International Flavors & Fragrances Inc.

Transcription

1 International Flavors & Fragrances Inc. Morgan Stanley Consumer Retail Conference November 18, 2008 Robert M. Amen Chairman and CEO Notices Forward Looking Statement: Certain statements made in this presentation that are not historical facts may constitute forward looking statements under the Private Securities Litigation Reform Act of 1995, including those that are signified by words such as anticipate, believe, expect, estimate, target, and similar expressions. These forward-looking statements reflect the current views of IFF and its management and are subject to risks, uncertainties, and changes in circumstances. 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; the effect of legal and regulatory proceedings and restrictions; and other factors described in our Form 10-K for the year ended December 31, 2007 and our Form 10-Q for the quarter ended September 30, IFF does not undertake to update any forward-looking statements. Any public statements or disclosures by IFF following this presentation that modify or impact any of the outlook or other forward-looking statements contained in or accompanying this presentation 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: The Company uses certain non-gaap financial measures to supplement our GAAP financial results. These financial measures should not be considered in isolation or as superior to our GAAP financial measures. Additional information concerning our non-gaap financial measures and a reconciliation to GAAP is available on our website at on the Investor Relations page. 2 1

2 Agenda v Flavor and Fragrance Industry v IFF Overview v Financial Highlights v Building a Stronger IFF v Looking Ahead v Summary 3 Savory & Beverage Flavors Pictures are representative of products in the market. Not all products flavored by IFF. 4 2

3 Sweet/Pharma/Oral and Dairy Flavors Pictures are representative of products in the market. Not all products flavored by IFF. 5 Fine Fragrances & Beauty Care Pictures are representative of products in the market. Not all products fragranced by IFF. 6 3

4 Functional Fragrances Pictures are representative of products in the market. Not all products are fragranced by IFF. 7 F&F Industry v Flavor and Fragrance industry is ~$14 billion 4 largest companies comprise ~ 70% of market v Flavor and Fragrance is key component to building consumer preference and brand differentiation v Demand driven by growth of: Consumer products GDP and disposable income Developed market growth on par with GDP Developing markets will contribute 50+% of global growth 8 4

5 Structural Drivers of Industry Growth v Population 5 billion people live in developing markets Differing value propositions v Growing middle class in developing markets Increasing disposable income v Global consumer mega trends Health and wellness, urbanization, and convenience Increasing demand for uniqueness & innovation 9 Shampoo & Conditioner Consumption Trends Per Capita Usage ($) Per Capita Disposable Income ($) 10 5

6 IFF Profile v Founded in 1889 v A recognized leader in the F&F industry v Global presence v Long-standing relationships with leading consumer products companies v Core competencies in: Material research Consumer insight Product creativity v Financially strong 11 Diversified Global Portfolio Sales by Region North America 24% Latin America 14% EAME 39% Greater Asia 23% 9 Months 2008 Sales $1.85 Billion Sales by Category Ingredients 12% Functional Fragrances 23% Fine Fragrance & Beauty Care 19% Flavors 46% 76% of revenue generated outside the U.S. 12 6

7 Competitive Strengths v Research & Development ~8.5% of sales Basic and applied research 188 patents granted over the past decade 18 YTD v Creative Expertise 14 creative centers 95 perfumers, 80 flavorists v Consumer Understanding Annually, more than 400,000 interviews worldwide v Regulatory Expertise 13 IFF s Value Creation Model Technology Consumer Insights Materials Advantage Consumer- Preferred Products Emotional Positioning Collaborative Approach Uniqueness 14 7

8 Organic Sales Growth: Q Q (In local currency) 12% Average Quarterly Growth Rate 4.1% 9% 6% 3% 0% 3% 4% 7% 7% 6% 5% 5% 2% 1% 4% 2% Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 15 Earnings Per Share (Excludes items impacting comparability*) $1.00 $0.80 $0.60 $0.59 $0.67 $0.62 $0.69 $0.72 $0.71 $0.53 $0.70 $0.81 $0.75 $0.45 $0.40 $0.20 $0.00 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 *Includes items such as one-time tax gains, assets sales, restructuring charges and implementation costs 16 8

9 Substantial Cash Generation (Dollars in millions) $400 Operating Cash Flow $300 $122 $200 $100 $270 $296 $177 $282 $192 $136 $ mos 08 v Consistent free cash flow in excess of needs v Selective reinvestment v Dividend payout 30%-35% 17 Solid Financial Returns 35% 33.0% 30% 25% 20% 26.0% 24.0% 21.0% 25.0% 28.0% 15% 12.7% 13.7% 13.0% 14.0% 15.0% 13.7% 10% 5% 0% months 2008 ROE ROI 18 9

10 Building a Stronger IFF v Grow Organic Geographic New applications and technologies v Improve Profitability Input cost recovery Discretionary spending Productivity and efficiency v Maintain Financial Strength Capital effectiveness 19 Looking Ahead vflat or slightly positive y-o-y local currency sales growth in Q4 vcurrent financial crisis will have uneven impact on the world economies vbusiness plans anticipate a generally weaker consumer environment in developed markets 20 10

11 Summary v Good YTD performance in difficult environment v Improving profitability remains a key priority v Balance current performance with long-term goals v Confident in strategy & business fundamentals 21 Question and Answer Session Robert M. Amen Chairman and CEO 11