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Investing.com -- Shares of Sensient Technologies (NYSE: NYSE:SXT) dropped 6% after the company's earnings per share (EPS) guidance for fiscal year 2025 fell short of analyst expectations.
The company reported a fourth-quarter EPS of $0.65, which was slightly below the consensus estimate of $0.66. Despite this miss, Sensient Technologies' revenue for the quarter was $376.4 million, surpassing the consensus estimate of $374.6 million and marking a 7.8% increase from the fourth quarter of the previous year's revenue of $349.3 million.
Looking ahead, Sensient Technologies provided guidance for fiscal year 2025 with an EPS range of $3.05 to $3.15, which is below the consensus of $3.39. The guidance includes approximately 13 cents of costs related to the company's Portfolio Optimization Plan and an estimated 10 to 15 cents impact from foreign currency headwinds based on current exchange rates.
In the fourth quarter of 2024, Sensient Technologies saw notable growth across its segments. The Flavors & Extracts Group reported a revenue increase due to favorable pricing and higher volumes, while the Color Group's revenue rise was primarily driven by higher volumes in food, pharmaceutical, and personal care product lines. The Asia Pacific Group also experienced a revenue increase, benefiting mainly from higher volumes across nearly all geographies. Corporate & Other operating expenses decreased significantly compared to the prior year's quarter, mainly due to non-cash costs associated with the Portfolio Optimization Plan recorded in 2023.
Paul Manning, Sensient’s Chairman, President, and Chief Executive Officer, commented on the results, stating, "As expected, Sensient delivered strong performance in 2024, driven by solid volume growth and sales wins, particularly in natural colors. Our results demonstrate our ability to succeed in the markets we participate in and the strength of our product portfolio."
Despite the positive revenue growth, the stock's decline reflects investor reaction to the company's EPS guidance, which suggests potential challenges ahead. Sensient Technologies' outlook indicates mid-single-digit growth in local currency revenue and mid-single-digit to high single-digit growth in local currency adjusted EBITDA, with high single-digit to double-digit growth expected in local currency adjusted diluted EPS. The company's guidance is based on current market conditions and subject to various risks and uncertainties.
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