International Flavors & Fragrances Inc.NYSE: IFF

MARKET CAP: $9B / CURRENT PRICE: $112.57

ABIGAIL MALIN

2What does IFF do?IFF creates, manufactures, and supplies flavors and fragrances for the food, beverage, personal care, and household products industries either in the form of compounds or individual ingredients.

Flavors47%Fragrances

53%

Revenues, by Segment

Within Flavors:• Savory• Beverage• Sweet,

Pharmaceuticals, and Oral Care

• Dairy

Within Fragrances:• Fine• Consumer

Within Consumer:• Fabric Care• Home Care• Personal Wash• Hair Care• Toiletries

3What is the investment idea?

Defending key position in a fragmented market Defining clear strategic plans for growth Facing hard times currently and in the near future

Buy in now, hold through bad weather ahead, and seek returns when currency

and raw material prices stabilize.

4Defending Key Position in a Fragmented Market

Top four player combined hold about 2/3 of the $18B market with a growth rate of 3.5% per year IFF has 17.22% market share (by sales)

Givaudan (SWX: GIVN) = 25%

Firmenich (Private) = 16%

Symrise (XTRA: SY1)= 12%

79% of total sales are outside the US

25 largest customers in 2014 accounted for 53% of sales Sales to the largest single customer accounted for 12%, primarily in

fragrance business

5Defending Key Position in a Fragmented Market (Continued)Success in this industry depends on:

1. Brand name 36,000 products

2. Innovation Ability 8% of sales to R&D

259 patents since 2000, including 8 in 2014

In 2014: launched 4 natural flavor modulators, began manufacturing Bio-Vanillin, commercialized 2 fragrance molecules, created breakthrough capsule

3. Geographic Span Emerging markets = 50% of sales in 2014

29 manufacturing sites – more flavors than fragrance because of locality pressures

6Defining Clear Strategic Plans for Growth

Routinely evaluate M&A opportunities Look for companies in attractive markets, where IFF is under-

represented, who hold differentiated technology

Goal of $500M - $1B of sales growth through acquisitions by 2020

Entrance into new markets in 2014 New flavor facility in existing Indonesian factory

Opened sales office in Chile

New facility in Turkey

7Defining Clear Strategic Plans for Growth (Continued)How have current acquisitions fared?

No impairment of goodwill in the past 5 years

Measures of Success are on the right trend…

Measure As of 3-31-15

Back 12-31-10

ROA 11.1% 9.7%

ROC 15.2% 14.4%

ROE 28.2% 29.7%

Gross Margins 44.4% 41.7%

Total Debt / Equity

60% 91.9%

Date Company Price How? Goodwill

Added?

1/15/14 Aromor Flavors & Fragrances Ltd., $102.6M

Existing Cash

$10 1% to revenues

4/13/15 Henry H. Ottens Manufacturing Co., Inc.

$190M Existing Cash

N/A N/A

8Facing Hard Times Currently and in the Near Future

2009 2010 2011 2012 2013 2014 0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

Total Revenues and Net Income Changes Over 5 Years

2009 2010 2011 2012 2013 201453%

54%

55%

56%

57%

58%

59%

60%

61%

Cost Of Goods Sold (%)

Historical Margins:

9Facing Hard Times Currently and in the Near Future (Continued)This makes now the time to buy! Why?

1. Input prices of raw materials are rising 8,500 different raw materials from 2,300 suppliers

50% crop related, 50% synthetic chemicals

But IFF holds pricing power to pass costs on to customers!

80.00%

7.50%7.50%

5.00%

Input Costs to Produce a Food/Bev-erage

marketing and distribution packaging

commodities flavor

10%

15%

30%

45%

Drivers of Purchase

packaging price brand image taste profile

10Facing Hard Times Currently and in the Near Future (Continued)This makes now the time to buy! Why?

2. Temporary currency devaluations are reducing the top line Consider, currency neutral growth in comparison

Sales Adj. Operating Profit Adj. EPS0%

2%

4%

6%

8%

10%

12%

14%

1%2%

10%

5%

7%

3%

Growth Rates from Q1FY14 to Q1 FY15

Currency Neutral Currency Impact

11What is the future value?

To calculate value, I used a DCF model, with 3 scenario outcome Revenues: Conservative (90%), Expected (5 year average), Aggressive

(110%) Broken down by region because each region has significantly different growth rate

Equity Value Per Share

DCF Growth

DCF EBITDA

Conservative 94.49 102.78

Expected 97.40 105.80

Aggressive 100.37 108.90

REVENUE GROWTH  Conservative  Expected  AggressiveEurope, Africa, Middle East 4.82% 5.35% 5.89%Greater Asia 7.58% 8.42% 9.26%North America 2.60% 2.89% 3.18%Latin America 7.12% 7.91% 8.70%

12What is the future value?(Continued)

Jul-1

6-14

Jul-2

5-14

Aug-05-

14

Aug-14-

14

Aug-25-

14

Sep-0

4-14

Sep-1

5-14

Sep-2

4-14

Oct

-03-

14

Oct

-14-

14

Oct

-23-

14

Nov-03

-14

Nov-12

-14

Nov-21

-14

Dec-0

3-14

Dec-1

2-14

Dec-2

3-14

Jan-0

5-15

Jan-1

4-15

Jan-2

6-15

Feb-0

4-15

Feb-1

3-15

Feb-2

5-15

Mar

-06-

15

Mar

-17-

15

Mar

-26-

15

Apr-07-

15

Apr-16-

15

Apr-27-

15

May

-06-

15

May

-15-

15

May

-27-

15

Jun-0

5-15

Jun-1

6-15

Jun-2

5-15

Jul-0

7-15

85

90

95

100

105

110

115

120

125

Relative Performance (%)

NYSE:IFF - Div Adj Share Pricing ^SPX - Share Pricing

Stock Price is dropping as a result of:• Currency movements• Geopolitical issues

While not at an all-time low, current news includes:• Being cross listed on

Euronext Paris• In discussion to

acquire Lucas Meyer Cosmetics (Q3)

Before, the deal (to be done with existing resources) is officially solidified, and the portfolio is officially expanded, we should buy.

13What are the risks? Success of acquisition growth strategy

Consumer taste and preferences can change quickly over time or geographic regions

Foreign expansion risks

High level of regulation FDA EPA OSHA DEA Chemical Registration / Notification Authorities Trade

Customers could move fragrance/flavor development in house

14

Any questions?

15Appendix 1: Management

10 directors, elected annually

No one of substantial tenure (oldest 2007)

Past Experiences: luxury consumer goods, pharmaceuticals, biomedical research, law, consulting, finance/accounting, technology, food

Minimum share requirements

Compensation = $120,000+ (some stock, some cash)

All directors + executives = 1.9% of equity combined

Metrics: Local currency sales growth, operating profit, gross margin, working capital