New York based International Flavors & Fragrances Inc.’s (IFF) Board of Directors approved a 15.0% hike in the company’s quarterly dividend rate. The revised quarterly rate now stands at 31 cents per common share compared with 27 cents previously, resulting in an annual rate of $1.24 per common share. The revised dividend will be paid on October 5, to shareholders as of the close of business on September 21.
International Flavors & Fragrances follows a consistent policy of returning cash to shareholders through dividend payments and share repurchases with more than $1.2 billion returned via these sources over the last five years. The recent enhancement is the company’s sixth dividend increase in seven years which underlines the company’s sound financial condition, smooth cash flow and the Board’s confidence in IFF’s bright future prospects.
During the first quarter of 2011, the company paid roughly $21.7 million in dividends. Cash and cash equivalents at the end of the quarter were $112.0 million and net cash from operating activities was around ($34.9) million.
International Flavors & Fragrances is one of the leading companies engaged in the creation and manufacturing of fragrance and flavor products in the United States and internationally. We believe that the company’s success will be driven by its substantial geographical presence and product mix. Moreover, intense research and consumer insight will augment the growth momentum.
For the fiscal year 2011, management targets local currency sales growth to be in the range of 4%-6%, operating profit growth between 7%-9% and EPS growth of over 10%.
Despite the positives, we believe intense competition within the industry can hurt the future prospects of the industry with major players like Danisco A/S, Firmenich SA, and Givaudan SA.
We currently maintain a Neutral recommendation on the stock, which is in line with the Zacks Rank of #3 (Hold).
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