International Flavors & Fragrances Inc.

What they do

IFF sells flavor compounds and natural taste solutions, specialty food ingredients, fragrance compounds and ingredients, and a biotechnology-derived portfolio of enzymes, food cultures, probiotics and specialty ingredients. Products go principally to manufacturers of foods, beverages, personal care, soaps and detergents, cleaning products, perfumes, dietary supplements, animal nutrition, biofuel and oral care products. Following the May 2025 divestiture of Pharma Solutions and the 2026 agreement to divest Food Ingredients, the company now reports three operating segments: Taste, Health & Biosciences, and Scent.

Revenue drivers

• Taste — Develops flavor compounds and natural taste solutions used in savory, beverage, sweet and dairy products, plus value-added spices and seasoning for meat, food service, convenience and alternative protein; one of the reporting segments retained after the restructuring of the former Nourish segment effective January 1, 2025.
• Scent — Creates fragrance compounds and fragrance ingredients for perfumes and household and personal care products, organized into Fragrance Compounds and Fragrance Ingredients.
• Health & Biosciences — Produces enzymes, food cultures, probiotics and specialty ingredients through five sub-businesses: Health, Food Biosciences, Home & Personal Care, Animal Nutrition and Grain Processing.
• Food Ingredients (being divested) — Specialty food ingredients including natural, artificial and plant-based ingredients, soy and pea protein, emulsifiers and sweeteners; on May 29, 2026 IFF agreed to divest this disposal group, which is now reported in discontinued operations.

Recent performance

Second quarter 2026 continuing-operations sales were $1.954 billion, up 2% reported and up 6% on a comparable currency neutral basis versus $1.919 billion a year earlier, with exchange rates adding a 2% favorable impact. Gross profit rose 4% to $853 million, or 43.7% of sales, from $824 million (42.9%) on volume growth, productivity gains and recognized tariff refunds. Second quarter reported income before taxes was $64 million and EPS was $0.13; adjusted operating EBITDA was $408 million at a 20.9% margin and adjusted EPS ex amortization was $0.82. First half 2026 continuing-operations sales were $3.860 billion versus $3.969 billion, while operating profit rose 28% to $411 million. Full-year 2025 sales were $10.890 billion and net loss was $359 million, including a $1.153 billion goodwill impairment on the Food Ingredients reporting unit.

Strategy

Management is executing a portfolio transformation toward Taste, Scent and Health & Biosciences, having completed the Pharma Solutions and Nitrocellulose divestitures in May 2025 and announcing a definitive agreement to divest Food Ingredients on May 29, 2026. Net proceeds from the Food Ingredients divestiture are to be applied to reduce outstanding debt by over $1 billion, targeting leverage of 2.0x to 2.5x net debt to EBITDA. The board authorized an enhanced $2.5 billion share repurchase program, beginning with a $500 million accelerated share repurchase in the second half of 2026 and the remaining $2.0 billion after the anticipated transaction close, targeted for completion by the end of 2027. Management says it is taking action to eliminate stranded costs and has introduced full-year 2026 guidance on a continuing operations basis.

Risks

• Portfolio transformation execution — IFF states that failure to successfully execute its strategic transformation or to enter into and close collaborations, joint ventures, acquisitions or divestitures could materially adversely affect its business, results of operations and financial condition.
• Antitrust and competition litigation — Results may be negatively impacted by uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class action lawsuits.
• Input cost and inflation pressure — Increases in input costs including raw materials, transportation and energy have been exacerbated by recent inflationary pressures.
• Trade and supply chain disruption — Trade wars, tariffs, sanctions, geopolitical developments, supply chain disruptions, environmental events, natural disasters and public health crises may adversely affect sourcing of raw materials and the development, manufacturing, distribution or sale of products.

Outlook

Management is providing full-year 2026 financial guidance on a continuing operations basis, saying underlying performance in the three business units is consistent with prior guidance. The company expects to close the Food Ingredients divestiture and then complete the remaining $2.0 billion of share repurchases, targeting completion by the end of 2027. Leverage is targeted in the range of 2.0x to 2.5x net debt to EBITDA, with net divestiture proceeds applied to reduce debt by over $1 billion.