With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are diversified and specialty chemical manufacturers.

Fortune Sector Leaders: Chemicals

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

This year's Fortune 500 marks the 66th running of the list.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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International Flavors &amp; Fragrances (IFF) is a chemicals manufacturer that creates flavors, fragrances, and specialty ingredients used in food, beverages, personal care, and pharmaceuticals. Tracing its roots back to 1889, when Josef Polak and Leopold Schwarz created Polak &amp; Schwarz, a producer of fruit flavors and oil essences, IFF now does business in 65 countries. Since breaking its Nourish group into two parts, the company operates through five segments: taste, food ingredients, health &amp; biosciences, scent, and pharma solutions.

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International Flavors & Fragrances (IFF): Company Profile, Stock Price, News, Rankings

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International Flavors & Fragrances

international flavors & fragrances

At this time, I would like to welcome everyone to the IFF third quarter 2025 earnings call. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. To ask a question at that time, please press star one on your telephone keypad. If you would like to remove your name from the queue, please press star two. Participants will be announced by their name and company. In order to give all participants an opportunity to ask their questions, we request a limit of one question per person. I would now like to introduce Michael Bender, Head of Investor Relations. You may begin.

Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to IFF's third quarter 2025 conference call. Yesterday afternoon, we issued a press release announcing our financial results. A copy of the release can be found on our IR website at ir.iff.com. Please note that this call is being recorded live and will be available for replay. During the call, we'll be making forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially, please refer to our cautionary statement and risk factors contained in our 10-K and press release, both of which can be found on our website. Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability.

A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in the press release. Also, please note that all the sales and adjusted operating EBITDA growth numbers that we will be speaking to on the call are all on a comparable, currency-neutral basis unless otherwise noted. With me on the call today is our CEO, Erik Fyrwald, and our CFO, Michael DeVeau. We will begin with prepared remarks and then take questions at the end. With that, I would now like to turn the call over to Erik.

Thank you, Mike, and hello, everyone. Thanks for joining us today. IFF's third quarter results demonstrate continued execution. Our performance this quarter shows that we continue to make progress towards our goals, operate with efficiency and discipline, and further strengthen our financial position. In a more challenging environment, we are doing what we said we would do as we expect to deliver financial results in line with our full-year guidance that we outlined in February. We will do this as we continue reinvesting in our business and advancing our growth strategy while driving productivity. I'll start today's call by briefly summarizing the third quarter, and then I'll talk about some of the key strategic progress we have made so far this year.

I will turn it over to Mike DeVeau, who will provide a detailed look at our results and segment performance in the third quarter, in addition to our outlook for the remainder of 2025. We will then open the call to answer your questions. Turning to slide six, we are seeing encouraging results as we build a stronger IFF. Through the actions we have taken to strengthen our customer focus and enhance productivity, IFF is improving its position to compete effectively and deliver value for all our stakeholders. We are operating in a dynamic environment with ongoing macro headwinds, geopolitical challenges, and market uncertainty influencing our customers and end consumers. Plus, we had a strong 9% comparable from last year. We anticipated this and have been clear that the second half would likely be more challenging than the first. Even so, sales remained steady, holding flat for the quarter.

Our scent and taste businesses both continued to deliver solid growth in the third quarter, which helped offset softness in food ingredients and short-term pressures in health and biosciences. As I spoke about last quarter, most of the H&B pressure was related to expected slowdowns in the health business, isolated to North America. To address this, we are investing to increase innovation and expand our commercial capabilities to ensure IFF is set up to address the needs of customers now and in the future. We continue to remain focused on what we can control in the current environment. IFF delivered strong adjusted operating EBITDA growth of 7% this quarter, with a margin that improved by 130 basis points. Our focus on profitability continues to bear fruit as our results demonstrated strong profitability even in this lower growth environment.

I am particularly encouraged as we are also doing this while our teams are reinvesting into our core businesses to position the company for long-term success. On slide seven, I'd like to share some of the exciting strategic progress we've made in the first nine months of 2025. Earlier this year, we opened a scent creative center in Dubai, a citrus innovation center in Florida, and expanded our LMR naturals site in Grasse, France. All are significant initiatives that will further advance our innovation offerings and strengthen our go-to-market capabilities. Our customers are at the heart of everything we do, and these strategic investments are increasing our commercial pipeline that will start to bear fruit in mid to late 2026 and into 2027. We also deepened our commitment to innovation through external collaborations.

