International Flavors & Fragrances (IFF) 11 Feb 212020 Q4 Earnings call transcript

At this time, I would like to welcome everyone to the IFF Fourth Quarter and Full Year 2020 Earnings Conference Call. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. [Operator Instructions] I would like to introduce Michael DeVeau, Head of Investor Relations.

You may begin.

Thank you. and everyone. afternoon, good morning, good evening, Good Welcome conference call. fourth quarter year XXXX and full to IFF's Yesterday issued and outlook evening, financial for our we XXXX. a press announcing release results IR can A the be website at found copy ir.iff.com. release on of our Please and be note available live will that is replay. recorded call this being for review ask I to you statements. take please forward-looking that moment a our

These outlook of the statements and full particularly with performance, call, the about company's and how on we During based contain quarter to are will for our we statements year today first be XXXX. uncertainty. making forward-looking things the regard see elements

For me Chairman release. additional the forward-looking comparability. With to GAAP results statements, the over Vice respective measures factors is then non-GAAP on presentation financial non-GAAP Today's stated statement exclude can our to to these financial refer measures cause factors our cautionary have. will to We'll items affect include our information CFO, actual believe CEO, concerning Fibig; President would questions which is and begin like today and Executive that now remarks any you the Rustom that we call and please available we’ll and prepared A measures, from press differ those I their turn and of yesterday's materially reconciliation on risk Jilla. that may Andreas our website. that, with to With take Andreas. our call in

new have with thank who legacy close you, joined and and tiptoe Thank all N&B. IFF journey today Mike, a us and you, to begin as

we the excited to full new N&B. officially opportunity then completed forward merger results, DuPont a IFF. detailed highlight outlook X, the look and We our have say of all Rustom I'm the will quarter will and into sharing XXXX February as proud really begin and go fourth with that and year for and I by

and commercial running, global hit chain products. have goods the ground and the company, establishing value innovation for an new leader consumer teams our Our as

the new organization transaction, purpose we also for For a unify N&B our best close and all unveiled and divisions identity to brand position the of intended success.

share from our driven As we industry. a enterprise, mission and purpose strengths to transform a build

XXXX. business. the I'm better We Building by XX.X% to market synergy further across productivity excluding Scent primarily is on Slide XXXX to return. would customer our new to I I'm direction challenge a improve and of remarkable accelerated execution. new an capabilities on and on performance of confident moving division, lead driven Beginning even by squarely momentum which with positioned week capture initiatives global combined amortization increase US$X.X driven about we strong IFF basis unprecedented was to are we last share excluding results, environment generate our together in pleased creation ahead the with organization, have seen on delivered create We exciting COVID-XX a report that pursuing comparable shareholder sales the In our growth base that resilient while XXXX. leverage to to challenging and evolving DuPont a an and portfolio company. we for year brought adjusted This and we believe N&B. strong with in are on now us a was gross X, continue of to full this we billion the currency X% Frutarom pandemic, our January, and the total to opportunity efforts of an remained and profitability transformational due as focused like company. a will pandemic. we performance value journey was the that our positive as from truly Amidst a leader financial a completed global embarking operating recap XXXX, industry what basis solid XXXX additional neutral XXrd in XXXX, the generated incredible in trend says year achieved XXXX. the margin to when ongoing our recent

As what have procurement, relates synergies the forward. it Frutarom including have are manufacturing, Beverage as with our Food we administrative and new expenses. we the business of to be an over past Taste cost integration two pleased achieved challenges Frutarom, segment, segments. will reflect of the we part Acknowledging restructured the It years, revenue larger we at from on going & integral

cash on adjusted N&B. increases earnings through with $X.XX. managing free excluding meaningful management sheet led Now we share, per continue the year. finished to amortization really as balance We pandemic. have We year the our focus the throughout flow the of combined to combination emphasized year-over-year, This an we with

DuPont the completion milestone phase of the have completing planning the we the combination merger. N&B, to of with important related achieved our also For integration

to across provide on markets initiatives QX, growing We the are on by in are forward business. at presented take we ultimately very divisions had pandemic Reflecting serve synergy aligning the closely On meaningful synergies But as will strong XXXX, second to IFF’s the full that further the dynamic the regarding bit we realizing focused a society the committed portfolio. collaboration details until breadth X% and now a later. new our showcase sales our impact opportunity, XXXX, we look profound on execution we with going and across and are to capture I have business. the integration a Slide the start let's regions we were encouraging a seen X, transaction. off of

seen business XXXX. of restrictions want of the the second to pandemic in year, peak regulatory cover we we quarter of our Given we the the from disruption of bit on the perspective a offer as more have trends the the within

