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IFF Is Set to Post Record Q3 Revenues despite Lower Growth

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Oct. 31 2018, Published 7:04 a.m. ET

Third-quarter revenue expectations

International Flavors and Fragrances (IFF) is expected to report revenues of $895.83 million in its third-quarter earnings. The revenues would be a 2.6% increase compared to the third quarter of 2017. If International Flavors and Fragrances meets analysts’ expectations, it would be the company’s highest third-quarter revenues. If the company meets the expectations, its third-quarter revenues will have risen at a compound annual growth rate of 3.8% in the past five years.

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Driving factors

The projected revenue growth is expected to be driven by organic sales growth. International Flavors and Fragrances’ volume is expected to grow more in emerging markets. New contracts and higher product prices, driven by higher raw materials, are expected to drive the company’s revenue growth. We can expect both of the company’s reporting segments to see revenue growth.

On the other hand, International Flavors and Fragrances could be impacted negatively due to unfavorable foreign currency. The US Dollar Index, which measures the dollar’s movement against the basket of currencies, has grown 5.7% in the past six months.

Investors looking for indirect exposure to International Flavors and Fragrances could invest in the Guggenheim S&P 500 Equal Weight Materials ETF (RTM). RTM invests 5.0% of its portfolio in International Flavors and Fragrances. The fund’s other holdings include Eastman Chemical (EMN), LyondellBasell (LYB), and Air Products and Chemicals (APD) with weights of 3.9%, 4.1%, and 4.3%, respectively, as of October 30.

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