Nicola Tang

Nicola Tang inquired if the potential delay in West Virginia's legislation has altered customer discussions regarding natural color conversion timing. She sought clarification on the Color Group's 'double-digit' top-line growth guidance for 2026 and asked about the confidence in the Flavors and Extracts and Asia Pacific groups' rebound, specifying drivers beyond just lapping prior-year impacts.

Answer

Paul Manning, Chairman, President, and CEO, stated that customers remain highly committed to natural color conversion, driven by end-consumer demand rather than specific legislation. He cited public commitments and Walmart's accelerated timeline as factors potentially moving conversions forward. Manning clarified that 'double digits' for the Color Group's 2026 top-line growth means 10% or better. For Flavors and Extracts, he expressed confidence, noting that the 'flavors and flavor ingredients' segment (two-thirds of the group) already showed mid-single-digit top-line growth and substantial profit growth in 2025, expected to continue. The Agricultural Ingredients business has reached an inflection point, anticipating top-line growth and cost reductions. For Asia Pacific, despite Q1 flatness due to tariff issues, a return to revenue and profit growth is expected from Q2 onwards, driven by strong performance in unaffected businesses. Both groups are projected for mid-single-digit top-line and high-single-digit EBITDA growth for the year.

Nicola Tang asked if the potential delay in West Virginia's legislation, due to a lawsuit, has altered customer discussions or conversion timelines for natural colors. She sought clarification on Paul Manning's 'double-digit' top-line growth expectation for the Color Group in 2026, specifically if it implies 10% or higher, given past performance. She also questioned the confidence in the Flavors and Extracts Group's improvement, whether it's solely from agricultural ingredients or also flavors, and the basis for the Asia Pacific Group's anticipated second-half rebound beyond just lapping prior year impacts.

Answer

Paul Manning (Chairman, President, and CEO, Sensient Technologies Corporation) stated that customers remain committed to natural color conversion, driven by consumer demand and not solely legislation, citing public commitments and Walmart's accelerated timeline. He confirmed 'double-digit' for Color Group revenue growth means 10% or better for 2026, emphasizing the exciting big picture for 2026-2028. For Flavors and Extracts, he expects mid-single-digit revenue growth and high single-digit EBITDA growth for the year, driven by continued strong performance in flavors and flavor ingredients, and a recovery in agricultural ingredients due to a record crop and cost-out initiatives. For Asia Pacific, he anticipates a return to revenue and profit growth from Q2 2026, after Q1 flatness, as tariff-related logistical issues stabilize and unaffected businesses perform well, projecting mid-single-digit top line and high single-digit EBITDA growth.

Nicola Tang of BNP Paribas questioned if current manufacturing capacity is sufficient for the $110 million synthetic-to-natural conversion and if the increased CapEx is aimed at gaining market share. She also asked about the future pricing dynamics of natural versus synthetic colors and the growth outlook for the Flavors and Extracts division amid lackluster packaged food volumes.

Answer

CEO Paul Manning stated that today's manufacturing footprint is insufficient for the full conversion, making the incremental CapEx essential to capture existing share and potentially more. Regarding pricing, he explained the 10:1 cost ratio is an average and that technology and supply chain improvements should continue to optimize economics for customers over time. For Flavors, he acknowledged flat market launch activity but highlighted that Sensient's focus on high-growth segments like natural colors will drive its business, pointing to the company's strong average revenue growth since 2019.

Nicola Tang asked for clarification on whether the $10 million tariff impact was limited to raw materials, inquired about underlying volume trends in key geographies, and questioned if Q1 momentum was aided by pre-buying. She also sought details on the increased CapEx guidance, including its purpose and geographic allocation.

Answer

Paul Manning, Chairman, President & CEO, clarified that the tariff impact includes both raw materials and finished goods, though raw materials are the larger component. He described market volumes as flat in the U.S., slightly better in Europe, and positive in Asia, stating that pre-buying was not a significant factor in Q1. Manning and Tobin Tornehl, VP & CFO, explained the increased CapEx of $80-$90 million is for manufacturing capacity to support natural color demand, primarily in the U.S., and will remain elevated for several years.

Representing BNP Paribas Exane, the analyst asked about the current market penetration of natural colors in the U.S., the competitive landscape for natural versus synthetic colors, the key drivers of the Asia Pacific group's strong performance, and for confirmation of the company's long-term EBITDA growth targets.

Answer

Paul Manning, Chairman, President & CEO, estimated U.S. natural color penetration at approximately one-third, significantly trailing Europe's 80%+, indicating a long runway for growth. He highlighted Sensient's competitive edge in manufacturing a full range of colors (natural, synthetic, coloring foods), which supports its focus on technically complex conversions. He attributed the Asia Pacific group's success to long-term strategic investments in its portfolio, sales force, and leadership, resulting in high new sales wins. Manning also reaffirmed the company's long-term ambition for mid- to high single-digit EBITDA growth, driven by revenue growth, cost controls, and favorable product mix.

