On successfully completing the first phase of development, International Flavors & Fragrances Inc. (IFF) extended its collaboration with Amyris, Inc. (AMRS) into the second phase for the development of specific renewable fragrance ingredients.
The association between the two companies can be traced back to Apr 2013, when a long-term agreement was signed to develop sustainable fragrance ingredients. Then, International Flavors & Fragrances reserved the right to use renewable fragrance ingredients in the flavors and fragrances sector, while Amyris was allowed to use the same in other sectors.
Using the expertise of Amyris in developing renewable products, International Flavors & Fragrances is hopeful of developing the fragrance ingredients. Apart from being cost-effective, these molecules will enable the company to meet the growing demand in the flavors and fragrances market.
International Flavors & Fragrances maintains an exhaustive research and development wing that focuses on the development of new and innovative compounds. The company spent nearly $260 million or 9% of total sales in 2013 on research and development activities. This reflects an increase over $234 million and $220 million spent in 2012 and 2011, respectively.
The company, in Jan 2014, acquired privately held Aromor Flavors and Fragrances Ltd., a specialist in producing and selling complex specialty ingredients used primarily in perfume, cosmetics and food industries. Aromor will be integrated into the company’s Fragrances Ingredients business and is anticipated to contribute 1% to core sales growth and be accretive to earnings in 2014.
Over the long term, International Flavors & Fragrances hopes to achieve around 4–6% local currency sales growth and over 10% earnings per share growth. Sales growth at Flavors and Fragrances is anticipated to be 2–3% above industry growth. Emphasis will be given on capital spending over the years to seize upon opportunities in the emerging markets. As a percentage of sales, capital spending is anticipated to be roughly 4–5% in 2013–2015 and roughly 3% in 2016–2018.
On Feb 25, Shares of International Flavors & Fragrances increased 0.3% over the previous day’s closing price.
International Flavors & Fragrances currently has a market capitalization of $7.5 billion and carries a Zacks Rank #2 (Buy). Other similarly-ranked stocks in the industry include Globe Specialty Metals, Inc. (GSM) and NewMarket Corp. (NEU).
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