New York-based International Flavors & Fragrances Inc. (IFF) hosted its Investor Day 2013 on June 5, 2013.
International Flavors & Fragrances has grown over time and has become a well renowned creator and supplier of flavors and fragrances for the food, beverage and beauty industries. The company operates in 32 countries and has a huge customer base in as many as 100 countries.
Management has laid emphasis on new business wins, geographical diversifications, wide product lines, continuous accomplishments in research and intense consumer insight, all of which bode well for the growth prospects of the company. Increasing exposure to emerging markets is also looked upon favorably.
Talking of the financial aspects of International Flavors & Fragrances, management provided its long-term targets (2013-2015) which include achievement of local currency sales growth in the range of 4%-6%, adjusted operating profit margin within 7%-9% and adjusted EPS growth of more than 10%. Adjusted effective tax rate is expected not to exceed 26.5% during the period.
International Flavors & Fragrances anticipates that sales growth for the Flavors and Fragrances businesses would be 2%-3% above industry while segmental profits would be in high single-digits.
Also, core working capital as a percentage of sales are likely to be less than 31% while adjusted return on invested capital would be over 18%. Adjusted operating cash flow is expected to exceed $1.0 billion while capital expenditure, as a percentage of sales, may be roughly 4%-5% in 2013-2015 and roughly 3% in 2016-2018.
Merger and acquisitions as well as rewarding of shareholders through dividend and share buybacks will remain a priority for International Flavors & Fragrances.
International Flavors & Fragrances currently has a market capitalization of $6.4 billion and carries a Zacks Rank #2 (Buy). Other stocks to watch out for in the industry are Nu Skin Enterprises Inc. (NUS) and Avon Products Inc. (AVP), each with a Zacks Rank #1 (Strong Buy) while Inter Parfums Inc. (IPAR), has a Zacks Rank #2 (Buy).
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