On a call with Wall Street analysts after the Fortune 500 company reported its 2024 results, CEO Erik Fyrwald made it clear that acquisitions were back on the table—but with a more disciplined approach.

Revisiting M&A—but no more ‘Frutaroms’

New York City-based IFF, which creates flavors, fragrances, and specialty ingredients used in food, beverages, personal care, and pharmaceuticals, has a checkered history with acquisitions.

Many on Wall Street said the company overpaid in its purchase of Frutarom and its merger with DuPont’s Nutrition & Biosciences division in 2018 and 2019. The $7.1 billion Frutarom deal, in particular, proved problematic after IFF uncovered what it said were improper payments by the Israeli company’s executives in Russia and Ukraine, leading to a lawsuit against Frutarom’s CEO.

Fyrwald sought to assure investors that history wouldn’t repeat itself. “I can assure you, we will not do anything like another Frutarom,” he said, emphasizing a commitment to acquisitions that align with IFF’s strategic priorities.

“We’re looking at bolt-on acquisitions specifically in Health & Biosciences, more related to technologies to further enhance our technology breadth, Scent, and Nourish, which is more to enhance our geographic footprint,” Fyrwald explained. “But we will only do bolt-ons that make absolute sense, that have good returns, and that really fill strategic voids.”

However, IFF has one more sale to complete in the meantime. Last year, the company announced plans to sell its Pharma Solutions business—which came as part of the DuPont transaction—to French plant-based ingredients producer Roquette in a deal valued at $2.85 billion, with the transaction expected to close by mid-2025.

While IFF focuses on strategic growth, external factors are also changing the landscape. One key challenge is the shifting regulatory rules under the Trump administration. When asked about potential scrutiny under RFK Jr.’s leadership at the Department of Health and Human Services, Fyrwald downplayed concerns. “We don’t see any of our products as targets,” he stated. “In fact, what we do see is that many of our customers may reformulate products to have cleaner labels, which, by the way, plays into our strengths.”

2024 performance and 2025 numbers

IFF reported full-year sales of $11.48 billion, flat compared to 2023 but at the high end of its expected range. Earnings per share came in at $0.95, beating Wall Street expectations of $0.78.

The company’s fourth-quarter sales grew 3% to $2.77 billion, though a quarterly loss before taxes of $115 million led to a reported EPS of -$0.18.

IFF’s financial position has also improved, with net debt to credit-adjusted EBITDA falling from 4.5x in 2023 to 3.8x at the end of 2024. Fyrwald noted that the upcoming Pharma Solutions sale will further aid deleveraging, positioning the company to invest.

“In 2025, we plan to continue to strategically reinvest in R&D, commercial, capacity, and technology as we aim to strengthen IFF and build a long-term sustainable platform that will deliver strong value creation for all our stakeholders,” said Fyrwald, who is the company’s third CEO since 2022.

While projecting 2025 sales of $10.6 billion to $10.9 billion (1% to 4% growth), recently named CFO Michael DeVeau cautioned that foreign exchange pressures may cut into those gains, with a 4% hit to sales and a 6% cut to EBITDA.

Fyrwald expressed optimism about IFF’s future but acknowledged the challenges that the company still faces. “While I’m pleased with the significant progress we’ve made over the last year, we still have a lot more work to do,” he said.

IFF shares have fallen about 7% since it reported earnings.