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INTERNATIONAL FLAVORS & FRAGRANCES INC

IFF
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Business Summary

International Flavors & Fragrances Inc. is a leading creator and manufacturer of products for application in food, beverage, health & biosciences, and scent, as well as complementary adjacent products including natural health ingredients, all of which are used in a wide variety of consumer and end-use products. The company holds global leadership positions in the Food & Beverage, Home & Personal Care and Health & Wellness markets, and across key Tastes, Textures, Scents, Nutrition, Enzymes, Cultures, Soy Proteins and Probiotics categories. Sales in 2025 were $10.890 billion , and the business is geographically diverse with sales in the U.S. representing approximately 28% of sales in 2025, while no other country represented more than 10% of sales.

The market for IFF's products is highly competitive, with main competitors consisting of other large global companies such as Givaudan, Novonesis, DSM-Firmenich, Symrise, Kerry, and ADM, as well as mid-sized companies, numerous regional and local manufacturers, and consumer product companies who may develop their own competing products. IFF believes its ability to compete successfully is based on in-depth understanding of customers and consumers, vertical integration, innovation and technological advances from research and development, the ability to tailor products to customers' needs, and the ability to manufacture products on a global scale. In 2025, the 25 largest customers collectively accounted for approximately 32% of sales, and no customer accounted for 10% or more of sales.

IFF generates revenue by developing and manufacturing products for application in food, beverage, health & biosciences, and scent, as well as complementary adjacent products, which are sold principally to manufacturers of dairy, meat, beverages, snacks, savory, sweet, baked goods, grain processors and other foods, personal care products, soaps and detergents, cleaning products, perfumes, dietary supplements, food protection, infant, elderly and animal nutrition, functional food, bio-fuel, and oral care products. The company's customer base is diverse, with approximately 20,000 customers in fiscal-year 2025, of which approximately 69% are small and mid-sized companies.

The Taste segment consists of the development and production of a range of flavor compounds and natural taste solutions used in savory products, beverages, sweets, and dairy products, and also includes value-added spices and seasoning ingredients. The Food Ingredients segment consists of a diversified portfolio across natural, artificial and plant-based specialty food ingredients that provide functional properties solutions for food and beverage products, as well as specialty soy and pea protein with value-added formulations, emulsifiers and sweeteners. The Health & Biosciences segment consists of the development and production of an advanced biotechnology-derived portfolio of enzymes, food cultures, probiotics and specialty ingredients for food and non-food applications, and is comprised of Health, Food Biosciences, Home & Personal Care, Animal Nutrition and Grain Processing. The Scent segment creates fragrance compounds and fragrance ingredients and is comprised of Fragrance Compounds and Fragrance Ingredients. The former Pharma Solutions segment produced a vast portfolio of cellulosics and seaweed-based pharmaceutical excipients, and its divestiture was completed on May 1, 2025 , while the nitrocellulose business was divested on May 9, 2025 .

During the year ended December 31, 2025, IFF completed several significant operational developments. The company completed the divestiture of its Pharma Solutions disposal group on May 1, 2025 , receiving gross cash proceeds of approximately $2.581 billion , and divested its nitrocellulose business on May 9, 2025 , receiving cash proceeds of approximately $161 million . The company also completed the sale of its Rene Laurent business in France on December 1, 2025 , receiving gross cash proceeds of approximately $19.3 million , and completed the divestiture of the Tobacco Flavoring Business in North America on April 1, 2025 , receiving gross cash proceeds of approximately $20 million . Effective January 1, 2025, the former Nourish segment was restructured into two newly designated operating segments: Taste and Food Ingredients . As a result of this reorganization, the company recorded an impairment charge of $1.153 billion within the Food Ingredients operating segment. The company also repurchased $38 million of common stock as part of a share repurchase program that began on October 1, 2025 , under a plan authorized by the Board of Directors for up to $500 million of common stock. Additionally, the company purchased with cash certain of its outstanding series of Senior Notes for $2.0 billion , excluding accrued and unpaid interest, and repaid the outstanding borrowings under both the 2026 Term Loan Facility and the 2025 Notes during the period.

Sales in 2025 were $10.890 billion , a decrease of 5% compared to sales of $11.484 billion in 2024. On a comparable currency neutral basis, sales in 2025 increased 2% compared to 2024. Gross profit in 2025 decreased $186 million , or 5% on a reported basis, to $3.938 billion (36.2% of sales) from $4.124 billion (35.9% of sales) in 2024. Net loss attributable to IFF shareholders was $361 million , or $(1.41) per share, compared to net income of $263 million , or $1.04 per share, in 2024. Cash flows provided by operating activities in 2025 were $850 million , or 7.8% of sales, compared to $1.070 billion , or 9.3% of sales, in 2024.

