Overview

IFF is a leading global creator of flavors, fragrances, and other specialty ingredients for the food, beverage, personal care, and pharmaceutical industries. The company has expanded its global leadership positions through the merger with N&B in 2021 and the acquisition of Frutarom Industries Ltd. in 2018.

IFF is organized into four reportable operating segments: Nourish, Health & Biosciences, Scent, and Pharma Solutions. The Nourish segment focuses on natural-based ingredients for food and beverage applications. The Health & Biosciences segment produces enzymes, food cultures, probiotics, and specialty ingredients. The Scent segment creates fragrance compounds and ingredients. The Pharma Solutions segment produces pharmaceutical excipients and other specialty ingredients.

Financial Performance Overview

In the second quarter of 2024, IFF’s sales decreased 1% on a reported basis to $2.889 billion, but increased 2% on a currency neutral basis. The decrease was primarily driven by the impact of divestitures, offset by volume increases across various businesses. Gross profit increased 14% to $1.068 billion (37.0% of sales) due to volume increases, productivity gains, and favorable net pricing.

For the first six months of 2024, sales decreased 3% on a reported basis to $5.788 billion, but were flat on a currency neutral basis. The decrease was primarily driven by the impact of divestitures, offset by volume increases. Gross profit increased 10% to $2.092 billion (36.1% of sales) due to similar factors as the second quarter.

Segment Performance

Nourish segment sales decreased 5% on a reported basis and 2% on a currency neutral basis, primarily due to the divestiture of a portion of the Savory Solutions business, partially offset by volume increases. Nourish Segment Adjusted Operating EBITDA increased 28% on a reported basis and 40% on a currency neutral basis.

Health & Biosciences segment sales increased 7% on a reported basis and 9% on a currency neutral basis, driven by volume increases. Health & Biosciences Segment Adjusted Operating EBITDA increased 14% on a reported basis and 12% on a currency neutral basis.

Scent segment sales increased 2% on a reported basis and 7% on a currency neutral basis, driven by volume and price increases, partially offset by divestitures. Scent Segment Adjusted Operating EBITDA increased 17% on a reported basis and 37% on a currency neutral basis.

Pharma Solutions segment sales were flat on a reported basis and decreased 6% on a currency neutral basis, driven by price and volume decreases. Pharma Solutions Segment Adjusted Operating EBITDA decreased 19% on a reported basis and 17% on a currency neutral basis.

Liquidity and Capital Resources

IFF had $674 million in cash and cash equivalents as of June 30, 2024. Cash flows provided by operating activities were $336 million for the first six months of 2024, a decrease from the prior year period primarily due to increased working capital needs.

IFF has a $2 billion revolving credit facility, with $1.696 billion available as of June 30, 2024. The company was in compliance with all debt covenants as of that date. IFF also has $8.507 billion in outstanding senior unsecured notes.

Outlook

IFF expects to continue executing on its strategic transformation, including further portfolio optimization through divestitures. The company remains focused on driving cost discipline, recovering margins, and delivering value for shareholders. However, the company faces risks from inflationary pressures, supply chain disruptions, and global economic uncertainty that could impact future performance.