International Flavors and Fragrances Inc. posted its biggest drop since at least 1980 after slashing its full-year sales guidance as customers pull back on spending while working through their stashes of products instead of replenishing their pantries.
(Bloomberg) — International Flavors and Fragrances Inc. posted its biggest drop since at least 1980 after slashing its full-year sales guidance as customers pull back on spending while working through their stashes of products instead of replenishing their pantries.
Shares dropped as much as 22% in trading on Tuesday after the release of quarterly results late Monday.
IFF, which provides ingredients, flavors and scents for industries including food and beverage and home and personal care, reported lower volumes in the second quarter. “Consumer demand remains soft,” Frank Clyburn, chief executive officer of IFF, said in the Tuesday earnings call. Volumes aren’t expected to recover during the second part of the year as previously anticipated, the company said.
The company is also undergoing a portfolio transformation as part of a broader improvement plan. It has launched the sale of a cosmetics business and divested three other divisions. IFF has hired JPMorgan as it explores additional sales.
“A key part of our approach is that we will not look to divest assets at at depressed multiples,” especially assets that are hurt by temporary trends, Clyburn said.
The company now expects full-year sales to be in the range of $11.3 billion to $11.6 billion, down from the previous guidance of about $12.3 billion and below the Bloomberg consensus of $12.17 billion.
IFF took a one-time inventory writedown of $44 million related to cost fluctuations for locust bean kernels, which are used to create a thickening agent.
(Adds CEO commentary in third and fifth paragraphs, and updates shares.)
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