International Flavors & Fragrances Inc. or IFF is gearing up to announce its fourth-quarter 2023 results on Feb 20 after the market closes.

Performance in the Previous Quarter

In the last reported quarter, International Flavors witnessed a decline in both earnings and revenues year over year. Nonetheless, the company managed to outperform the Zacks Consensus Estimate for both the top and bottom lines.

The company has exceeded earnings estimates in two out of the last four quarters, though it fell short in the remaining two, with an average negative surprise of 0.94%.

Estimates for Q4

The Zacks Consensus Estimate for fourth-quarter revenues stands at $2.72 billion, signaling a 4.5% drop from the year-ago reported figure. Earnings are expected to be 75 cents per share, reflecting a 22.7% decline from the same period last year.

Segmental Analysis & Expectations

International Flavors is expected to have experienced challenges due to low consumer spending and customer destocking. Furthermore, high raw material, energy, and labor costs are likely to have negatively impacted the company’s margins in the fourth quarter.

Labor shortages and supply-chain disruptions are anticipated to have affected the company’s production in the quarter under review. Although the company initiated pricing actions and cost-reduction measures, these factors are expected to have exerted pressure on its margins.

The decline in overall volumes, especially in the Functional Ingredients business, is expected to have had a detrimental effect on the company’s bottom line. The Nourish segment’s sales are projected to decline by 13% year over year.

On a brighter note, it is anticipated that the Scent segment will witness a 3% increase in sales, driven by continued momentum in Consumer Fragrance and improvements in Fine Fragrance. Meanwhile, the Health & Biosciences segment’s sales are expected to rise by 2% despite a forecasted 4.4% fall in operating EBITDA.

Quantitative Model Predictions

According to our model, an earnings beat for International Flavors is not conclusively predicted this time around. The company’s Earnings ESP stands at 0.00%, and it currently holds a Zacks Rank of 3.

Stock Performance

IFF shares have recorded a 15.6% decline in the last year, as opposed to the industry’s 27.4% drop.

Image Source: Zacks Investment Research

Other Companies to Watch

Our model suggests that companies like Inter Parfums, Planet Fitness, and Monster Beverage have the potential to outperform earnings expectations this reporting cycle.