X% year-on-year Fragrance, large the fourth the improvement to the continue improve came the quarter from part week the excluding a in this in returned rates to Fine growth fourth up of Our seen X% growth third quarter, which XXrd versus quarter. growth in

by XX% XXrd This The of products excluding majority all vast these impacted business As week. COVID-XX XXrd portfolio, our negatively food, disinfection of roughly the type XX% impact hygiene, beverage, pre-pandemic of nature and by sales, excluding approximately the is which of impact year, roughly the XXXX, or before was in for benefited and defensive decreased full we've week. the and noted X% includes from XX% our in the the was grew pandemic. of

performance Our customers, was who benefited from strong with multinational especially pandemic. the those

to However, our local adversely exposure and impacted sales. players regional

an in recovery. disproportionately important across of by customers it's smaller expect think impacted our source historically I contributors be growth industry, important regional them these and to a that they and remember while COVID-XX, been important have we were to

all of achieved business we whole, the results the XXXX. are On proud in resilience and of

seen inevitable to negative impact that segments. significant for led certain end our have prolonged markets of and headwinds Some

firm whole our as when our consumer see However, role you IFF with that new to strong business value we we look with of good at begin in product chain. momentum the as gives execute in the XXXX. meaningful central portfolio, N&B me a That confidence the results great the

steady combined had improved, in Scent year is XXXX, the was detailed fourth review improvement we strong be a Taste performance strong, As like I'm currency call has to the January approximately who that our continued begin to continue in growth business good performance Rustom on neutral against over pressured COVID. see of financial X% very to now company be It very more had quarter. would pleased to comparison. and loss. since pass ago N&B we to basis I will strong say trends a a by the pandemic to a the provide

basis. down several only following as I’d the X%. this as counting In slides. next $XX Andreas. million neutral we slide foreign When the explain quarter, generated excluding on related year-over-year CPGs changes points of X% slide disclose. currency appears you, fourth high the into a XXXXs currency additional Thank a P&L go in XXrd cover up $X.X approximately roughly IFF comparable was neutral growth through exchange I'll in price detail on the sales, on and billion impact many plus as And get the week, X%

amortization adjusted neutral as operating FX. performed on a COVID by Taste It operating mostly significant neutral or finally we currency delivered a and XXXX, or excluding of in year percentage result similar profits in profits earnings point QX including the basis percentage comparable including level operating offset having sales, the by operating benefit foreign solid share, lower of performance impact on $X.XX FX operational a fourth a currency Scent. acceleration on by the quarter. X In crisis. basis of While a our the a challenging of at and We decreased in quarter, see per down performance XX% was X% quarter. positive did amortization benefits excluding to XX% see with adjusted XX% currency profit ago to EPS X a was This good point

quarter regarding on currency focus our to year I both impacts Now the and results moving markets the in like our sales Slide to and X, emerging provide to fourth currency better clarity on growth. would full neutral the

For in level, quarter points. average X% XXrd for period, in approximately of the in revenue and applied the XXXX, QX the to growth pricing our full have neutral of current And if would X the X% X%, the the by X% to the be and full local the X%. grown excluding of currency impact year percentage approximately at prior all FX our would would currency Scent the At To our up year, approximately simply was financial effects XX% full growth and period go quarter neutral current fourth currency segment been of in the we related the have looked fourth clear impact period rates year. the from week.

and Responding again of competitors peers investors will excluding further are X% Starting after in doing. in While feedback of up other QX and from we our both XXXX, the impact the Taste our align reporting QX methodology. with week. XXXX, XXrd the been our our would what full and have review year companies to CPG all

a and this is consolidated basis we plan divisional provide historical before call, division for next our XXXX, our by For earnings and of will to XXXX. level at growth provide restatement a

breakdown more operational at activities, our Slide drive XXrd to overall X% QX improvements results disciplined attained I to volumes do largely synergy A the were Moving heading about profitability. optimism that Frutarom support and want our XXXX. detail we the cost in this into momentum on reformulation week operational through into and now Scent. me initiatives, some and to factors close look the able management. impacting as shows improvements key our meaningful productivity realization, let hide XX, at go Higher profit bridge that mostly operating

year, our we a the there challenging XXrd expected came As direct in year-to-year which results. week Further our this or reset, a these was compensation offsets costs, our from that RSA negative in currency represent XXXX will results the program primary negative which communicated and occurred of expect and QX in and impact included indirect both tax XXXX COVID-XX an from XXXX. benefit year-over-year the XXXX headwind, operating XX% of combined which earlier weak half was and neutral point of a percentage decline incentive driver Unfortunately, comparable, AIP second annual only in Brazilian profit. items reduce incremental were the XX

I'd results detail. Now on our Slide XX, like discuss in more division to Scent

Another categories. or Sales Home Wash from recent X% in strong We've strong is driven the when million Personal excluding our result our performance quarter from continued more strategy new a X% fourth Scent. up performances $XXX than to Consumer the increase or mid-single wins & strong that Fragrance Fragrance began Fragrance business access of with the a call comparison. represented in growth. high-single and growth to America Care overall Fine business XX% very totaling our more with new digit and to also week Europe. digit in share than happy Consumer Also see by to of over grew increase I'm growth the Fragrance a returned we Consumer in one-third several XXXX as North in our our XXrd

development a in driven Fragrance trend Cosmetic XXXX, I'm and cautious, in Ingredients, high-single While growth double-digits this extrapolating QX quarter by XXXX. not for of nice we the the first a Actives. growth In digits we're was experienced

in sales a the Scent on division quarter. the $XXX million the overall profit achieved margin So of XX.X%

the of for growth while moving improving the team delivering our reporting portfolio sales expanded a and margin opportunities profile. Scent tremendous bolstered adjusted N&B. piece a working over forward, The differences recent remain by done from leading core years, has performance growth job Scent’s is together Our market the past three across will encouraging over story with time

of Turning like our now XX, quarter division. the to performance highlight I'd to Slide fourth Taste

