International Flavors & Fragrances (IFF) 6 Aug 212021 Q2 Earnings call transcript

At this time, I would like to welcome everyone to the IFF Second Quarter 2021 Earnings Conference Call [Operator Instructions]. I would now like to introduce Michael DeVeau, Head of Investor Relations.

You may begin.

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

elements call, the business forward-looking see These are statements making today outlook. how things the we about During statements be of and contain based we'll and company's uncertainty. on performance

these available the concerning differ forward-looking please statement measures information For presentation N&B, measures quarter, is and and President completion our Vice today light be the those can and to in respective months Jilla. months me GAAP measures, and Chairman legacy of And results. IFF, non-GAAP 'XX defined our N&B their on refer months in using that Fibig; cautionary on CEO, our half three to will additional in actual non-GAAP as for three results the the of both Rustom first financial stated January financial periods the June results Today's XXXX note legacy Executive for merger which XXXX, factors items materially on legacy and believe to of cause of February call June, our the months combined press factors reconciliation of defined allow IFF comparability from February that we statements, legacy to six With X, that release. is XXXX. to CFO, exclude and and second five Andreas as site. include affect Web yesterday's Please our comparability. risk results we'll historical of A to

over at with begin then Andreas. any may prepared turn would you like to that have end. will I now remarks the to take the call We questions and

our of transaction an call begin the Thank us joining fully our by first half today. highlighting of you, ongoing N&B detailed year. dynamics will regarding the providing you, thank and business the by financials, quarter. I the performance will of business of following integrate segment Rustom the the followed we overview the provide saw completion efforts Mike, today's and our level during update then the quarter a performance market to first XXXX, in review second everyone, for an in of quarter

jump for we question-and-answer expectations XXXX. the Rustom conclude an of the into also with Before session, overview of remainder will our

X, like first of a quarter, business in review report Slide with first that to beginning acceleration versus and growth would half IFF pleased through the the year. to QX has I'm our robust is I half a the our Now the for delivered which combined second the of year. highlights performance strong

financial efforts, base. everything said In first advancing integration X% results, ongoing the strong has before, N&B representing our half I've completion execution IFF delivered on following XXXX, IFS As growth or sales, $X.X in X% billion of February. the achieved in of the a and currency-neutral is while merger

and the first combined with significant At we a digits. growth to IFF operate the in half, of In XXX highlight chain points high portfolio XX.X%. environment, single purposes in both of basis headwinds to X% performed margin solid our a growth peers, mid legacy legacy combined that reflect in with and differences supply want also nearly EBITDA For comparable a with very global EBITDA was and between growing digit EBITDA businesses a the cost challenging same rate achieving to expansion well I time, margin logistics. and continue material single N&B strong

our of under significant million achieve track cash We deleveraging our financial credit X.X improved our times debt remain quarter enables adjusted X.X by quarter. in in leverage times year to IFF from EBITDA to second to to net free $XXX including three strong on times first the our close, we de-lever. flexibility, Importantly, targets efforts post and the maintain flow of X transaction to

Finally, business continue for in our synergies the realize well N&B integrating transaction. and are track with line the with to also we expectation on

portfolio, we As preparation quarter early divestiture continue we to which in food sharpen expect the progress fourth the be business, IFF completed late our of the on we to or quarter. third

the quarter, an will business this efficient enhanced last with mentioned ability non-core innovate I segments. As to IFF and a the across more of key create business grow divestiture

industry our We as capabilities. and investments see as to increase the of year. continue legacy delivered have We on business expectations benefits first for going with motivates ways the our as in to global IFF integration logistic and portfolio growth, of midst to product is making acceleration legacy strong, growth This our to our in of active the an momentum maintain are as levels I'm accomplish. strong team the we management seek are defying continue as capacity, we offering of expanded of very we we and the prospects our performance are pleased N&B, business, growth able will half back is as which creation. strategy, specifically ongoing reflect and well both Long-term what to N&B committed interim, value a technologies, inventory our to growth continue Stepping sales validation transformational historical to forward. the pandemic. to a a in plant versus been well increasing costs R&D and maximize in opportunities higher and incurring

to plans, third capabilities new our half our quarter allowing As executing our we objectives XXXX, IFF the to are of achieve long-term this our expectations. on and and clear, leverage build on look while fully second integration momentum

X. performance economic the I dynamics to operating growth results markets sales first to our challenges each well, influenced we a briefly perform our would Despite digit by four growth growth in in X% to a single double and key digit North sales mid-single-digit the achieving our regional that America, business regions. by led Slide Scent, our and like the China. in report increase quarter, global to for recoveries, of to pleased discuss a Similar Nourish are in continue Turning Asian persisting all growth in H&B. half. India we of In in achieved led varied first and segments,

business this While to India by and favorable achieved we growth, digit second and of Solutions increases strong South with double anticipated all the growth Cone strong QX. in driven COVID in would in Brazil, that and currency had Nourish, growth segment in America, all XX% was contributed businesses Latin in our a sales we expected than impacted the Mexico due Scent and Pharma the been to higher growth half. in business quarter, we perspective, performance region. segments across have impact achieved Asia, underpinned key in movements resilient the finished first sustained double-digit by nearly this all IFF region, strongest performing growth our and in From

to first We second sales impressively related increase single our region EMEA as half achieved restrictions in are has a up report pleased eased. quarter in X% high to particularly rebounded that in COVID-XX the the digits. We

continue rates continue digit Our recover. Nourish emerging Scent increase we and challenges, the QX, Europe year global and vaccination Bearing well growth double as this in of COVID-XX expect business both the to Western and remainder Central through to growth. performed newly any particularly achieving

more I mentioned to X% particularly half through those basis X. X% business segments our Slide of significantly the contributed to our at look XXXX, a across sales on that a key will provide that sales turning growth currency-neutral first growth I Now overall detailed IFF's performance or earlier.

