Fulvio Cazzol

Fulvio Cazzol asked for a summary of IFF's cost inflation outlook for 2026, covering input costs, tariff-related costs, and wage inflation, along with mitigation strategies.

Answer

EVP and CFO Michael DeVeau indicated expectations for modest input cost inflation in 2026, including raw materials, tariffs, logistics, energy, and packaging. He stated that IFF plans to mitigate these costs through customer collaboration, reformulation, productivity, and pricing, with productivity gains also offsetting general increases in working costs like merit increases.

Fulvio Cazzol inquired about IFF's cost inflation outlook for 2026, including input costs, tariff-related costs, and wage inflation, and how the company plans to mitigate these pressures.

Answer

EVP and CFO Michael DeVeau expects modest input cost inflation in 2026 across raw materials, tariffs, logistics, energy, and packaging. He stated IFF is collaborating with customers and will mitigate costs through reformulation, productivity, and pricing. Wage inflation is expected to be offset by productivity gains.

Fulvio Cazzol asked for more details on the challenges in the North America health business unit within the Health & Biosciences segment, inquiring if the anticipated improvement starting in 2026 still holds or if there's increased uncertainty.

Answer

CEO Erik Fyrwald explained that the North America health business has been slow, but IFF has implemented new leadership with strong commercial and marketing capabilities, increased innovation investment, and is connecting with existing and new customers. He expressed confidence in improvements, particularly in the second half of 2026, leading to a full recovery in 2027.

Fulvio Cazzol asked for more color on the Health & Biosciences (H&B) business in North America, specifically what is happening and if the expectation for improvement starting in 2026 still holds, or if there is more uncertainty now.

Answer

CEO Erik Fyrwald explained that IFF has implemented new leadership with strong commercial and marketing capabilities in the North America health business. He reiterated increased investment in innovation and connecting with customers, expressing absolute expectation for improvements, particularly in the second half of 2026, leading to a full recovery in 2027.

Fulvio Cazzol inquired about the gross margin development specifically for the Power Brands and asked for expectations regarding the European consumer, given recent strong performance in the region.

Answer

CEO Hein M. Schumacher attributed the strength in Europe to consumers responding well to significant innovations like Wonder Wash and new deodorant varieties. CFO Fernando Fernandez stated that the gross margin progression for Power Brands was similar to the rest of the portfolio, but reminded that Power Brands operate at a 400-500 basis point higher gross margin overall.