We recently announced an exciting strategic collaboration with BASF to drive next-generation enzyme and polymer innovation, including our designed enzymatic biomaterials, or DEB technology. This partnership enables us to develop more market-driven solutions that create sustainable value for both industry and the environment. Also, earlier this year, we announced a joint venture with Kemira to provide high-performance, sustainable alternatives to fossil fuel-based ingredients, also utilizing our DEB technology. Applying this technology not only provides superior purity and consistency compared to traditional biopolymers, but also enhances performance across various applications. We are already seeing commercial applications of this technology, as we also announced that a major multinational CPG company has launched a new laundry detergent formulation enhanced by DEB technology, which delivers improved fabric softness and cleaning performance while replacing non-biodegradable ingredients with a readily biodegradable alternative.

In addition, during the year, we reduced our leverage significantly, reaching approximately 2.5 times net debt to EBITDA. After strengthening our balance sheet, we announced on our second quarter call a $500 million share repurchase authorization, making an initial move toward a more balanced and disciplined approach to capital allocation. Over the past few years, we have made significant progress streamlining our portfolio, which has allowed us to reinvest in our core business, achieve our deleveraging targets, and strengthen our financial flexibility. During 2025, we made significant progress on this as we completed the divestitures of Pharma Solutions and Nitrocellulose and announced the divestiture of our soy crush concentrates and lecithin business to Bunge, which is aligned with our margin enhancement strategy. We continue to evaluate potential strategic alternatives for our food ingredients business as we look to drive our portfolio optimization strategy.

While we do not have any additional information to share today, we are making very good progress. Generating significant interest, and we'll keep you updated as we make further progress. On a year-to-date basis, we've delivered sales growth of 2% and achieved adjusted operating EBITDA growth of 7%. This is primarily due to the immense efforts of IFFers all around the globe, continuously striving to innovate, deliver results for their customers and communities, and elevate everyday products used by millions of consumers worldwide. With that, I'll pass the call over to Mike to offer a closer look at this quarter's consolidated results. Mike.

Thank you, Erik. Thank you, everyone, for joining us today. In the third quarter, IFF delivered revenue of nearly $2.7 billion, led by mid-single-digit growth in scent and low-single-digit growth in taste. Our sales were flat against a strong 9% comparable and were up approximately 4.5% on a two-year average basis. We continue to focus on driving EBITDA growth through disciplined execution and margin improvement initiatives. In the third quarter, we delivered adjusted operating EBITDA of $519 million, a strong 7% increase. Our adjusted EBITDA margin also increased 130 basis points to 19.3%. Also worth noting is that our operational improvement plan continues to yield results in our food ingredients business. In the third quarter, food ingredients delivered a strong adjusted operating EBITDA margin improvement of 230 basis points compared to last year.

The team has done an excellent job on improving the margin profile over the past two years, where they increased adjusted operating EBITDA margin by over 400 basis points and are on track to achieve their mid-teen EBITDA margin profile. On slide nine, I will share additional details about this quarter's performance in each of our business segments. In taste, sales increased 2% to $635 million, with strong growth in Latin America and Europe, Africa, and the Middle East. On a two-year average basis, growth remained strong at approximately 8.5%. The segment also delivered profitability gains of roughly 2%, driven by favorable net pricing and cost discipline. Our food ingredients segment achieved sales of $830 million, down 3% versus the year-ago period, with strong growth in inclusions that were more than offset by softness, primarily in protein solutions.

As I mentioned, food ingredients had an excellent quarter in terms of profitability, where the team delivered adjusted operating EBITDA of $106 million, a 24% increase year-over-year. Our health and biosciences segment achieved $577 million in sales, which was flat versus the prior year. On a two-year average basis, growth remained solid at approximately 6%. Growth in food biosciences, home and personal care, and animal nutrition was offset primarily by expected softness in health, specifically in North America. In this market, we've improved our leadership team, placing a strong emphasis on commercial and marketing capabilities. Their objective is to leverage our strong R&D pipeline and win with a broader set of customers to capture strong growth potential in that market. While the fourth quarter will remain a challenge, we expect trends to improve in 2026.

In the third quarter, H&B adjusted operating EBITDA grew 3%, driven primarily by productivity. Scent delivered a strong quarter of sales growth, with net sales of $652 million, up 5% year-over-year. On a two-year average basis, growth remained strong at approximately 7%. Third quarter performance was driven by a 20% increase in fine fragrance and a low single-digit performance in consumer fragrance. As expected, fragrance ingredients were under pressure and declined low single digits, as growth in specialties was more than offset by declines in commodities. As a reminder, we are strategically shifting our fragrance ingredients portfolio towards higher growth and higher value-added specialties. We will do this by leveraging R&D and biotech for new molecule development. Our goal is to accelerate the pace of our captive releases to ensure we can differentiate ourselves and grow disproportionately in this margin and creative business.

