"Given the enormous volatility in the financial markets and weak economic environment in which we have been operating, I am generally pleased with our third quarter sales and operating results," said Robert M. Amen, chairman and CEO, IFF. "That being said, rising material and input costs have put pressure on our profitability throughout the year. And while we have made some progress toward our cost recovery goals, our year-to-date efforts have been insufficient to maintain our operating margins. As a result, we are increasing our focus on improving profitability while appropriately balancing the needs of our customers."
For the third quarter, the company's fragrances business delivered sales of $339 million, an increase of 4% on a reported basis and flat in local currency. Its fine fragrances and beauty care division enjoyed good sales growth for most of the quarter, however, a significant diminution in customer demand during September resulted in a local currency sales decline of 1%. It is important to note, for comparison purposes, the division had sales growth of 8%. Local currency sales in functional fragrances were flat on a quarter-over-quarter basis. In North America and Greater Asia the segment grew 7% and 4% (in local currency), respectively, due to new wins in the fabric care and personal wash categories.
"IFF has a successful strategy, solid business, a strong balance sheet, and the proven ability to generate cash," said Amen. "We believe these factors will enable us to successfully navigate through the current economic environment and help us achieve our long-term objectives. We continue to make progress on our strategic initiatives in flavors, which is driving positive trends across all categories—albeit at a slower rate than earlier in the year. In addition, we are seeing an improvement in our fragrances business, though challenges still remain."
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