International Flavors & Fragrances Inc. Q1 2024 Financial Report
International Flavors & Fragrances Inc. reported a net loss of $10.7 million for the quarter ended March 31, 2024, compared to a net income of $109.7 million in the same period last year. The company’s revenue for the quarter was $1.2 billion, a 1.4% increase from the previous year. The company’s gross profit margin was 47.9%, and its operating margin was 14.2%.
Company Overview
International Flavors & Fragrances (IFF) is a global leader in taste, texture, scent, nutrition, enzymes, cultures, soy proteins and more. The company operates in four segments: Nourish, Health & Biosciences, Scent and Pharma Solutions.
In 2024 Q1, IFF’s sales decreased 4% to $2.9 billion due to divestitures, offset partly by volume and price increases. Gross profit rose 6% to $1 billion due to volume gains, pricing and productivity. Net income attributable to IFF was $60 million compared to a $9 million net loss last year.
Investigation Impact
In March 2023, IFF disclosed it is under investigation by global authorities for potential anti-competitive conduct in its fragrance business. IFF is cooperating fully, but the outcome and potential impact remain uncertain.
Financial Analysis
Revenue
- Total Q1 revenue decreased 4% year-over-year to $2.9 billion. Excluding currency impact, revenue declined 1%.
- By segment, Nourish fell 9%, Health & Biosciences grew 4%, Scent increased 6% and Pharma Solutions dropped 10%.
Profits
- Gross margin expanded from 31.8% to 35.3%, driven by volume gains, pricing and productivity.
- Operating profit rose 52% to $199 million as higher gross profit offset increased operating expenses.
- Net income attributable to IFF was $60 million compared to a $9 million net loss last year.
Cash Flow
- Operating cash flow was $99 million compared to $127 million last year as working capital increases offset higher earnings.
- Cash proceeds from divestitures and lower capital spending led to $78 million in investing outflows versus $167 million last year.
- Financing cash inflows were $40 million compared to $78 million last year due to higher debt repayments.
Debt and Liquidity
At March 31, 2024:
- Cash and cash equivalents totaled $764 million.
- Debt outstanding was $10.3 billion, with a net debt to credit adjusted EBITDA ratio of 4.42x.
- Debt covenants were in compliance and available liquidity was $1.8 billion.
Strategic Direction
IFF is focused on integrating the N&B business, reducing debt levels, enhancing innovation and brand connections, driving efficiencies and executing its portfolio optimization strategy. This includes both divestitures of non-core businesses and targeted acquisitions.
Outlook
IFF faces risks related to economic conditions, inflation, supply chain disruptions, the N&B integration, legal matters, and other challenges. However, its market-leading positions in key consumer categories, focus on execution and strategic transformation efforts position it for long-term growth.
In 2024, IFF expects to drive sales growth, continue recovering margins toward pre-inflation levels and make strategic investments funded through divestiture proceeds and cash generation.
