International Flavors & Fragrances Shares Are Tumbling Premarket Today: Here's Why

International Flavors & Fragrances Inc IFF shares are diving premarket today after it reported mixed fourth-quarter FY23 results and a dividend cut.

Revenue of $2.703 billion (down 5% Y/Y), topped the consensus of $2.699 billion. On a comparable basis, currency-neutral sales rose 1% Y/Y, led by growth in the Scent and Health & Biosciences business. 

Adjusted operating EBITDA rose to $461 million from $441 million a year ago. Operating cash flow at the end of the year was $1.44 billion, and FCF totaled $936 million.

Adjusted EPS of $0.72 missed the street view of $0.75.

As of December 31, 2023, cash, cash equivalents, and restricted cash stood at $735 million. 

Dividend Cut: IFF plans to reduce the expected quarterly dividend per share by approximately 50% to $0.40 (implying $1.60 annually) to enable faster balance sheet deleveraging and improve financial flexibility.

Consequently, the Board of Directors declared a regular quarterly cash dividend per share of $0.40, payable on April 10, 2024, to shareholders of record as of March 22, 2024.

FY24 Outlook: International Flavors & Fragrances expects volume growth of 0%-3% amid continued macroeconomic uncertainty and projects sales of $10.8 billion-$11.1 billion (vs. consensus of $11.41 billion) and adjusted operating EBITDA of $1.9 billion-$2.1 billion.

Also, the company projects pricing to decline by around 2.5%, principally due to reductions in Functional Ingredients and Fragrance Ingredients, given lower input costs and competitive dynamics.

Last month, International Flavors & Fragrances disclosed the appointment of J. Erik Fyrwald as Chief Executive Officer and member of the IFF Board of Directors, succeeding Frank Clyburn, effective February 6, 2024. 

Price Action: IFF shares are down 8.85% at $74.77 premarket on the last check Wednesday.