IFF International Flavors and Fragrances Sept 2013 Investor Slide Deck Powerpoint PPT PDF

7/29/2019 IFF International Flavors and Fragrances Sept 2013 Investor Slide Deck Powerpoint PPT PDF

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September 4, 2013

Kevin BerrymanEVP & Chief Financ ial Off icer

BarclaysBack-to-School

Conference

Doug ToughChai rman & C EO

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Forward Looking Statements

Before we begin, we would like to remind everyone that during todayspresentation, we will be making forward-looking statements about theCompany's performance . These statements are based on how we seethings toda y and ac tual events or results may differ materially from thosereflected in our forward-looking statements. Forward-looking statements canbe identified by words such as believes, estimates, expec ts, or similarreferences to the future, and include statements we may make regardingthe Companys future financ ial performance, business prospects, andoperating strategies.

There are many fac tors that can result in ac tual performance differing fromprojections and forward-looking statements. These fac tors are set forth in our2012 Annua l Report on Form 10-K filed with the SEC on February 26, 2013.

Today's presentation will include non-GAAP financial measures, whichexclude those items that we believe affec t compa rability. Rec onc iliation of

these non-GAAP financial mea sures to their respective GAAP measures areavailable on our website at www.iff.com.

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$2.9B in Revenue (TTM)

Split 51% Fragrance; 49% Flavors

More than 75% revenue outside US

Over 5,800 employees

32 countries

49 sales offices

22 regional creative centers

Business Profile (as of 2Q13)


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Global Flavors and Fragrances Industry

Characteristics

~$18 billion global industry*

Market growth of 2% to 3%

Market remains fragmented outside top p layers

IFF has an approximate 16% share**

Defensive/stable industry

Based on FY 2012** Source: The Freedonia Group, Inc. 2011ExcludesEssential Oilsa nd Natural Extracts

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Global Fragrance Compound MarketGlobal Flavors Market Breakdown

Source: IAL Consultants & Internal Estimates *2011Source: IAL Consultants & Internal Estimates *2011

Growing 3-5% CAGR

Source: IAL Consultants & Internal Estimate s *2011Source: IAL Consultants & Internal Estimate s *2011

Total Fragrance CompoundMarket Estimated at $6 Billion*

Growing 2-3% Per Year

Total Flavors MarketEstimated at $9.6 Billion*

Fine

Fragrance

27%

Fabric

Care

25%

Beauty

Care17%

Home

Care

16%

Personal

Wash

15%

Beverage

35%

Savory

33%

Sweet

21%

Dairy

8%

Other

3%

Global F&F Compound Marketsby Category

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Investment Profile

Partner with leading global consumercompanies

Diversified product portfolio and stronginnovation pipeline

Geographica lly diversified with 49% of businessin emerging markets (as of 2Q13)

Strong financial performance and cash flowgeneration

Backward integration ensures sustainablesupply of raw materials

Experienced management team & focusedstrategic growth plan


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Long-Term Growth Strategy

LeverageGeographicReach

StrengthenInnovationPlatform

MaximizePortfolio

Emerging markets aregrowing 2-3x rate ofdeveloped markets

Over 49% of o ur salesare to emerging markets

Expertise in adaptingflavors to local tastes

Spend 8% or aboveon R&D

Research is becominggreater percentageof R&D

Drive innovation intothe portfolio

Econo mic Profit is usedfor disciplined decisionmaking

Single-instance globa lenterprise system

Enhanced marginsand operating profit

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42.0%

44.0%

46.0%

48.0%

50.0%

52.0%

54.0%

56.0%

58.0%

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

Nearly 50% of Sales to Emerging Markets

Deve loped Emerg in g

Emerging Market Presence is Building

56% FY

44% FY

54% FY

46% FY

53% FY

47% FY

51% Q2

49% Q2

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Research Platforms

1FlavorModulation

FlavorNaturals2

FlavorDeliverySystems3

HighImpact4

5FragranceMolecules

FragranceNaturals6

FragranceDeliverySystems7

ProcessResearch8

Malodor9

Modeling10

10 Research Platformsaddress consumer need states


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65%

20%

15%

EP Positive EP Break-even EP Negative

79%

15%

6%

EP Posi tive EP Break-even EP Negative

Maximize Portfolio Improved Economic Profit

94% of Portfolio is now EP neutral or Positive

2012 Portfolio Value Breakdown2010 Portfolio Value Breakdown

% Capital Employed % Capital Employed

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Innovation at IFF

Kevin BerrymanEVP and Chief Financial Officer


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Long-Term Financial Targets

LeverageGeographicReach

StrengthenInnovationPlatform

MaximizePortfolio

Local CurrencySales Growth

Adjusted OperatingProfit Growth

AdjustedEPS Growth

4-6% 7-9% 10+%

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Sec ond Quarter 2013Financial Results

* LFL, or like-for-like, isa non-G AAP metric that excludes the exit of low-margin sales activities,please see ourGAA P to Non-GAAP Reconciliation at IFF.com.

