Volume Outlook
Q: Are you being conservative with your volume guidance?
A: Management expects volumes to soften in the second half due to ongoing consumer softness in the U.S. and EU, and they can't expect significant market tailwinds. They believe destocking has mostly ended outside of Pharma Solutions, but until consumer markets strengthen, they are cautious about volume growth.

Margin Sustainability
Q: Can EBITDA margins remain at 20% for the rest of the year?
A: Management anticipates EBITDA margins will decrease from the first quarter's 20% to around 18.5% for the rest of the year. This decline is due to lower volumes, mix changes, and timing of expenses. While the first quarter benefited from net price-cost realization and some timing benefits, they do not expect these to recur to the same extent.

Divestitures and Portfolio
Q: Will you pursue more divestments after Pharma Solutions?
A: The focus is now on strengthening the remaining four business units—Nourish, Scent, Health & Biosciences, and Functional Ingredients. Management is conducting a strategy review for each business but did not commit to any further divestitures at this time.

Cash Flow Confidence
Q: Are you confident in achieving your free cash flow targets?
A: Management is trending more favorable and now expects free cash flow closer to $600 million, up from the initial $500 million target. This improvement is due to earnings momentum, better working capital performance, and timing on taxes.

Functional Ingredients Turnaround
Q: Can Functional Ingredients return to prior sales and earnings levels?
A: Management believes the first quarter marks the beginning of improvement in Functional Ingredients. They are focusing on strengthening execution and conducting a strategy refresh. They aim for a strong improvement in 2024 and continued progress into 2025 and beyond.

Scent Division Performance
Q: What drove strong performance in Scent, especially Consumer Fragrances?
A: The Scent division saw 9% volume growth in the first quarter. This was driven by world-class perfumers and a focus on bringing leading innovation to customers. Management expects continued strong performance under new leadership.

Productivity Gains
Q: Is the $150 million productivity gain target increasing?
A: Management is now expecting $200 million in productivity gains for the full year, achieving about $50 million per quarter. This increase is due to operational efficiencies, procurement improvements, and opportunities in manufacturing.

Organizational Changes
Q: What are the implications of the new organizational structure?
A: The company is moving to an end-to-end business unit model to drive clarity in strategy and execution. Functions like finance and HR will now report directly into business units, aligning incentives with business performance. Management believes this will unleash the full potential of their people and capabilities.

Market Demand Trends
Q: What are customers saying about future demand and innovation?
A: Customers are pivoting towards needing more innovation, as they can't rely on price increases for growth. They're seeking leading innovation from IFF to help profitably grow their businesses. Management sees this as a tailwind, as innovation is central to their strategy.