Barclays

Back-to-School
Conference
Doug Tough
Chairman & CEO

Kevin Berryman

EVP & Chief Financial Officer

September 4, 2013

Forward Looking Statements

Before we begin, we would like to remind everyone that during todays
presentation, we will be making forward-looking statements about the
Company's performance. These statements are based on how we see
things today and actual events or results may differ materially from those
reflected in our forward-looking statements. Forward-looking statements can
be identified by words such as believes, estimates, expects, or similar
references to the future, and include statements we may make regarding
the Companys future financial performance, business prospects, and
operating strategies.
There are many factors that can result in actual performance differing from
projections and forward-looking statements. These factors are set forth in our
2012 Annual Report on Form 10-K filed with the SEC on February 26, 2013.
Today's presentation will include non-GAAP financial measures, which
exclude those items that we believe affect comparability. Reconciliation of
these non-GAAP financial measures to their respective GAAP measures are
available on our website at www.iff.com.
2

Business Profile (as of 2Q13)

$2.9B in Revenue (TTM)

Split 51% Fragrance; 49% Flavors
More than 75% revenue outside US
Over 5,800 employees
32 countries
49 sales offices
22 regional creative centers

Global Flavors and Fragrances Industry

Characteristics
~$18 billion global industry*
Market growth of 2% to 3%
Market remains fragmented outside top players
IFF has an approximate 16% share**
Defensive/stable industry

Based on FY 2012
** Source: The Freedonia Group, Inc. 2011
Excludes Essential Oils and Natural Extracts

Global F&F Compound Markets

by Category
Total Flavors Market
Estimated at $9.6 Billion*

Total Fragrance Compound

Market Estimated at $6 Billion*

Global Flavors Market Breakdown

Global Fragrance Compound Market

Dairy
8%

Personal
Wash
15%

Other
3%
Beverage
35%

Sweet
21%

Savory
33%

Fabric
Care
25%

Beauty
Care
17%

Growing 3-5% CAGR

Source: IAL Consultants & Internal Estimates *2011

Fine
Fragrance
27%

Home
Care
16%

Growing 2-3% Per Year

Source: IAL Consultants & Internal Estimates

*2011

Investment Profile
Partner with leading global consumer
companies
Diversified product portfolio and strong
innovation pipeline
Geographically diversified with 49% of business
in emerging markets (as of 2Q13)
Strong financial performance and cash flow
generation
Backward integration ensures sustainable
supply of raw materials
Experienced management team & focused
strategic growth plan

Long-Term Growth Strategy

Leverage
GeographicReach

Emerging markets are

growing 2-3x rate of
developed markets

Strengthen
InnovationPlatform

Spend 8% or above
on R&D

Over 49% of our sales

are to emerging markets

Research is becoming
greater percentage
of R&D

Expertise in adapting
flavors to local tastes

Drive innovation into

the portfolio

Maximize
Portfolio

Economic Profit is used

for disciplined decision
making
Single-instance global
enterprise system
Enhanced margins
and operating profit
7

Emerging Market Presence is Building

Nearly 50% of Sales to Emerging Markets
58.0%
56.0%

56% FY

54% FY

53% FY

51% Q2

44% FY

46% FY

47% FY

49% Q2

54.0%
52.0%
50.0%
48.0%
46.0%
44.0%
42.0%
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

Developed

Emerging

Research Platforms
10 Research Platforms address consumer need states

Flavor
Modulation

Flavor
Naturals

Flavor
Delivery
Systems

High
Impact

Fragrance
Molecules

Fragrance
Naturals

Fragrance
Delivery
Systems

Process
Research

Malodor

10

Modeling

Maximize Portfolio
Improved Economic Profit
94% of Portfolio is now EP neutral or Positive
2010 Portfolio Value Breakdown
% Capital Employed

2012 Portfolio Value Breakdown

% Capital Employed

6%

15%

15%

20%
65%

EP Positive

EP Break-even

EP Negative

79%

EP Positive

EP Break-even

EP Negative

10

Innovation at IFF

11

Kevin Berryman
EVP and Chief Financial Officer

Long-Term Financial Targets

Leverage
GeographicReach

Strengthen
InnovationPlatform

Maximize
Portfolio

Local Currency
Sales Growth

Adjusted Operating
Profit Growth

Adjusted
EPS Growth

4-6%

7-9%

10+%
13

Second Quarter 2013

Financial Results

LC sales growth +6%; +8% LFL*

Fragrances +8%; Compounds +10%
Flavors +5%; LFL +8%*
Emerging markets +10% (49% of
total sales)
Adjusted gross margins +240bps**
Adjusted operating profit +10%**

* LFL, or like-for-like, is a non-GAAP metric that excludes the exit of low-margin sales activities,
please see our GAAP to Non-GAAP Reconciliation at IFF.com.
**Adjusted Operating Profit, adjusted EPS and LC Sales are Non-GAAP metrics,
please see our GAAP to Non-GAAP Reconciliation at IFF.com.

