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International Flavors (IFF) Q4 Earnings & Sales Top Estimates

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Zacks Equity Research
·5 min read
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International Flavors & Fragrances Inc. IFF reported adjusted earnings of $1.32 per share in fourth-quarter 2020, beating the Zacks Consensus Estimate of $1.19. The bottom-line figure however, declined 9.6% from the year-ago quarter.

Including one-time items, earnings per share in the fourth quarter came in at 57 cents per share compared with the 70 cents per share recorded in the year-ago quarter.

In the reported quarter, International Flavors’ net sales were $1,270 million, down 1% year over year. The top-line figure, nonetheless, topped the Zacks Consensus Estimate of $1,260 million. During the December-end quarter, currency neutral sales dropped 2%, including an approximately 4 percentage point negative impact associated with an additional sales week in fourth-quarter 2019.

Operational Highlights

During the October-December quarter, International Flavors’ cost of goods sold was down 3% year over year to $756 million. Adjusted gross profit climbed 2.2% year over year to $514 million. Adjusted gross margin came in at 40% compared with the 39% witnessed in the year-ago quarter.

Research and development expenses flared up 17% year over year to around $100 million. Adjusted selling and administrative expenses shot up 7.7% year on year to $210 million during the fourth quarter. Adjusted operating profit declined 10.3% year over year to $156 million. Adjusted operating margin came in at 12.3% compared with the year-earlier quarter’s 13.5%.

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 4% year over year to $766 million during the December-end quarter. On a constant-currency basis, revenues declined 5% year over year. Food Service continued to witness pressure, declining double-digits on a reported and currency-neutral basis. Operating profit fell 9% year on year to $90 million.

Revenues generated in the Scent segment came in at $504.2 million, up 5% year over year. On a constant-currency basis, revenues were up 3% year over year. Consumer Fragrance remained solid, aided by strong growth in Home Care & Personal Wash. Fine Fragrance returned to growth on new customer wins in North America and Europe. Fragrance Ingredients was solid on double-digit growth in Cosmetic Actives. Operating profit increased 3.9% year over year to $80 million.

Financial Position

International Flavors had cash and cash equivalents of $660 million as of Dec 31, 2020, up from $624 million as of Dec 31, 2019. Long-term debt declined to $3,779 million as of Dec 31, 2020, from $3,997 million as of Dec 31, 2019.

International Flavors generated $714 million of cash from operating activities in 2020 compared with the $699 million recorded in 2019. Capital invested in purchasing property, plant and equipment totaled $192 million in 2020 compared with the prior year’s $236 million. Dividend paid summed $323 million at the end of 2020.

2020 Performance

International Flavors reported adjusted earnings per share of $5.70 for 2020 compared with the $6.17 reported in 2019. Earnings also beat the Zacks Consensus Estimate of $5.60. Including one-time items, the bottom line came in at $3.21, down 19.7% from 2019.

Sales were down 1% year over year to $5.08 billion from the prior-year figure of $5.14 billion. The top line matched the Zacks Consensus Estimate.

2021 Guidance

International Flavors expects sales of $11.5 billion in 2021, including approximately $507-million sales related to the completion of the merger deal with DuPont’s DD Nutrition & Biosciences ("N&B") business. Moreover, adjusted EBITDA margin is projected at around 23.2%.

Price Performance

Over the past six months, International Flavors’ shares have gained 6.8%, outperforming the industry’s growth of 3.4%.



Zacks Rank & Key Picks

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

A few better-ranked stocks in the Consumer Staples sector are Coca-Cola Femsa S.A.B. de and C.V. KOF and Diageo plc DEO, each carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Coca-Cola Femsa has a long-term earnings growth rate of 9.6%. The stock has gained 4.5% in the past six months.

Diageo has a long-term earnings growth rate of 8.3%. Its shares have rallied 18.3% in six months’ time.

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