Executive Vice President, Chief Financial Officer at International Flavors & Fragrances
Thanks again, Frank. Turning first to our consolidated second-quarter results. IFF generated more than $3 billion in sales, representing 11% year-over-year increase on comparable currency-neutral basis, primarily driven by double-digit growth in Nourish and Pharma Solutions. In terms of our growth contribution, pricing represents the majority with volumes up modestly.
Our focus coming into 2022 was to fully recover inflation through pricing actions. And for the full year, we are on track to recover approximately $1 billion in cost inflation. We are doing so in a very thoughtful and strategic manner, over-indexing on lower margin and capacity-constrained businesses. While foreign exchange rates have had an adverse impact on our sales and EBITDA in the second quarter, I'm pleased to report an adjusted operating EBITDA grew 3% year-over-year on a reported basis or 7% on a comparable currency-neutral basis driven by productivity gains and pricing actions we implemented in the quarter.
We also achieved solid year-over-year earnings per share growth of 3% excluding amortization. Before moving on, I wanted to share that during the second quarter of '22, we took an impairment charge of $120 million within certain entities in Russia due to a number of factors, including reduced business focus as we have restricted our operations to essential consumer products that includes: food, hygiene, and medicine; supply chain issues; reduced product demand and exchange rate volatility; all as the result of the Russia-Ukraine conflict. It was determined that such declines in operating performance were not expected to reverse in the near future and future expected growth is expected to be limited, given the operating conditions in Russia. This non-cash impairment charge was allocated pro rata to intangible assets and property, plant, and equipment within the asset group in the amounts of approximately $92 million and $28 million, respectively.
Moving now to Slide 12, I'll provide a brief overview of the underlying performance across our business segments. As I mentioned, sales growth across each of our business segments including Nourish, Health & Biosciences, Scent, and Pharma Solutions contributed to IFF's year-over-year comparable currency-neutral sales growth of 11%.
Nourish was once again our largest growth driver, with a significant broad-based growth across our flavors, ingredients, and food design businesses. Scent had another strong quarter with currency-neutral sales growth in the high single-digits, led by fine fragrance, consumer fragrance, and ingredients.
Health & Biosciences delivered the mid single-digit growth due to consistent performance in health, cultures and food enzymes, and animal nutrition, as well as microbial control prior to the official divestiture completed in July. Both home and personal care and grain processing were negative in the second quarter as each business had very strong double-digit comparison in the prior year period.
Lastly, we are pleased by Pharma Solutions' continued rebound, having achieved double-digit growth, driven by continued strength in our industrial and pharma businesses. Turning to Slide 13, I'd like to provide a review of our profitability for the quarter. Second quarter adjusted EBITDA totaled $700 million, exceeding our expectations and representing 7% in year-over-year comparable currency-neutral growth, driven by the pricing actions and productivity gains that I mentioned earlier. Our comparable adjusted EBITDA margin in the second quarter was 21.3%, and on an inflation-adjusted basis would have been approximately 220 basis higher, or approximately 23.5% if we normalize for the impact of pricing contribution to sales. This compares to an EBITDA margin of 22% in Q2 for 2021.
As a result of our strategic pricing actions, we have fully recovered total inflation cost-to-date and we are optimistic that we will achieve full dollar cost recovery for the full fiscal year. As we continue navigating this uncertain market, we will continue to closely monitor raw materials and logistics costs in the quarters ahead and take appropriate action to offset additional inflationary pressures and maintain profitability.
On Slide 14 is an overview of our second quarter performance by business segment. Nourish, which delivered year-over-year comparable currency-neutral sales growth of 15% and 18% growth in comparable currency-neutral adjusted operating EBITDA, saw strong demand, particularly in food designs and flavors. In Health & Biosciences, high single-digit increases in health, and cultures and food enzymes, and mid single-digit growth in animal nutrition drove 4% comparable currency-neutral sales growth for the division.
While we implemented strategic pricing actions and saw notable productivity gains similar to Nourish this quarter, lower volumes and unfavorable mix led to 2% year-over-year decrease in comparable currency-neutral adjusted operating EBITDA. In Scent, fine fragrances continue to lead the way with double-digit growth, followed by high single-digit growth in ingredients and low single-digit growth in consumer fragrance. Collectively, Scent achieved year-over-year comparable currency-neutral sales growth of 9% though inflationary pressures outpaced our strategic pricing actions, which led to a 17% decrease in comparable currency-neutral adjusted operating EBITDA.