Business Outlook

Management expects that capital spending in 2026 will be approximately 6% of sales.

IFF continues to pursue collaborations, joint ventures, partnerships, and acquisitions to enhance innovation, expand its product portfolio, and support growth, though these transactions involve significant risks including integration challenges and failure to achieve anticipated synergies. The company is also evaluating additional transactions, including strategic alternatives for its Food Ingredients segment, as part of its ongoing portfolio optimization strategy.

The company's strategic transformation and portfolio optimization includes the evaluation of additional transactions, including strategic alternatives for the Food Ingredients segment. Successfully completing such transactions depends on factors beyond the company's control, such as industry and macroeconomic conditions, third party interest and financing, underlying asset performance, regulatory approvals, and entanglements with the rest of the businesses.

The company's gross margin increased in 2025 to 36.2% from 35.9% in 2024, reflecting the benefit of lower costs and improved productivity. The decrease in cost of sales was primarily driven by the impact of divestitures of approximately $493 million , lower raw material costs, lower unfavorable manufacturing absorption, and increased productivity, offset in part by volume increases.

The company has evaluated and re-prioritized its capital projects and expects that capital spending in 2026 will be approximately 6% of sales. The company's capital allocation strategy seeks to maintain investment grade ratings while investing in the business, continuing to pay dividends, repurchasing shares outstanding and repaying debt.

The company's capital allocation strategy seeks to maintain investment grade ratings while investing in the business, continuing to pay dividends, repurchasing shares outstanding and repaying debt. The company paid dividends totaling $409 million and $514 million in 2025 and 2024, respectively, with cash dividends declared of $1.60 per share in both 2025 and 2024. The Board of Directors authorized a repurchase plan of up to $500 million of common stock, which began on October 1, 2025 .

The company faces structural headwinds including consumer demand and preferences driven by factors such as the increasing use of weight management pharmaceutical products, increasing health and wellness awareness, greater transparency in product labeling, and changes in global, regional or local economic conditions. Additionally, increased regulatory requirements, statements or questions around certain products may result in changes in customer orders or delays in developing, manufacturing or marketing of new or existing products.

The company identified several execution risks including the inability to successfully execute its strategic transformation or enter into or close collaborations, joint ventures, partnerships, acquisitions, or divestitures, which may have a material adverse effect on its business, results of operations and financial condition. The company also faces risks from trade wars, tariffs, sanctions, geopolitical developments, supply chain disruptions, environmental events, natural disasters, public health or human rights crises, and other events that may adversely affect sourcing of raw materials, and development, manufacturing, distribution or sale of products.

Risk Factors

IFF faces material risks from its substantial indebtedness, with total debt of approximately $5.994 billion as of December 31, 2025, which could materially adversely affect its financial condition, ability to return capital to shareholders, and credit ratings. The company is subject to ongoing antitrust investigations in a number of countries and class action lawsuits in the U.S. and Canada alleging antitrust violations, with outcomes that are uncertain and could result in regulators imposing significant fines, penalties, or business restrictions. A significant portion of assets consists of long-lived assets, including $14.3 billion of intangible assets and goodwill as of December 31, 2025, and any future impairment could materially impact profitability, as evidenced by the $1.153 billion goodwill impairment charge recorded in 2025. The company is also exposed to risks from trade wars, tariffs, sanctions, and geopolitical developments that may adversely affect sourcing of raw materials and manufacturing, with the company sourcing approximately 20,000 different raw materials from a broad network of suppliers. Additionally, the N&B Transaction could result in significant tax liability, and the company may be obligated to indemnify DuPont for any such tax liability imposed on DuPont.

