International Flavors & Fragrances' IFF third-quarter results support our thesis that unfavorable foreign exchange rates and soft fine fragrance sales will weigh on the firm's near-term results. Our fair value estimate remains in place. Third-quarter sales fell 1%, but grew 2% excluding unfavorable foreign currency movements. While IFF benefited from new contract wins as well as improving consumer demand, we aren't convinced this improvement is sustainable, as the consumer spending environment, particularly for discretionary items, remains weak. Further, we believe changes in the product-development timelines of some core customers (in light of the need to retain capital in the face of tough macroeconomic conditions) could pressure IFF's growth over the next several quarters. The adjusted gross margin expanded 70 basis points to 40.7%, while the adjusted operating margin increased 20 basis points to 16.8%, reflecting higher prices, cost savings from restructuring initiatives, and moderating input costs.
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Analyst Notes
09-14-09 | 9:12AM IFF Chairman and CEO to Resign
08-05-09 | 9:07AM IFF Fails to Gain Traction in 2Q
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