Within scent, volume growth drove the segment's $135 million in adjusted operating EBITDA, a 6% increase year-over-year. Turning to slide 10, our cash flow from operations totaled $532 million year-to-date, and CapEx was $406 million, or roughly 5% of sales. Our free cash flow position in the third quarter totaled $126 million. This year, we have paid $306 million in dividends through the end of the third quarter, and our cash and cash equivalents were $621 million. As of quarter end, our gross debt was approximately $6 billion, a roughly $200 million decrease from last year, and more than $3 billion decrease year-over-year. Our trailing 12-month credit-adjusted EBITDA totaled roughly $2.15 billion, in line with last quarter, while our net debt to credit-adjusted EBITDA remained constant at 2.5 times. We will continue to be disciplined in our capital allocation priorities.

Reaching our deleveraging goals was a strong achievement, and we are now focused on preserving this foundation through operational performance, specifically driving improvements in profitability and networking capital. Lastly, on slide 11, I will walk you through our outlook for the balance of the year. We have talked today and in prior quarters about the environment in which we are currently operating. Our touchpoints across our global business and with our customers have allowed us to forecast this year well, as our teams are delivering results in line with the guidance ranges we communicated in February. Based on our year-to-date actuals and expected fourth-quarter performance, we are reiterating our full year 2025 guidance. As a reminder, we are expecting sales to be in the range of $10.6 billion-$10.9 billion, and adjusted operating EBITDA to be between $2 billion and $2.15 billion.

On a comparable, currency-neutral basis, we expect to finish the year at the low end of our 1%-4% sales growth guidance range, as shared last quarter, and near the midpoint of our 5%-10% EBITDA growth range. We believe that this is the right call to maintain our full-year guidance, even with a wider range implied for the fourth quarter. It is consistent with the message we have shared all year, which is staying focused on what we said we would deliver, even in a challenging environment. For the fourth quarter, we expect our typical seasonality, resulting in a step down in absolute sales and margin. As a reminder, we again face another strong comparable versus the prior year, with 12% growth in taste, 7% growth in scent, and 6% growth in each and be.

With that, I would now like to turn the call back to Erik for closing remarks.

Thanks, Mike. Taking a look at the year so far, our global team has delivered in a difficult environment, with revenue and profitability increasing year-over-year. I'm proud of what our team has accomplished, yet we continue to strive for more. We are continuing to serve our customers with excellence while investing in an exciting innovation pipeline and positioning IFF to deliver stronger profitable growth on a sustained basis. We are focusing on what we can control. Our strategy is clear. Our team is executing, and we have confidence in our ability to deliver increasing value for our shareholders and all stakeholders. I know we are building a stronger IFF that will be well-positioned for 2026 and beyond. Thank you, and I'll now open the call for your questions.

Thank you. At this time, we will now begin today's Q&A session. If you would like to ask a question, as a reminder, it is star one. To remove your question, it is star two. We'll pause briefly while your questions are registered. The first question is from Fulvio Cazzol with Berenburg. You may begin.

Yes. Good morning, gentlemen, and thank you for taking my question. It's in relation to the health and biosciences business. I was wondering if you can provide a bit more color on what's exactly going on in the North America region for the health business unit. I know that the decline in Q3 was well anticipated, and you highlighted this at the Q2 results presentation. I was also wondering if you still expect to see any improvement starting in 2026, or if there is more uncertainty today on the outlook for this business compared to, say, three months ago. Thank you.

Thanks for the question, Fulvio. This is Erik. In health and biosciences, the health business in North America has been slow for us. What we've been doing to turn that around is we've put in place new leadership with strong commercial and marketing capability. You'll recall last year, we step-changed our investment and innovation pipeline in health. That's going well. We're connecting with our existing customers to help them grow faster, and we're finding new customers to serve in North America. Bottom line is I absolutely expect to see improvements, particularly in the second half of 2026, going into 2027, and then a full recovery, fully back on track in 2027.

The next question is from the line of Nicola Tang with BNP Paribas. You may begin.

Hi, everyone. Thanks for taking the question. I wanted to ask about the top-line guidance. The bottom end, so the 1% currency-neutral growth implies a negative low single digit for Q4 versus the flat year-on-year that you did in Q3, despite slightly easier comps. What are the main headwinds to top-lining Q4, and how much of your cautious outlook relates to the weak end-market macro geopolitical trends that you referred to versus IFF-specific exposures? To what extent do we need to see end-market recovery to see a top-line acceleration in 2026? Thanks.

