International Flavors & Fragrances’ shares fell nearly 4% on Tuesday after the company reported disappointing third-quarter results and cut its profit projection for the year.
IFF’s third-quarter profit fell 16% to $89.8 million, or $1.12 a share, and, on an adjusted basis, dropped to $1.34 a share from $1.39 a year earlier. Sales rose 2% to $777 million.
Analysts had projected adjusted profit of $1.41 a share on $785.1 million in sales. In trading Tuesday, IFF shares closed at $126.06, down 3.8%.
IFF, which makes flavors and fragrances found in cosmetics, detergents, yogurt, ice cream and other products, said it was facing “challenging conditions given a higher level of economic uncertainty and limited volume growth by many consumer packaged goods companies.”
For the full year, the company is now projecting profits will improve 3% to 4% with sales increasing 2.5% to 3.5%. It previously expected per-share profit to improve 4.5% to 6.5% with sales rising 1.5% to 2.5%.
“From a currency neutral operating profit perspective, we anticipated performance to be muted given the timing of planned investments, yet results came in softer than expected due principally to unfavorable mix and higher manufacturing costs,” CEO Andreas Fibig said in a news release.
“As we progress in the fourth quarter, we are optimistic that sales, operating profit and EPS growth – on a currency neutral basis – will all improve sequentially,” he added.
As far as individual business segments, fragrance sales increased 1%, or $4.2 million, to $410.1 million, with growth in consumer fragrances being led by a high-single-digit increase in Greater Asia and mid-single-digit growth in North America.
The flavors business saw a 2% increase in sales to $366.9 million. In North America, low-single-digit growth in savory and sweet flavors was offset by softness in beverage flavors.