US: Sensient Technologies Corporation Reports Results for the Second Quarter Ended June 30, 2012
23 July 2012 | News | Source: Sensient Technologies Corporation
Sensient Technologies Corporation (NYSE: SXT) reported diluted earnings per share of 70 cents in the second quarter, an all-time quarterly record and an increase of 4.5% over the 67 cents per share earned in the second quarter of 2011. The impact of foreign currency reduced reported earnings per share by approximately four cents in the second quarter. Foreign currency translation also significantly reduced both revenue and operating income in the second quarter. Revenue was $367.8 million in the second quarter compared to $377.0 million in the second quarter of 2011. Operating income was $54.3 million in both the current quarter and last year's comparable period. Stated in local currency, revenue increased 2% and operating income increased 5% compared to last year's second quarter.
"We achieved local currency revenue and operating income growth in difficult economic conditions. We continue to see opportunities for growth in all of our Groups, and I remain very optimistic about the Company's future."
The second quarter earnings include legal costs of two cents per share incurred by the Company in a legal action against one of its former law firms. The action related to significant environmental claims arising out of a 1988 transaction in which the law firm was the Company's legal advisor. The underlying environmental liability was minimized in a negotiated settlement in 2009. The Company did not receive an award as a result of this legal action, and it has concluded its efforts to recover its costs with respect to this matter. Management does not expect any impact on future financial results.
Diluted earnings per share for the six months ended June 30, 2012, increased 6.7% to $1.28 per share, compared to $1.20 reported in the first half of 2011. Revenue was $733.4 million for the six months ended June 30, 2012, compared to $726.7 million reported in the first six months of last year. Revenue and diluted earnings per share increased 4% and 11%, respectively, in local currency.
Cash provided by operating activities in the second quarter of 2012 was $40.1 million, an increase of 4.5% from the $38.4 million reported in last year's second quarter.
"Sensient delivered a solid performance in the second quarter," said Kenneth P. Manning, Chairman, President and CEO of Sensient Technologies Corporation. "We achieved local currency revenue and operating income growth in difficult economic conditions. We continue to see opportunities for growth in all of our Groups, and I remain very optimistic about the Company's future."
The Color Group reported revenue of $127.9 million in the second quarter of 2012, compared to $132.4 million reported in the comparable period last year. Operating income increased 5.3% to an all-time quarterly high of $25.9 million, from $24.6 million in the second quarter of 2011. In local currency terms, revenue and operating income increased 2.5% and 11.2%, respectively. Color Group operating margins increased 170 basis points to 20.3% in the second quarter, due to an improved product mix focusing on higher value products. This is the first time since 2003 that the Color Group's operating margin has exceeded 20%.
The Flavors & Fragrances Group reported second quarter revenue of $218.9 million, compared to the $225.8 million reported in the comparable period last year. Operating income was $33.5 million in the quarter, compared to $35.9 million reported in last year's second quarter. Foreign currency translation reduced revenue by 4.3% and operating income by 3.0%.
The Corporate & Other segment, which includes the Company's operations in Asia Pacific and China, and the flavor businesses in Central and South America, reported revenue of $38.5 million, an increase of 6.1% compared to $36.3 million reported in last year's second quarter.
Sensient is maintaining its guidance for 2012 diluted earnings per share, which is expected to be between $2.50 and $2.59.