IFF cuts annual sales forecast as demand slows

Chemicals company International Flavors & Fragrances Trimmed its annual sales forecast for a second straight quarter, signaling slowing demand for its ingredients and solutions.

Shares were down about 12% after the bell on Monday, as the company also missed market expectations for second-quarter revenue and profit.

The forecast cut reflects the company’s view that volumes in the second half of 2023 would not recover as previously expected, driven particularly by continued customer destocking.

The New York-based firm — which produces ingredients and solutions for pharma, skincare and beauty, food companies and fragrances — expects 2023 sales to be in the range of $11.3 billion to $11.6 billion, compared with its prior forecast of about $12.3 billion.

Demand from end-users such as consumer companies, to which International Flavors provides ingredients such as sweeteners and protein solutions, also squeezed amid inflationary pressures.

The company now expects volumes for the year to be down mid- to high- single digits, compared with its previous expectation of flat volumes.

The firm, which raised prices across some segments this year to protect its margins, continues to expect a mid-single digit price increase for the full-year 2023, as it battles higher input costs and expenses related to its inventory reduction program.

Excluding items, International Flavors reported a second-quarter earnings per share of 86 cents, while analysts on an average expected earnings of $1.10 per share, according to Refinitiv data.

For the quarter ended June 30, its net revenue fell 11% to $2.93 billion, missing expectations of $3.07 billion.