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IFF Reports Strong Fourth Quarter and Full Year 2013 Results

  IFF Reports Strong Fourth Quarter and Full Year 2013 Results  Fourth Quarter Local Currency Sales Growth of 7% and Adjusted EPS Increase of                                  11% to $0.92     Full Year Local Currency Sales Growth of 5%; Reported Sales Growth of 5%          Full Year Adjusted Earnings per Share Increase of 12% to $4.46  Business Wire  NEW YORK -- February 13, 2014  International Flavors & Fragrances Inc. (NYSE:IFF), a leading global creator of flavors and fragrances for consumer products, today reported financial results for the fourth quarter and full year ended December 31, 2013.  Fourth Quarter 2013 Results    *Reported revenue increased $44 million, or 7%, to $725 million from $681     million in the prior year quarter. Local currency sales increased 7%     reflecting solid sales growth in both the Flavor and Fragrance business     units, fueled by double-digit growth in the emerging markets. In the     fourth quarter, our expanding footprint in the emerging markets accounted     for 50% of consolidated sales.   *Reported net income for the quarter totaled $61.5 million, or $0.75 per     share, compared with net income of $68.1 million, or $0.83 per share, in     the prior year quarter. Net income in the fourth quarter of 2013 included     a $9.1 million after-tax Spanish capital tax charge, a $1.9 million     after-tax loss on the sale of a non-operating asset, and other costs     associated with previously announced restructuring or improvement     initiatives.   *Excluding the Spanish capital tax charge and other costs included in the     Reconciliation of Income table from the current year’s results, adjusted     net income increased 11% to $75.5 million from $68.1 million in the prior     year quarter, and adjusted earnings per share (EPS) increased 11% to $0.92     per share from $0.83 per share in the prior year quarter.  Full Year 2013 Results    *Reported revenue for the full year increased 5% to $3.0 billion. Local     currency sales increased 5% for the full year, reflecting strong growth     from new business wins and positive volume on existing business. On a     like-for-like basis (LFL), which excludes the exit of Flavors low-margin     sales activities, local currency sales increased 6%. The emerging markets     grew by 10% and accounted for 49% of full year sales.   *Reported net income for the full year totaled $353.5 million, or $4.29 per     share, compared with net income of $254.1 million, or $3.09 per share, in     the prior year. The current year’s net income included charges of $22.9     million related to a Spanish capital tax charge and other costs associated     with the recently announced restructuring and operational improvement     programs. These charges were partially offset by an $8.5 million after-tax     net gain on the sale of non-operating assets. The prior year’s net income     included charges of $73.4 million (or $0.89 per share), primarily related     to the Spanish income tax settlement.   *Excluding these charges from both years’ operating results, adjusted net     income increased 12% to $368.0 million from $327.5 million in 2012 and     full year adjusted EPS increased 12% to $4.46 from $3.98 in the prior     year.   *Cash flows from operations for the full year were $407.6 million, or 13.8%     of sales, compared with $323.8 million, or 11.5% of sales in the prior     year. The current year’s cash flow from operations included $48 million of     cash payments related to the Spanish tax cases and incremental U.S.     pension contributions. The prior year cash flow from operations included a     $105.5 million cash payment due to the Spanish income tax settlement.     Excluding these payments from the Company’s operating cash flow, adjusted     cash flow from operations would have increased 6% from $429 million in     2012 to $456 million in 2013.  Subsequent Events    *On January 16^th, IFF announced it had completed the acquisition of Aromor     Flavors and Fragrances, Ltd, a privately-held manufacturer and marketer of     complex specialty ingredients. Aromor would have represented approximately     $35 million of incremental sales to IFF’s 2013 results on a pro-forma     basis. Aromor is expected to be accretive to IFF’s earnings per share in     2014. The acquisition of Aromor, with its strong R&D capabilities,     supports IFF’s strategic focus on creating consumer-preferred Fragrance     Compounds using specialized, value-added, cost-effective molecules.  Management Commentary  “We are very pleased with our fourth quarter performance, which benefited significantly from the diversity of our businesses and end-use categories in both the developed and emerging markets,” said Doug Tough, Chairman and CEO of IFF. “The emerging markets continue to be a primary driver of our topline growth, and accounted for half of our consolidated sales and a majority of our top line local currency sales increase. This strong, continued growth further validates our emerging market strategy and is yet one more data point that underpins our commitment to these markets.”  Mr. Tough continued, “We once again delivered local currency sales growth and adjusted operating profit improvements that exceeded our long-term targets, while continuing to make important investments in our people and portfolio to strengthen our company and position IFF for continued success.”  Mr. Tough added, “2013 was an extremely productive year for IFF. By executing on our three strategic priorities, we have delivered on our long-term growth targets for full year 2013, achieving 5% local currency growth (6% LFL), 11% adjusted operating profit growth and 12% adjusted EPS growth, while having the financial flexibility to invest in the future growth of IFF, and return capital to our shareholders.”  “We are very excited about the future profitable growth of IFF and believe we are well-positioned to deliver another strong year in 2014.”  Fourth Quarter 2013 Operating Highlights    *Local currency sales increased 7%, supported by 12% growth in Greater Asia     and 10% growth in both Latin America and EAME.   *Gross profit margins, as a percent of sales, improved to 43.2% from 42.2%     in the fourth quarter of 2012. Excluding previously announced     restructuring and other improvement initiative costs from cost of goods     sold, the adjusted gross profit margin increased 160 basis points to 43.8%     from 42.2% in the prior year quarter. The improved performance reflects     moderating input costs combined with the implementation of our strategic     initiatives, including mix, innovation and cost reductions.   *Research, selling and administrative (RSA) expenses, as a percent of     sales, were 30.1% in the fourth quarter of 2013 compared with 27.6% in the     fourth quarter of 2012. The current quarter RSA expense includes a $13     million pre-tax charge related to the Spanish capital tax case. Excluding     the impact of the Spanish capital tax charge, adjusted RSA, as a percent     of sales, increased 70 basis points to 28.3% compared with 27.6% in the     prior year quarter, reflecting increased investment in R&D, increased     incentive compensation accruals resulting from our strong full year 2013     performance, as well as $5 to $6 million of non-structural expenses.   *Operating profit in the fourth quarter totaled $94.9 million, compared     with $99.2 million in the prior year quarter. Excluding $17.2 million of     expenses primarily related to the Spanish capital tax case and other     costs, adjusted operating profit increased approximately $13 million, or     13%, to $112 million from $99.2 million in the prior year quarter.     Operating profit benefited from strong sales growth and gross margin     enhancements, which offset higher RSA and incentive compensation accruals     related to our strong 2013 performance. Adjusted operating profit margin     increased 80 basis points to 15.4% from 14.6% in the prior year quarter.   *Interest expense increased by $0.7 million in the fourth quarter compared     with the prior year quarter, primarily reflecting new long-term borrowings     from our senior note offering in the second quarter of 2013 to take     advantage of attractive borrowing rates and maintain efficiency and     flexibility in our capital structure.   *The effective tax rate for the quarter was 25.9% compared with 23.2% in     the prior year quarter. Excluding the impact of the pre-tax Spanish     capital tax charge and other previously announced restructuring and     operational improvement costs, the adjusted effective tax rate for the Q4,     2013 would have been 26.1%. The quarter-over-quarter increase in the     adjusted effective tax rate reflects a higher cost of repatriation and     loss provisions, partially offset by a favorable mix of earnings and the     reinstatement of the U.S. federal R&D tax credit in 2013.  Fourth Quarter 2013 Segment Results  Fragrances Business Unit    *Reported revenue increased 8% to $382 million in the fourth quarter of     2013 compared with $354 million in the fourth quarter of 2012.   *Local currency sales growth of 7% in the fourth quarter of 2013 benefited     from strong growth in the emerging and developed markets, and follows 13%     growth in the fourth quarter of 2012.   *Fragrance Compounds, including both Fine Fragrance and Beauty Care and     Functional Fragrances, achieved sales growth of 9%, as volume growth from     new business wins more than offset volume erosion on existing business.     This growth was on top of 15% growth in the prior year quarter.   *Fragrance Compounds growth was supported by double-digit growth in Greater     Asia and EAME and solid growth in both Latin America and North America.   *Fragrance Ingredients had a small decline of 3% this quarter, driven by     the planned transition of some volume from Ingredients to Compounds.     Excluding the transition, Fragrance Ingredients would have experienced     positive growth for the second consecutive quarter.   *Fine Fragrance and Beauty Care achieved 9% local currency sales growth,     due to strong growth in Fine Fragrance owing to strong new business wins     in EAME. Functional Fragrance achieved 10% local currency sales growth due     to strong growth in Fabric Care, supported by our proprietary     encapsulation technology.   *Fragrances gross margins improved over the prior year quarter primarily     due to moderating input costs and other strategic initiatives including     mix, innovation and cost reductions.   *Segment profit increased 16%, or $9 million, to $62 million in the fourth     quarter of 2013 compared with $53 million in the fourth quarter of 2012.     The improved segment profit is due to strong sales growth combined with     further gross margin expansion and cost discipline. These gains more than     offset increased incentive compensation expenses and higher research and     development expenses this quarter. Segment profit margin increased 110     basis points to 16.2%, up from 15.1% in 2012.  Flavors Business Unit    *Reported revenue increased 5%, or $16.5 million, to $343.0 million in the     fourth quarter from $326.5 million in the prior year quarter.   *Local currency sales increased 7% in the fourth quarter driven by     double-digit growth in the emerging markets, and accounted for 53% of     Flavors sales.   *Sales growth this quarter was supported by growth from new business wins     and increased volume on existing business. The Savory, Beverages and Sweet     end-use categories all experienced low- to mid-single digit sales growth.   *Flavors achieved the highest regional growth in Latin America. Other     strong regions included EAME and Greater Asia.   *Flavors gross margins improved over the prior year quarter primarily due     to the net benefit of moderating input costs versus pricing, as well as     other strategic initiatives to improve efficiency.   *Segment profit increased 12%, or $8 million, to $70 million compared with     $62 million in the prior year quarter. Segment profit growth reflects     strong sales growth combined with further gross margin enhancements, which     offset increased incentive compensation and higher allocated expenses for     shared corporate resources. Segment profit margin increased 130 basis     points to 20.3% from 19.0%.  Full Year 2013 Operating Highlights    *Local currency sales increased 5% to $3 billion, reflecting 10% growth in     emerging markets and 2% growth in the developed markets. On a LFL basis,     which excludes the exit of low-margin sales activities, local currency     sales increased 6%.   *Gross margins, as a percent of sales, increased 180 basis points to 43.5%     from 41.7% in 2012. Excluding previously announced restructuring charges     and operational improvement initiative costs, adjusted gross margins     increased 210 basis points to 43.8% from 41.7% in the prior year. The     improved performance reflects moderating input costs combined with other     strategic initiatives to improve efficiency.   *RSA expenses, as a percent of sales, were 25.9% compared with 24.4% in     2012. Excluding the impact of the 2013 Spanish capital tax charge included     in administrative expense, adjusted RSA, as a percent of sales, increased     110 points to 25.5% from 24.4% in 2012 primarily as a result of higher     incentive compensation accruals.   *Operating profit totaled $516 million in 2013 compared with $487 million     in 2012. Excluding the Spanish capital tax charge and restructuring costs     from the current year’s results as well as previously announced     restructuring charges from the prior year’s results, the adjusted     operating profit would have increased 11%, or $52 million, to $540 million     in 2013 from $488 million in 2012. Adjusted operating profit margins     increased 100 basis points to 18.3% from 17.3% in 2012.   *Interest expense increased by $5 million year-over-year, primarily     reflecting new long-term borrowings from our senior note offering in the     second quarter of 2013 to take advantage of attractive borrowing rates and     maintain efficiency and flexibility in our capital structure.   *The effective tax rate was 27.1% in 2013 compared to a rate of 42.7% in     the prior year. Excluding the impact of the 2012 and 2013 items previously     noted, including the 2012 Spanish income tax settlement and the 2013     pre-tax Spanish capital tax charge, the adjusted effective tax rate in     2013 was 25.7% compared with 26.4% in the prior year. The year-over-year     reduction reflects the reinstatement of the U.S. federal R&D tax credit in     2013, partially offset by a higher cost of repatriation.  Full Year 2013 Segment Results  Fragrances Business Unit    *Reported revenue for the full year increased 6% to $1.5 billion. The     Fragrances segment contributed 52% of the Company’s consolidated revenue     in 2013, up from 51% in 2012.   *Local currency sales increased 6% for the full year, supported by     double-digit growth in Greater Asia and Latin America and solid growth in     EAME. For the full year, Fragrance Compounds had local currency growth of     8%, following 7% local currency growth in 2012. This growth was supported     by 8% growth in both Fine and Beauty Care and Functional Fragrances owing     to strong new business wins. Fragrance Compounds benefited from solid     growth in each end-use category, including double-digit growth in Fabric     Care and high single-digit growth in Fine Fragrance.   *Fragrance Ingredients local currency sales growth declined 4% for the     year. Excluding the planned transition of volume to Fragrance Compounds,     the Ingredients business would have been flat year-over-year.   *Fragrances gross margins improved over the prior year primarily due to     moderating input costs combined with productivity initiatives, including     mix and productivity programs.   *Segment profit margins improved 200 basis points to 18.5%, up from 16.5%     in the prior year. Segment profit increased 19% or $45.2 million to $283.6     million, up from $238.4 million in 2012. The improved segment profit is     due to strong sales growth combined with further gross margin expansion     and ongoing cost discipline, which more than offset increased incentive     compensation accruals and increased investments in R&D.  Flavors Business Unit    *Reported revenue for the full year increased 3% to $1.4 billion. The     Flavors segment contributed 48% of the Company’s total consolidated     revenue.   *Local currency sales increased 4% for the full year. Growth from new     business wins offset a slight sales decline on existing business and the     exit of low-margin sales activities. Excluding the impact of exiting these     low-margin sales activities, LFL growth would have been 6%.   *LFL growth of 6% was due to positive growth in every region, led by     double-digit growth in Latin America, and high single digit growth in     Greater Asia and EAME.   *Full year sales were supported by strong growth in the emerging markets,     which accounted for 51% of Flavors total sales, and continued to outpace     the growth in the developed markets. From an end-use category perspective,     local currency sales growth was fueled by double-digit growth in Beverages     and solid growth in Savory.   *Flavors gross margins increased over the prior year primarily driven by     moderating input costs and the exit of low-margin sales activities,     combined with strategic initiatives.   *Full year segment margin increased from 21.6% to 22.7%, or a 110 basis     point improvement. Flavors segment profit totaled $324 million versus $298     million in the prior year, or an increase of 9%. The improved segment     profit reflects strong volume growth combined with further gross margin     expansion, which more than offset investments in R&D, increased incentive     compensation expenses, and increased corporate allocated expenses.  Audio Webcast  A live webcast to discuss the Company's fourth quarter and full year 2013 financial results, and first quarter and full year 2014 outlook will be held today, February 13, 2014, at 10:00 a.m. EST. Investors may access the webcast and accompanying slide presentation on the Company's website at www.iff.com under the Investor Relations section. For those unable to listen to the live broadcast, a recorded version of the webcast will be made available on the Company's website approximately one hour after the event and will remain available on IFF’s website for one year.  About IFF  International Flavors & Fragrances Inc. (NYSE:IFF) is a leading global creator of flavors and fragrances used in a wide variety of consumer products. Consumers experience these unique scents and tastes in fine fragrances and beauty care, detergents and household goods, as well as beverages, sweet goods and food products. The Company leverages its competitive advantages of consumer insight, research and development, creative expertise, and customer intimacy to provide customers with innovative and differentiated product offerings. A member of the S&P 500 Index, IFF has more than 6,000 employees working in 31 countries worldwide. For more information, please visit our website at www.iff.com.  Cautionary Statement Under The Private Securities Litigation Reform Act of 1995  This press release includes “forward-looking statements” under the Federal Private Securities Litigation Reform Act of 1995, including statements regarding (i) the accretive effect of the Aromor Flavors and Fragrances Ltd. acquisition and (ii) expected growth in the emerging markets. These forward-looking statements are qualified in their entirety by cautionary statements and risk factor disclosures contained in the Company’s Securities and Exchange Commission filings, including the Company’s Annual Report on Form 10-K filed with the Commission on February 26, 2013. The Company wishes to caution readers that certain important factors may have affected and could in the future affect the Company’s actual results and could cause the Company’s actual results for subsequent periods to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. With respect to the Company’s expectations regarding these statements, such factors include, but are not limited to: (1) volatility and increases in the price of raw materials, energy and transportation; (2) the economic climate for the Company’s industry and demand for the Company’s products; (3) fluctuations in the quality and availability of raw materials; (4) changes in consumer preferences or a decline in consumer confidence and spending; (5) the Company’s ability to benefit from its investments in emerging markets; (6) the Company’s ability to implement its business strategy, including the achievement of anticipated cost savings, profitability, realization of price increases and growth targets; (7) the Company’s ability to successfully develop new and competitive products that appeal to its customers and consumers; (8) the impact of currency fluctuations or devaluations in the Company’s principal foreign markets; (9) the effects of any unanticipated costs and construction delays in the expansion of the Company’s facilities; (10) the effect of legal and regulatory proceedings, as well as restrictions imposed on the Company, its operations or its representatives by U.S. and foreign governments; (11) adverse changes in federal, state, local and foreign tax legislation or adverse results of tax audits, assessments, or disputes; (12) the direct and indirect costs and other financial impact that may result from any business disruptions due to political instability, armed hostilities, incidents of terrorism, natural disasters, or the responses to or repercussion from any of these or similar events or conditions; (13) the Company’s ability to attract and retain talented employees; and (14) adverse changes due to accounting rules or regulations. New risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risks on the Company’s business. Accordingly, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.                                                                                International Flavors & Fragrances Inc. Consolidated Income Statement (Amounts in thousands except per share data) (Unaudited)                                                                                                           Three Months Ended December      Twelve Months Ended December 31,                      31,                      2013       2012        %        2013           2012          %                                              Change                                 Change                                                                                      Net sales            $ 725,169   $ 680,558   7   %    $ 2,952,896     $ 2,821,446   5      % Cost of goods         411,714    393,490   5   %     1,668,691     1,645,912   1      % sold Gross margin           313,455     287,068   9   %      1,284,205       1,175,534   9      % Research and           70,409      62,245    13  %      