International Flavors & Fragrances Inc. (IFF) disclosed its long-term business strategy and financial objectives at its Investor meeting in New York City.
The flavors and fragrances creator entered the first quarter of 2011 on a strong note and expects earnings per share growth to exceed 10%, attributed to strong sales growth and cost discipline. For the full fiscal year 2011, operating margin is expected to approach the company’s previous long-term target of 18%.
The company anticipates high single-digit input of cost inflation in 2011 as compared with the earlier expectation of mid-to-high single-digits. Gross margin pressure, which is anticipated to be limited in the first quarter, is expected to be felt in the second quarter. In spite of the gross margin pressure, there may be improvement in operating margin in the second quarter. In the second half of the year, gross margin pressure is expected to subside with improved price realization.
The company over the next few years looks forward to an increase in its capital spending to about 5% of sales, primarily to capture opportunities in emerging markets. Also bolt-on acquisitions will be given preferences to gain access to desirable customers, regions, or technologies. The company anticipates an increase in dividend roughly in line with EPS and pursuing buybacks.
Over the long-term, the company anticipates achieving 4%-6% growth in local currency sales, 7%-9% operating profit growth and over 10% earnings per share growth.
International Flavors & Fragrances is one of the leading companies engaged in the creation and manufacturing of fragrance and flavor products in the United States and internationally. We believe that the company’s success will be driven by its substantial geographical presence and product mix.
INTL F & F (IFF): Free Stock Analysis Report
Zacks Investment Research
