IFF Q1 Operating profit Down 62%
- Chaileedo Press
- May 9, 2023
- 2 min read
IFF, a global leader in the fragrance and flavor industry, has announced its first quarter performance for the fiscal year 2023. IFF's net sales in Q1 amounted to USD 3.03 billion, which is essentially flat compared to the same period last year. The company’s operating profit in Q1 was $131 million, down 62%.
International Flavors & Fragrances (IFF), a global leader in the fragrance and flavor industry, has announced its first quarter performance for the fiscal year 2023. IFF's net sales in Q1 amounted to USD 3.03 billion, which is essentially flat compared to the same period last year. The company’s operating profit in Q1 was $131 million, down 62%.
In the first quarter, IFF reported income before taxes was $14 million, while the adjusted operating EBITDA was $503 million. The adjusted operating EBITDA declined by 19% on a comparable basis and after accounting for currency fluctuations compared to the same period in the previous year. IFF said this was due to lower volumes and unfavorable manufacturing absorption, which offset the gains achieved from pricing and productivity, as a result of the inventory reduction program implemented by the company.
Overall, in 2022, all four business segments of IFF, which are Scent, Nourish, Health & Biosciences, and Pharma Solutions, saw a decline in their operating EBITDA.
“We delivered first quarter 2023 results in line or ahead of our expectations amidst a challenging operating environment," said IFF CEO Frank Clyburn. “Our team successfully navigated soft endmarket demand and customer inventory destocking as they executed on our priorities to deliver our financial commitments. As we look ahead to the balance of the year, we continue to believe our volume performance will improve, yet acknowledge that market conditions remain uncertain.”
Specifically, the Scent segment reported a sales revenue of $608 million in the first quarter, showing a slight increase of 4% year-on-year. The growth was mainly driven by double-digit growth in the high-end fragrance and consumer fragrance businesses.
Like other companies, the Scent segment was also affected by inflation pressure. However, strong sales and favorable product mix offset some of the negative impacts, resulting in a comparable currency-neutral sales growth of 8%.
The Health & Biosciences segment, which includes the household and personal care business, reported a net sales revenue of $513 million in the first quarter, showing a decline of 22% year-on-year. This was due to the company's inventory reduction plan and measures to control production volumes, which offset the growth brought by price increases and productivity improvements.
IFF expects its sales for the full year of 2023 will be around $12.3 billion, which is slightly lower than the previous estimate of $12.5 billion. However, the expected adjusted operating EBITDA for the full year of 2023 remains unchanged at approximately $2.34 billion.
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