International Flavors & Fragrances (NYSE:IFF) executives emphasized portfolio actions, disciplined execution, and a stronger balance sheet as they discussed fourth-quarter and full-year 2025 results and laid out expectations for 2026.
CEO Erik Fyrwald said the company remains focused on “disciplined execution and improvements across the business,” while continuing to reinvest in high-value core operations. CFO Michael DeVeau added that IFF is “cautiously optimistic” about 2026, with guidance calling for sales growth driven primarily by volume rather than price.
Portfolio reshaping and balance sheet progress
- IFF completed divestitures of its Pharma Solutions, Nitrocellulose, and René Laurent businesses.
- The company announced an agreement to sell its Soy Crush, Concentrates, and Lecithin businesses to Bunge, which it expects to close by April.
- IFF formally launched a sale process for its Food Ingredients business after months of preparation; management said it is “officially in the market” and encouraged by the “depth and quality of interest” from strategic and financial parties.
DeVeau said the company is “under no pressure to sell” Food Ingredients given improved capital structure and operational performance, but views a sale as a way to “capture full value” for shareholders. In Q&A, Fyrwald said proceeds would be used to buy back shares to offset dilution and to pay down debt to keep leverage below the company’s 3.0x target.
On leverage, Fyrwald said IFF’s net debt to credit-adjusted EBITDA ended 2025 at 2.6x, reflecting what he called a “more disciplined capital allocation strategy.” DeVeau added that gross debt finished the year at about $6 billion, down nearly $3 billion from 2024.
Fourth-quarter results: modest sales growth, higher EBITDA
DeVeau reported fourth-quarter revenue of nearly $2.6 billion, with comparable currency-neutral sales up 1% against a 6% year-ago comparison. EBITDA totaled $437 million, up 7%, and EBITDA margin increased 90 basis points to 16.9%, which management attributed primarily to volume growth and productivity initiatives.
By segment in the quarter:
- Taste: Sales rose 2% to $588 million, with growth in all regions and high-single-digit growth in North America driven by new wins. EBITDA was $94 million, up 17%, supported by favorable net pricing and cost discipline.
- Food Ingredients: Sales fell 4% to $802 million, as weakness in Protein Solutions and Emulsifiers and Sweeteners offset Systems and Inclusions growth. Management said some decline reflected a proactive exit of low-margin business and lost sales due to sanctions in Russia and emulsifiers. EBITDA declined 11% to $82 million due to volume declines and unfavorable net pricing.
- Health & Biosciences: Sales increased 5% to $589 million, with double-digit growth in Food Biosciences and Animal Nutrition and high-single-digit growth in Home & Personal Care. Health was down low single digits but improved sequentially. EBITDA rose 20% to $155 million on volume growth and productivity gains.
- Scent: Sales grew 4% to $610 million, driven by 10% growth in Fine Fragrance and mid-single-digit growth in Consumer Fragrance. Fragrance Ingredients remained pressured by market softness and price competition in commodity ingredients. EBITDA increased 1% to $106 million, with productivity and volume gains partly offset by unfavorable net pricing in Fragrance Ingredients.
Full-year 2025: segment drivers and cash flow details
Fyrwald said IFF delivered “solid sales growth” in 2025 against a strong comparison, citing average sales growth of 4% over the last two years. He said consolidated EBITDA grew 7% with 100 basis points of margin expansion, driven by volume and productivity gains and favorable net pricing.
Fyrwald noted segment-level full-year performance trends, including Taste sales growth of 4% with EBITDA up 10%, Health & Biosciences sales up 3% with EBITDA up 7%, and Scent sales up 3% with EBITDA up 2%. He also pointed to Fine Fragrance strength and commodity pressure in Fragrance Ingredients, as well as Food Ingredients margin expansion despite lower sales.
