Yahoo Finance International Flavors (IFF) Gains From New Strategy Reveal
Shares of International Flavors & Fragrances IFF have increased 2.6% since the company provided details of its updated strategic plan and new operating model on Dec 7. These strategic actions will enable IFF to sharpen its customer focus and better align with the market, setting it up to maximize its growth potential.
The financial and strategic initiatives that the company elaborated on are growth-focused strategy, enhanced cost & productivity initiatives, financial guidance, redesigned operating model, portfolio optimization, and governance and leadership.
With the help of this new strategic framework, the company will focus on customer excellence and continued profitable growth. IFF will be better positioned to meet consumer demand and achieve its goal of applying science and creativity for a better world with this updated strategy framework. It will help IFF advance the possibilities with the highest potential returns through controlled investments, consistent execution, and incremental cost reductions. Moreover, it will implant Environmental, Social and Governance (ESG+) priorities across the company’s entire enterprise.
The company will continue to take pricing actions to counter the impact of cost inflation while improving productivity and delivering cost reductions. IFF expects to achieve mid-single-digit adjusted operating EBITDA growth on a comparable currency-neutral basis in fiscal 2023. As part of the company’s long-term financial objectives, IFF outlined that it expects to increase sales by 4% to 6% and adjusted operating EBITDA by 8% to 10% on a comparable currency-neutral basis over the 2024, 2025 and 2026 period.
IFF expects a further $100 million in annual savings through headcount reduction that can be reinvested and boost earnings. From 2023 to 2025, the company anticipates achieving net yearly savings of between $350 and $400 million.
IFF intends to transform its operating model into a more customer-centric and market-backed approach. To this end, it will conduct business in three core end markets — Food and Beverage, Home and Personal Care, and Health. IFF anticipates the new operating model to be completely operational by the end of 2023.
International Flavors & Fragrances aims to continue to optimize its portfolio to improve the capital structure and step up its investment in high-return businesses. By the end of the first quarter of 2023, the company plans to announce the sale of three non-core assets, with the projected proceeds of $1.2 billion to be utilized to lower debt levels.
The next action plan is to modify the board of directors in accordance with ideal corporate governance principles. This will provide the company with the best assistance and monitoring possible for the advancement of its growth and transformation strategy. The board intends to lower its size to 10 directors from the current 14 by the annual shareholder meeting in May 2023.
For the third quarter of 2022, the company reported adjusted earnings of $1.36 per share, beating the Zacks Consensus Estimate of $1.30. The bottom line declined 7% from the year-ago quarter. IFF’s total revenues came in at $3,063 million, beating the Zacks Consensus Estimate of $3,026 million. The top line remained flat year over year.
Price Performance
In the past year, International Flavors’ shares have lost 27% compared with the industry’s decline of 32%.
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Zacks Rank & Key Picks
International Flavors currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Consumer Staples sector are Archer Daniels Midland ADM, Ambev ABEV, and Coca-Cola Europacific Partners CCEP. ADM flaunts a Zacks Rank #1 (Strong Buy), while ABEV and CCEP hold a Zacks Rank #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Archer Daniels Midland’s earnings surprise in the last four quarters was 26.2%, on average. In the past 60 days, its earnings estimates have increased 9.5% for 2022. For the ongoing year, the bottom line is estimated to be $7.49, suggesting growth of 44.3% from the previous-year’s level. ADM stock has gained 46% in the past year.
Ambev has an estimated year-over-year earnings growth rate of 6.7% for the current fiscal year. The earnings per share estimate is currently pegged at 16 cents. The estimates have been revised by 6.7% north in the past 60 days. ABEV has an average trailing four-quarter earnings surprise of 4.4%. Its shares have gained 6.9% over the past year.
Coca-Cola Europacific Partners has an estimated year-over-year earnings growth rate of 1.5% for the current fiscal year. The earnings estimate is currently pegged at $3.40 per share. The estimates have been revised 3.3% north in the past 60 days. CCEP shares have gained 0.3% over the past year.
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International Flavors & Fragrances Inc. (IFF) : Free Stock Analysis Report
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