Solutions. performance and Nourish, a food are Pharma by X%, core & in strong remains a four pleased Fragrance. to report divisions, all basis, Fragrance a flavors, growth Health sales Biosciences, neutral strong in performance across We to neutral currency and solid Nourish Fine our and Similar by Scent achieving growth design. of of led Consumer first our achieved quarter, in year-to-date the X% ingredients growth currency Scent driver largest on driven

has grain business following Our second and were Health control in quarter processing. affected pressures challenging growth COVID-XX the a solid in quarter, & microbial sales to returned where first by Biosciences

challenged, quarter the as showed personal as control in in and we first cultures nutrition. and microbial animal well which recovery saw home for enzymes be the continues While and a second grain food growth processing, to care half,

of growth the ago dynamics I first our year discuss Solutions underlying four Pharma also half strong a business to against our segments On like of would each X, Finally, delivered influencing Slide XXXX comparison. half. to in the first the

growth affect half of Nourish led As all flavors. I categories, continued based broad and compared in the costs discipline, robust performance continue to in saw Despite higher raw cost we first margin when XXXX. mentioned, by strong volume material to

basis, However, EBITDA about grew year-over-year on X%. a

and led Our demand in Personal growth in strong growth microbial health. strong logistic Biosciences move improvement This year and Health the comparable this strong a as Nonetheless, by impacted and margin. are continued in processing. by in businesses to and encouraged we & Higher grain offsets pressures performance control first & delivered QX. into Home COVID-XX related Care half, performance related our costs expect capacity we ago

Our strong in in by driven favorable Fragrances strength of was strong growth continue retail also the XXX leading expect to we higher profitability operating by and in a profitability continued mix higher absolute remainder XX%. recover, This volumes, the Fragrances Consumer Cosmetic and to increase points Scent, as continue growth of an basis EBITDA margin grew achieved EBITDA driver, nearly rebound Fine and channels year. led which digit Actives. through productivity, Scent and delivered double

was growth by improvements Solutions, Pharma industrials. the in driven Lastly, in X% primarily segment's

challenged to significantly energy result higher utilization in related lower was So and raw our costs, due a shortages. material margin manufacturing weather

confident our a the I affirmation recent continued discuss completing customers, before revenue significant meet our million like synergy this with with are our year. target also our and spend and already realized From million. our N&B. progress on meet six since of would we feedback track in target to share moment opportunity Coupled to seeing in highlighting of and on some how wins. revenue revenue the merger on synergy approximately strong like only to ability $XXX our would merger, XX, Slide In I us. additional remain run are positive with opportunity context synergy perspective, months XX in this from connection our we to we synergy Now XXXX demand continued we a rate $XX

Scent Care segment our customers how saw & creates perfect with new ultimately of expressed an technology for across differentiated potential. delivers business. sales our annual working Health enzyme detergent. customers. for At and Recently, performance, global creative a represents our capabilities, fragrance a actively capabilities dishwashing is capabilities enzyme division, technology see meat require IFF's customers create and product across to that opportunity expanded Scent IFS division us same million portfolio. our solutions fit-for-purpose allowed and customer the our Biosciences a example with integrated with solution which a a creates demand collaborate four plant This divisions of portfolio food Home for N&B deliver Our expanded for we're network IFF and in divisions. an our our $X for our the category, need more other we capabilities best leading ensures delivery opportunities than Together combined to time, with to The showcase beverage across that to superior our continue opportunity and solutions develop and our based alternatives

For which low market, to low advantages new sugar, improved customers. we speed our flavor introducing are technologies yogurt, for fat are with key texture and

few first spend, approximately comprehensive have in in synergies $XX reduce us and on cost dollars the Lastly, increased to quarter, from in rightsize This significant the a leverages we from are long consolidations the office cross million with a the we for and of we differentiator customers integration a increasingly ramping offering. combined in quarter examples to our total was that of opportunities the flavor organization. up term. scientific integrated our and which the largely our strides to first indirect a demand fiber our half second various million are result over second developing category, basis. our These savings scale benefit solution are the our technical quarter health best-in-class perspective, renegotiations an seeing program few and allowed for gummy leverage implemented just our of selling expertise an our made from business We that unmatched

very commitment because Additionally, accelerate the to operational encouraged and this the process, integration by our exiting strengths on hand run million full we year our transition synergy and all for front, I'm at now able service progress track various on, were are million. DuPont. continued agreements of and least to early our year we synergies three to target $XX to cost $XXX deliver over ultimately, will the I Rustom. And of rate cost on it with