259,838         233,713     11     % development Selling and            148,190     125,594   18  %      505,877         453,535     12     % administrative Restructuring and other              46          —         —   %      2,151           1,668       29     % charges Interest               11,129      10,423    7   %      46,767          41,753      12     % expense Other (income)        723        116       523 %     (15,638   )    1,450       (1,178 )% expense, net Pretax income          82,958      88,690    (6  )%     485,210         443,415     9      % Income taxes          21,479     20,571    4   %     131,666       189,281     (30    )% Net income           $ 61,479    $ 68,119    (10 )%   $ 353,544      $ 254,134     39     %                                                                                      Earnings per         $ 0.75      $ 0.83               $ 4.32          $ 3.11 share - basic Earnings per share -              $ 0.75      $ 0.83               $ 4.29          $ 3.09 diluted                                                                                      Average shares outstanding Basic                  81,242      81,318               81,322          81,108 Diluted                81,843      81,998               81,930          81,833                                                                                        International Flavors & Fragrances Inc. Condensed Consolidated Balance Sheet (Amounts in thousands) (Unaudited)                                                                                                   December 31, 2013   December 31, 2012 Cash & cash equivalents                  $    405,505        $    324,422 Receivables                                   524,493             499,443 Inventories                                   533,806             540,658 Other current assets                         222,406            208,164 Total current assets                          1,686,210           1,572,687                                                               Property, plant and equipment, net            687,215             654,641 Goodwill and other intangibles,               696,197             702,270 net Other assets                                 262,109            316,594 Total assets                             $    3,331,731      $    3,246,192                                                               Bank borrowings and overdrafts, and current portion of long-term debt        $    149            $    150,071 Other current liabilities                    560,217            479,807 Total current liabilities                     560,366             629,878                                                               Long-term debt                                932,665             881,104 Non-current liabilities                       371,649             482,655                                                               Shareholders' equity                         1,467,051          1,252,555 Total liabilities and                    $    3,331,731      $    3,246,192 shareholders' equity                                                                      International Flavors & Fragrances Inc. Consolidated Statement of Cash Flows (Amounts in thousands) (Unaudited)                                                                                          Twelve Months Ended December 31,                                               2013              2012 Cash flows from operating activities:                                                                   Net income                                    $  353,544         $  254,134 Adjustments to reconcile to net cash provided by operations: Depreciation and amortization                    83,227             76,667 Deferred income taxes                            (484      )        (15,878  ) Gain on disposal of assets                       (17,841   )        (4,461   ) Stock-based compensation                         23,736             19,716 Pension settlement/curtailment                   215                874 Spanish tax charge                               —                  72,362 Payments pursuant to Spanish tax                 —                  (105,503 ) settlement Changes in assets and liabilities Current receivables                              (53,156   )        (33,056  ) Inventories                                      4,822              4,571 Accounts payable                                 10,074             (740     ) Accruals for incentive compensation              24,518             34,632 Other current payables and accrued               9,995              29,203 expenses Changes in other assets/liabilities             (31,088   )       (8,725   ) Net cash provided by operating                  407,562          323,796   activities                                                                   Cash flows from investing activities:                                                                   Additions to property, plant and                 (134,157  )        (126,140 ) equipment Proceeds from disposal of assets                 27,312             1,763 Maturity/termination of net investment           646                1,960 hedges Purchase of life insurance contracts             —                  (1,127   ) Proceeds from termination of life               793              9,283     insurance contracts Net cash used in investing activities           (105,406  )       (114,261 )                                                                   Cash flows from financing activities:                                                                   Cash dividends paid to shareholders              (87,347   )        (130,943 ) Net change in revolving credit facility          (283,225  )        138,756 borrowings and overdrafts Deferred financing costs                         (2,800    )        — Repayments of long-term debt                     (100,000  )        — Proceeds from long-term debt                     297,786            — Proceeds from issuance of stock under            3,799              9,211 stock plans Excess tax benefits on stock-based               6,112              8,380 payments Purchase of treasury stock                      (51,363   )       —         Net cash (used in) provided by                  (217,038  )       25,404    financing activities Effect of exchange rates changes on              (4,035    )        1,204 cash and cash equivalents Net change in cash and cash equivalents          81,083             236,143 Cash and cash equivalents at beginning          324,422          88,279    of year Cash and cash equivalents at end of           $  405,505        $  324,422   period                                                                                 International Flavors & Fragrances Inc. Business Unit Performance (Amounts in thousands) (Unaudited)                                                                   Three Months Ended          Twelve Months Ended                      December 31,                December 31,                      2013         2012          2013           2012 Net Sales Flavors              $ 342,953     $ 326,445     $ 1,422,739     $ 1,378,377 Fragrances            382,216     354,113     1,530,157     1,443,069  Consolidated           725,169       680,558       2,952,896       2,821,446                                                                   Segment Profit Flavors                69,507        61,867        323,562         298,326 Fragrances             62,072        53,333        283,651         238,379 Global                 (19,704 )     (15,971 )     (66,942   )     (48,419   ) Expenses Restructuring and other              (46     )     —             (2,151    )     (1,668    ) charges, net Operational improvement            (4,008  )     —             (8,770    )     — initiative costs Spanish capital tax           (13,011 )    —           (13,011   )    —          charge Operating              94,810        99,229        516,339         486,618 profit                                                                   Interest               (11,129 )     (10,423 )     (46,767   )     (41,753   ) Expense Other (expense)             (723    )    (116    )    15,638        (1,450    ) income, net Income before        $ 82,958     $ 88,690     $ 485,210      $ 443,415    taxes                                                                   Operating Margin Flavors                20.3    %     19.0    %     22.7      %     21.6      % Fragrances             16.2    %     15.1    %     18.5      %     16.5      % Consolidated           13.1    %     14.6    %     17.5      %     17.2      %                                                                     International Flavors & Fragrances Inc. Sales Performance by Region and Category (Unaudited)                                                                                              Fourth Quarter 2013 vs. 2012                        Percentage Change in Sales by Region of Destination                        Fine &                              Total                        Beauty  Functional  Ingredients  Frag.  Flavors  Total                        Care                                            North   Reported       -6%      8%           -10%          -2%     -8%       -5% America                                                                               EAME    Reported       29%      5%           0%            12%     14%       13%         Local          24%      2%           -3%           8%      13%       10%         Currency                                                                               Latin   Reported       -2%      14%          0%            6%      15%       9% America         Local          -1%      15%          0%            6%      19%       10%         Currency                                                                               Greater Reported       10%      16%          12%           14%     4%        8% Asia         Local          12%      18%          19%           17%     9%        12%         Currency                                                                               Total   Reported       10%      10%          -2%           8%      5%        7%         Local          9%      10%         -3%          7%     7%       7%         Currency                                                                                                                                                                                    Full Year 2013 vs. Full Year 2012                        Percentage Change in Sales by Region of Destination                        Fine &                              Total                        Beauty  Functional  Ingredients  Frag.  Flavors  Total                        Care                                                                               North   Reported       -3%      3%           -6%           -2%     -2%       -2% America                                                                               EAME    Reported       12%      6%           -4%           6%      7%        6%         Local          10%      3%           -6%           4%      6%        5%         Currency                                                                               Latin   Reported       9%       12%          -5%           9%      5%        8% America         Local          11%      14%          -5%           11%     8%        10%         Currency                                                                               Greater Reported       9%       14%          3%            11%     4%        7% Asia         Local          10%      15%          8%            13%     7%        9%         Currency                                                                               Total   Reported       8%       9%           -4%           6%      3%        5%         Local          8%      8%          -4%          6%     4%       5%         Currency                                                                                Note:  Local currency sales growth is calculated by translating prior year         sales at the exchange rates used for the corresponding 2013 period                              International Flavors & Fragrances Inc.                  