IFF Half-Year Report 2023

Second Quarter 2023 Consolidated Financial Results

• Reported net sales for the second quarter were $2.93 billion, flat versus the prior-year period. On a comparable basis, currency neutral sales decreased 4% versus the prior-year period, as continued growth in Scent and
• Pharma Solutions were more than offset by softness in Nourish & Health & Biosciences. Pricing continues to be strong, increasing high- single digits year-over-year, and volume was pressured primarily related to destocking, declining low double-digits versus the year-ago period. Approximately 60% of the total volume decline was due to a more than 20% volume decline in the Functional Ingredients business. IFF volume performance was down mid-single digits in the second quarter 2023, excluding the impact of Functional Ingredients.
• Income before taxes on a reported basis for the second quarter was $50 million. Adjusted operating EBITDA for the second quarter was $510 million. On a comparable basis?, currency neutral adjusted operating EBITDA declined 18% versus the prior-year period, as strong pricing and productivity gains were more than offset by lower volumes, unfavorable manufacturing absorption related to the Company’s inventory improvement program and a $44 million one-time write-down of inventory related to unprecedented cost fluctuations for Locust Bean Kernel (LBK).
• Cash flows from operations at the end of the second quarter was $375 million, and free cash flow defined as cash flows from operations less capital expenditures totaled $85 million. This cash flow performance was driven by more than $150 million reduction in inventory versus the first quarter 2023. Net debt to credit adjusted EBITDA at the end of the second quarter was 4.5x.