& representing IFF Nourish on I In primarily QX, X% XX% approximately generated and higher second raw double was us was of and Health Scent margin in expense volumes, logistics reductions year-over-year offset costs, Biosciences and Thank on gross divisions driven will air EBITDA overview cost adjusted administrative input growth you, our strong materials and begin digit Andreas. enabled cost combined $X.X freight our by billion this disciplined an by in with increase by of performance. our a our a pressured X%. Though sales, higher deliver partly operating management neutral quarter to consolidated Slide XX. results inflation basis, and currency or growth synergies. This practices,

four more an relative And to We two sense the XX, single provide performance due period. QX see, sales I the single increase the year XXXX’s strong were Pharma no was you growth levels. second digit is amortization all growth growth on extraordinary sales delivered in digit in COVID-XX, also perspective to versus per mid as want to can Total compared double space excluding pre-COVID. with up adjusted of and second a a H&B. There a earnings digit for in so in achieved high to our evaluate year quarter. doubt Slide to divisions share, sales basis performance quarter On makes and Scent Solutions, XXXX as also on $X.XX that Nourish X% company it in strong

which underscores all respective up including are pre-COVID single by of which is to of QX our XXXX single subcategories to digits; have pleased remain we well but notably, as relative double categories as impacted and Active, is levels, microbial With of low high portfolio Fine as up performance is as forward. Cosmetic are to of those control, most report an move digits; growth we XXXX, position had handful, digits. while diversity customers. and that the Foodservice Fragrance, their expect quarter COVID-XX our the strong XXXX strength of will and Processing, partner levels. levels This Grain to which we below their a ahead second improve our we in the our QX up exception grown Most continue essential

on gum financials in a to contributing our by each Now Sales very second foodservice strong strong Nourish quarter solutions, XX% XX. ingredients and a on next year-over-year protein Flavors, as growth from to a pandemic with the protection of design, including food channels and Beginning currency away neutral performance, from categories. deeper by or our four particularly double-digit dive I food with continue rebound normalize. basis, restrictions saw continue Nourish increased bean strong slides, will cellulosic, on of the in divisions. consumer to few Slide XX% behavior the also locus into Frutarom growth and driven for robust ease in in home a XX% related growth division

Pricing we growth at of to EBITDA continued material in the pressure mentioned segments, slide, the costs second over X%. individual percent higher to I our modest put of in raw quarter. QX and adjusted although a the As on contributed margins previous relatively in operating are growth delivered of most have pleased accelerate

will discuss take significantly this as increase in we third we and pricing quarter more later, of fourth will As the actions hold. our expect

Slide XX. to Turning

Our Health or saw currency-neutral division on growth & Biosciences basis, Personal X% by of Care. and double-digit X% growth year-over-year in led Home a

delivered processing grain to earlier, chain by are supply led operating to not Andreas to COVID-XX. by we category & based we category’s our microbial and and in from the although confident particularly adjusted double year-over-year growth health Biosciences of growth segment's the offset control Health and recoveries also the moving health As this on categories particularly comparison, rest & return X%. in EBITDA industrial Biosciences this related forward. remain was probiotics the Health Performance and the trajectory strong did quarter, challenged our mentioned encouraged digit growth, challenges strong

down While due see margin robust to you logistics to in this capacity. and was that the demand order costs was available quarter, division's balance customer this higher

long term later increase this in plant to business output R&D and increased in capacity this to year. invest technology investments have support We and growth

EBITDA are and costs airfreight impacting interim to momentum margin. our this our We growth the is significantly higher maintain incurring in

XX of Scent growth the discuss to Slide this be to standout turning Now quarter. which division, results contributor a to our continued

in growth of adjusted basis XXX Scent division a points, operating Our million productivity, XX% of offset Scent on total expansion or volume did which of growth also achieved currency $XXX inflationary generated basis. representing margin XX% year-over-year neutral robust XX% sales, driven by EBITDA and mix with pressures. some

a modest Consumer year against and improved digit significant very comparison, last in by While a more Consumer down volumes, Fragrance’s quarter new slightly Fragrances, offset rebound to digit growth. ago Fine XX%, was performance double year's by double which more Fragrances wins than this approximately grew led due strong

Our strong performance, division's with Cosmetic also and by extremely growing double performance. we Overall, in ingredients continued strong strong pleased Scent's contributed category to performance are Ingredients. led the Fragrance digits, Active

XX Solutions. Currency flat Lastly, a for comparison. against Slide performance year Solutions. year against comparison was utilization strong two with a Core led Pharma's year to performance Specialty Global driver pressured neutral EBITDA turning energy division, this costs the by most at margin strong to ago to challenged was lower to X.X%. the significant growth and a Pharma higher discuss material ago very solid industrial Pharma sales due a On weather shutdowns result a related this about Adjusted quarter decline plant basis, raw as of of couple operating with manufacturing was shortages. due were

able availability absorb run Midwest year, which related costs. not the material to and raw in storm the this earlier had to we meant we Specifically, production were issues US fixed our

lead improving, chain which balance the expect will to of we stronger Pharma in forward, the Solutions for margins Going supply the year. is

cash first global priority for as to flow our I'd which remain position, Slide continue the to a like we of XXXX, turning top market. review navigate recovering half leverage to a Now XX. dynamics

we we integration we generated half, in totaled dividends in of capital. with rewarding $XXX as half by will free million to X% as the prove In areas driven in that term see working the IFF first $XXX well an the million free as delivered first our from will first invest shareholders. you to million over operations totaling continue related $XXX in in cash believe CapEx for ultimately flow improvement sales also $XXX the half, approximately cash core flow or accretive growth million, long As activities.