Taste comparison. Our Food with Food include exception The amortization achieved in totaling $XX Taste roughly segment million Service business division similar Service’s week a also the of intangible $XXX with $XX approximately division declined down approximately X% when XX% excluding resilient has XX.X% on basis. was assets. X% remained Taste the of in These sales margin XXrd million million throughout profit. or our the profit pandemic. numbers

amortization be that would declining digits in QX pressured to margin on If continued mid-single neutral you quarter currency the a exclude our XX.X%. Frutarom basis. be

market As COVID-XX sales. of a both and the has of performance regional Frutarom’s disproportionately impacted of large customers, local end Food Service portion annual which and represent

our Looking growth. mid-single other digit remains business North at by markets American our strong with performance region, outperforming particularly

was We Service’s have while for the challenges in market. America in Asia experiences savory the weakness to by driven at ongoing experienced challenges in specifically challenged – and segment our EAME us Greater Food pandemic performance flavor Latin solutions, due by

as enhanced priority XXXX, profitable to a and So expect we emerge in from Taste will the pandemic. profitability remain and deliver returning our growth top fully to results in we improved division

Slide our cash, to our cash IFF early but be bringing of was in and strong generator has XX, we more to critical company. leverage, always was people N&B flow. I'd the like coming importance time across XXXX debt, that spend given focused along on the it cash even fact some our XXXX that on of the turning generation the starting Now additional

and both the and for launched throughout we in working initiatives annual progress incentives, CapEx targets included tracked our capital the specific year. So we

up cash costs. an to year see, increase from integration a also As related transaction but was operating was and function this you lower income profit, X%. million higher as Net flow XXXX full in the operating $XXX year-over-year of for of will million year, $XXX

hard XXXX week. than XXXX Capital modest ending disruption this by was impacted receivable week this our of Working lower going improved any And quarter always payments use more the days to extra timing in supply offset issues. by on favorably avoid related holding January accounts integration driven However, a incentive the five offset very average cash to Collections despite related our timing was help in to as result performance, XXXX, as QX by this satisfied conversion due compensation well related was of cash additional customer are trajectory XXXX we inventory to be XXrd Overall, which six as costs. a the primarily was payments QX. XXXXs cash where some this in chain Core flow with headwind cycle, that by and fully was year-over-year. to of COVID-XX of

of We X.X% sales also in prior reduced of period. our CapEx sales to X.X% versus the

free XXXX spending prioritize and ever we manage throughout to through help significant increase reducing more million. will and on-site this the led As our in of cash preserve cash XXXX And work to a in than restrictions – to All the $XXX lower net focused XX% pandemic be debt. equally and travel on CapEx. generation in level in also we cash compared XXXXs flow, overall

key Moving XXXX I XX, expectations. the year to Slide to our like would address assumptions full behind

by business XXXX. January, the encouraged and certainly in were we While our in fourth quarter trends

in XXXX first impact a similar We half expect XXXX in as half. to have second COVID-XX we’ve seen

on we XXXX remain and in will full food business improvements fine levels. below XXXX year bio-refinery a like to our expect sales basis, While services fragrance,

of U.S. exchange Assumed is sales. year which full our approximately in $X.XX, a our to a guidance XX% dollar Euro of represents combined rate

EBITDA expect We revenue back-end $XX an additional million cost million DuPont’s from this from merger cost synergies the million of synergies contribution N&B, $X related $XX loaded approximately synergies. year coming and with with mostly of

should moving Now into we help additional inputs business you some XXXX. also that provided model the

to total amortization depreciation $XXX million. interest is $X,XXX approximately which million. of be around and expect expense amortization be We annual million, $XXX to Annual expected includes

we effective still given our through February details annual For on are the just X. completed we acquisition working tax that rate, the

validated it’s still team. being estimate, the by we have While do an

preference we complete additional is communicate. before work my to So

for expect Lastly, million the calculation the we for XXX million and that’s company pro to shares diluted EPS shares forma approximately XXX outstanding shares purposes be transaction. approximately from including

also we’ll For these that modeling. win want months at that we of did actuals point QX two this remember in post-close, three continue B time. note to into please IFF it’s numbers & XXXX, months And our share and thinking dig but do N to of for please

accordingly should will you anything change. we update So

XX. filing In included XXXX communicated to Now the turning to full with in January line December pro Slide XX plus XX. synergy the projections detail forma year guidance. S-X plan realization financial our I’d our like

in sales at year. generate note that to N&B should We companies’ X% the results expected Global to and a the that approximately EBITDA approximately combined approximately a EBITDA by we’re expand On peers, sales of includes and confidence generate improvement I to broader note We our strong that XXXX. in approximately as the combined our expect moving towards basis, adjusted our January compatibility throughout points. and Please to our the on occurred pro report margin. $XX.X These nearly company see with in EBITDA well. sales metrics margin complex At Market. an of growth businesses, expected basis several efforts, basis of grow to reflect forma in an ability pro billion part but easier XX.X% as million were $XXX XXX XX-month forma adjusted includes reporting guiding which sales estimate

redoubling our and – to to results. a in EBITDA with are company the and stronger enhanced more our to financial capabilities, portfolio a deliver foundation a investor the as which year key we We sector. combined efforts focused be to that even new an and With strong IFF think is contributor transparent strong starting from

the focus Our second subsided the the meaningfully our platform, of will the guidance in rigorous on of execution. strength have reflects enhanced impact our expectation that XXXX our pandemic and half

into that dynamics deliver we meaningfully such, I’d some of to XXXX like continue XXXX. results of better also first quarter expect XXXX. on we to expect than underlying are the that As will the comment

