We believe the companys long term outlook is brighter

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We believe the company’s long-term outlook is brighter, based on expectations for strong sales and earnings growth and emerging market expansion. As such, our long-term rating remains BUY. RECENT DEVELOPMENTS On May 7, IFF reported 1Q18 net sales of $931 million, up 12% from the prior year and $16 million above consensus. In local currency, net sales were up 7%, driven by growth in both Flavors and Fragrances. Adjusted EPS rose to $1.69 from $1.52 last year, topping the consensus estimate by $0.11. The share count declined slightly, to 79.1 million. Independent Equity Research Since 1934 ARGUS A R G U S R E S E A R C H C O M P A N Y 6 1 B R O A D W A Y N E W Y O R K , N. Y. 1 0 0 0 6 ( 2 1 2 ) 4 2 5 - 7 5 0 0 LONDON SALES & MARKETING OFFICE TEL 011-44-207-256-8383 / FAX 011-44-207-256-8363 ® 2017 - DJIA: 24,719.22 1934 - DJIA: 104.04
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M ARKET D IGEST - 2 - The first-quarter gross margin decreased 20 basis points year-over-year, to 43.6%, reflecting a 13% increase in the cost of goods sold. Operating income rose from $130 million to $175 million and topped the consensus estimate of $168 million. Driven by a 12% decrease in selling and administrative expense and lower restructuring costs, the operating margin rose 310 basis points, to 18.8%. In the Flavors segment, sales rose 11% to $449 million and accounted for 48% of revenue. Sales were nearly $3 million above consensus. Currency-neutral revenue growth of 6% was driven by strong sales of Savory, Beverage and Sweet products. This marked the 49th consecutive quarter of local-currency revenue growth in the Flavors segment. In the Fragrance segment, sales rose 14% to $482 million and contributed 52% of 1Q revenue. Sales topped the consensus estimate of $468 million. Currency-neutral revenue rose 8%, benefiting from double-digit growth in all regions. Segment operating profit increased from $78 million to $93 million and came in $10 million above consensus. On May 7, IFF agreed to pay $7.1 billion to acquire Frutarom, a flavors, savory solutions and natural ingredients company. Under the terms of the transaction, IFF will assume Frutarom’s net debt and Frutarom shareholders will receive $71.19 in cash and just under a quarter share of IFF stock for each of their shares. We estimate that IFF will issue an additional 17 million shares to fund part of the transaction. Management expects to achieve $145 million in annual cost synergies within three years. The deal has been approved by both companies’ boards and is expected to close in 6-9 months. IFF expects the acquisition to be accretive to earnings in 2019. The deal values Frutarom at 21.5-times the consensus EBITDA estimate prior to the announcement, well above the multiple of 15 that we think is reasonable. EARNINGS & GROWTH ANALYSIS In 2018, management expects organic revenue to increase 6.0%-8.0%. It also projects organic adjusted operating profit growth of 6.5%-8.5% and adjusted EPS growth of 5.5%-7.5%. It expects currency headwinds to reduce reported sales by 300 basis points.
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  • Fall '13
  • RetoGallati
  • Revenue, ........., Discovery Channel, Discovery Communications

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