raising of announced As cash million we leverage that generation holding will look the and finished cash a $XX ahead, increases. From debt dividend XXth have billion. robust, year marking perspective, are we our $XXX consecutive steady confident cash are quarterly our we dividend, that remain at equivalents our at with and gross

Our trailing EBITDA and adjusted billion our adjusted debt totaled XX month was credit net credit X.X times. EBITDA to $X.XX

We are EBITDA time to transaction to the below still we at Xx years to in than in better slightly are be we de-lever and debt expect point net post first this to the three close. expecting

to outlook the has strong we provide growth Slide our the second IFF And moving strong year continue Now and for the first solid XXXX. of on of will update built performance. delivered year. to half rest particularly an the quarter through year like I'd a expect full XX. in financial foundation the

neutral rest about once total the of For be the total is down the about $XX.XX into from we previous of sales confidence with year. expect revenues we X%. be X% to FX achieve or which QX and are year momentum billion the our X% to X% to we revenues XXXX sales and through Breaking benefits contributors approximately up billion, of growth forecast approximately continuing $XX.X full to as in expectation currency increasing our have growth, XXXX, for growth. our This equates again an

approximately time, versus QX encouraged to margin we At we strong explained persist, year QX see at EBITDA adjusted we I pandemic earlier. XXXX same sales QX. recoveries strong margin us the important continued we across the in in and well by for reasons XX% A which of capture now previously. and performance full part related are about reduction is uncertainties to believe all seeing growth the XX.X% position related this the our While are business, performance

inflation, raw continue course to of also perspective, to to continue in across we increase cost have we the From raw the prices are we to as material through. more noted the recovery to based broad We and successful first supply a second full In continue the seen energy portion a close that recover It material that over in such managing expect of the costs be seeing the costs we're non-raw pressures half. raising chain. half, see higher inflationary increases our are should also cost year. material

Our rates volumes significantly increased expectations higher customer balance available for are demand has mostly but capacity. also to airfreight and as higher robust

absorbing expect to The and impacting to business the expansion in until higher more unfavorable projects negatively the basis capacity XXX is are points. XXXX We by costs grow are short material operating this complete. of costs price costs are logistics only higher combination temporary margin term in our than and logistics raw

additional we higher expectations through we believe previous synergies, lower level. only However, and a focus similar cost points our discipline EBITDA about cost than dollar unlocking our with strong sales, higher on roughly and basis XX revenues end up will

modeling as significantly that as CapEx are percentage sales, please over interest next Overall, amortization average resources rate, maintaining diversified beyond, while counts, QX. discipline the tax well the continued we For placed remain amortization, continue and depreciation our quarters as additional more execution, growth all we financial same and capturing our we and a that excluding adjusted purposes, of leveraging two to in share weighted confident and shared company. expense, and stronger, what expertise are diluted on effective a bolstered note focus

Now some I'd provide the the before for question-and-answer session. closing to call Andreas our remarks back turn like to we line open who will

thanks Rustom, again all you, and of to us today. joining Thank

combined around employees uncertain continue display N&B half commitment world for of portfolio call, talented passionate proud Before recognize thousands customers, a business the IFF-ers. our I'm environment IFF's deliver Despite unify to first strengths group their to and and to execute that I lead objectives. teams continued incredibly our wrap and communities. such ambitious to who with serve to our to of unwavering up we and like navigate, together would QX our results our first And have our the our of showcased today's ability I the

confident much proud move even as company combined that be to structures for greater heights. needed financial have the I'm we reach we built have We to ahead. and of operational quarter this our

will be quarter. I our and we products. are line an force post pandemic targeting innovative our and Thank commercial days for you. chain a Together, are know this. aspirations we be would continue the positioned mission Rustom full to are and performance, like the good I for As strong consumer exceptionally to to we I a further in third for the year of leader of goods early momentum have strong redefine global mentioned, And open With what we means to value seeing top it a in questions. indicative call the that, and achieve

we'll our with question from Mark And take Instructions] Stifel. [Operator first Astrachan

is more question sales the guidance. guess around I

Rustom So considering talked I incremental the over raise favorable about year. the guess, the quarter pricing. not half more why back strong result? comparisons remain of second Obviously,

elasticity that about much just and was there the could the about watch generally? and any about half you in pricing, do the that thing more how related should of Is be the increase XQ portfolio the if that? that, back you business? how think on then seems legacy which relative pricing, to you in thinking listen the And something about maybe do that to think around borrowing then DB So there kind to for talk for we And of year? from

talking pricing. get the on then Rustom about it, me started Let and is

no from question, the second of third quarter So there's borrowing second your for quarter. all, first the

