International Flavors & Fragrances Reports Q2 2025 Results with Decline in Net Sales and Strategic Restructuring

International Flavors & Fragrances Inc. (IFF) reported its financial results for the second quarter and first half of 2025, revealing a decline in net sales and significant changes in its business structure following recent divestitures. For the three months ended June 30, 2025, IFF's net sales totaled $2.764 billion, a decrease of 4% from $2.889 billion in the same period last year. The decline was attributed to the impact of divestitures, particularly the sale of the Pharma Solutions and Nitrocellulose businesses, which collectively accounted for approximately $193 million in lost sales. Gross profit for the quarter also fell to $1.030 billion, down 4% from $1.068 billion, although the gross margin improved slightly to 37.3% from 37.0%.

In terms of profitability, IFF reported a net income of $612 million for the second quarter, a significant increase from $172 million in the prior year, largely due to a $488 million gain on the extinguishment of debt following the repurchase of senior notes. The company’s operating profit for the quarter was $198 million, compared to $191 million in the same quarter of 2024. However, the first half of 2025 saw a net loss of $405 million, compared to a profit of $233 million in the first half of 2024, primarily due to a $1.153 billion goodwill impairment related to the Food Ingredients segment.

Strategically, IFF has undergone a reorganization effective January 1, 2025, which resulted in the separation of its Nourish segment into two new reportable segments: Taste and Food Ingredients. This restructuring aims to enhance operational efficiency and align resources more effectively. The company also completed the divestiture of its Pharma Solutions business on May 1, 2025, and the Nitrocellulose business on May 9, 2025, as part of its strategy to streamline operations and focus on core areas.

Operationally, IFF's cash and cash equivalents increased to $816 million as of June 30, 2025, up from $469 million at the end of 2024. The company generated $368 million in cash from operating activities during the first half of 2025, reflecting improved working capital management. IFF's employee headcount remained stable, with no significant changes reported. The company continues to focus on enhancing its product offerings and expanding its market presence, particularly in the Taste and Food Ingredients segments, which reported sales increases of 3% and flat performance, respectively, in the second quarter.

Looking ahead, IFF anticipates that the divestitures will allow for a more focused approach to its core business segments, with expectations of improved profitability and operational efficiency. The company has also authorized a new share repurchase program valued at $500 million, signaling confidence in its long-term growth strategy. IFF's management remains optimistic about navigating market challenges and leveraging its strengths in the food, beverage, and health sectors to drive future growth.