Great. Hi, Nicola. Thanks for the question. Yes, you are correct. While comparable is 6% in the fourth quarter, which is down from 9% in the third quarter, we are being a little bit more prudent on our top-line projection this quarter. The largest part of this, the driver of this, is really the macro environment. When you look at end-market demand, specifically on volumes, you'll see in the food and beverage category and HPC, it has been soft. What we did is we kind of continued this trend through the balance of the year, just to make sure that we're fully forecasting it correctly. In our core portfolio, Erik touched on it, and I think I touched on it in our paired remarks as well. We continue to work on fragrance ingredients and health North America.

The team is making good progress there, but we still got a little bit more work that we have to do to really get back to recover, as Erik suggested. I do want to note, though, as a point of reference, in these areas, when you put the two businesses together, it is about 5% of our total company sales. It is small in nature, but a lot of emphasis and attention on that going forward. As we move into 2026, we are cautiously optimistic that we will get to a point where we will see growth acceleration as the market does normalize and some of the self-help work that we are doing over the last 18 months starts to yield results.

The next question is from the line of David Begleiter with Deutsche Bank. You may begin.

Hi, this is Emily Fusco on for Dave Begleiter. On food ingredients, are we still on track for an update on this business with the Q4 earnings call in February? Also, just to follow up, have you begun to engage with private equity and strategics on this business? Thanks.

Thanks, Emily. Absolutely. You'll get an update. I'll give you a quick update now. We are seeing strong interest by both private equity and strategics. Fortunately, the business transformation that Andy Muller is leading with his team is on a strong track, which obviously is very helpful to this process. This is a very good business that keeps getting better and has a bright future, and we'll update where we are in February.

Thank you. The next question is from the line of Lisa De Neve with Morgan Stanley. You may begin.

Hi. Thanks for taking my question. I have one question. Can you please reiterate your free cash flow outlook for this year and the components of how we should expect the different free cash flow components to move into the fourth quarter and if you expect to see an improvement? That's my first question. I have a small follow-up on Fulvio's question. You talked about investments in HMB. Could you please remind us of where specifically you're making the investments, most notably, if you're opening any new plants in certain regions? Thank you.

Sure. Maybe I'll start on the cash flow question. Thanks, Lisa. In terms of the free cash flow expectation for 2025, we do expect to be modestly below our target that we gave earlier in the year, which was about $500 million. There are some puts and takes in there that are worth noting. On the positive side, we are expecting CapEx to be a bit lower as we've implemented a little bit more stricter policy, just given our cash flow generation. That's a good guy, a positive aspect. There are two offsetting factors to that. One being inventories are higher in some area of our business. Part of this is around building some strategic stock in some key areas to take advantage of current cost and availability of materials.

The second piece of it is really around some of the Reg G or one-time costs are elevated, really, because of the portfolio work that we're doing overall. When we put those two together, I think it gets you to kind of be a little bit modestly below that $500. I do want to note that in terms of overall networking capital, you will see an improvement in the fourth quarter. It is a big focus for us as we go into 2026. There is an opportunity for us to improve our free cash flow generation, which is in our control, and the team is committed to making strong improvements as we go forward. Maybe that's the cash flow. Erik, I'll pass over for you to.

On health and biosciences investment. As we said last year, we've significantly increased our spend in R&D and commercial capabilities, both for our health business, next-generation probiotics, and other products, as well as our enzyme business and our DEB technology. We've announced and we're making great progress that we're building a DEB plant together with Kemira, with our joint venture called Alpha Bio. It is on track, and we expect to start that up in 2027 and look forward to that. Significant investment into health and biosciences, and we see that starting to pay off, as we said, significantly in the second half of 2026 and very strong into 2027.

Thank you. The next question is from the line of Kristen Owen with Oppenheimer. You may begin.

Hi, good morning. Thank you so much for the question. I wanted to ask about the new wins that you cited in both taste and scent. I mean, we continue to hear about how challenging the volume backdrop has been. I am hoping you can elaborate on maybe what contributed to those wins in this backdrop. Thank you.

Thanks for the question, Kristin. Obviously, there's economic challenges across the businesses, especially in North America, we see right now. In all our four BUs, including taste and scent, we've got a heavy focus on strengthening our commercial pipeline, really strong focus on customers, and increasing our win rate, as well as our innovation pipeline. We're seeing really good progress across segments, across businesses, and across geographies. Just to give you a couple of examples of wins in scent and taste, the first one is our new, excuse me, our new ENVIROCAP scent encapsulation technology was recently commercialized in laundry with a major CPG company. The performance is great. They're very excited about it. The sustainability benefits are tremendous. We'll see that technology add to our growth going forward.

