Consolidated revenue for the fourth quarter of 2012 was $356.2 million, a fourth quarter record and an increase of 4.7% over the $340.4 million reported in last year’s fourth quarter. Earnings per share were 55 cents in the fourth quarter of 2012 compared to 57 cents in the fourth quarter of 2011. The impact of foreign currency translation was less than 1% in the fourth quarter for revenue, operating income and earnings per share.
Cash provided by operating activities in 2012 was $139.4 million, compared to $142.9 million in 2011. Total debt as of Dec. 31, 2012, was $354.0 million compared to $335.4 million as of Dec. 31, 2011.
The company is initiating a broad strategic and restructuring plan in the first quarter of 2013. One component of the plan will focus on relocating the Flavors & Fragrances Group headquarters, technical groups, and North American management to Chicago.
The relocation of the Flavors & Fragrances Group headquarters will give the company better access to its customers, improve its access to food industry talent, improve access to worldwide air service and allow it to showcase its broad product portfolio in a state-of-the-art facility. The company expects to incur personnel and moving related costs between $12 million and $14 million over the next 12 to 18 months as a result of this relocation. This plan does not anticipate the relocation of the Indianapolis production site.
The second component of the plan will generate operating efficiencies throughout the company. The plan will reduce headcount and consolidate several facilities throughout Europe and North America.
The company expects to reduce its global headcount by more than 200 employees, and consolidate several manufacturing sites during the next twelve months. These changes will not impact the company’s sales coverage, and will result in a more efficient utilization of its human and capital resources. The company expects to reduce its annual operating costs by about $10 million as a result of these changes.
“We achieved record revenues and earnings for a third consecutive year despite a very challenging environment,” said Kenneth P. Manning, chairman and CEO of Sensient Technologies. “We increased our dividend, repurchased shares and continued to reinvest in our business during 2012. The company is strong and the 2013 restructuring activities will give us better access to our customers, increase our efficiencies and improve our operating margins. We continue to see growth opportunities, and I am very optimistic about the company’s future.”
The Color Group reported record revenue of $494.1 million in 2012, up from $491.9 million in 2011. Operating income grew to $94.1 million, an all-time high and an increase of 4.3% over the $90.2 million reported in 2011.The Color Group’s operating margin was 19.0% in 2012, an increase of 70 basis points over the 2011 result of 18.3%. The record results for 2012 were driven by strong performances from the North American food and beverage business and the digital inks business.
The Color Group reported revenue of $114.3 million in the fourth quarter, up from $112.8 million reported in last year’s fourth quarter. Operating income was $19.1 million in the fourth quarter of 2012, compared to $20.3 million in the fourth quarter of 2011.
The Flavors & Fragrances Group also reported record revenue of $875.3 million in 2012, up from $857.5 million in 2011. Operating income was $123.0 million in 2012 compared to $129.4 million in 2011.
In the fourth quarter, the Flavors & Fragrances Group reported revenue of $216.9 million, an increase of 5.6% over the $205.4 million reported in last year’s fourth quarter. Operating income was $28.7 million in the quarter compared to $31.8 million in the fourth quarter of 2011.
The Corporate & Other segment, which includes the company’s operations in Asia Pacific and China, and certain flavor businesses in Central and South America, reported revenue of $156.8 million in 2012, an increase of 9.2% from the $143.6 million reported in 2011. Revenue was $40.4 million in the fourth quarter of 2012, up 15.2% over the $35.1 million reported in last year’s fourth quarter.
Sensient expects 2013 diluted earnings per share, excluding the restructuring charges, to be within a range of $2.64 and $2.72.