Lucas Meyer acquisition gets credit for much of IFF’s financial success with fragrance
That Lucas Meyers did well for the company was no accident of luck: “In terms of strengthening and expanding our portfolio, M&A, partnerships and collaborations have become a more pronounced element of our strategy,” says company chairman and CEO Andreas Fibig in a media release.
Big picture
The subhead of the company media release bears good news. “Sales +5%; Adjusted Operating Profit +8%; Adjusted EPS +11%, all on a currency neutral basis;” currency neutral, of course, being the operative term.
Flavors and home care fragrance performed fairly well for IFF in 2015. Fragrance, as it relates to personal care and cosmetics, got a mention in the company’s big picture remarks about the year’s business only when acquisitions and partnerships came up.
“Over the course of the year, we successfully completed the acquisition of Ottens Flavors and Lucas Meyer Cosmetics.” says Fibig. “We also…announced a partnership with Vapor Communications to pioneer the future of digital scent,” a deal which Cosmetics Design reported on at the time.
Fragrance business
Sales were up by 4% in the fragrance business unit, on a currency neutral basis, “including approximately 1 percentage point related to the acquisition of Lucas Meyer Cosmetics,” according to the company.
The company’s fine fragrance business increased 1%, driven by 6% growth in the combined European, African, and Middle Eastern regions. And thanks to hare care, consumer fragrances were up by about 5%.
Fragrance ingredients had a lot to live up to: IFF recorded 18% growth in that segment for 2014. The 2015 results show only 2% growth. Here, “performance was primarily driven by the contribution of sales related to Lucas Meyer Cosmetics.”
On a reported basis fragrance sales came in at $1.6bn, a drop of $51.2m. And, profit in the segment was reported at $321.8m, a decrease of $13.7m.
Commercial distinction
In reviewing the year’s strategic achievements, IFF emphasized its goal being an industry-wide “partner of choice.”
To move toward that objecting, the company “launched a new branding initiative by unveiling [a] new purpose statement, visual identity and refreshed tone of voice to ensure all our current and future customers understand our vision, imagination and innovative focus.”
Fibig also proudly highlighted that in 2015 IFF was “recognized by several customers to be among their top performing business partners and received several innovation awards for IFF | Lucas Meyer Cosmetics.”
And looking at Q4 separate from the full year, Lucas Meyers did quite well for the company. The IFF | Lucas Meyers Cosmetics business, as a standalone, grew by double digits, while sales correlating to the acquisition, boosted fragrance ingredients for the quarter by 9%.