A second example I really, really like is we've been successful winning a Miu Miu by L'Oréal fine fragrance from our master perfumer, Dominique Ropion. That's going to be a nice business for us going forward, a great product. I think we'll do well in any economic scenario that we see. Good progress on our commercial pipeline, our innovation pipeline, and things that we can control by bringing great technology innovation to customers. That's how we're going to continue to grow these businesses.

Thank you. The next question is from the line of Salvator Tiano with Bank of America. You may begin.

Thank you very much. You spoke a little bit about 2026, hopefully growth accelerating a bit. Can you also mention any other major or discrete items that you see affecting your income statement or your cash flow next year versus 2025?

Yeah, thanks, Sal. Great question. We are, to be fair, in the middle of the planning process for 2026. So we can't go into much details. We'll provide the full guidance update as part of our year-end or Q4 call in February for 2026. That said. In terms of moving parts, there's probably just one that I just want to remind everybody. I think it's pretty self-explanatory. But if you remember, we closed the pharma transaction on May 1st. And so when you think about 2026. I think through the first five months of the year, four months of the year, it was about $369 million in sales and $76 million of EBITDA. So that will go away as we cycle down the first half of the year. So I flagged that. In terms of the rest of it, it is pretty normal course in terms of operations.

There's not really any big discretionary items that we'd flag at this point in time.

Thank you. The next question is from the line of Ghansham Panjabi with Baird. You may begin.

Hey, guys. Good morning. Erik, can you give us an update on the internal initiatives you have going on as it relates to both cost optimization and growth? You called out capacity being tightened in certain areas in the past. I know you answered the question on health and biosciences, but what about across the rest of the portfolio? Just on the cost-saving side, as it relates to productivity, etc., can you give us a sense as to the savings that is likely to flow into 2026 in context of just the operating environment not being very helpful? Thank you.

Yeah, thanks for the question. I'll have Mike go through the details here.

Yeah. Appreciate it, Ghansham. Over the last 18 months, we've done a lot of work to improve our competitiveness as an organization. Specifically, Erik has highlighted, specifically around the HMB health business, that we put a lot of money in terms of R&D and commercial capabilities, starting really in the second half of 2024 and over the course of 2025. That's really to bolster some of the innovation pipeline and really strengthen, again, the commercial capabilities. In addition, we've also increased and will continue to increase our CapEx in the areas to improve capacity, specifically in HMB, where we think we have good growth potential and really good incremental margins associated with that. That's something we've done and will continue to do as we go forward from here in that business to really generate the value there.

As we go into 2026, we believe we're positioned well. We are cautiously optimistic that we will lead to improved growth trajectories going forward. At the same time, we're also working on just generating better incremental productivity that comes with improving margins going forward as a focus. I don't want to go into too much of the details here. Again, we'll come back in February and we give our overall guidance. I think the team has made a tremendous amount of progress, both in reinvesting, really trying to get the growth aspect of it, and targeting incremental productivity opportunities to continue to expand margin and reinvest in the business as needed through a self-funding mechanism. Feel good about the progress being made.

Thank you. The next question is from the line of Patrick Cunningham with Citigroup. You may begin.

Hi, good morning. This is Alex on for Patrick. I guess we're hearing more about the economy taking a K-shape where lower-income households are spending less. I guess I'm wondering if you're seeing this as something you're seeing across your business segments. And maybe what that implies for volumes in 2026. Thank you.

Thanks, Patrick. Yeah, we are seeing some of this. We have talked to the weakness overall in volumes in North America. The good news is we have got a diverse customer base, both in size of customers, geography base, and in categories. We are adapting our focus around the world. Just to give you some examples, on the lower end and private label area, we are seeing growth, and we have put more emphasis on that. On the high end, the fine fragrance business continues to do well. We have put a lot of emphasis on making sure that we are a partner of choice in fine fragrances. We talked about the Miu Miu win with L'Oréal, very important for us. We are seeing geographies, and even in fine fragrance, like the Middle East, growing very rapidly. We are putting more emphasis there. We opened a creative center there.

We continue to obviously stay focused on ensuring that we do well with global key accounts, but also increasing our emphasis on regional and smaller customers in geographies that are fast-growing. Yes, there is a K-shaped economy more today than there was before, but we are adapting our model to make sure that we grow at or ahead of the market going forward.