X%, continue at first to both pandemic related we at comparison headwinds. also from manage As IFF quarter we X% and through a N&B strong face

delivers majority we service, term until products the of solutions, While or will we remain expect pressure our the under in that microbial COVID-related and continue food sales near portfolio and challenges. the bio-refinery essential to lap

closely monitoring extrapolate trends trend January I’m had X% sale business XXXX, business to Andreas due period. we on new our in strong are QX pleased our of sales, said January IFF’s Building not of part in approximately and in fragrances some We to ago. cautious just holiday with the with quarter, that business QX improvements the – our our what was a earlier, finished that fine performance that as believe solid In disclosure we pro approximately given – say growth IFF forma N&B became to N&B basis. million currency $XXX neutral in days results on first eight

We guidance. are quarterly not providing

for that one reminder while away results we month no calendar our remember for January January. our reporting from cycle X-X-X anyone full has to this sales. on expected our previous Just Please the extrapolating reporting out quarter, year impact from moved

IFF. So two for working better have daily perhaps in Therefore, progress XXXX, QX sales. legacy days a will average we for metric less tracking

we’re know do will While pandemic with XXXX. we not our the start where take to happy us,

continue capital and deliver well resources, in operating uncertain to ensure market. manage our an thoughtfully to expenses that We businesses to positioned will

note will Scent, and the quarterly in combined Health our quarter expectation Nourish, to It community of forma Solutions, segments, getting details. is since share pro that and our pro XXXX been four Pharma closed sales and investment and want EBITDA have Bio-Sciences, our that May, full we our company. for prior our also we We to X, on the year including the for on segmentation each deal first working forma we February earnings XXXX one release

go more being Slide our currency reporting to summarizing in forward to investor and Starting aimed to me back sales All updates. moving reporting at peers. more before we and to align our neutral let comparable QX methodology. end XXXX, will disclosure by friendly Andreas, and our more common the Now it passing XX

comparable period allocating reporting the of growth current current We previous will our the pro will sales a calendar neutral share back division. to without our an now of segments, financial calculate to and towards for it our EBITDA level. and peers. weeks as four level at May, for to eliminate released to more the corporate quarter we of also in corporate by shifted X-X-X revenue from profit segment like to well Andreas. for period. related in basis issues earnings consolidated month XXXX currency eliminating on will adjusted each the sales both first turn the applying XXXX And period quarter currency They’re week. EBITDA XXrd Prior local to we expense taking including as and segment This in FX guiding by calendar the used table And reporting each the be for line We’ve rates our ends the details as year. expenses includes to forma to in well comparability by full easier accordingly I’d average prior commonly our moving

Thank you, Rustom.

focus Turning XXXX the to the IFF Slide new XX, business. N&B with let’s on and

complete in ideally realizing planning. in XXXX planning But us delivering for With integration challenged close working very Our is well creation can A planning our It to succeed. resulting opportunity teams say pleased even position. effort by team’s both integrations for our significant on model to an the on despite leadership shareholders global long to positioned synergies, execution, learned a enable past that well executed to execution. revenue come. secure IFF tremendous cost due team set in significant an that will the our every experience integration planning operating that entirely to years out remotely lessons practical year to we I’m value plans COVID-XX. We XXXX. the planning have for new aggressive we running compete complete, and and focus in and has been this across further. has timeline confident commitment near-term needed I’m provided together organizations, the work to pandemic driven out the more create extraordinarily to transformational and right global a than integration the combination, only This integration aspect

of take on and value a to the proposition move the and Slide second focus IFF. XX new Let’s we

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times greater our Our investment nearest than will be sphere. R&D X.X

We with two more fragrances. industry cultures, flavors a and proteins, and will most medium our and customer or categories core broadest XX% from base probiotics, and in than in of one is our sales XX,XXX private enzymes, This small, have number on positions total number label and nutrition, soy about coupled diverse customers. annual

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think we it and remember over the five have completely to been is while is portfolio how a it transformational is transaction move, I that evolving the culminating important consistent N&B past the years.

