitment to providing customers with innovative and superior products that are desired and enjoyed by consumers all around the world. This diversification allowed us to achieve strong broad-based growth in the fourth quarter, led by double-digit growth in the emerging markets. Both business units contributed to our gross margin performance, reflecting strong new wins from our continued focus on innovation, ongoing manufacturing leverage, and the impact of exiting lower margin sales activities. Our strong top-line performance enabled us to achieve local currency sales, operating profit and EPS growth in line with our long-term targets.”
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