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Internationa Flavors &: Iff Reports Strong Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

NEW YORK--(BUSINESS WIRE)--November 9, 2015--International Flavors & Fragrances Inc. (NYSE:IFF) (Euronext Paris: IFF) reported financial results and strategic achievements for the third quarter ended September 30, 2015.

Third Quarter 2015 Consolidated Summary: Growth vs. Prior Year ¹

Reported (GAAP)

Adjusted (Non-GAAP)

Adjusted Currency Neutral

Operating

Profit

Consolidated

(1)%

3%

0%

7%

5%

10%

Acquisition Impact

¹ Schedules at the end of this release contain reconciliations of reported GAAP to non-GAAP metrics.

Win Where We Compete

achieve market leadership position in key markets, categories & customers

North America Fragrance Compounds +7% led by double-digit Hair Care & Home Care growth

Fragrances currency neutral sales in China +6% driven by strong growth with regional customers

Home Care grew high-single-digits, on a currency neutral basis, as a result of strong new wins

Flavors North America +19% including the acquisition of Ottens Flavors

Flavors Latin America up double-digits, on a currency neutral basis, for the 8th consecutive quarter

Innovating Firsts

strengthen position and drive differentiation in priority R&D platforms

Encapsulation-related sales improved double-digits in Fabric, Toiletries and Home Care

Sweetness and Savory Modulation portfolio grew strong double-digits

Commercialized two captive fragrance ingredients that drive greater differentiation

Launched second natural taste modulator of 2015 to build consumer-preferred products

Developed new capsule chemistry to strengthen participation beyond Fabric Care

Become Our Customers’ Partner of Choice

: attain commercial excellence

IFF-LMR Naturals & Haitian Vetiver partner certified “For Life” by the Institute of Marketecology

Achieved additional core list status with several key customers across both flavors and fragrances

Won North America innovation award with one of IFF’s largest Flavors customers

Awarded Supplier Excellence award with one of IFF’s largest Fine Fragrance customers

Gained industry-leading membership in the Together for Sustainability sustainable sourcing initiative and recognized by CDP as a world leader for corporate action on climate change

Strengthen and Expand the Portfolio

pursue value creation through collaborations & acquisitions

Lucas Meyer Cosmetics achieved double-digit currency neutral sales growth on a standalone basis

Ottens Flavors sales improved double-digits with strongest growth coming from regional customers

Announced partnership with Vapor Communications to pioneer the future of digital scent

Management Commentary

“We are pleased to report strong financial results in the third quarter, despite ongoing volatility in many key international markets,” said Chairman and CEO Andreas Fibig. “Thanks in large part to the diversity of our business and our recent acquisitions, we achieved strong revenue growth, gross margin expansion and double-digit increases in adjusted operating profit and adjusted EPS – all on a currency neutral basis.

“Currency neutral sales improved 7%, including three percentage points of growth relating to the acquisition of Ottens Flavors and Lucas Meyer Cosmetics. Overall our top-line performance continues to be driven by strong new wins, particularly in Fragrance Compounds, where the contributions from new wins were at the highest levels in nearly two years. Adjusted operating profit and adjusted EPS on a currency neutral basis grew at a rate faster than sales, both up 10%, as we benefitted from gross margin expansion and fixed cost leverage.

“With a focus on building greater differentiation, accelerating profitable growth and increasing shareholder value, we continued to make strides against our Vision 2020 strategy. In North America – one of the areas we are targeting for leadership positions – the Flavors team has done a nice job integrating our recent acquisition of Ottens Flavors. Leveraging their defined go-to-market strategy – geared toward ensuring we are the partner of choice for key regional accounts – Flavors North America was up 19%. In China, Fragrances grew 6% on a currency neutral basis, despite the volatile economic environment, as we continued to have success with many of the strong regional Consumer Fragrance brands.

“Delivery systems across both flavors and fragrances continued to drive growth. The strong trends in Fabric Care and Beverage continued in the third quarter, led by our encapsulation technology in fragrances and proprietary delivery system in flavors. We were also pleased with the sales of our sweetness and savory modulation portfolios which continued to produce strong results, increasing strong double-digits.

“In addition to the strides we have made from a market share and innovation perspective, we also made progress in our never-ending quest to “become our customers’ partner of choice.” Capitalizing on the trends in naturals, IFF-LMR Naturals received its fourth “For Life” Social Responsibility designation for its Haitian Vetiver operations. We are proud that our commitment to embedding sustainability throughout our business practices and our corporate culture is being acknowledge as evident by our recent CDP Climate “A” List perfect score. We also won an innovation award in North America with one of our largest Flavors customers, which recognizes partners for their thought leadership, and were awarded a supplier excellence award with a large Fine Fragrance customer.

“Strengthening and expanding our portfolio is a focus of ours as we diligently pursue value-creation opportunities in partnerships and collaborations. In the third quarter, we completed the acquisition of Lucas Meyer Cosmetics which helped us expand our product offerings beyond flavors and fragrances into cosmetic active ingredients. We are pleased to report that Lucas Meyer Cosmetics achieved strong double-digit currency neutral sales growth on a standalone basis – a good indication that we are putting our capital to work in areas that accelerate growth. To maintain our legacy of pioneering firsts, we also announced a partnership with Vapor Communications, which we believe will put us on the forefront of digital scent in the years to come.

“Based on our strong year-to-date results and our outlook for more modest sales growth in the fourth quarter – due to challenging comparisons that include an extra week of sales in the prior year – we continue to believe we can deliver 6% full year 2015 currency neutral sales growth, including acquisitions. To correspond with our top-line performance, we continue to believe we can deliver approximately 9% adjusted operating profit growth and 10% adjusted EPS growth, both on a currency neutral basis for full year 2015”.

Third Quarter 2015 Segment Summary: Growth vs. Prior Year

Fragrances:

(2)%

6%

15%

Flavors:

8%

9%

Fragrances Business Unit

Currency neutral sales improved 6%, including approximately two percentage points related to the acquisition of Lucas Meyer...


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