Edgewell Personal Care, Brenntag and Beauty Health boost sales as IFF remains under pressure

11 May 2023 --- Amid a continued challenging economic environment, International Flavors & Fragrances (IFF), Edgewell Personal Care, Brenntag and The Beauty Health Company have released their latest financial results. While the companies face uncertainties about what lies ahead, they expect their next quarter’s performance to pull through.

Overall net sales
For its first quarter, IFF had US$3 billion in net sales – a 6.2% decline from the same period last year. The company expects an acceleration in the second half of the year.

“We delivered first quarter 2023 results in line or ahead of our expectations amidst a challenging operating environment,” says Frank Clyburn, CEO at IFF.

Meanwhile, Edgewell Personal Care’s net sales for its second quarter of March this year were US$598.4 million, an increase of 9.3% compared to the prior year’s quarter. 

“Our results this quarter represented another meaningful step forward in the continued transformation of our business. We delivered better than expected top and bottom-line results, fueled by increasingly healthy categories and strong operational and commercial execution by our entire organization,” shares a spokesperson from the company.

Brenntag had stable gross profits of €1.05 million (US$1.14 million), on par with strong Q1 2022.

“Overall, Brenntag’s financial performance in the first quarter of 2023 was in line with our expectations and guidance. The very high free cash flow is an extremely pleasing result and shows the first impact of our increased focus on working capital management. With the same discipline, we will continue executing on our growth strategy in both divisions, our digital, data and excellence transformation, and our sustainability and mergers and acquisitions strategy.” comments Christian Kohlpaintner, CEO at Brenntag.

The Beauty Health Company had Q1 net sales of US$86.3 million – which increased 14% year-over-year – “continuing a trend of double-digit quarterly growth.”

IFF fragrances boost sales
IFF had US$3 billion in net sales.For IFF’s Scent Segment, Q1 sales were US$608 million versus US$585 million in the same quarter last year.

“Our team successfully navigated soft end-market demand and customer inventory destocking as they executed on our priorities to deliver our financial commitments,” adds Clyburn.

“As we look ahead to the year’s balance, we believe our volume performance will improve, yet acknowledge that market conditions remain uncertain. As such, we remain steadfast in our focus to control what we can control as we solidify profitability, maximize cash flow and drive portfolio optimization to generate strong returns for our shareholders.”

On a comparable basis (excluding impacts of divestitures and acquisitions), sales increased by 8%, led by double-digit growth in Fine Fragrance and Consumer Fragrance. 

Scent’s adjusted operating EBITDA was US$105 million, the adjusted operating EBITDA margin was 17.3%, and on a comparable basis, currency neutral adjusted operating EBITDA increased by 1%, led by volume growth, pricing and productivity gains.

Also, currency neutral adjusted operating EBITDA declined 19% versus the prior-year period on a comparable basis. According to the company, this is because pricing and productivity gains were more than offset by lower volumes and unfavorable manufacturing absorption related to IFF’s inventory reduction program.

The company expects 2023 sales to be approximately US$12.3 billion.

The company predicts its sales volumes “to remain under pressure” in Q2 and accelerate during the year’s second half. The company will adjust prices and drive cost savings via productivity and restructuring moves.

Edgewell Personal Care’s strong consumer demand
Growth in net sales was driven by increased pricing and volumes.Edgewell Personal Care’s net sales for its second quarter of March this year were US$598.4 million.

“Organic net sales increased 11.4%, with growth in all segments and major geographic regions, as international markets increased 13.2 % and North America markets increased 10.5%,” shares the company.

“Gross profit was US$241.7 million, inclusive of a US$10.6 million unfavorable impact from currency movements, compared to US$230 million in the prior-year quarter.”

Its Wet Shave division saw a net sales increase of US$3.6 million, primarily driven by increased pricing – with balanced growth in North America and international markets, Wet Shave segment profit increased by US$7.5 million, or 27.1%.

The Sun and Skin Care division had a net sales increase of US$26.4 million, or 14.4% – driven by strong Sun Care and Men’s Grooming sales. However, segment profit decreased by $2.4 million, or 5.6%, due to higher cost of goods sold and increased marketing expenses.

Feminine Care experienced increased net sales of US$20.7 million, or 34.9%, due to higher pricing and improved product availability, with a profit of US$10.1 million.

“This was our eighth straight quarter of year-over-year organic growth, with growth in all major geographic regions and all segments of the business, underpinned by volume growth and reflecting strong consumer demand for our brands across key categories and markets,” says a spokesperson.

Brenntag’s “solid start”
For its Q1 performance, Brenntag had a: “very strong free cash flow of €449 million [US$490 million] at nine times the prior-year level and presents a record in the first quarter.”Brenntag had stable gross profits of €1.05 million.

“In a continued challenging macro-economic environment with ongoing geopolitical uncertainties and strong inflationary trends, we achieved first quarter results in line with our expectations and guidance. 

Sales and operating gross profit could be kept stable compared to the exceptionally strong level of the prior-year quarter,” comments Kohlpaintner. 

“As anticipated, the Brenntag Group showed a sequentially stronger performance than Q4 2022. We observed a gradual monthly improvement in demand, with early indications for a positive Q2 volume development continuing. This is an additional motivation to our colleagues worldwide who are relentlessly working on realizing business opportunities and further developing our company in this tough operating environment.”

The chemicals company supplier believes this year will “remain a continuously tough operating environment, characterized by geopolitical concerns, macro-economic challenges but also a sequentially recovering demand.”

Beauty Health’s double-digit quarter growth
The Beauty Health Company’s flagship brand, Hydrafacial, experienced a strong consumer demand with 21% year-over-year net sales growth globally.

“I am pleased with our growth in the first quarter and our strong momentum going into Q2. We see sustained consumer demand for Hydrafacial treatments globally and palpable excitement for the international launch of Syndeo,” says Andrew Stanleick, president and CEO at BeautyHealth. The Beauty Health Company had Q1 net sales of US$86.3 million.

“This demand, together with the investments made last year and favorable market trends, particularly in China, give us the confidence to raise our 2023 net sales target and reconfirm our 2023 adjusted EBITDA margin guidance and long-term 2025 targets.”

Early this year, the COVID-19-related shutdowns in China affected the quarter but were partially offset by a “remarkable rebound” in March.

“Of note, consumables net sales grew 34% year-over-year in the Americas and 13% in EMEA. Excluding US$1.2 million of Q1 2022 consumables net sales in Russia, growth in EMEA was 35%. In APAC, consumables net sales declined by 22%, driven primarily by COVID-related shutdowns in China in January and February,” shares the company.

Latest financial releases
In other beauty industry financial releases, Coty’s premium fragrances boosted profits, Natura &Co revenue went up 3.4%, while Evonik addressed a challenging quarter.

Earlier this month, Estée Lauder sales dipped amid historically high inflation, recession concerns and slow recovery in Asia retail. Also, Firmenich reported its last stand-alone financials days before merging with DSM.

Symrise and Beiersdorf have been off to a solid start for quarter one this year, with Nivea showing “outstanding” growth in all regions. 

Meanwhile, LVMH and Givaudan successfully braced economic headwinds, and BASF sales took a hit.

PersonalCareInsights also recently disclosed the financials of L’Oréal, P&G, Inter Parfums and Amyris.

By Venya Patel

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