14

1H 2013 Performance Overview

LC Sales
Growth *

Adjusted Operating
Profit Growth*

Adjusted EPS
Growth*

5%

12%

12%

LCsalesgrowthof6%LFL**reflectssuccessofemergingmarketstrategy
7%growthinFlavors
8%growthinFragranceCompounds
Adjustedgrossmarginexpansionof260bpsto43.6%,reflectsfavorable
volume&mix,
reducedinputcosts,andmanufacturingefficiencies
12%growthinadjustedoperatingprofit;12%growthinadjustedEPS

* LC Sales, Adjusted Operating Profit and Adjusted EPS are non-GAAP metrics;
please see our GAAP to Non-GAAP Reconciliation at IFF.com.
**LFL, or like-for-like, is a non-GAAP metric that excludes the exit of low-margin sales activities, please see our GAAP to Non-GAAP.
Reconciliation at IFF.com.

15

Adjusted Gross Margin* Progression

Strategic initiatives, including category mix, innovation,
and cost reductions more than offset net price/cost margin factors

42.1

3.4

43.6

Strategic
Initiatives*

1H 2013 Gross
Margin

1.9

1H 2010 Gross
Margin

Net Price and

Input Costs

* Includes volume leverage, category mix, including exit of low-margin sales activities, and cost savings initiatives, net of cost increases.
*Adjusted gross margins exclude restructuring and other charges and operational improvement initiatives

16

Increased Working Capital Efficiency

Core Working Capital as a % of Net Sales
35%
34%
33%
32%
31%
30%

<31%

29%
28%
27%

2008

2009

2010

2011

2012

2013 - 2015

2013 2015 = Company Estimates

17

Adjusted Operating Cash Flow

3-Year Cumulative
In $ Millions
1,200
1,000
800

$1B +

600
400
200
0

2004 - 2006

2013 2015 = Company Estimates

2007 - 2009

2010 - 2012

2013 - 2015

18

Uses of Cash
Allocation based on principles of Financial Flexibility

Capital
Expenditures

Financial
Flexibility

Acquisition/
Development
Opportunities

Cash
Returned to
Shareholders

19

Capital Expenditures
Increased Investments in Emerging Market Capacity and Technology

5%
4%
3%

4-5%

4.4%

2%

3.4%

~3%

1%
0%

2003 - 2009

2010 - 2012

2013 - 2015

2016 - 2018

20

Cash Returned to Shareholders

$1.46
$1.30

Annual Cash
Dividend Declared
$0.96

$1.16
$1.00

IFFs quarterly dividend has

grown by a CAGR of 13%
over last 3 years

$1.04

$0.88

$0.69
$0.60

2002

$0.73

Increased quarterly
dividend
15% to $0.39 per share

$0.77

$0.63

Historical dividend payout

ratio of 30-35%

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012 2013 E

Authorized $250 million

share buyback intend to
spend $50 million in 2013
21

M&A Activity
Augment Our Organic Growth Strategy
Routinely evaluate M&A opportunities
F&F companies participating in attractive markets
F&F companies operating in geographies
where we are under- represented
F&F companies with differentiated technology
Evaluate consistent with principles
of Economic Profit
Will consider adjacencies
that bolster long-term
growth prospects

22

Balance of Year Perspective

ContinuetoexpectLCgrowthinline
withLTtargetsof46%
Marginexpansion,costcontroland
manufacturingefficienciesdriving
operatingprofitgrowth
OurR&Dpipelineshouldprovideus
withlongertermgrowthwhile
providingsustainablecosteffective
rawmaterials
FY2013isexpectedtobeinlinewith
longtermtargets

23

Sales Exposure to FX in Emerging

Markets
Q2 13 Revenue

51%

Emerging Markets

49%

Developed Markets

USD + Other Currencies

Emerging Markets

Emerging Market Currencies

24

Summary

Geographically Diversified Company with Steady Growth

Partnered with Leading Global Consumer Companies
Strong Innovation Platforms Focused on Consumer Needs
Strong Financial Performance and Cash Flow
Ability to Deliver Strong Returns Longer-Term

25

Questions

26