DeVeau said operating cash flow for 2025 was $850 million, with capital expenditures of $594 million (about 5.5% of sales). Free cash flow was $256 million, which included about $300 million of “Reg G-related charges” primarily tied to divestiture activities, and a working capital outflow of about $166 million. DeVeau said working capital performance—and inventory in particular—will be a key priority in 2026. Fyrwald added that inventory levels were higher than targeted in the first half of 2025, prompting a heightened year-end focus on reductions.
IFF returned $409 million to shareholders via dividends and repurchased $38 million in shares after starting a repurchase program in the fourth quarter. DeVeau reiterated an expectation to at least offset annual share dilution of roughly $80 million to $100 million.
2026 outlook: volume-driven growth, reinvestment funded by productivity
For 2026, DeVeau guided to sales of $10.5 billion to $10.8 billion, implying comparable currency-neutral growth of 1% to 4%, and EBITDA of $2.05 billion to $2.15 billion, implying comparable currency-neutral growth of 3% to 8%. He said foreign exchange is expected to add about 1 percentage point to sales and have a negligible impact on EBITDA.
Management said the outlook assumes current market conditions, with upside tied to broader end-market volume improvement. In Q&A, DeVeau said the company expects growth to be “volume driven,” and he cited customer commentary indicating CPG companies are increasingly emphasizing volumes in 2026. He also disclosed incremental margins on volume of roughly 30% to 35%, depending on the segment.
DeVeau said year-over-year comparisons are strongest in the first half—particularly in the first quarter—due to favorable one-time items in the prior year, including contributions from divested businesses. As a result, IFF expects “more muted” sales and EBITDA in the first quarter, followed by progressively improving comparisons and performance through the year.
On margins and incremental flow-through, DeVeau said guidance reflects ongoing reinvestment in innovation and commercial capability funded by productivity, and that volume growth remains “critical” for stronger leverage. Fyrwald added that management expects margin benefits as the innovation pipeline increasingly comes through.
On cost inflation, DeVeau said IFF anticipates modest input cost inflation in 2026 across raw materials—including tariff impacts—plus logistics, energy, and packaging. He said the company expects to mitigate inflation through collaboration with customers, reformulation, productivity, and pricing over time. He also said pricing is expected to be “slightly down,” primarily due to the commodity portion of Fragrance Ingredients and residual pricing impacts in Food Ingredients.
Operational themes: innovation, Health turnaround, and select end-market trends
Fyrwald described innovation as a key driver for 2026, citing investments in enzyme capacity, naturals, Health, and new molecules supported by biotechnology and AI capabilities. He said IFF expects to see more benefits from increased R&D investment beginning in the second half of 2026 and into 2027.
In Health & Biosciences, management said the Health business remains the key area still in decline, particularly in North America, but executives described sequential improvement and said they expect it to flatten in the first half of 2026 and return to growth in the second half under new leadership and an improvement plan.
Executives also discussed product and consumer trends. Fyrwald said IFF has been working across business units on solutions for GLP-1 consumers and cited yogurt and protein-related innovation as areas where the company is supporting customers. He added that ongoing reformulation (such as reduced sugar, salt, fat, and “cleaner label” initiatives) represents an opportunity for IFF, though he said it has not accelerated as much as some market commentary would suggest.
Management closed the call by reiterating expectations for continued portfolio optimization progress in 2026, alongside a focus on profitable growth, cash flow improvement, and reducing “below the line” costs over the next 18 months.
About International Flavors & Fragrances (NYSE:IFF)
International Flavors & Fragrances Inc (NYSE:IFF) is a global leader in the creation and production of flavors, fragrances, cosmetic actives and nutritional lipids. The company develops taste and scent solutions for a wide array of end markets including food and beverage, personal care, household goods and pharmaceutical products. Its portfolio spans natural and nature-identical flavors, fine fragrances, functional ingredients for skin and hair care, and specialty oils that enhance nutritional value and sensory appeal.
IFF’s research and development network comprises innovation centers in North America, Europe, Asia-Pacific and Latin America, where multidisciplinary teams collaborate on aroma chemistry, sensory science and biotechnology.