Management Priorities

Management's message emphasizes the company's ongoing strategic transformation and portfolio optimization, including the completion of several divestitures in recent years and continued evaluation of additional transactions such as strategic alternatives for the Food Ingredients segment. The company's capital allocation strategy seeks to maintain investment grade ratings while investing in the business, continuing to pay dividends, repurchasing shares outstanding and repaying debt. Management expects that capital spending in 2026 will be approximately 6% of sales.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business
  2. [2] Item 1, Business
  3. [3] Item 1A, Risk Factors
  4. [4] Item 1A, Risk Factors
  5. [5] Item 1A, Risk Factors
  6. [6] Item 1, Business
  7. [7] Item 1, Business
  8. [8] Item 1, Business
  9. [9] Item 8, Note 3 — Business Divestitures
  10. [10] Item 1, Business
  11. [11] Item 8, Note 3 — Business Divestitures
  12. [12] Item 8, Note 3 — Business Divestitures
  13. [13] Item 8, Note 3 — Business Divestitures
  14. [14] Item 8, Note 3 — Business Divestitures
  15. [15] Item 8, Note 3 — Business Divestitures
  16. [16] Item 7, MD&A — Overview
  17. [17] Item 7, MD&A — Impairment of Goodwill
  18. [18] Item 7, MD&A — Liquidity and Capital Resources
  19. [19] Item 5, Market for Registrant's Common Equity
  20. [20] Item 5, Market for Registrant's Common Equity
  21. [21] Item 7, MD&A — Liquidity and Capital Resources
  22. [22] Item 7, MD&A — 2025 Financial Performance Overview
  23. [23] Item 7, MD&A — 2025 Financial Performance Overview
  24. [24] Item 7, MD&A — 2025 Financial Performance Overview
  25. [25] Item 7, MD&A — Gross Profit
  26. [26] Item 7, MD&A — Gross Profit
  27. [27] Item 7, MD&A — Gross Profit
  28. [28] Item 7, MD&A — Gross Profit
  29. [29] Item 7, MD&A — Gross Profit
  30. [30] Item 7, MD&A — Results of Operations
  31. [31] Item 7, MD&A — Results of Operations
  32. [32] Item 7, MD&A — Results of Operations
  33. [33] Item 7, MD&A — Results of Operations
  34. [34] Item 7, MD&A — Cash Flows Provided By Operating Activities
  35. [35] Item 7, MD&A — Cash Flows Provided By Operating Activities
  36. [36] Item 7, MD&A — Cash Flows Provided By Operating Activities
  37. [37] Item 7, MD&A — Cash Flows Provided By Operating Activities
  38. [38] Item 7, MD&A — Liquidity and Capital Resources
  39. [39] Item 7, MD&A — Results of Operations
  40. [40] Item 7, MD&A — Results of Operations
  41. [41] Item 7, MD&A — Cost of Sales
  42. [42] Item 7, MD&A — Liquidity and Capital Resources
  43. [43] Item 7, MD&A — Cash Flows Used In Financing Activities
  44. [44] Item 7, MD&A — Cash Flows Used In Financing Activities
  45. [45] Item 8, Consolidated Statements of Shareholders' Equity
  46. [46] Item 5, Market for Registrant's Common Equity
  47. [47] Item 5, Market for Registrant's Common Equity
  48. [48] Item 1A, Risk Factors
  49. [49] Item 1A, Risk Factors
  50. [50] Item 7, MD&A — Impairment of Goodwill
  51. [51] Item 1, Business
  52. [52] Item 7, MD&A — Liquidity and Capital Resources
  53. [53] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  54. [54] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  55. [55] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  56. [56] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  57. [57] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  58. [58] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  59. [59] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  60. [60] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  61. [61] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  62. [62] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  63. [63] Item 7, MD&A — Results of Operations
  64. [64] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  65. [65] Item 7, MD&A — Results of Operations
  66. [66] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  67. [67] Item 7, MD&A — Results of Operations
  68. [68] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  69. [69] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  70. [70] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  71. [71] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  72. [72] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  73. [73] Item 8, Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
  74. [74] Item 8, Consolidated Statements of Cash Flows
  75. [75] Item 8, Consolidated Statements of Cash Flows
  76. [76] Item 8, Consolidated Statements of Cash Flows
  77. [77] Item 1A, Risk Factors
  78. [78] Item 8, Consolidated Balance Sheets
  79. [79] Item 7, MD&A — Liquidity and Capital Resources
  80. [80] Item 7, MD&A — Income Taxes
  81. [81] Item 7, MD&A — Income Taxes
  82. [82] Item 7, MD&A — Income Taxes
  83. [83] Item 7, MD&A — Results of Operations
  84. [84] Item 7, MD&A — Results of Operations
  85. [85] Item 7, MD&A — Results of Operations
  86. [86] Item 7, MD&A — Results of Operations
  87. [87] Item 7, MD&A — Results of Operations

Analysis on 6/21/2026