Nicola Tang inquired about the assumptions behind the top and bottom ends of IFF's 1%-4% Currency Neutral sales outlook for 2026, whether all divisions are expected to grow within this range, and if Q4 2025's better-than-expected currency-neutral sales signal improving market trends or specific drivers.

Answer

EVP and CFO Michael DeVeau explained that the 2026 guidance assumes current market conditions, with the higher end requiring broader end-market volume improvements. He noted Q4 2025's marginal outperformance was driven by new wins, and expects Taste, Scent, and Health & Biosciences to grow within the range, with Food Ingredients growing to a lesser extent.

Nicola Tang inquired about the assumptions underpinning IFF's 1%-4% currency-neutral sales outlook for 2026, whether all divisions are expected to grow within this range, and if Q4 2025's better-than-expected sales in core divisions signaled improving market trends or specific drivers like new wins.

Answer

EVP and CFO Michael DeVeau explained that the 2026 guidance reflects current market conditions, with the higher end requiring broader market volume improvements. He confirmed Q4 2025's top-line beat was driven by new wins, and anticipated growth across the three core businesses, with food ingredients growing to a lesser extent.

Nicola Tang inquired about IFF's top-line guidance, noting the implied negative low single-digit growth for Q4 despite easier comparables. She asked about the main headwinds, the split between macro and IFF-specific factors, and the conditions for top-line acceleration in 2026.

Answer

CFO Michael DeVeau confirmed a more prudent top-line projection for Q4, primarily driven by the challenging macro environment and soft end-market demand in food & beverage and home & personal care volumes. He noted IFF-specific pressures in fragrance ingredients and Health North America, which together represent about 5% of total sales. For 2026, he expressed cautious optimism for growth acceleration as the market normalizes and self-help initiatives yield results.

Nicola Tang asked about the integration within the Food Ingredients business, potential stranded costs from the Bunge deal, and the scope for further portfolio cleanup.

Answer

CEO J. Erik Fyrwald explained that the team is working to establish Food Ingredients as a standalone business to increase strategic flexibility. He confirmed there will be stranded costs from the Bunge deal but stated the company is proactively addressing them, having learned from the Pharma divestiture to manage such costs upfront.

Nicola Tang requested more specific details on the expected 1% to 4% currency-neutral sales growth for 2025, asking for a breakdown of expectations across the core business divisions.

Answer

CEO Jon Erik Fyrwald responded that the growth will be predominantly volume-driven, with only modest pricing contributions. He specified that the primary growth drivers will be the Health & Biosciences, Scent, and Taste divisions. In contrast, the Food Ingredients segment is expected to experience much more moderate volume growth as its primary focus shifts toward improving profit margins.

Nicola Tang from BNP Paribas asked about the Nourish segment, seeking to understand the drivers of the sequential margin decline and requesting more color on the performance of Flavors versus Functional Ingredients, as well as the margin progression into Q4.

Answer

CFO Glenn Richter explained that Nourish margins typically peak in Q2 due to a favorable summer season mix. He attributed the Q2 to Q3 decline to mix normalization and increased business investments. He projected a further margin contraction of 50-90 basis points in Q4 due to seasonal volume declines.

Nicola Tang of BNP Paribas asked for the basis of confidence that consumer downgrading in Household Care will stabilize in the second half. She also requested an update on spot input cost trends.

Answer

EVP of Consumer Biosolutions, Anders Lund, stated that confidence stems from Novozymes' resilience in serving the entire industry, picking up volume in private labels that larger brands may lose. He also cited strong innovation and pricing dialogues. EVP and CFO, Lars Green, noted that while spot input costs have peaked, the gross margin will still feel the impact in H2 due to P&L delays and hedging, expecting an H2 margin similar to the H1 average.

Nicola Tang of BNP Paribas Exane requested an update on the Advanced Protein Solutions facility's progress and customer discussions beyond the anchor client. She also asked about the timeline for announcing the management team for the combined company with Chr. Hansen.

Answer

President & CEO Ester Baiget confirmed the advanced protein facility in Blair is on time and budget for a year-end startup, targeting a DKK 1 billion revenue opportunity over five years across the entire platform. Regarding the merger, she stated that while the board has been announced and integration work is proceeding, she would not commit to a specific timeline for announcing the next layer of management, prioritizing a successful closing.

Nicola Tang asked for a breakdown of pricing initiatives between short-term inflation recovery and long-term strategy, and whether pricing would be given back if input costs fall. She also inquired about the feedback from employees and customers regarding the proposed combination with Chr. Hansen.

Answer

CEO Ester Baiget emphasized that pricing is based on the value delivered to customers, not raw material costs, and is a long-term strategic component of growth that will be sustained. Regarding the deal, she reported receiving very positive feedback from both customers and employees, with customer conversations reinforcing synergy assumptions and employees showing excitement for the combined company's future.