IFF announces new segments, reaffirms guidance
June 7, 2019
International Flavors and Fragrances (IFF) announced that over the next year it will begin operating in three business segments at a capital markets day in New York City on 6 June. The three segments will be taste, scent, and nutrition and ingredients, and will consist of a mix of IFF businesses and former Frutarom businesses. IFF acquired Frutarom for $7.1 billion last year.
Yoni Glickman, former head of Frutarom’s natural product solutions segment, will lead the nutrition and ingredients segment. Nicolas Mirzayantz will continue to lead the scent segment, and Matthias Haeni will continue to lead the taste segment, which will also include Frutarom’s former taste, savory solutions, and inclusions business.
IFF also reaffirmed its’ 2021 financial guidance, calling for 5–7% currency-neutral sales growth and earnings per share growth of at least 10% a currency-neutral basis, excluding amortization. Growth is expected to be driven by cross-selling opportunities, innovation, M&A, and cost savings related to the Frutarom acquisition. IFF expects the cross-selling to amount to $100 million in sales during 2019 through 2021, and $145 million in cost savings to result from the Frutarom deal.
For 2019, IFF expects $5.2–5.3 billion in sales and $6.30–6.50/share in earnings excluding amortization.
A portfolio shift towards natural ingredients, and increased sales in areas adjacent to “traditional flavors and fragrances” are expected to help drive growth, says Alexandra Thrum, an analyst with Morgan Stanley (New York). “IFF highlighted how their portfolio is now positioned towards adjacencies as natural ingredients,” Thrum says.
M&A, and bolt-on acquisitions, will continue to be “an important strategic priority,” Thrum adds. “It appears that the company sees the most opportunity for M&A in the nutrition and ingredients division,” she says. IFF has made several acquisitions since late 2018, with a focus on food ingredients and technology access.
By Vincent Valk
Source: Chemical Week