International Flavors & Fragrances (IFF) exceeded market expectations for third-quarter earnings and revenue, thanks to higher prices for its food ingredients and fragrance solutions and lower purchasing costs.
IFF had increased product prices in some segments to protect margins as it faced higher input costs at the start of the year and a slowdown in demand for food ingredients.
Sustained demand for fragrance and health solutions has helped offset pressure on the food ingredients business as consumers continued to see health and wellness as a priority, even in a difficult macroeconomic environment.
The company’s net sales fell 8% to $2.82 billion for the quarter ended September 30, but beat market expectations of $2.77 billion, sending the company’s shares up about 3% in extended trading.
IFF plans to divest parts of its portfolio to focus on higher margin activities.
In October, IFF sold its cosmetic ingredients division, including the Lucas Meyers Cosmetics brand, to Swiss-based chemical company Clariant AG for $810 million.
In the reported quarter, the company also completed the sale of its Savory Solutions unit, which produced ingredients to add flavor, spice and color to imitation meat.
In October, Bloomberg News reported that IFF was engaging with an advisor to explore a possible sale of its pharmaceutical business. Excluding items, IFF reported third-quarter earnings per share of 89 cents. Analysts on average expected earnings of 75 cents per share, according to LSEG data. IFF reiterated its full-year revenue guidance between $11.3 billion and $11.6 billion. The benefits of the inventory reduction have also meant that the company now expects to be in the mid to upper range of full year 2023 adjusted operating EBITDA between $1.85 billion and $2.0 billion. (Reporting by Juveria Tabassum; Editing by Krishna Chandra Eluri)