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potential would XX, Slide IFF. to the value I for to have like seen emphasize we creation long-term Now

and company substantial Our opportunities has that will drive expand margins. new growth synergy

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expect we expectation of of cost meaningful addition, runway synergy including a million XXXX. to by the cost In achieve savings, end $XXX

$XX We in will execution our unlock EBITDA on about contribution that million in XXXX. plan expect

I combination too not synergies, just think leading to also but say is and important based about businesses. it’s strong that any

our of running and to underscore legacy this use that against is This capital. track to in that of operational every critical At continuous the Our businesses It both costs in business space center leaders the mindset place will business, IFF realization, the are structure we’ll legacy be organization. one-time across discussion embracing to be across and excellence requires part of to both committed N&B improvement track progress where comprehensive identified a the we’re expense diligently, our superior with and objectives. synergy combined a including results. and

a Our basis, to value how creation a with value will of on And component creation our the to on be highlight are not synergy continuous hope is while leavers focused you critical in success that. realization, I all to we the It P&L. edited defined be will provide total end, just be immediately business stronger as where to will results that the performance actions cumulative highlight On synergies XX, are a for base to taken Slide the want begin story. execution.

will what there it? on the but million give imagine, on questions XX, another One actually you how from mentioned the synergy are is capture you our deliver, are investors we will $XXX for get And to cost revenue instead, January part not, you how. tried side of these the as As you actions we We plan do type the about is can initiatives XX separate most initiatives behind that the several on of flavor and cost of side. initiatives. the that a savings in all

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and XXXX XXXX to see up margin will in new to adjusted estimated approximately IFF billion to strong operating a for improvements in generate performance. we of meaningful points around expect margin XX% XXX increase flows XXXX. expect basis cash $X EBITDA from also free our We continue an IFF, approximately The significant including

delevering, capital core our As a that – priority. and will we remain further pursue management remain gross, we so

difficult XX, net rating. worked to to reaffirm you to I the business our debt to grade deliver continue investment call. have Finishing months for times to commitment Slide IFF Across joining three our and XX world, strong would and like our our serve tirelessly those on a post-close all ratio targeting our results. ensure maintaining customers to EBITDA thank again year throughout are teams We XX on

year people. the full our Our showcase and of financial most results our portfolio strengths importantly,

So stakeholders. those our challenging IFF progress made an journey. for environment, has formation the better deliver with to N&B company, even of we new made together stronger our on value positioned transformational us tremendous The

to process execute. the With time pre-integration completed, it’s now

communities improve our structures world. persists, commitment future team in our our We to industry will global our people, and meet have newly to expected to shape goals the company we the look that and customers, our our ingredients By and you will is remain and thrilled the ensure will really place hope solutions volatility us chapter, foundational shareholders. of and financial to role order combined I’m revolutionize operating our for deliver pursuit planet partner. customers, as redefine by and to unchanged leading join industry in and exciting to strengthen and IFF industry on and that as the new teams

that, I our our to now So focus to the to you. address is call before questions, and today open like Thank for market outlook to please rumors. on for questions. that not would Q&A and about questions note With results plan opening

Instructions] our Mark And ahead. we’ll go [Operator take first with from Please Astrachan question Stifel.

Your line is open.

parts – question Yes. guess, morning on long-term targets. one two the new Thanks everyone. good and I the long-term

guiding, you’re X% organic, you recent in gives I achieve you years. growth said kind So X% X% year sales Or can one. years achieved achieved haven’t in what piece, should that the even something organic confidence, both of X% think on to in when growth like businesses say to that I growth that Rustom recent level haven’t

despite too, in too, have mechanically, been – And those to guess standpoint on same the So And business long-term also over the or but confidence margins productivity legacy to of cost would same how from below achieve get and an synergies, contribution been much EBITDA your EBITDA EBITDA puts EBITDA here’s initiatives. the you how XXXX, in from change margins, accounting margin growth targets, when couple recent just had in the add years. I years, why flat takes do essentially get And last the I results FX that. there?

but if could on I important. long hopefully you it’s touch it’s maybe question, just a those, appreciate So

and very question. the Yes. FX the take first piece I on I give it to A then Mark. important Thank you, Rustom.

We are that we on very confident track much are for targets. the long-term very

Let me why. explain

for journey already continue. Scent division that turned see will that very we very example, ours year, And You around quite this early in a has also tough good XXXX. signs this of like important significantly year a see

So on basically here very are on we track. much

the one XXXX. reaching to issue a has XXXX good then of we well. The years And XXXX sequential taste second as some into and improvement start a taste. performance a in But have is bit and seen

back track. we have take the this to division have bring We all to done on actions

more put East to basically focus more split markets. European Middle Western on have the We emerging the into region Africa, mature Europe, the on Europe, and markets

Frutarom year. say, efforts a of, let’s last on the particularly integration focus put lot Europe We in have organization, of

like So it strategy our fully looks perform well. go-to-market integrated and we and have restructured that are to starting we

and So portfolio, good we will I a that growth year you’ve parts think response secondly, it a second think solutions, cross was And will that’s half have well and last continue help, we as will growth certainly, it, to profile, we N&B, And very confident us on have their at And the actually year this pressured the customer COVID. seen which underestimate selling – increase also not of lot well. to should has the that the portfolio the seen particular terms I of of in wins. legacy portfolio. rate IFF by we our and depends, as side. pieces have of recent On On help of we in top on that. come integrated good which of out of least

are very can that we do it. So we confident

that, to years. well. days. the worried legacy not Scent the let’s With on less just We on took I’m of We but in was EBITDA I On started, over happen of as we will we to I improvement. EBITDA actually the it said, hand increase on on as and side N&B Rustom say because the The side, on comment taste sales, couple last see or there’s about good a EBITDA, actually margins margin, FX that took IFF. good same division actions,

we the you guidance you in synergies right, Mark. if basically out, then as was provided additional talked at back, when expected. the if rolled look about revenue Thanks, synergies dollars, Andrea. Hi, and S-X we The Mark think we we that that

we overall we’ve as all a So ran the better that estimates. as FX change we is as way time period very talked particular out we dollars, in I the and right? us The hard we new actual which of any mean, about the FX had rate. forward those methodology, basically the we provided new look It rates back doesn’t does growth give of call. to

Exactly.

