Net sales have increased 5 per cent to $597m however this figure was significantly boosted by the effect of a weak dollar against the euro. At comparable exchange rates the increase would be nearer 1 per cent, according to the US-based company. A slight drop in gross profit as a percentage of sales was seen - 41.1 percent in comparison to 41.8 recorded last year - which the company attributed to higher material costs and an unfavourable product mix. The average cost of raw materials rose 4 per cent from last year's quarter, estimated the company. Operating profit fell slightly from 16.8 per cent in last year's first quarter to 16.0 per cent affected by restructuring charges of $6.2m related to job losses. Flavors division led sales growth The company's flavour division performed well over the quarter with net sales increasing 12 per cent to reach $274m, although excluding positive currency effects the figure is approximately 8 per cent. Performance was driven by growth in Latin America and Asia where the company places its hopes for future growth. "We are very pleased with the continued strength of our flavors business, which has delivered market share growth for seven consecutive quarters," said IFF CEO Robert M. Amen. Fragrance suffered from weak US sales However, the company's fragrance division suffered a relatively flat performance with sales hovering around the $323m mark. "Our fragrance business results were mixed. Functional fragrance sales were strong in Asia and Europe, although this performance was offset by weakness in global fine fragrances and North America functional fragrance sales," said Amen. Sales in fragrance ingredients dropped 6 per cent from 2007 figures, which the company claims is due to a drop in demand in North America and Europe. Emerging markets to lead future growth Even in the light of such mixed results the company affirms its targets for the year, looking to the emerging markets to drive future market growth. "Despite a challenging US economic environment, which we anticipate will continue for some time, we remain confident about our growth prospects - particularly in emerging markets - and out ability to deliver on our financial goals," said Amen.