Our teams are continuing to work with our customers to address these ongoing inflationary pressures and we fully [Indecipherable] to recover all inflationary cost over time. Lastly, Pharma Solutions was one of our strongest performances this quarter, achieving 10% in year-over-year comparable currency-neutral sales growth and an exceptional 25% increase in comparable currency-neutral adjusted operating EBITDA, driven by double-digit growth in industrial and high single-digit growth in pharma. The division's profitability was further supported by pricing actions and productivity gains.
Turning to Slide 15, I would like to discuss our cash flow and leverage positions for the first half results. In our first six months, our free cash flow position was impacted by higher inventory values. This was a result of a combination of continued inflationary pressures and rebuilding inventories to support customer service levels. $336 [Phonetic] million in the first half, representing approximately 3.6% of sales as we continue to make necessary investments in our business. In addition, IFF delivered $402 million in dividends to our shareholders.
From a leverage perspective, we remain well positioned as we advance our strategic refresh. We finished the second quarter with cash and cash equivalents of $569 million, while gross debt for the quarter totaled $12.15 billion. Note that we received $1.3 billion gross proceeds from the sale of our microbial control business in July.
At the end of Q2, we maintained a 4.4 times net debt credit adjusted EBITDA ratio. In addition, just last week, we proactively amended our existing term loan credit agreement and revolving credit agreement in order to ensure we maintain adequate flexibility to navigate near-term market uncertainties. The associated amenity was approximately $800,000. The amended agreement delayed certain step downs from maximum permitted leverage ratio of 4.5 to 1, stepping down to 3.5 to 1 over time, with the first step down now occurring at the end of the third quarter 2023 versus the end of the fourth quarter 2022 previously.
Trailing 12-month credit adjusted EBITDA totaled $2,644 million. As Frank mentioned, on August 3, our Board of Directors authorized a 3% or $0.02 increase in the quarterly dividends at $0.81 per share of the company's common stock. The quarterly dividend is payable on October 5, 2022, to shareholders of record as of September 23. Including this authorization, we increased our quarterly dividend payment for the 13th consecutive year.
Let's now turn to our consolidated outlook on Slide 16. As we look to the remainder of 2022, we remain on track to deliver our commitments and are reconfirming full-year guidance projected sales of $12.6 billion to $13 billion and currency-neutral sales growth of 9% to 12%. While we are reconfirming our outlook, we also are increasingly cautious on the overall market environment outlook as we navigate continued foreign exchange fluctuations, ongoing inflation, and potentially recessionary pressures. We expect to achieve our sales targets through pricing actions as we press ahead for a full dollar cost recovery. We expect foreign exchange pressures to impact sales by approximately 5 percentage points compared to our previously forecasted 4 percentage points. We are also reconfirming adjusted operating EBITDA to the $2.5 billion to $2.6 billion which equates to currency-neutral operating EBITDA growth of 4% to 8%. Please note that we expect foreign exchange to impact that growth by approximately 6 percentage points versus 5 percentage points previously.
As always, we remain laser-focused on mitigating the many macroeconomic challenges with an emphasis on controlling what we can control during these uncertain times. Notably, focusing on pricing execution and productivity. In terms of the third quarter, we expect sales growth to be strong, driven by pricing actions with sales coming in modestly above $3 billion. And impacted by incremental foreign exchange headwinds, some seasonality of our business and the divestiture of microbial control. The sale of microbial control will impact Q3 revenues by approximately $110 million. For the third quarter, we expect adjusted EBITDA to be approximately $600 million to $610 million.
Before passing the call back to Frank, I want to revisit the four-core business objectives we outlined at the beginning of the year. Overall, we are executing well against our operational priorities so far this year. Relative to maintaining strong sales momentum, we achieved 12% year over year currency-neutral sales growth for the first half of '22 and are targeting currency-neutral growth of 9% to 12% for the full year.
In terms of executing our broad-based pricing actions, we fully recovered the total cost of inflation and we remain on track to achieve a full dollar cost recovery for the full-year '22. Importantly, we are closely monitoring inflationary trends in the broader market environment to ensure we are well-equipped to stay ahead and where necessary quickly respond to future challenges.
On the productivity front, we continue to make tremendous progress towards our productivity savings goals for the full year. In the first half of the year, we delivered over $70 million operational efficiencies and deal-related synergies, well above our expectations. We are well on track to exceed our $100 million full-year savings target.
Finally, relative to accelerating non-core divestitures, we successfully completed the sale of our microbial control business on July 1 and are continuing to assess our portfolio to identify additional portfolio optimization and divestiture opportunities in this uncertain market. These divestitures will help us delever our balance sheet and enable us to reinvest in our highest-performing businesses.
With that, I'll pass the call back over to Frank.