Thank you. The next question is from the line of Josh Spector with UBS. You may begin.

Yeah, hi, good morning. I wanted to try again a little bit on '26 and just thinking about really the range of scenarios and your ability to respond. Specifically, that if we stay in this kind of, call it, 1% growth environment, maybe from a consumer perspective, do you have actions and levers that you think would deliver earnings growth higher than that, be it self-help or other things in flight that we should be considering? Thank you.

Yeah, great question, Josh. I'll take this one if that's okay. Growth is an important part of the algorithm. The more growth we get, the incremental margins associated with that growth, in terms of fixed cost leverage, it's nice. The more you can grow, the better you are. That's ultimately what we're striving to, which is why some of those reinvestments were so important to make sure we accelerate the growth. At the same time, you do need to prepare that if the event that the market is still in that 1%-2% range, how do you work on your cost structure to ensure you generate profitability improvement? We are fully focused on that. The team has done a very good job over the last couple of years to drive productivity.

It is something that is paramount now as we go forward to continue to do that. Areas like streamlining corporate functions, leveraging automation, redesigning processes, that will allow us to be more effective and more efficient. I do believe we still have some opportunities there. There is contingency planning associated with that. As we think about the context going forward, we will include that as areas to accelerate to make sure we maximize profitability as we go forward, even in a lower growth environment.

Thank you. The next question is from the line of John Roberts with Mizuho. You may begin.

Thank you. Have we been seeing any acceleration in the reformulation of food products? Is that maybe part of the reason for the continued strength in the flavors business?

We haven't seen a big shift yet. What I would call it is a continued move towards cleaner labels and reformulation for that, which we like. If that accelerates, that's good for us. What we've been doing is following what our customers and consumers want, which are cleaner labels. We've got a very strong capability, both in scent and in taste and naturals. That's played well for us. That's why you're seeing growth, because of our focus on the innovation, but also on our commercial capabilities to help customers delight consumers.

Yeah, maybe just to add on that, when you look at it, John, the pipeline has actually improved and continued to improve. What that's a good barometer is that the customers are looking for more innovation, which is very good for our business overall. I think that's the buoyancy that you've seen over the last couple of quarters within scent and taste overall, which has provided a bit of tailwind there.

Yeah, as the customers see lower volume growth in the market, they're pushing for more innovation to be able to profitably grow themselves. We're there to help.

Thank you. The next question is from the line of Kevin McCarthy with Vertical Research Partners. You may begin.

Hi, this is Matt Hettwer on for Kevin McCarthy. Would you comment on two items? A, the potential pace of execution against the $500 million share repurchase authorization that you announced last quarter. B, the expected cash proceeds from the pending divestiture of the deal with Bunge.

Sure. Thanks, Matt, for the question. In terms of the share buyback program, we actually started or commenced it on October 1. That was part of our trading plan. That is now been implemented. As a reminder, the program is geared towards dilution plus model, which means at a minimum, our plan is to target offsetting dilution, which for us, on a yearly basis, is about $80 million. We have some flexibility based on intrinsic value, free cash flow generation that we can increase or decrease to purchases within the trading grid. We do have some of that flexibility. As you think about modeling for the fourth quarter, just given that we started on October 1, I would assume at this point we are offsetting dilution, which is the $80 million divided by four, essentially, which is called about $20 million.

We will give more update as we get to the guidance call in February. That is kind of part number one. I think part number two, your question was the expected proceeds for the pending deal with Bunge. In terms of gross proceeds, I think it is about $110 million in gross proceeds. I would estimate around $90 million in terms of net cash proceeds after tax and some of the deal fees associated with it.

Thank you. The next question is from the line of Lauren Lieberman with Barclays. You may begin.

Thanks. Good morning. Like I said, I had two questions, actually. First was on taste. In the slides, you mentioned you had favorable net pricing. I was just curious if that's comparable to what peers are doing. I was surprised to see that there was positive pricing in this environment. That was the first question. The second one is if you could just offer any observations on growth of multinationals versus local and regionals. Thanks. Also the pipeline, sorry. Also just the pipeline activity from those two subsets.

Maybe, Erik, I'll start on the taste piece of it. The team has really done a good job. When I think about the net pricing comment, Lauren, when there's areas of inflation, and one area there is some tariff inflation that we get, the team has done a really good job of offsetting that as part of their pricing areas. At the same time, it's a net pricing number. In terms of the inflationary environment that we've seen throughout 2025, which was about low single-digit inflation, the team did a really good job of productivity to drive some of those costs down. When you combine productivity with the raw material cost exposure and the pricing strategy, that's how you got to your net pricing benefits there.