Yes.

Andreas there. in else think question your covered I everything

you, Rustom. Thank

Gunther Please go Bernstein. ahead. And from with question we’ll take Zechmann our next

Your line open. is

Hi, changed way Hi, good growth. the European morning, Andreas. the reporting That’s sales TS organic almost Good that you Mike. for disclose to Rustom. that the morning emotional me

but bit difficult So component in what say about guidance, on a to hear that’s in guidance, maybe and it that we what predict, the break the any as XXXX FX is if you I Rustom for call on it, just what include organic much follow-up you of is what XXXX FX your down your then a And you I volume and inflation is the, have a of long how failed I pricing expectation wish. to back being Can underlying well. please? bake pricing? do the clarify cost

I into – costs underlying costs as higher pricing, the and that we The raw is material raw do mean, our material mean, of the the period. during I recovery expect well. pricing based

for weighted maybe you look the the Euro. actually, krona, of the Euro/Danish dollar the part biggest. currencies, That’s basket our It’s put XX%. about, us biggest U.S. at average pretty that’s address the I krona, mean, we is because it. the much it’s FX in when the of about biggest, I’ll tied second and Danish but to think So you if the currencies

And Okay. right. at we the Yen, or to the of Indian others, rupee Japanese is, is XXXX than big of from then perspective XXXX if what Those was are our we the from at spot today, the two versus this If budget other That’s a if about XXXX, our weighted basket I difference. look you – it’s mean, what it running actually the the basic – look and X% then those ones. had. And look year was in that we better the revenue. Reals and many

growth So right? started, preliminary in growth our we and our rate X%, a That’s what X.X%. [indiscernible] remains line around and you’ve XXXX With roughly to contribution we’ve small as no January put there, expectations. from synergies started expected change with from XXXX about S-X out sales we’ve the seen

that I drivers you’ve the through COVID guidance assumptions If thanks. growth what as see made and follow-up, XXXX positive talk – us around of the can as part you just Great, can place. you negative

would should we food part XXXX. top First broad the of And on the as same recover better. remain more food, we less cetera that service, on second we et be impact the of the us. That’s cetera, last expect year, fine year or half fragrance, the – et resumed that we macro to – second of

with Faiza Please have Deutsche we Next Bank. ahead. Alwy go

is open. line Your

go operator, next can maybe Okay, question. we there? you to are Faiza, the

Yes. Thank morning. you. Hi. Good

you who are So than activists can’t there Andreas but market, I know, I are the know Hello. some comment. more

we Hello? you. can hear Yes,

Can you guys hear me?

go Yes, we Faiza? you ahead? can. Can

Hello.

Okay.

again. Now hear we

next Bank of move And with ahead. we’ll America. Please with go Matthew Deyoe

is Your line open.

Good morning.

seen lockdown the service So Can was and you’d as down said double headlines on a European you more food lot be digits on of quarter the specific? we’ve gear. And well.

keeping digits? mid-single range X% to didn’t – So single growth is or food closer maybe is XQ. service the are X% more versus taste what service grow why ex-food holistically, to What the digits in businesses I the decelerated that mid better? excluding And keeping guess and ex taste in

Yes.

food question. the and first the talk about for Let’s service you thank

But XXXX start year. actually better XXXX, general, certainly in to next down over back year. was a will service in the than food we was that better into we level we’ll we seen up of So single digit, seen come following much of the achieve course last high have January the which have

I think lockdowns in despite the that’s Europe. good

we the driven customer and projects to very no But recovery helps. probably because by said, What So other customers was into general it was many we taste a promising. that had probably customers regions compared we in. good well. XXXX also And structure, a impacting coming smaller mid-sized in hope very, was as and start of I was actually, of competitors. as see new better the more, the the pipeline of some

business some traction easy the way. other comps, And move XXXX. of on room is the seems how some could half like much move to business good It new there very through do pretty in the year, back what the has expect, run you business we It Scent wins? left made in does. look scent we as but XXXX, like, fragrance obviously at consumer And as you fine the

has these that have personal the and wash growth. as effects. these wins, see we But year a counts. which to now, two are And we business year you for COVID which we no, us as hygiene mass double-digit, market a and and this us it into on, we core products, fully half are winning it has three critical One tailwind now helping growing And quite is XXXX. ago made wins, in touched and we gives that maybe is gaining our is, three it Yes, and here. significantly, fill effect new And some core share taking absolutely. that we on volume are certainly triangulate

course So a now the it of business year? we now? question stay see very is, over the what it strong will the will. And right Yes,

well. have very well year-to-year as We started

business, have So we promising. by well also growth fragrance XXXX demand demand, consumer that’s the will very but we in volume by driven on believe the very, good as [indiscernible]

Please next go take ahead. our Alwy with We’ll Bank. question Deutsche Faiza from

Your open. is line

Yes. Hi, thank you.

guys you hope Sorry that about me I before. now. hear can

clear. Very can. We

Okay, great.