Reconciliation of Like-for-Like Sales Growth                                  (Unaudited)  The following information and schedules provide reconciliation information between reported GAAP amounts and certain adjusted amounts. This information and schedules is not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.                                                                % Change in Sales for the Twelve Months Ended December 31, 2013                                                                                              Reported       Local          Exit of Low-   Like-For-Like                 Sales         Currency      Margin Sales  Sales Growth                     Growth         Sales Growth   Activities     ^(2)                                    ^(1) Total Company    5%            5%            1%            6%                                                                   Flavors: North America       -2%            -2%            5%             3% EAME                7%             6%             1%             7% Latin America       5%             8%             3%             11% Greater Asia        4%             7%             0%             7% Total Flavors       3%             4%             2%             6%                                                          (1)  Local currency sales growth is calculated by translating prior year       sales at the exchange rates used for the corresponding 2013 period        (2)   Like-for-like is a non-GAAP metric that excludes the impact of exiting       low-margin sales activities and foreign exchange                            International Flavors & Fragrances Inc.                            Reconciliation of Income                             (Amounts in thousands)                                  (Unaudited)  The following information and schedules provide reconciliation information between reported GAAP amounts and certain adjusted amounts. This information and schedules is not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.                                                                                                                              Fourth quarter 2013                      Items Impacting Comparability                                                                                                                                    Restructuring          Operational                               Gain on                      Reported    and Other              Improvement          Spanish Tax          Asset            Adjusted                      (GAAP)      Charges                Initiative           Charges              Sale             (Non-GAAP)                                                         Costs                                                                                                                     Net Sales              725,169 Cost of Goods          411,714      (2,250  )    ^(a)      (1,759 )   ^(b) Sold Gross Profit           313,455      2,250                  1,759                                                      317,464 Research and           70,409 Development Selling and            148,190                             (152   )   ^(b)     (13,011 )   ^(c)                       135,027 Administrative RSA Expense            218,599 Restructuring and other              46           (46     )    ^(a) charges, net Operating              94,810       2,296                  1,911               13,011                                 112,028 Profit Interest               11,129 Expense Other (Income)         723                                                                          1,938   ^(d) expense, net Income before          82,958       2,296                  1,911               13,011               1,938             102,114 taxes Taxes on               21,479       804                    478                 3,903                —                 26,664 Income Net Income            61,479     1,492             1,433          9,108           1,938         75,450                                                                                                                                                                                                                                         Earnings per share -              $ 0.75      $  0.02                $  0.02              $ 0.11               $ 0.02           $  0.92 diluted                                                                                                                                (a)  Costs related to the Fragrance Ingredients                           Rationalization                     (b)   Related to plant closings in Europe and several                           locations in Asia.                     (c)   Spanish capital tax charge                     (d)   Represents a loss on sale of a non-operating asset                             In the fourth quarter of 2012, there were no items impacting comparability.                      International Flavors & Fragrances Inc.                            