Number because what already. and driving important. two and had that's the also in strong the the the think July we sales is I us into quarter the second third is start quarter, performance

are It's areas, a well. of also in rate. seeing. strong very business R&D superior here a it's it So is some demand enzyme as we particular a win a really parts good in pipeline In technology, robust the and

question are for Look, we else. for us is going now higher. not [difficult] it's the right now everybody environment So why and as a

do, target you not here our that Rustom, very we now sales and on helpful. and careful have could look, here variant. So a we that a And what we volume getting let's And make we’re probably Delta about the of pricing if be talk COVID sure have bit ahead side. said, be we would realistic skis the

focus needed But recover uncertainty half predominantly strong also, growth is ensuring our had Look, COVID, as material I heard. the mean, recognize there driven. that logistics raw we on out achieve is We to there in do QX, with we the costs. on second volume Delta pricing and you very

So we've I mean half, to risk our close growth. pricing need on at level. and similar to the calibrated And first volumes half a second guidance. manage the a appropriately pricing. growth We X.X expecting our for is think will of composition points contribute and different the bit half performance, second we're in that, with of average,

is this FX without So all course. of

our take We'll next with Sison question from Mike Wells Fargo.

together. 'XX in and Any the potential sales the that putting changes any year? the thoughts in teams even the second Andreas, just half positive maybe or synergy curious, you this are on momentum pretty sounded of contribution

this set are Mike, we what for very that so we achieved year. have very, we confident

trip actually rate teams know sale bit lighter couple good sale. pandemic. a flavor I run and a give going Second in what the examples. actually with what since say, a the a year, the we little of twice. is the an let’s on impressed US doing. you I'm in combining, did did I power will And saw see turns are how very Europe are we I'll the out. I ingredient

health ingredients the kind with opportunities washing of when so combining Flavors, like we as really our And the how what a raise early can forecast The already But is for might natural right take So in much very detergents, look. probably example, already were not and started we for have most I'm are too and superior the Home in be moving detailed next forefront me area at areas optimistic good. say, important direction. in let's which edition endeavor. to where the on in for are, for really well, That it's are the we Care all that's year. example, thing the we that teams this next call

So but early raise it optimistic now. to I'm probably it's right too

Mike? Okay,

next Bank. our Faiza from take We'll with Deutsche Alwy question

wanted bit constraints a you about talked I know Health & to about Biosciences. capacity demand. due little So to that previously business more elevated in I ask had

the can business the in if So half And the higher of expecting accelerate wonder sort growth if your segment I about if of maybe within other to I capacity of particular or forward? you help sort growth there's was this us various Health this, the any back color quarter? in & within subsegments going you Biosciences think should because that provide growth limited constraints potential think but

core and Absolutely, see some a we in categories, well. the of superiority in that's all almost demand and we for as a our part really really robust enzyme Faiza, And portfolio. very areas, technology see our

answering our your let's we than able now to demand manufacturing strong here. let's say, the next, could demand this to more, is say, right to and the in probably more deliver satisfy. debottleneck priority business making our months, some lines that actually we sure really manufacturing investing had of we in question, And are So in parts, XX XX

know, anything? the want we had now we more and we deliver indeed, working Rustom, make demand that really to capacity. XX/X to I add than appropriate you don't are could So whether have we sure

be led in I or has long covered clear, mean, Andreas capacity not medium look, else. to tight enzymes the the to But And everything is constraint. short in term. strong capacity demand term a

then [Technical Difficulty]… Just to be clear

our take question And we'll from… next

would back want [Technical on be you great, if you the cut that Faiza, Operator, Difficulty]. line to out jump

going I longer wanted to next be question. the the capacity back thought to more moving I term half, clarify listed to But a solution. were it's of on the just in you constraints aren't guys

Is XXXX. the think it? to ahead thinking that more right to about way So

but bulk of in absolutely. fourth it Yes, some quarter the XXXX. in Yes, of most the it

next go John to UBS. Roberts We’ll with

to you mentioned divestments significant active any accelerate anticipate Do management. portfolio You more reduction? debt

at we know we're look I what say, in and would to probably if I more our hard don't working the anything? portfolio. moment, something Rustom, that's to Yes, at detail. want say with It's you early to say probably, too do

No, I anything. add wouldn't

among the management be Secondly, should there's continued team. to be some we that? about concerned senior turnover How

we a the turnover concerned Look, team. always if we are management have on

in under pandemic, as it you we most expect are same really firing now on then numbers, make a cylinders we think Because very, well. we we we So And not the see, the on and delivering very these we here right for of in units big way actually think sure businesses But control. far, general, it's makes and we people. I easier. well all a integrating actually third as are task quarter we well and very on hand, that in keep still I the which can one find have have that right very, performing our the the that it it are

take question will our we next Zechmann from Bernstein. Gunther with And

couple questions, of please. A

Firstly, materials. on raw

as and but those X% I year Symrise negotiations, there. extra Nourish of on You one the growth year like just How secondly, for growth you been continue in still but day Is next appreciate remarkable, to that more of the a two you that for this each, do should also in Sivanto year. X% then year strong And where stack what And in for versus and the guide that well? of supply outperformed. the think negotiations working itself you that, there's that quite time start outperformed. sort about not please? or we It's see