In are the So could has years, your comment as last tenure on the you IFF some peers. in rumors reflect you activist hoping Andreas, underperformed I few can’t was there I but on. But market, know CEO.

you So few driven maybe that on been over is have what right anything you you the Do been last done would customers the underperformance? think focused focused you’ve has on M&A, categories? Have think years? in of, there sort you or differently appropriately operating and do have you too invested R&D

good. Very you, Faiza. Thank

was when actually XXXX, in think looking changing at went all, we very the strategy, or First changing. of had is because what we started laying environment I or out our well, clear strategy a

more different maybe more naturals. we had demands for So customer solutions, integrated demands,

solutions, business and seen have the role, for a move bigger but not just that have We integrated in a adjacencies taking forward. to the share, smaller customers play general that

at in a categories. very when company limited So billion back that achieve clear was that And grow in worked instances, I the look in one number XXXX, defined billion our And in believe now very in very, the the company with number sales $X to an was very well. offering. slightly led we that of we very, are it with point strategy has time, $XX or and in offering broad that many we're out two

very and our the market good. strategy think response to was I so changing very, our

We ourselves to to over have years significant the very basically positioned come. growth deliver really

at – you move. went food well have If is think my I which things, gone can what might we touch right strategically or on was it look the better,

on have synergies reasons. the We say side. good for top would challenged I cost many line was

our could now. learned certainly. I we done probably think faster lesson on And which right compliance we have organization, has European integrated the

I between, the we certainly that think worked that supply, had important. I then was crisis Scent business to around think turn in out have and And well. and the in we we very

moves, the balance, I right I line top in fixed areas think on strategy, the food some right but think the So it. where related, say let's of on we side, is the some it compliance,

commercial others fixed it the integrated And than – we we would faster as done maybe have well. here finally fast, think it. I have structure we and

the So years tremendously and I And that's couple think because are now. in clear, the acquisitions are good we you big the at for right next – That's about look It's years, five I all of we the last need. next positioned execution couple at shareholder value. what everything very we next coming certainly and promise have of all there no focused years. can

with We’ll move next Please Jeff ahead. with Zekauskas go JPMorgan.

line open. is Your

much. Thanks very

down your of the of XX%. of on that DuPont effects your revenues business, you the In COVID XX% said terms business, roughly in were

or X.XX% of other you customer lot companies So and Symrise. there's previous secondly, the business were Chevy a And if penalty. the DuPont, customers DuPont a by were, fragrance flavor are to and DuPont was the a penalty of And you the and it merger? smaller? bigger for Is

the you part the piece I first can first customer it. take take then Rustom of and maybe

some very, So we very but had little. customer relationships,

some The DuPont flavors companies legacy very because fragrance legacy business with limited had very, other some flavors a to but buying and DuPont, was well, as demand.

big question, first another you not take piece that's please. if but Rustom could think Jeff’s of I the movement,

also the a reduction I'd service, numbers biorefineries, this COVID, with XX% the point, by bit, the it's It's think raised Sure. impacts about would ballpark. say Jeff. impacted And number. on XX% getting different we're at was they varied but business I areas to N&Bs little brought that roughly it of as microbials, food in

question Ghansham Panjabi Please with ahead. Baird. from go Our next

guys, Hey morning. good

Good morning.

in. me putting for Thanks

a the relative pro half to your forma Just Slide can you XX, waiting being first basis. Thanks half just first EPS on the And us off just given hoping comments of XXXX the on well current first help for as out the tax second kind and assumptions. I'm COVID the CapEx also half, so much. your with of guidance listed environment. challenging where about XXXX you between just rates many

Rustom?

Yes.

tax the tax out DuPont lot there and before Their effective right. one out are, of was details a and up rates is out. taxes more on of coming that. I whole N&B that, rate XX.X% mean tax We’ll look, out be carve entities is got time rate at in set how our numbers to because what definitely Tax On sense rates, we the back remember we've than tax done. of It's DuPont DuPont’s higher. is rate, a it a work more and which come the higher rate was so come carve year, with a with the

the we'd transparent most your to provided gives haven't EPS, ask like think quarter, guidance rather the metric Regarding the on ways you EBITDA because more on breakout, that us first it, questions actually all the clearest, sales at the on And on – of EBITDA we actually if don't how perspective, looking the not mind. our of we the I'd us as performance and sort from gives answer – EBITDA best the most focused the for business. owner's

on year for question the CapEx the expectation… full Rustom, think I

had at XXXs, No about S-X change it the as like was we in all in from high was there. that think I our what XXX, somewhere there XXX, out

from N&B we have million from $XXX specifically We million side ours. and expected the – $XXX

I one. that missed, Sorry, forgot

We’ll Lauren move go with Lieberman with next ahead. Please Barclays.

morning. Great. Good Thanks.