Reconciliation of Income                             (Amounts in thousands)                                  (Unaudited)  The following information and schedules provide reconciliation information between reported GAAP amounts and certain adjusted amounts. This information and schedules is not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.                                                                                                                                            Full year 2013                      Items Impacting Comparability                                                                                                                                                            Restructuring          Operational                               Gain on              Adjusted                      Reported               and Other              Improvement          Spanish Tax          Asset                (Non-                      (GAAP)                 Charges                Initiative           Charges              Sale                 GAAP)                                                                    Costs                                                                                                                                    Net Sales              2,952,896 Cost of Goods          1,668,691               (5,250  )    ^(a)      (3,520 )   ^(b) Sold Gross Profit           1,284,205               5,250                  3,520                                                         1,292,975 Research and           259,838 Development Selling and            505,877                                        (152   )   ^(b)     (13,011 )   ^(c)                          492,714 Administrative RSA Expense            765,715 Restructuring and other              2,151                   (2,151  )    ^(a) charges, net Operating              516,339                 7,401                  3,672               13,011                                    540,423 Profit Interest               46,767 Expense Other (Income)         (15,638   )                                                                             14,155      ^(d) expense, net Income before          485,210                 7,401                  3,672               13,011               (14,155 )            495,139 taxes Taxes on               131,666                 2,590                  891                 (2,327  )   ^(c)     (5,633  )            127,187 Income Net Income            353,544            4,811             2,781          15,338          (8,522  )        367,952                                                                                                                                    Earnings per share -              $ 4.29          ^(e)   $  0.06         ^(e)   $  0.03       ^(e)   $ 0.19        ^(e)   $ (0.10   )   ^(e)   $ 4.46 diluted                                                                                                                                              (a)  Costs related to the Fragrance Ingredients                         Rationalization                   (b)   Related to plant closings in Europe and several                         locations in Asia.                   (c)   Spanish capital tax charge and Spanish tax charge                         related to the 2002-2003 ruling                   (d)   Represents a net gain on the sale of non-operating                         assets                   (e)   The sum of these items do not foot due to rounding                                                                                              Full year 2012                      Items Impacting Comparability                                                                                            Reported      Spanish Tax          Restructuring          Adjusted                      (GAAP)        Settlement           and Other              (Non-                                                         Charges                GAAP)                                                                                                                                                                 Net Sales              2,821,446     — Cost of Goods          1,645,912     — Sold Gross Profit           1,175,534     — Research and           233,713       — Development Selling and            453,535       — Administrative RSA Expense            687,248       — Restructuring and other              1,668         —                      (1,668 )    ^(a) charges, net Operating              486,618       —                      1,668                488,286 Profit Interest               41,753        — Expense Other (Income)         1,450         — expense, net Income before          443,415       —                      1,668                445,083 taxes Taxes on               189,281       (72,362 )   ^(b)       621                  117,540 Income Net Income            254,134     72,362            1,047           327,543                                                                                 Earnings per share -              $ 3.09        $ 0.88               $   0.01               $ 3.98 diluted                                                                                            (a)  Related to restructuring program announced in Q1                           2012                           Pursuant to the Spanish tax settlement; includes a                     (b)   $0.71 per share charge to net income covering the                           fiscal years 2004-2010 and a $0.17 per share accrual                           for uncertain tax positions for years not settled.  Contact:  Investor Relations: International Flavors & Fragrances Inc. Shelley Young, 212-708-7271 Director, Investor Relations