International Flavors & Fragrances Inc. (IFF)
Q2 2010 Earnings Call
August 5, 2010; 10:00 am ET
Doug Tough - Chairman & Chief Executive Officer
Nicolas Mirzayantz - Group President of Fragrances
Hernan Vaisman - Group President of Flavors
Kevin Berryman - Executive Vice President & Chief Financial Officer
Mike Sison - KeyBanc
Mark Astrachan - Stifel Nicolaus
Mimi Noel - Sidoti & Company
Jeffrey Zekauskas - JP Morgan
Erik Sjogren - Morgan Stanley
Richard O'Reilly - Standard & Poor's
John Roberts - Buckingham Research
Previous Statements by IFF
» International Flavors & Fragrances Inc. Q1 2010 Earnings Call Transcript
» International Flavors & Fragrances Inc. Q4 2009 Earnings Call Transcript
» International Flavors & Fragrances Inc. Q3 2009 Earnings Call Transcript
At this time, I would like to welcome everyone to the International Flavors & Fragrances’ second quarter 2010 earnings conference call. All participants will be on a listen-only mode until the formal question-and-answer portion of the call. Participants will be announced by their name and company. In order to give all participants an opportunity to ask their question, we request and limit of one question per person.
I would now like to introduce Michael DeVeau, Investor Relations Manager. You may begin.
Thank you, operator, and thanks everyone for joining us this morning. With me on the call today is our Chairman and CEO, Doug Tough; our Group President of Fragrances, Nicolas Mirzayantz; our Group President of Flavors, Hernan Vaisman; and our Executive Vice President and CFO, Kevin Berryman.
Please note that this call will be recorded and will be available for playback on our website. Please keep in mind that during this call, we may make some forward-looking statements about the company’s performance, particularly with respect to the second half of 2010. These statements are based on how we see things today and may contain some elements of uncertainty.
For additional information concerning factors that can cause actual results to differ materially from forward-looking statements, I ask you to refer to the cautionary statements and risk factors contained in today’s earnings release and on IFF’s website.
Some of today's prepared remarks will exclude those items that affect comparability. These items are laid out in our non-GAAP reconciliation, which is also available under the Investor Relations section of our website.
With that, I’d like to choose, Doug.
Thank you, Michael. Good morning and good afternoon to everyone. Before moving on to discuss our Q2 results, I would like to update you on one of the priorities we discussed on our Q1 conference call. Since joining IFF full time back in early March, we’ve begun to pressure test our current strategies and our business model to ensure we are operating to the best of our ability.
As a part of this review, we have engaged a strategic consultant to aid us with the process. While we are still in the initial phases, gathering data and understanding the complex dynamics, we believe we are working towards an optimum path that will lead to greater shareholder value. We are thoroughly examining our regions, our categories and our customers relative to the drivers of our current and future levels of profitability.
Specifically, we are looking to optimize our resources to ensure we are putting emphasis where we will get the best overall return. We are evaluating the relative levels of human and capital resources that are required to deliver our current results.
Perhaps, but not surprisingly, we have discovered very different performance results whereas some categories, some customers and regions are creating much better returns than others. Please note, however that much work still needs to be done. My expectation is this project will continue throughout the balance of this year. We will do our best to keep you informed of our progress and how these results will lead to even greater financial performance that in turn will drive further shareholder value.
I can assure you this is the highest internal initiative at IFF and I am pleased with the efforts and the progress made thus far by the entire organization.
Returning to our second quarter results, I would like to note some key non-financial accomplishments that I believe will position us well in the future. First, in Flavors, I’m happy to report that we have been selected as a global core supplier for a multinational flavor customer making us one of only three suppliers on that coveted list.
This is great news for IFF and speaks volumes about its customers trust and our ability to deliver quality; innovative products that help them differentiate their brands in the marketplace.
Adding to our portfolio of health and wellness solutions is our newly signed licensing agreement with Redpoint Bio, developers of an all-natural sweetness enhancer derived from stevia that will be exclusively ours for five years. The addition of this product will enable us to offer our customers more natural solutions to reduce sugar products.
We also like to mention that the Fragrance team once again showed that IFF is a stock leader in looking to the future of Fragrance as they demonstrated in their well-received Headspace symposium presented earlier this year in concert with Museum of Modern Art and the Parsons School of Design.
For those of you who do not know the Headspace symposium gathers leading thinkers, designers, scientists, artists and established perfumers to challenge the conception, impact and potential applications of scent by exploring new territory for design. Opportunities such as these are great ways to think outside the box leading to the key innovations so necessary to our business.
While the rest of the IFF senior team will take you through the full details of our Q2 performance, I’ll provide a few high-level comments. It is clear that the strong momentum we experienced in the beginning of the year continued into the second quarter.