peers is of the rates, talk food forward growth what's the outperformance win and quarter? versus you the and mix How about please? portfolio driven can is much of and how much sustainability So just in going that services

to Andreas, that then I'll take you [Multiple Speakers]… want and

Let started. me get

right lot see open we are a the as helps to sell quite now the because flavors, now ingredients which particularly right we optimistic first, an ingredient for for up We dynamic customers what to strong cross good see ingredient now, well the sales side, see the to with yes, good our if some always then you really and it's nicely. do very try wins And actually we we that CPGs, there's is pretty So And the wins, very filled. the is pipeline us the flavor sales. having in coming also the working flavors, is already and sales, flavor of the of comparison peers. on Nourish on in,

short So actually into third raw very the is robust, the mats, because started being The Nourish are very well, good. and strong. quarter. well. win super about see demand And And good rates talk if could strong as what will as that really term, really we strong Rustom, very, you we be

now. inflation at and seen continued We've logistics looking raw about X.X% Actually, in closer in we're materials. to

yes, to So on But all that. getting deceleration in any time, of working point this close in Nigerias the we and started not have negotiations starting Gunther, at we inflation. are seeing

a the as the actually we because impact mean actually and can interested. anything, anyone operating push margin. increases, continuing has and the seeing does our when even to math, general. it this down do if there's take recover cost I another -- well, just exacerbating, you XXX% of fact, go we're In that And -- It in

million cost pick that's pure XX price of like and that back $XXX to operating XXXX of a even $XXX alone our go add keep basis everything of else You about number, math. and takes unchanged, results and and margin, recovery our just points million

there's So factors I different here. mean in

from And Goldman Sachs. we'll take question with Adam our Samuelson next

the So a I the question, term. just forward this the terms trajectory? and longer around big pricing going this but the impact cost of little the year targeted inflation was the I'm was have about EBITDA year? around How experience timing Because and about the hoping a it synergies. to maybe in do Did to months? the targets or procurement some a recover XXXX? revenue maybe thinking it think the bucket after -- the big XX bit about kind growth, by in dynamics last play next pressures of of impact we How off aggressively ties we that. trying medium some impacting that of margins terms know I term at impacting to the any do of You're cost capture synergy trajectory think think over of XX part, market how

And wanted, in I to team the focus quarter the we second look procurement not probably get was in the for right now a savings to have and didn't third. we because say big that our

how the actually deliver synergies. pretty agile, we shifted way the we So

was now next because, ease. procurement it some will XXXX So headcount getting are more synergies And at time, then cost more as planning out well. in point of in from in we for in certainly year and areas of it terms particular other the in

we job where to good get just, let's it a think say, shift I from. we did So reachc

hand for certainly you it over On positive the good on you the if line it carryover raised doing and Rustom the it you revenue I the in to about will effect EBITDA, is because also growth, into margin. have you But and is prices, if see Rustom, But everybody talk which pressures, marketplace before cost good How see general? next the that year can on in EBITDA is right to guess I see now. us. it sales

mean, I Like our -- depresses I with the the of recovery, full operating even said, it margin. impact

we're some talked expansion Pfizer, year, at If bad, not you about other as XXXX. capacity they the look so like factors it's online of this with in come getting we projects

sales. air to where we compared is negative will the to we than this three we number from come you we've think So we're looking got you time are the far when margin expected. impact see, little by XXXX. we are And slightly go right what it. so at lower there. are a it so away XX% as freight recognize we is the now it's that And you as numbers when year we away can year committed seeing into And op stronger But started, and further yes,

airfreight. it point available, big portion we helpful capacity as the significantly, the we have is side airfreight on quite which will is Rustom a Actually as a cost because by And well. soon of as making, reduce enough is super good driven

take Jeff Zekauskas with we'll next And our question JPMorgan. from

down? business? Scent it better is margins a Scent large pricing or that Why other Nourish were dynamic is margins year-over-year how up factor, and preparations some and Was had there the fruit

that. take of the part So let me

where lotus the seen I and bean are close see most that you we've the I in, half So that coming that like coming year increases very half about and year, of in propylene and still it's as we're think material the it cost of stuff And mean hit was compared Nourish. talked There's are but of now, soy increases million-ish draft impacting freights. it's Probably $XXX the right LBK, the that's if vegetable the oils, and through sort coming smaller raw we opposed that had there. kernel that. the soy back through cost Nourish. it's of that's part there's to business, specific there, we rates, volume impact cedarwood, that And glycol, close freight is it's biggest is the freight impacting more turpentine one having a protein, meal, to areas, Nourish. a the the Scent in is I coming then few of Nourish Andreas not to but first it's XX% which about, impact. the biggest behind. like mean also cost

the So that's really business you're driving what there. seeing

preparation the big is how fruit And that? business,

sub-$XXX a we've That's small to a small and that, But that… business. won't. talking, if I the don't How wanted know million. disclose we is it's us seller have very been -- so I

question take we'll next Barclays. Lieberman from And Lauren with our

legacy year, the expect of expectations. I guess is of really digits IFF that just which comments balance you set thing with be the was the first to for impressive up double

would sounds constraints. the that capacity the considerably. due I to be pretty house the comment would could it just first? was curious decelerating of N&B like it imply I think on that might that I be side you mean if But

want to you it? take Rustom,

double digits. growth was mean it, Actually, the that's low comment growth QX, currency thought so and is think was in mid I that N&B's heritage current I digits Andreas? single mean in N&B’s perhaps neutral QX, heritage IFF I currency was it leg I -- neutral

look, had the some through it we in recovering we second No, the all in of are half in pharma, we'll what recover because cold Midwest. we the actually, see is snap

for not but higher quarters. have comps with it's probably certainly but the back two Bioscience the the last see is manufacturing come driven we will to which that also Health & degree limited by will to on And piece, capacity, demand. we So our

