IFF Expands Capacity at Haverhill

New York-based, International Flavors & Fragrances Inc. (IFF - Analyst Report) recently announced expansion plans to be carried out at its Haverhill, UK production line at the European Center of Excellence for Flavor Delivery Systems and Encapsulation.

The company's CAPLOCK production line underwent further expansion which together with the initial investments amounted to approximately $10 million. The Encapsulation technology primarily provides choices for delivering flavors in products ranging from instant beverage powders to dry savory mixes, from confectionery products to baked goods and for all products requiring shelf-life stability over extended periods.

The strategic expansion is seen positively for the company's flavors business which will further augment the segment's performance going forward. We believe that with the economy reviving from the global crisis, consumer spending is gathering momentum, a positive driver for the flavors and fragrances industry.

Moreover, going forward, IFF's success will be driven by new business wins, substantial geographical diversifications, wide product lines, continuous accomplishments in research and intense consumer insight. The company's long-term targets include achieving a 4%-6% increase in local currency sales, about 7%-9% operating profit growth and over 10% earnings per share growth.

Also, capital spending over the years is expected to concentrate more on seizing opportunities in emerging markets. Besides, bolt-on acquisitions will be given preferences to gain access to desirable customers, regions, or technologies.

The current Zacks Consensus Estimate for earnings per share for the third quarter of 2011 is $1.07, which reflects a year-over-year growth of 8.93%. Estimates for the fiscal year 2011 and 2012 are $3.90 and $4.33, representing annual growth of 15.59% and 11.20%, respectively.

We currently maintain a Neutral recommendation on the stock.

Read the full analyst report on IFF