Hey, good morning, Lauren.

that. questions. X% was for X% just is understand change pricing some including technicality effects in to to new on FX two the Because more neutral. you're the driven disclosure? to long-term a so need of target revenue Does with One Hi, target methodology inherently that

a to were same just And transaction implies market synergies certainly to like that. sort and pace about business question view your that view wondering a with relates I And what on on market model so the industry, on before. I revenue while just objective with of of provide to long-term target. of were your the what are because growth, creating your and I'm the different a delivery leaving that wanted at this understand targets to And just just I just that on work I a for the appreciate sure Thanks. upside. on second So more make longer-term it revenue view how before. grow taking targeting of conservative wonder growth, sort was they and for lot because you seems room

take to Let on and piece then me I Rustom over Lauren handed first the the I second piece.

a say let's right listen, time XXXX, a were the this Rustom internally period, for revenue COVID because So COVID for target slower as The in time now us still it's for the discussing we is have it of in was year, first the for start, and Europe. we a half lot. a said certainly issue lockdown

market year, We this it more be months. So we bit a we particularly first force. six full believe will carefully take go impacted that grows before the in the

So you for further, that years, start. are a bullish, X% certain the take makes X% because we had slower if make average let's – we to But say for on, actually the two and two following that the pretty average, years. to target And nice the X% for three a combined and have it's certainly both companies quite last the organizations actually that's is go. or good the in above looking done

the about it let's of selling opportunities, the are then the growth some business the certainly are solution, good focus having model, it. are feel and good very markets. cross were execution exposure we I of And you very, So a say, mentioning, we And the to integrated is yes. changing certainly as bit

we we can can. times, but as volatile So you come debt day, if long-term move target. question more the forward have into first fast piece to as the of in take the Rustom, that's see we to a of end look it, the these at how

in assumptions actual Lauren, dollars we you at said right, long-term using if that, targets back Yes. effects dollars. the time our set and

So doesn't the methodology change. that actually we use

said you So prior earlier right. and been that over growth dollars for couple would rates of is to situation if maybe percent the different, talked of that are Having spot year. neutral the the of they revenue morning's applied higher, have but that we wouldn't that kind our earlier a than last took exact years, out this same any if have interesting, on that, average currency this year. they I a weighted mean up answer assume extrapolated question, the the about right, the couple percent entire been higher

you would for percent, that percentages the another translate actual you neutral couple and wouldn't out into reported mean, I So coming be the group, have numbers see of reported higher, would dollar sure, off. currency but

and to business and back without Scent the N&B the the X.X% on kind in reinforce We right. So just numbers if I had base that, you're that. – want of and the of that think go If actual our growth it's the we in looking realistic of growing based up that ballpark business years I Taste looking is synergies back with out well. the way our a point, was that then, the about as anything complex But it. from we way and business, business and to came at X%, like this is at bigger to

that's think those numbers. we Okay, going realistic through

the million like you our get to there. expectation in that out and which $XXX how put are $XXX You XXXX in million in X% number is and revenue the up synergies, that's XXXX

Rustom. Thank you,

if Operator, we’ll one okey. that’s take more,

Juvekar PJ We'll take go from with question next Citi. our Please ahead.

Yes. Hi, good morning.

morning, PJ. good Hi,

good. question. Good, my taking for you Thank

couple of got margins. questions I a on So related

currency, the in not And is through. mean Scent, coming operating you in business on X% Your at is up that were cost your was if X% profit Taste down your out what I sales leverage XX%. down in was sales was and profit take effects flat, by

my the question. I line second top have then than the isn't That's first bottom growing why quick question. So And faster line? a

Rustom? Okay.

actually Bottom faster. line growing is

about in profit. full Scent, year way find where full goes you and right, ballpark. a for it The see ballpark If our growth, will number at you looked that's you on X% number us much the on revenue year that it's is

even If coming had you the if quarter at look in – on and/or large the we've that matter, you Scent had that. we very at for look three through quarter, increases

seeing are that. we So

XXXX large right. up going AIP had quite an just a plan, were quarter, you're a in, in this costs full-year had We $XX this from annual that to what have I credit the in increase there also and a the in we fourth put We think the factoring – swing. million AIP, I on is around because from and that was incentive bad, particularly in memory point was time that, a whereas important so XXXX fourth basis think was there a quarter is

that… think I

a Yes. good it will because Rustom? actually repeat And not thing. XXXX, it’s important that's in so

other was – The sorry. thing yes,

Move on.

the freight the the extra on is which The on it's protective $XX other of extra working we've of COVID. impact cost. COVID revenue, thing the million those for all compensation cost year there the COVID – factor extra the our sea COVID was mean ships, in mean probably but around the personal at the impact is equipment I numbers talked costs, is it the about XX extra noseeum, as in by extra people, I time freight costs, costs, different air paying you well. about the year not in

Rustom. you, Thank

floor to back Andreas time. remarks. reached And closing the to our turn for any we like I would allotted have Mr.

for good for We Yes. have the questions. a Thank we question. still know line you big

you to you. yes, our you Bye-bye. months. that. over of with Thank of the will really to We couple weeks all was and come next continue talk more and to Thank one-on-ones for good

Bye, everyone.

today’s conclude does conference. this And

and time rest any at line your the your disconnect may You day. enjoy of