International Flavors & Fragrances (IFF) Q4 2023 earnings summary

Executive summary

• Q4 sales were $2.703B, down 5% reported but up 1% on a comparable currency-neutral basis; adjusted operating EBITDA rose 17% on that basis.

• FY 2023 sales were $11.479B, down 8% reported and 1% comparable currency-neutral; adjusted operating EBITDA was $1.98B, down 10% comparable currency-neutral.

• A $2.623B non-cash goodwill impairment drove reported losses; management cited sequential volume improvement and cautious optimism for 2024.

• FY sales and adjusted operating EBITDA were within guidance; 2024 targets call for improved volumes and EBITDA growth amid macroeconomic uncertainty.

Financial highlights

• Q4 revenue was $2.703B versus $2.844B a year earlier; adjusted operating EBITDA was $461M versus $441M, and margin rose to 17.1% from 15.5%.

• Q4 reported EPS was $(10.21); adjusted EPS excluding amortization was $0.72 per diluted share.

• FY reported EPS was $(10.05); adjusted EPS excluding amortization was $3.34 per diluted share.

• FY reported net loss attributable to shareholders was $2.567B, versus $1.871B in 2022.

• FY operating cash flow was $1.44B and free cash flow was $936M.

Outlook and guidance

• FY 2024 revenue guidance is $10.8B–$11.1B; volume outlook is 0%–3%, with pricing expected to decline ~2.5%.

• FY 2024 adjusted operating EBITDA guidance is $1.9B–$2.1B; comparable currency-neutral adjusted EBITDA growth is projected at 3%–11%.

• FX is expected to reduce 2024 sales growth by 0%–1% and adjusted EBITDA growth by ~2%–3%, based on current market rates.

• Sequential volume improvement is expected to continue, though recovery pace and scale remain unclear; all divisions target volume improvement and margin expansion.

• Productivity initiatives are intended to offset cost inflation, incentive-compensation reset and reinvestment; cash generation and working-capital improvement remain priorities.