So we it how see will goes.

already We side more positive will in be in Certainly, it quarter are but will have than what very the the this first we we acceleration an go and right second direction. it the careful seen on quarter. saw in here

had hope certainly, reflected in businesses legacy it on, quite right Nourish N&B strong Nourish helping the way, you the quite the you carefully. a underestimate strong as third I performance the then business well the in the in really in have side quarter, by direction, part with we pretty Ingredients Scent really seen and numbers, you Fragrances, start. we that. it mix are also are the And going of can business, on So particular, the Fine in What should And tell the is observing not I the having of which significantly.

new the Yes, absolutely. a that number big IFF had of has know or in launches IFF And I work. industry also perfumer the

the that than gotten just that. expected months was one that on about in logistics because CapEx, a rate. prior and call the bit the there. before been even little the deal I capacity further curious perhaps and seen need of something the suggests But on of you've or because that's it separate in like to additions XX had that, XX if investing there's to though, going close to higher whether feels airfreight these the out more be so again, far. I to from a N&B as underinvested so now in was definitely degree still question, I've bit you're capacity So with business, and it

but So you cash yet that. just flow just of where point be investment period a this a about could Are multiyear capacity, not that. you've just the year to in curious about curious one got

wins are No, good the and robust that together. And and two bit enzyme a of a things piece demand lot came very point, which particular to the I on a is would there One come surprise say a we Lauren. unit. it's in the of had

going not deliver had real say time already have we So some underinvested the there's through our that I that's better over some see products earlier I would deal probably the demand haven't on here let's plan robust. but that something might it it is it horizon. going wins to which CapEx is me pipeline, add? be on we that what forward months because We The you in positive And months. we market, And N&B know, very I be positive for strong other it and expansion some six not good. a it position. could would can than adapted is our also But is Rustom, our help probably do comes but shortages was R&D need investment next, midterm the it. don't with we is. is it the And pandemic, super much to have as that nicely the forward. where we from which in the with talked too say, now would of have particular, XX say, us we of really quite in was superiority anything these, more is will

mean as I got total, positive flow I the mean is a but I business. cash multiyear. Andreas, another this of bit guess, We've more. $XXX use little we're I I strong about and and good think going just million we spend view -- to in have probably it. Lauren, use we're mean, actually going so We to a it it's good. can

Ghansham we'll from Baird. our take next with And Panjabi question

on of Andreas, about this globally Service Fragrances to starting and your businesses. Obviously, and at thinking and mobility portfolio other some improve you're point. kind the Food is directionally seeing impact just Fine

volumes, moderation about same the talk companies more at food it's token, just broadly. consumer On whether or seeing you're products CPG

the would point? you sort to that And over IFF this you moderate? see so, do sales of as for how at that couple So Do growth starting those progress anticipating of see we dynamics categories quarters? the netting next you're out if that are affect

demand see strong rate. our not would just by now we demand the but win go driven different robust And the still also categories, I right Fine if for I to this by Fragrances. say is

well. share that's I hear the big Fragrance, helpful. market for winning you are very, in see that's Consumer in CPGs you more a here, the market, from would We are the we general, But moderation what fair very our as than and say, again, and all on and we core about we to be. lists good we wanted then lucky talked last position quarters year callers ago really contributing. the they made a are of in that and over half the the And street are position or couple we the

in for see So moderation. us. general, we that's But some helpful

would strong in our and more but very active is Care, a Personal & Home one wins big growth strong cosmetics. Health On driven We our Another big, by than Bioscience, I and the see market. forward. technology say, going whole by and

And in back well. let's out nutrition and processing that's control So pretty of, performance modest animal would I say, is say. And grain year. then what last as coming are microbial good

many now we would unique that On offer seen flavor, in be in we down are the we to that actually and can driven us in right the any we to a of might ingredient, position position helps total Nourish also that from demand. are the side, solution the us competitors I say of And position than way. a that the haven't our different to slowing because

moderation, but your answering of much some position we're not we us where So see markets, too question because for right in is see market's the the now. we

comment. be that will my So overall

And our next from we'll take Mark question Stephens Inc. Connelly with

think a health position COVID? you're just to move ex in point as you and you start about COVID you all the away I'm are out, home you dining the big a trying what and if we hit. when are when mask Andreas, And were we what gets reopening, to continue from opportunities get of we just into sense very if risks different to along? than where went wellness, are up because

the be online delta could impact, which impacted, of impact. negative the these down, only usage where I business is have food close I for dangerous if to or fragrance. but categories now, see seen more we a But maybe two proving an is really say fine are starting what much would we're variants think service could if say, the right would again, I the us. I

