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, 2013.
Fourth Quarter 2013 Results
- Reported revenue increased $44 million, or 7%, to $725 million from $681 million in the prior year quarter. Local currency sales increased 7% reflecting solid sales growth in both the Flavor and Fragrance business units, fueled by double-digit growth in the emerging markets. In the fourth quarter, our expanding footprint in the emerging markets accounted for 50% of consolidated sales.
- Reported net income for the quarter totaled $61.5 million, or $0.75 per share, compared with net income of $68.1 million, or $0.83 per share, in the prior year quarter. Net income in the fourth quarter of 2013 included a $9.1 million after-tax Spanish capital tax charge, a $1.9 million after-tax loss on the sale of a non-operating asset, and other costs associated with previously announced restructuring or improvement initiatives.
- Excluding the Spanish capital tax charge and other costs included in the Reconciliation of Income table from the current year’s results, adjusted net income increased 11% to $75.5 million from $68.1 million in the prior year quarter, and adjusted earnings per share (EPS) increased 11% to $0.92 per share from $0.83 per share in the prior year quarter.
Full Year 2013 Results
- Reported revenue for the full year increased 5% to $3.0 billion. Local currency sales increased 5% for the full year, reflecting strong growth from new business wins and positive volume on existing business. On a like-for-like basis (LFL), which excludes the exit of Flavors low-margin sales activities, local currency sales increased 6%. The emerging markets grew by 10% and accounted for 49% of full year sales.
- Reported net income for the full year totaled $353.5 million, or $4.29 per share, compared with net income of $254.1 million, or $3.09 per share, in the prior year. The current year’s net income included charges of $22.9 million related to a Spanish capital tax charge and other costs associated with the recently announced restructuring and operational improvement programs. These charges were partially offset by an $8.5 million after-tax net gain on the sale of non-operating assets. The prior year’s net income included charges of $73.4 million (or $0.89 per share), primarily related to the Spanish income tax settlement.
- Excluding these charges from both years’ operating results, adjusted net income increased 12% to $368.0 million from $327.5 million in 2012 and full year adjusted EPS increased 12% to $4.46 from $3.98 in the prior year.
- Cash flows from operations for the full year were $407.6 million, or 13.8% of sales, compared with $323.8 million, or 11.5% of sales in the prior year. The current year’s cash flow from operations included $48 million of cash payments related to the Spanish tax cases and incremental U.S. pension contributions. The prior year cash flow from operations included a $105.5 million cash payment due to the Spanish income tax settlement. Excluding these payments from the Company’s operating cash flow, adjusted cash flow from operations would have increased 6% from $429 million in 2012 to $456 million in 2013.
- On January 16 th, IFF announced it had completed the acquisition of Aromor Flavors and Fragrances, Ltd, a privately-held manufacturer and marketer of complex specialty ingredients. Aromor would have represented approximately $35 million of incremental sales to IFF’s 2013 results on a pro-forma basis. Aromor is expected to be accretive to IFF’s earnings per share in 2014. The acquisition of Aromor, with its strong R&D capabilities, supports IFF’s strategic focus on creating consumer-preferred Fragrance Compounds using specialized, value-added, cost-effective molecules.