I think I can't speak to the competition, but I can speak that the team has done a very good job at executing on that piece of it. In terms of the global versus local and regional, Erik?

Yeah, we're seeing the regional and locals growing faster. We've put more emphasis on growing with them and accelerating our pipelines with them. The global key accounts are still critically important to us. They're increasing their focus on innovation. Our pipelines with them are very strong and robust. We're not decreasing emphasis on global key accounts, but we're increasing our focus on the regional and locals.

Thank you. The next question is from the line of Laurence Alexander with Jefferies. You may begin.

Good morning. Can you give us some color on what your customers are telling you about inventory levels and their patience on reformulations? What I mean is, are they seeing the evidence that reformulations are driving significant organic growth acceleration? If not, how long will they keep reformulating before they switch to other ways to protect earnings and cash flow in a slow-growth environment?

Maybe I'll start, Erik, and feel free to add on. The inventory question is a good question, Lawrence. I think when you get into a slower-growth environment, specifically with some of the global accounts, you always have to make sure the inventory management aspect doesn't have the impact on the business. I think based on the feedback that we've heard from the team, there are some markets, very candidly, like North America, that have a little bit higher inventory levels. I think embedded in our forecast is a little bit of a deceleration in that market specifically because of inventory levels. Broadly speaking, if you take a step back, inventories feel like they are in a good spot globally. Like I said, there are some markets like in North America that there could be some inventory management that could potentially happen there.

I think that's part number one. Part number two, in terms of the patience, I think your question around patience of reformulation. It's an opportunity. When you look at the customer set, over the last several years, pricing has a big part of their algorithm. Really, and I think Erik just alluded to it, to really differentiate yourself in a market where pricing becomes more challenging in the overall market, innovation becomes a key part of the driver going forward. I don't think you're going to see them throw up their hands and say, "Innovation is not important." I think they're going to continue to make sure that is a central part of their algorithm going forward.

For us at IFF, that's a good thing because we like the portfolio, we like the R&D that we have, and we're focused on that. I think those are the two I would give. Erik, I'll pass to you if there's anything.

The only thing I would add then is on the inventory side, there is a lot of uncertainty with our customers, and they are trying to operate with lower inventory levels. We absolutely can and will do a better job of managing our inventory levels, but we are also trying to make sure that we are not missing order opportunities. We are really trying to stay close to our customers and understand what their needs are so that we are able to operate with lower inventories but not miss any delivery reliability goals.

Thank you. The next question is from the line of Silke Kueck with JPMorgan. You may begin.

Hi. Good morning. How are you? When you look at 2026, what do you think are the bigger product launches? The collaboration with BASF sounds like there are product opportunities on the detergent side. Is that something that will affect consumer fragrances and scent, or is that something that will be seen in the enzyme category under H&B? That's my first question. Secondly, the beverage can companies have spoken about growth in protein-enriched beverages, like protein being added to essentially everything. Is that an opportunity for IFF? When it's beverages, do you see that as a taste opportunity, or because it's protein, will that show up in H&B? My third question is, you talked about regionals and locals growing faster than multinationals. Does that mean private label is also growing faster? How do you approach going after the private label business?

Thanks for those questions, Silke. I'll try to take them one at a time. Mike, please pitch in any time. Let's talk first of all about the BASF collaboration. I think it's really important. BASF has a very strong position in chemistry with many home and personal care companies. We've got a very strong capability in enzymes and have very good positions with a number of customers, but haven't reached the broader market as well as we would like to. The combination of us plus BASF's really strong commercial capability, our enzymes, and their chemistry is, we believe, a very strong opportunity to serve customers better for both of us. We'll see that play out. It should start to see enzyme growth toward the end of 2026, but more in 2027, I would say.

With that, we'll improve our relationships and connections with customers for scent. On the protein movement, I would say it's very strong. It obviously helps our protein business. We're the leaders in plant-based proteins, which are very much in vogue and desired. Less so in the alternate meats. That is rebased and growing, but off of a smaller base. Certainly in beverages, bars, and other areas, we see growth opportunities for our protein business, but also for our broader food ingredients business to make sure that the protein drinks and other products have the right mouthfeel, the right taste, do not settle out, the protein does not settle out, and very importantly, the taste. The flavors, which gives us an opportunity to go in with.