Fragrances, health more side and hygiene other say on to if fortify are On you close probiotics trying as the trying the healthy, Consumer as be the health their would the the hand, terms of particular, in people going to getting And that because are said, in. comes, products, up. well food, I down in

we as I And as would say close down. we opportunities have so have many risk another least at to

how I it for that's now. So would describe

And Citi. with [Technical we'll Difficulty] take question our next

we to pre-pandemic And Fragrance? the levels Are Scent, Fine was particularly inventory in quickly, Just in growth channel any Fine there Fine Fragrance. about? Fragrance that back had building you in in you good should XX% think growth

because are outperforming or our not number. this starting the show inventory building will they're We even to And XXXX business. there's quarter for order an now whether Christmas

start third strong it's the And so a into quarter. far,

inventory effect lot Fine nicely say of on that would well, marketed. and are good very side business not of I our extra building Fragrances lot really and fragrances winning much there's are a So so as for which then an a we

describe So anything it. that's don't would how your I to I know, Rustom, add from side?

it. covered that No,

We'll take our next from of question DeYoe Bank America. Matthew with

I first, more guess, you for mid-February. a It that Can you're that? questions little was to seems what like and margin margin on but blaming, bit Yuri, on in you So dig pharma outlook. cost? the happened

would that And points climb unique whole the then industry at what capacity do down stuff inflation forward, air maybe Rustom. improve do you this et bit And that I experiencing? given freighting at IFF so percent basis if of Can of margin look little be that break type rate be a hole? what we between material would XXX XXX energy basis you from what mentioned, to And how there outages, out is the hit of you points issues, going raw cetera?

methachloride. the the And do first a then temporarily of the the down produced, had me mean, plants still underutilization. suppliers sold thing and let we two with been it from situations, force I but problems So it because outages the also we one. obviously, yes, which every during pity meant single came with and shut February have period, type we majeure that could our it's there's

material look total came between comes through general, freight of about is to in portion. or But what XX% that's so roughly I interestingly, raw break So from at material there. the was and general XX% percentages about, call raw much it, If freight increases at freight. the in the a and from smaller

up may higher these they've break material that inflation when and that have slightly is mean X about times the we're are lots be And the probably also, impact sea freight freight one as way cost and stuff. all and increase on we the seeing. X% with even probably we there's delays rate X And I contracted complication numbers. that's about X.X% going. as to high rates there's more many I'm is about, you X% talked rounding even times of going containers been. others experienced, we If

-- and we’re So on rate sometimes reliability can't later we have modes also still pick of spot the book at transport contracted get the to a sometimes we look forced stuff from to perspective. much rates. And different

there. on going lot's a So

appears to We'll there Lisa be Neve Stanley. with final And from one take De question question. our last Morgan

Two questions follow-up. from me, and then

care second trend Fine still Fragrance more were time, Fine Fragrance. did business, and Scents relatively at given raw how you you was first delivered Can demand margins. the mix this to you bit in strong back extent But share were towards see expect half good very in favorable going same I materials a kicking little question. Active, mention That's you product to related mean, this my and So for meaningfully? to the and which to we to

fairly And half, you're just from I a in cautious maybe so mentioned to just why presentation, that The one, see this. the from about X.X% volume you trying and the being the may pricing, on in second I'm understand early X.X% misunderstood similar volumes. second or you contribution side,

it? take you can Rustom,

mean recover really that to predominantly to and on in get on side, pricing QX, strong did driven. to raw and is to able mean, in the numbers very I we trying recover to And I We're close ensuring second volume have we volume XXX%, important the there. EBITDA focus that the material is our costs. the growth being half

Lisa, guide guidance, trying pricing to for and manage so need what we're half again. our to in -- we've of risk performance, the the And second sort is

Scent really mean, Fragrances the you're that's I the first your on by was I going the margin mean seeing sure. have mean, that's sure. for what So when XX%, for up for business, And I part really mix the there. yes, expansion tremendous. question, Fine of you driven over

there's and then mean offset super and volume in but Active was of as and mixed And add not was more the you're well general. it Cosmetic nourishing I seen the there seen. costs productivity, Scent there, scale on way we've costs in business, growth, see what which as seeing that well. So also to Anything you've inflationary of coming Andreas? the half, pressures we'll second the

think we try us on over mix. I very really which with I which which have businesses for Scent, should captured very help very, it with I And the for what you to forward. to profitability all mix. a you portfolio, think just make a higher growth higher all remark profitability now and general the the well. going Obviously, areas, No, of push positive it's time want parts the see driver something is our basically

to questions. I turn will for no are call closing There further the any remarks. over Andreas back

Yes. Thank you.

is we first We as delivered all, growth, of real good in even we strong XXXX, are because, incredibly quarter second parameter comparison here. said, on proud the which again, to

think of for I Secondly, like integrating teams with what a to all IFF Thank our and around task most and best and would I time they for really you an that’s and Thank we’re it’s again, business that, well easy you you the congratulate not globe do time as have in we the guys. of I use talk N&B to it Bye-bye. accomplished. of And for. pandemic. where the later. And did stands to think, everybody

Thank for you. program. Thank your And this you today’s concludes participation.

may You disconnect time. any at