International Flavors & Fragrances NYSE: IFF reported a stronger-than-expected start to 2026, with first-quarter sales growth across all business segments, higher adjusted profitability and improved free cash flow, while management reaffirmed its full-year guidance despite macroeconomic uncertainty tied in part to the Middle East conflict.
CEO Erik Fyrwald said IFF’s first-quarter results reflected “continued focus on execution” as the company serves customers through innovation, productivity initiatives and cash generation. He said the company is making progress against commitments laid out two years ago, including portfolio simplification and deleveraging.
“Even amid uncertain market conditions around the world, we’re making solid progress on our commitments as we continue to strengthen IFF for long-term success,” Fyrwald said.
Revenue rises 3% as all segments grow
CFO Michael DeVeau said IFF generated more than $2.7 billion in first-quarter revenue, representing 3% sales growth on a comparable currency-neutral basis. The increase was volume-led, with growth across all businesses.
Health & Biosciences led the company with 5% sales growth to $595 million, driven entirely by volume gains, with strength across nearly all businesses, particularly Animal Nutrition and Food Biosciences. Adjusted operating EBITDA for the segment rose 7% to $153 million.
Taste sales increased 2% to $656 million, with growth in all regions and mid-single-digit gains in Greater Asia. Taste adjusted operating EBITDA rose 18% to $153 million, which DeVeau attributed to volume growth, favorable net pricing and productivity gains.
Food Ingredients sales rose 3% to $839 million, supported by growth in nearly all businesses, including strong double-digit growth in Inclusions and mid-single-digit growth in Systems. DeVeau said volume growth of about 5% was the highest in several years for the segment. Food Ingredients adjusted operating EBITDA increased 12% to $114 million.
Scent sales increased 1% to $651 million, led by growth in Fine Fragrance and Consumer Fragrance. Fragrance Ingredients declined, as management expected, due to market softness and price competition in the commodity portion of the portfolio. Scent adjusted operating EBITDA fell 2% to $148 million as volume growth and productivity gains were more than offset by unfavorable price-to-input costs in commodity Fragrance Ingredients.
Margins and cash flow improve
IFF reported adjusted operating EBITDA of $568 million for the quarter, up 8% from the prior-year period. Adjusted EBITDA margin increased 110 basis points on a currency-neutral basis to 20.7%, which DeVeau said was the company’s highest EBITDA margin since the second quarter of 2022.
Cash flow from operations totaled $257 million, up $130 million year over year. Capital expenditures were $165 million year-to-date, or about 6% of sales, and free cash flow was $92 million, an improvement of $144 million from the prior year.
DeVeau said working capital remains a key priority for 2026 and noted that IFF added a compensation metric across the organization tied to free cash flow conversion to EBITDA.
During the quarter, IFF returned $102 million to shareholders through dividends and $35 million through its dilution-plus share repurchase program. The company ended the quarter with $562 million in cash and cash equivalents. Gross debt was $5.85 billion as of March 31, down more than $3 billion from the prior-year period. Net debt to credit adjusted EBITDA was 2.5 times.
Portfolio simplification continues
Fyrwald said IFF has made “significant progress” simplifying its portfolio, allowing the company to focus on core and higher-growth businesses while achieving deleveraging targets. In March, IFF completed the sale of its commodity soy crush, concentrates and lecithin business to Bunge for $110 million.
The company is also continuing the sale process for its Food Ingredients business. Fyrwald said the process is “going very well,” with several potential buyers in a second round of due diligence and positive feedback so far. He said IFF expects to provide an update by its second-quarter earnings call.
Fyrwald also highlighted regional investments in Health & Biosciences in Latin America, including the startup of IFF’s Arroyito site in Argentina, described as the company’s first full fermentation-based enzyme production site in the region, and the opening of a household care application laboratory at its innovation center in Brazil.
2026 guidance reaffirmed despite inflation and Middle East uncertainty
IFF reaffirmed its full-year 2026 outlook, calling for sales of $10.5 billion to $10.8 billion, representing 1% to 4% growth, and adjusted operating EBITDA of $2.05 billion to $2.15 billion, representing 3% to 8% growth. The company expects top-line growth across all divisions, supported by new wins and its innovation pipeline.
Management said the Middle East conflict and related inflationary pressures are expected to affect the shape of the year. DeVeau said inflation is beginning with energy and logistics, where IFF is seeing double-digit increases, and is expected to move into raw material costs later in 2026. The company is working with customers on pricing actions, beginning with surcharges tied to logistics and energy costs.
DeVeau said second-quarter EBITDA is expected to be lower than the $568 million reported in the first quarter. He cited more moderate growth, unfavorable price-to-input costs as surcharges are implemented, and Fine Fragrance pressure in the Middle East, where volumes are expected to be affected by slower demand and customer supply chain challenges such as packaging availability.
“Our full year outlook we are reaffirming today reflects a different shape than what we expected 90 days ago, with a stronger Q1 and a more measured balance of year given the Middle East conflict,” DeVeau said.
During the question-and-answer session, Fyrwald said the company had not seen indications of significant customer pre-buying in the first quarter. He said demand should remain solid, including continued full-year growth in Fine Fragrance, though below the double-digit levels seen previously.
Asked about pricing discussions, DeVeau said IFF is engaging customers based on observable increases in logistics and energy costs, while also offering reformulation and other cost-reduction solutions. Fyrwald added that the company is seeking to pass through cost increases rather than use inflation to expand margins, with margin improvement expected from innovation and productivity.
Fyrwald closed the call by saying IFF is executing on its strategy, including building commercial and innovation pipelines, delivering productivity and moving toward a more focused portfolio.
About International Flavors & Fragrances NYSE: IFF
International Flavors & Fragrances Inc NYSE: IFF is a global leader in the creation and production of flavors, fragrances, cosmetic actives and nutritional lipids. The company develops taste and scent solutions for a wide array of end markets including food and beverage, personal care, household goods and pharmaceutical products. Its portfolio spans natural and nature-identical flavors, fine fragrances, functional ingredients for skin and hair care, and specialty oils that enhance nutritional value and sensory appeal.
IFF's research and development network comprises innovation centers in North America, Europe, Asia-Pacific and Latin America, where multidisciplinary teams collaborate on aroma chemistry, sensory science and biotechnology.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider International Flavors & Fragrances, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and International Flavors & Fragrances wasn't on the list.
While International Flavors & Fragrances currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The space race is growing fast, and you don’t have to wait for SpaceX to go public to invest. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.
Get This Free Report
