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First Quarter 2007<br/>Investors’ Webcast<br/>May 3, 2007
Robert M. Amen
Robert M. Amen
Chairman and CEO
Douglas J. Wetmore
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Notices
Forward Looking Statement:
Forward Looking Statement:
These slides contain forward looking information, which may be identified by terms such as “expect”, “may”, “anticipated”, “guidance”, “outlook” and similar terms and involve significant risks and uncertainties. Actual results may differ materially. Risks and uncertainties include general economic and business conditions; interest rates; the price, quality and availability of raw materials; our ability to achieve our business strategy and anticipated cost savings, profitability and growth targets; the impact of currency fluctuation or devaluation; uncertainties related to litigation; the impact of possible pension funding obligations and increased pension expense; and the effect of legal and regulatory proceedings and restrictions. We do not undertake to update or revise such forward-looking statements. These and other factors that could cause actual results to differ materially from such forward-looking statements are discussed in greater detail in our accompanying quarterly earnings release and in our SEC filings.
Any public statements or disclosures by IFF following this release that modify or impact any of the outlook or other forward-looking statements contained in or accompanying this release or as part of the webcast will be deemed to modify or supersede such outlook or other forward-looking statements in or accompanying this release or the webcast.
Non-GAAP Financial Measures:
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Agenda
Highlights
Highlights
First Quarter Financial Results
Business Priorities
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Robert M. Amen
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Solid Start to 2007 <br/>($ in millions, except per share data)
Q1 Q1
Q1 Q1
2006 2007 %*
Sales $511 $566 + 11%
Operating Profit $ 81 $ 95 + 18%
Net Income $ 54 $ 63 + 17%
EPS $ .58 $ .69 + 19%
* Percentages may not calculate due to rounding
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First Quarter Highlights
Strong sales growth
Strong sales growth
Flavors increased $24 million; up 11%
Fragrances increased $31 million; up 11%
Operating profit expansion
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Organized for Growth
New Structure Effective January 2007
New Structure Effective January 2007
Flavors
Hernan Vaisman, Group President
Fragrances and Ingredients
Nicolas Mirzayantz, Group President
Business Rationale
Accelerate growth
Align R&D with each business unit
Leverage global capabilities
Support provided by centralized resource groups
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Flavors Business<br/>First Quarter 2007 Highlights
Resurgence in Sales
Resurgence in Sales
Global and regional customer growth
North America improvement
Growth driven by volume and new wins
All regions experienced an increase
Double-digit growth in emerging markets
Gaining momentum
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Fragrances Business<br/>First Quarter 2007 Highlights
Fine Fragrances and Beauty Care
Fine Fragrances and Beauty Care
Continued benefit from 2006 wins
Growth and gain in market share
13 consecutive quarters of growth
Growing faster than market
Functional
Double-digit growth in NA
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Douglas J. Wetmore
Senior Vice President and
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First Quarter 2007 Sales<br/>($ in millions)
2006
2007
Flavors +11%
Flavors +11%
2006
2007
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NOAM
NOAM
Flav +4%
Frag +11%
LATAM
LATAM
Flav+14%
Greater Asia
Greater Asia
Flav +18%
Frag + 2%
EAME
EAME
Flav + 11%
Frag + 15%
First Quarter 2007 <br/>Growth by Business Unit in each Region
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Flavors Profitability<br/>Q1 2007 vs. Q1 2006 ($ in millions)
2006 2007 %
2006 2007 %
Sales $ 219 $ 243 + 11%
Op. Profit $ 37 $ 45 + 22%
Flavors profitability increased 22% on:
Sales performance
New wins and volume growth of existing business
Improved gross margin
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Flavors Sales Growth<br/>2005-2007
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Fragrances Profitability<br/>Q1 2007 vs. Q1 2006 ($ in millions)
2006 2007 %
2006 2007 %
Sales $ 292 $ 323 + 11%
Op. Profit $ 52 $ 59 + 13%
Fragrances profitability increased 13% on:
Decline in gross margin mainly due to sales mix
Higher ingredient sales
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Fine and Ingredients drove total fragrance sales
First Quarter 2007 vs. 2006<br/>Fragrance Sales Growth
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Fragrance Sales Growth<br/>2005-2007
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First Quarter Operating Results <br/>($ in millions)
* Percentages may not calculate due to rounding
*
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Sales
Sales
Growth
Other
Other
Income/
Interest/
Restructure
Tax
Tax
Rate
2007
2007
EPS
First Quarter 2007 EPS Growth <br/>Components
Share
Share
Count
2006
2006
EPS
Productivity/
Productivity/
Mix
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Earnings Per Share Performance (Excludes AJCA, restructuring, & asset gains)
$0.69
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Cash Flow Summary <br/>($ in millions)
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2007 Share Buyback Data <br/>(Amounts and shares in millions)
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Robert M. Amen
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European Chemical Regulation - REACH
Legislation passed by the European Parliament in 2006
Intent of REACH is to have all chemicals used in the EU registered and tested for safety
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REACH Implementation
First step is pre-registration between June and November 2008
- - Existing substances not pre-registered cannot be used after November 30, 2008
- - New substances can be pre-registered pending registration
Registration is required for substances used in volumes exceeding:
- - 1,000 tons annually by 1 December 2010
- - 100 tons annually by 1 June 2013
- - 1 ton annually by 1 June 2018
Well-positioned to comply with REACH and assist customers with
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R&D and Innovation
Aligned with the Business Units
Aligned with the Business Units
Categories of Effort
Traditional R&D for Flavor & Fragrance molecules and taste system
Taste receptor cell research
Naturals and nature-inspired technology
Creative teams
Output
Patented materials
Proprietary molecules
Unique delivery systems
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Business Priorities 2007
Execute Business Plan
Execute Business Plan
Customer Focus
Improve Operational Efficiency
Build a Stronger Organization
People Development
Improve Business Model
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Financial Goals<br/>2007 – 2009
Grow local currency sales by 4+% per year
Grow local currency sales by 4+% per year
Improve operating margins to 18+% of sales by the end of 2009
Increase EPS on average 10+% per year
Grow dividend in line with EPS growth
Execute stock repurchase plan
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Questions