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International Flavors & Fragrances Inc. (IFF - Analyst Report) recently announced plans to implement some restructuring initiatives in its Fragrances division, primarily aimed to strengthen its go-to-market capabilities. Additionally, steps were taken to improve the company’s profitability.

Within the Fragrances division, responsibilities were realigned in the Functional Fragrances unit along with reallocation of resources from the developed markets to the emerging markets.

Job cuts, amounting to 70 positions were also announced within the Functional Fragrances division as well as in some other departments of the company across the globe. Pre-tax severance and other employee-related costs in the fourth quarter of 2011 are expected to be roughly $10 million, or 8 cents per diluted share. Moreover, for 2012, there is an expectation of pre-tax savings of approximately $9 million.

With the economy reviving from the global crisis, consumer spending is seen to be gathering momentum, a positive driver for the flavors and fragrances industry. 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 current Zacks Consensus EPS Estimate for the company is $3.73 and $4.08 for the fiscal years 2011 and 2012, respectively. The estimate represents a year-over-year growth of 10.68% for 2011 and 9.28% for 2012. Estimate for the fourth quarter is 71 cents, representing a year-over-year growth of 2.28%.

The company is slated to release its fourth quarter results on February 9, 2012.

International Flavors & Fragrances is a creator and manufacturer of fragrance and flavor products, has operations in the United States and internationally. The company offers stiff competition to its peers including Danisco A/S and Firmenich SA.

We expect the company to perform in line with the market and hence currenlty maintain a Neutral recommendation.

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