**Adjusted Operating Profit, adjusted EPSand LC Salesa re Non-GAAP metrics,please see ourGAA P to Non-GAAP Reconciliation at IFF.com.

LC sales growth +6%; +8% LFL*

Fragrances +8%; C ompounds +10%

Flavors +5%; LFL +8%*

Emerging markets +10% (49% oftotal sales)

Adjusted gross margins +240bps**

Ad justed operating profit +10%**

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1H 2013 Performance Overview

LCsalesgrowthof6%LFL**reflectssuccessofemergingmarketstrategy

7% growthinFlavors

8% growthinFragranceCompounds

Adjustedgrossmarginexpansionof260bpsto43.6%,reflectsfavorable

volume&mix,

reducedinputcosts,andmanufacturingefficiencies

12%growthinadjustedoperatingprofit;12%growthinadjustedEPS

LC SalesGrowth*LC SalesGrowth*

5%5% 12%12%

Adjusted EPSGrowth*

Adjusted EPSGrowth*

Adjusted OperatingProfit Growth*

Adjusted OperatingProfit Growth*

12%12%

* LC Sales, Adjusted Operating Profit and Adjusted EPSare non-GAA P metrics;please see ourGAA P to Non-GAAP Reconciliation at IFF.com.

**LFL, orlike-for-like, isa non-GAA P metric that excludes the exit of low-margin salesac tivities, please see our GAAP to Non-G AAP.Reconciliation at IFF.com.


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Adjusted Gross Margin* Progression

Strategic initiatives, including category mix, innovation,and cost reductions more than offset net price/ cost margin factors

* Includes volume leverage, c ategory mix, including exit of low-margin salesac tivities, and co st savingsinitiatives, net of cost increases.*Adjusted grossmarginsexclude restructuring and otherc hargesa nd operational improvement initiatives

42.1 1.9

3.4 43.6

1H 2010 GrossMargin

Net Price andInput Costs

StrategicInitiatives*

1H 2013 GrossMargin

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Increased Working Capital Efficiency

Core Working Capital as a % of Net Sales

27%

28%

29%

30%

31%

32%

33%

34%

35%

2008 2009 2010 2011 2012 2013 - 2015


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Uses of Cash

Allocation based on principles of Financial Flexibility

CapitalExpenditures

FinancialFlexibility

Acquisition/DevelopmentOpportunities

CashReturned to

Shareholders

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Capital Expenditures

Increased Investments in Emerging Market Capac ity and Technology

3.4%

4.4% 4-5%

~3%

0%

1%

2%

3%

4%

5%

2003 - 2009 2010 - 2012 2013 - 2015 2016 - 2018

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$0.60$0.63

$0.69$0.73

$0.77

$0.88

$0.96$1.00

$1.04

$1.16

$1.30

$1.46

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E

Cash Returned to Shareholders

Increased quarterly

dividend

15% to $0.39 per share

IFFs quarterly dividend has

grown by a C AGR of 13%

over last 3 years

Historica l dividend payout

ratio of 30-35%

Authorized $250 million

share buyback intend to

spend $50 million in 2013

Annual Cash

Dividend Declared


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M&A Ac tivity

Routinely evaluate M&A opportunities

F&F companies participa ting in attrac tive markets

F&F companies operating in geographieswhere we are under- represented

F&F companies with differentiated technology

Evaluate c onsistent with p rinciplesof Economic Profit

Will consider adjacenciesthat bolster long-termgrowth prospects

Augment Our Organic Growth Strategy

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Balance of Year Perspective

ContinuetoexpectLCgrowthinline

withLTtargetsof46%

Marginexpansion,costcontroland

manufacturingefficienciesdriving

operatingprofitgrowth

OurR&Dpipelineshouldprovideus

withlongertermgrowthwhile

providingsustainablecosteffective

rawmaterials

FY2013isexpectedtobeinlinewith

longtermtargets

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51% 49%

Sales Exposure to FX in EmergingMarkets

Emerging MarketsQ2 13 Revenue

Developed Markets

Emerging Markets

USD +Othe r Currencies

Emerging Market Currenc ies


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Summary

Geographically Diversified Company with Steady Growth

Partnered with Leading Global Consumer Companies

Strong Innovation Platforms Focused on Consumer Needs

Strong Financial Performance and Cash Flow

Ability to Deliver Strong Returns Longer-Term

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Questions

Documents

IFF International Flavors and Fragrances Sept 2013 Investor Slide Deck Powerpoint PPT PDF