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International Flavors (IFF) Q3 Earnings & Sales Lag Estimates

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Zacks Equity Research
·5 min read
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International Flavors & Fragrances Inc. IFF reported adjusted earnings of $1.40 per share in third-quarter 2020, missing the Zacks Consensus Estimate of $1.45. The bottom-line figure also declined 8.5% from the year-ago quarter.

Including one-time items, earnings per share in the third quarter came in at 75 cents per share compared with the $1.13 per share recorded in the year-ago quarter.

In the reported quarter, International Flavors’ net sales were $1.27 billion, flat year over year. The top-line figure missed the Zacks Consensus Estimate of $1.28 billion. During the September-end quarter, currency neutral sales inched up 1%, reflecting year-over-year growth in Scent division.

Operational Highlights

During the July-September quarter, International Flavors’ cost of goods sold was up 1% year over year to $744 million. Adjusted gross profit edged down 1.1% year over year to $524 million. Adjusted gross margin came in at 41% compared with the 42% witnessed in the year-ago quarter.

Research and development expenses flared up 6% year over year to around $90 million. Adjusted selling and administrative expenses slid 1% year on year to $194 million during the third quarter. Adjusted operating profit declined 3.8% year over year to $193 million. Adjusted operating margin came in at 15.2% compared with the year-earlier quarter’s 15.8%.

International Flavors Fragrances Inc. Price, Consensus and EPS Surprise

International Flavors  Fragrances Inc. Price, Consensus and EPS Surprise
International Flavors Fragrances Inc. Price, Consensus and EPS Surprise

International Flavors Fragrances Inc. price-consensus-eps-surprise-chart | International Flavors Fragrances Inc. Quote

Segmental Performances

Revenues in the Taste segment dipped 2.2% year over year to $765 million during the September-end quarter. On a constant-currency basis, revenues declined 1% year over year. Food Service continued to witness pressure, declining double-digits on a reported and currency neutral basis. Operating profit fell 15.7% year on year to $102 million.

Revenues generated in the Scent segment came in at $503 million, up 3.7% year over year. On a constant-currency basis, revenues were up 4% year over year. Growth in Consumer Fragrance remained solid, while Fine Fragrance declined in mid-teens on a reported and currency neutral basis, thanks to the temporary disruptions of consumer access to retail markets due to the pandemic. Operating profit increased 14.8% year over year to $101 million.

Financial Position

International Flavors had cash and cash equivalents of $483 million as of Sep 30, 2020, down from $624 million as of Dec 31, 2019. Long-term debt declined to $3,891 million as of Sep 30, 2020, from $3,997 million as of Dec 31, 2019.

International Flavors generated $415 million of cash from operating activities during the nine-month period of the current year compared with the $383 million recorded in the prior-year period. Capital invested in purchasing property, plant and equipment totaled $124 million in the first nine months of the ongoing year compared to $160 million in the prior-year comparable period. Dividend paid summed $240 million in the first nine months of 2020.

Guidance

International Flavors has not provided any guidance for the current year on account of the pandemic’s uncertain impact. Moreover, the company is facing a 400-basis-point sales headwind due to an additional sales week in fourth-quarter 2019.

Price Performance

Over the past year, International Flavors’ shares have depreciated 14.4% compared with the industry’s loss of 4.6%.



Zacks Rank & Key Picks

International Flavors currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Consumer Staples space are Nu Skin Enterprises, Inc. NUS, The Boston Beer Company, Inc. SAM and e.l.f. Beauty, Inc. ELF. While Nu Skin and Boston Beer sport a Zacks Rank #1 (Strong Buy), e.l.f. Beauty carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nu Skin has a projected earnings growth rate of 7.7% for 2020. The stock has gained 17.6% in the past year.

Boston Beer has an estimated earnings growth rate of 63% for the ongoing year. Its shares have surged 165.2% in the past year.

e.l.f. Beauty has an expected earnings growth rate of 1.6% for fiscal 2021. Shares of the company have appreciated 23.5% over the past year.

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International Flavors Fragrances Inc. (IFF) : Free Stock Analysis Report
 
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