International Flavors & Fragrances Inc. has a market cap of $3.65 billion; its shares were traded at around $45.89 with a P/E ratio of 15.6 and P/S ratio of 1.6. The dividend yield of International Flavors & Fragrances Inc. stocks is 2.2%. International Flavors & Fragrances Inc. had an annual average earning growth of 5.4% over the past 10 years. GuruFocus rated International Flavors & Fragrances Inc. the business predictability rank of 5-star.IFF is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, Charles Brandes of Brandes Investment, Chuck Royce of Royce& Associates, Bill Frels of Mairs & Power Inc. , Murray Stahl of Horizon Asset Management, Manning & Napier Advisors, Inc, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:R&D expenses increased approximately $12 million from the prior year. The increase is due to higher incentive compensation accruals of $6 million, lower R&D credits of $2 million, and currency movements of $1 million. The remaining amount is due to targeted investments to support our strategic growth initiatives and lower prior period base comparison resulting from a significant curtailment in 2009 spend due to the prevailing economic crisis.
In the second quarter of 2010, interest expense totaled $12.1 million compared to $14.0 million in 2009. The reduction is due to certain debt repayments of more than $210 million made during the second half of 2009 in connection with an advance prepayment of a Japanese Yen term loan and certain private placement loans. Average cost of debt was 4.8% for the 2010 period compared to 4.6% in 2009.
Other expense of $2.1 million in the second quarter of 2010 increased $0.5 million versus other expense of $1.6 million in 2009, mainly due to higher losses on foreign exchange transactions compared to the prior year.
In the second quarter 2010, Flavors operating profit totaled $65 million, or 21.2% as a percentage of sales, compared to $55 million or 20.2% in 2009. The improvement in profitability was mainly driven by strong sales growth and associated absorption, favorable input costs and the continued efforts in our margin improvement initiatives. These improvements were partially offset by higher incentive compensation costs and investments in R&D.
Fragrance operating profit for the second quarter of 2010 was $65 million or 18.1%, as a percentage of sales, compared to $38 million or 12.6% reported in 2009. The improvement in profit was driven by higher volumes and lower input costs plus good cost leverage on R&D, selling and administrative expenses. The 2010 period includes $2 million of restructuring related charges related to the rationalization of our European fragrance manufacturing footprint and higher incentive compensation expense. The restructuring charge in the second quarter of 2009 was $5 million. These improvements were partially offset by higher incentive compensation costs.
Global expenses represent corporate and headquarters-related expenses which include legal, finance, human resources and other administrative expenses that are not allocated to an individual business unit. In 2010, Global expenses for the second quarter were $22 million compared to $9 million during the second quarter of 2009. The increase is primarily due to higher incentive compensation accruals plus litigation related costs.
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