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What Caused IFF's Flavors Segment's Margin to Expand in Q2 2018?

What Caused IFF's Flavors Segment's Margin to Expand in Q2 2018?2018.08.16

IFF’s Flavors segment in the second quarter

International Flavors & Fragrances’ (IFF) Flavors segment saw a fall in its contribution to the company’s overall revenue by 0.2 percentage points in the second quarter. The segment accounted for 49% of IFF’s revenue in the quarter compared to 49.2% in the second quarter of 2017.

The Flavors segment reported revenue of $450.54 million in the second quarter, an increase of 8.7% on a YoY (year-over-year) basis. In the second quarter of 2017, the segment reported revenue of $414.3 million.

The growth in the segment’s revenue was driven primarily by price increases and higher volume growth across all its categories and regions. North America led this growth at 9% driven by growth in the Tastepoint brand and new business wins in the beverage, dairy, and sweet categories.

Latin American revenue rose 8% on higher demand in Argentina and Mexico. The EMEA (Europe, the Middle East, and Africa) region’s revenue rose 5%, while revenue in Asia rose 2%.

Segment’s profit and margin

The segment reported a net profit of $109.6 million in the second quarter, a rise of 13.2% YoY. In the second quarter, the segment reported a net profit of $96.8 million. The growth in the segment’s profit was driven by higher volume growth and benefits from productivity initiatives. As a result, the segment’s net profit margin expanded to 24.3% in the second quarter compared to 24.2% in the second quarter of 2017, implying a rise of 10 basis points on a YoY basis.

Outlook

The segment’s revenue could continue its growth trend driven by new business wins. Its profit and margin could continue to expand as a result of continued productivity initiatives.

 

source: http://marketrealist.com

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