Our protein and our other food ingredients capabilities and bring more total solutions to customers that at least open the door for not only our food ingredients people, but for our taste capabilities. This protein dynamic, I think, was strong and is further accelerating with the GLP-1s. We see that continuing, and we see us well positioned. We are already seeing good growth from it. The last one was on the regional and locals. Yes, private label is increasingly important. That is back to the K-economy. We are putting more emphasis on working with the private label retailers, but also the co-manufacturers who make the products and making sure that our capabilities are helping them achieve what they want to help.

Thank you. The next question is from the line of Abigail Eberts with Wells Fargo. You may begin.

Hi there. Thanks for taking my question. I know this was touched on already, but I wanted to push a little bit further on fine fragrance. You obviously reported 20% growth this quarter and double-digit growth last quarter. It's been growing very strongly. I know you mentioned wind, but I'm wondering if there's something else in underlying trends driving this growth. Looking forward, is this a level of growth that we should expect going forward? I know you mentioned upside from your scent centers in Dubai and Florida, bearing fruit mid to late 2026. How should we think about this next quarter or this coming quarter and then the first half of 2026? Thanks.

The fine fragrance business has shown tremendous growth rates. I do not expect to have that strong a growth going forward, but I do expect continued solid growth from fine fragrances. I think that is because of our capabilities. We have got great perfumers. We have got great molecules. We have got significantly enhanced investment in innovation that is going to be coming more in 2026 and 2027. We have invested in places like Dubai with Creative Center and Creative Centers in other parts of the world, Shanghai and others. We are absolutely committed to this market. We absolutely want to serve our customers to help them have great products. I think another dynamic here is the whole social media dynamic where you are seeing influencers really starting to or have been, and I think will continue to expand the marketplace, expand to new generations, to.

Not only females, but more to males, a younger generation, and more diverse groups. I think that's fueling the growth, and we see that continuing.

Thank you. The last question is from the line of Christopher Parkinson with Wolfe Research. You may begin.

Hey, good morning. This is Harris Fein. I'm for Chris. I mean, there's been some solid year-on-year margin comps in food ingredients. Just wondering if you could maybe talk about the line of sight to bridge that margin to the mid-teens next year. We're also all looking forward to the strategic update early next year. In the interim, maybe if you could talk about any opportunities you have to prune maybe more along the lines of what you did with the soy crush business in the interim could also be helpful. Thank you.

Yeah. Hey, Harris. Thanks for the question. Look, I think the food ingredients team has done a fantastic job really emphasizing margin improvement. Just kind of bringing it back, if you remember, at the lows, it was about 9% EBITDA. The trajectory now, it was 9-12, moving towards 14 if you adjust for portfolio, gets towards that 15. The line of sight is actually pretty strong in terms of overall recovery, and the team has done an excellent job. As they go forward, what's really important, because not only did we divest business, we were also very strategic in, I'd say, ongoing pruning of our overall portfolio. We were very selective. Some of the lower-margin businesses, we kind of walked away, which is embedded in some of our top-line performance this year in 2025. I think so.

As you go into 2026, the more growth you can get into that business and return to growth, that's where you get nice leverage with the P&L. That's kind of priority number one, is how to get the business back towards that growth number. One. Two, we started basically two years ago on a big productivity push. Looking at plant optimization, raw material optimization, the team has done a good job, and that's a big driver of what you're seeing in the performance in 2025. That will also continue into 2026. Between those two levers, I think you still have a line of sight to continue to improve that business, both from a top-line perspective, but also from a margin perspective.

I think then you'll get back to that mid-teen, and the team is focused and fully focused on that as they drive going forward.

I'll just add one other thing is we are investing where we see high profit margin growth opportunities. For example, the Taura Fruit Inclusions business segment, we're expanding the capacity significantly there. The current capacity is sold out, high margins, high growth. Andy and his team are really driving also growth in the higher margin areas.

Thank you. There are currently no questions registered at this time. I'll let the pass the call back over to Erik for any further remarks.

Thank you all for joining today's call. Let me close by saying that I'm very proud of the progress the IFF team has made over the last 18 months. We are a much stronger company with a bright future. We have a solid balance sheet, a clear strategy, a strong and strengthening innovation pipeline, a strong focus on serving customers and consumers, and we're executing better and better and doing what we say we are going to do. I look forward to the road ahead, and thank you very much.

Thank you all. At this time, this will now conclude today's conference call. We appreciate your participation. We hope you all have an amazing rest of your day. You may now disconnect your line.

International Flavors & Fragrances Q3 2025 Earnings Call Transcript | Fortune

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International Flavors & Fragrances (IFF) Q3 2025 Earnings Call Transcript

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