A beneficial tax ruling cut the firm's effective tax rate for the second quarter by nine percent. This provides a partial explanation for the fact that net income for the quarter increased by 28 percent on last year, taking the quarterly figure to $78m. A weak dollar helped the US-based firm increase its net sales 8 percent to $573.7m. However, falling fragrance prices and the cost of increasing production in China offset the increased sales, leaving gross margins virtually unchanged. Flavor sales grew 11 percent on last year but fragrance sales rose by only six percent even though fine fragrance and beauty care sales increased 11 percent. The market was unimpressed by the results, as shares in International Flavors & Fragrances closed down 6.4 percent to $47.45 at the end of yesterday's trading. Analysts said the poor fragrance results and the absence of guidance for 2007 accounted for the fall, according to Associated Press. At the end of July, IFF announced a $750m share repurchase scheme that it will have to fund, at least partially, through increased borrowing. This fact may have added to traders' concerns as they reacted negatively to the second quarter results. IFF's chairman and CEO, Robert Amen, remained upbeat about the results. Amen said: "We are pleased with the continued growth in sales, operating profit and earnings." Although the fragrance giant did not provide a financial outlook for 2007, the company's head did say: "Looking ahead, we believe we are well-positioned to continue to grow in line with our goals." IFF's financial performance has been mixed in recent years. Heavy restructuring costs led to a dip in sales in 2005, but the firm recovered strongly in 2006, posting a 15 percent increase in net income for the year.