NEW YORK—International Flavors & Fragrances Inc. (IFF), a global creator of fragrances for consumer products, reported second quarter 2010 (2Q10) revenue of $666 million, 17 percent higher than the prior year quarter. Revenue in local currency increased 17 percent as foreign currency had a limited impact on results. Reported earnings per share (EPS) were $0.83, compared to $0.60 for the 2Q09. EPS in 2010 included a $0.02 per share expense related to ongoing restructuring efforts in Europe, while 2Q09 included a $0.05 per share expense relating to restructuring and employee separation costs. Excluding these items, adjusted EPS for the second quarter increased 31 percent to $0.85 versus $0.65 in the prior year quarter.
"It is clear the strong momentum we experienced in the beginning of the year continued into the second quarter," said Doug Tough, chairman and chief executive officer. "We are very pleased to report strong year-over-year improvements across all our financial metrics. While we have benefited from some elements of restocking and favorable prior year comparisons, the team was successful in winning key new business that will support our efforts to drive market share improvements."
Tough added, "As we enter the second half of 2010, it is important to note that the benefits of restocking have begun to subside. When combined with stronger prior year comparisons, we expect local currency sales in the second half to return to more normalized levels, with relative strength in the third quarter versus the fourth. In addition, we continue to be mindful that foreign exchange movements may impact our results. As a result, in order for us to be successful, we must continue to execute our plans, serve customers well, anticipate challenges and win in the marketplace every day."
Fragrance Business Unit
Local currency sales in the second quarter increased 23 percent over the prior-year period as all regions and nearly all categories reported double-digit growth. Trends in the Fine Fragrance and Beauty Care category continued to be robust, growing very strong double-digits, as new business wins, higher volumes, restocking and favorable comparisons benefited results. In Beauty Care, both Hair Care and Toiletries continued to perform very well, increasing at a strong double-digit rate. Functional Fragrance also performed well, driven by strong trends in Fabric Care and double-digit growth in Home Care. Fragrance Ingredients local currency sales increased 24 percent as favorable comparison versus the year-ago period, some elements of restocking and improvements in underlying demand aided results.
Operating profit increased by $28 million to $65 million in the second quarter, including a $2 million charge related to ongoing restructuring efforts in Europe as compared to $5 million related to restructuring costs in the prior year period. Excluding these items, adjusted operating profit grew nearly 60 percent, or $25 million, to $67 million. As a result, adjusted operating profit margin for the quarter increased 430 bps to 18.6 percent, driven by higher volumes, reduced input costs and benefits from previous cost reduction initiatives.