Second Quarter 2016 Consolidated Financial Highlights
Reported net sales for the second quarter totaled $793.5 million, an increase of 3% from $767.5 million in the second quarter of 2015. Excluding the impact of currency, currency neutral sales increased 4%, including a 2 percentage point contribution related to the acquisition of IFF | Ottens Flavors and IFF | Lucas Meyer Cosmetics.
Reported operating profit totaled $164.5 million, an increase of 11% from $148.8 million in the second quarter of 2015. Adjusted operating profit and currency neutral adjusted operating profit both increased 7% to $165.7 million in the second quarter of 2016, driven primarily by volume growth, benefits associated with cost and productivity initiatives, and the contribution of acquisitions.
Reported earnings per share (EPS) increased 13% to $1.46 per diluted share compared with $1.29 per diluted share in the prior year second quarter. Adjusted EPS increased 8% to $1.47 per diluted share compared with $1.36 per diluted share in the prior year second quarter. Excluding the impact of foreign exchange, adjusted currency neutral EPS increased 5% driven by lower year-over-year shares outstanding, offset by higher interest expense and a higher effective tax rate.
Second Quarter 2016 Segment Summary: Growth vs. Prior Year:
Fragrances Business Unit:
On a reported basis, sales increased 5%, or $18.9 million, to $414.0 million. Reported Fragrances segment profit increased 10%, or $7.7 million, to $87.6 million and reported segment profit margin expanded 100 basis points to 21.2%.Currency neutral sales improved 5%, including approximately 3 percentage points related to the acquisition of IFF | Lucas Meyer Cosmetics.
Fine Fragrances decreased 1% on a reported and currency neutral basis as strong double-digit growth in Latin America was offset by softness in North America and EAME.
Consumer Fragrances grew 4% on a reported and currency neutral basis driven by broad- based growth across all sub-categories led by a double-digit increase in Personal Wash and strong contributions from Fabric and Home Care. On a geographic basis, growth was led by a double-digit increase in Greater Asia and high-single-digit growth in North America.
Fragrance Ingredients grew 15% on a reported basis and 14% on a currency neutral basis, inclusive of sales related to the IFF | Lucas Meyer Cosmetics acquisition.
Fragrances segment profit improved approximately 7% on a currency neutral basis as a result of volume growth, benefits from cost and productivity initiatives, and the acquisition of IFF | Lucas Meyer Cosmetics. Segment profit margin expanded 40 basis points to 21.2% on a currency neutral basis.
Flavors Business Unit：
On a reported basis, sales increased 2%, or $7.0 million, to $379.5 million. Reported Flavors segment profit increased 8% to $90.3 million from $84.0 million, and reported segment profit margin improved 120 basis points to 23.8%.
Currency neutral sales grew 3%, including approximately 1 percentage point related to the acquisition of IFF | Ottens Flavors, as all categories improved year-over-year.
EAME increased 3% on a reported basis and 4% on a currency neutral basis led by high-single-digit currency neutral growth in the Middle East and Africa and broad-based growth across Western Europe and Eastern Europe.
North America improved 4%, principally reflecting the contribution of additional sales related to the acquisition of IFF | Ottens Flavors.
Latin America decreased 10% on a reported basis and 7% on a currency neutral basis. Mexico grew strong double-digits on a currency neutral basis; however; performance was offset by challenges related to customers reducing their inventory positions due to the softening of import restrictions in Argentina.
Greater Asia increased 4% on a reported basis and 6% on a currency neutral basis led by strong growth in Indonesia, India and Asean.
Flavors segment profit grew approximately 9% on a currency neutral basis primarily resulting from volume growth and the benefits from cost and productivity initiatives. Segment profit margin expanded 120 basis points to 23.8% on a currency neutral basis.