INTERNATIONAL FLAVORS & FRAGRANCES INC. $104 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.3 million; Market cap: $8.5 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.iff.com) makes over 36,000 compounds that improve the taste of foods and the smell of consumer products.
In January 2014, the company paid $102.5 million for Aromor Flavors and Fragrances, a private Israeli firm that is also one of IFF’s ingredient suppliers.
This purchase helped increase IFF’s sales by 5.8% in the three months ended March 31, 2014, to $770.2 million from $727.8 million a year earlier. The company gets 75% of its sales from outside the U.S. and nearly 50% from emerging markets. If you exclude currency exchange rates, sales rose 7%.
Without unusual items, such as costs to integrate Aromor, earnings rose 10.9%, to $108.5 million, or $1.32 a share, from $97.8 million, or $1.19. IFF spends about 8% of its sales on research, so it’s more profitable than it appears.
Rising raw material costs could slow IFF’s earnings growth for the rest of 2014. Still, the company will probably earn $5.04 a share for the full year, up 13.0% from 2013, and the stock trades at 20.6 times that estimate. The $1.56 dividend yields 1.5%.
IFF is a buy.
