IFF's continuing Taste, Health & Biosciences and Scent businesses grew sales 6% like-for-like on higher volumes, but GAAP EPS fell to $0.13 from $2.14 as last year's one-off gains lapsed and a $71M non-deductible fragrance-investigation provision hit.
Revenue
$2.0B
+1.8% YoY
Net income
$33M
-94.0% YoY
Diluted EPS
$0.13
-93.9% YoY
Operating margin
8.1%
Overview
International Flavors & Fragrances (IFF) makes the flavors, fragrances and biotech ingredients (enzymes, cultures, probiotics) that go into other companies' food, drinks, detergents and perfumes. Its second quarter of 2026 (April–June) is the first reported after IFF agreed on May 29, 2026 to sell most of its Food Ingredients business to CVC Capital Partners for about $3.8 billion in net cash. Food Ingredients is now reported as a discontinued operation: its results are pulled out of the main figures (for this year and last year) and shown on a single line further down. Every figure below is for the three businesses IFF is keeping — Taste, Health & Biosciences, and Scent — unless stated otherwise.
On that basis, the underlying business grew: sales rose 6% on a like-for-like basis and the core profit measure rose 6%, both driven mainly by selling more volume. But reported profit collapsed — net income from continuing operations fell from $550 million to $33 million. That drop is almost entirely about last year's one-off gains and this year's legal provision, not about how the business ran.
Key figures (continuing operations)
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$1,954M
$1,919M
+1.8%
Comparable currency-neutral sales growth
—
—
+6%
Gross margin
43.7%
42.9%
+0.8 pts
Operating profit
Read 0 community reports on International Flavors & Fragrances, or write your own.Write a report
Free cash flow, first half (incl. discontinued ops)
$378M
$94M
+$284M
A few terms, since they carry the story:
Comparable currency-neutral sales strip out two things that distort the reported number: businesses sold since last year (so you compare the same set of businesses) and swings in exchange rates when foreign sales are converted into dollars. It is the closest measure to "did customers buy more?"
Adjusted operating EBITDA is IFF's main profit yardstick: earnings before interest, tax, depreciation and amortization, also excluding items IFF treats as non-recurring (legal provisions, restructuring, divestiture costs). Its margin is that profit as a share of sales.
Operating margin is the share of sales left after running the business and after amortization, restructuring and the legal provision, but before interest and tax.
Why reported sales grew only 2% while the underlying business grew 6%
Two effects pulled in opposite directions:
Divestitures subtracted about $107 million. Q2 2025 still contained roughly one month of Pharma Solutions (sold May 1, 2025) and Nitrocellulose (sold May 9, 2025) — Pharma Solutions alone had $103 million of sales in last year's quarter — plus the Rene Laurent business in France (sold December 1, 2025, about $4 million of quarterly sales). None of that is in this year's number.
Currency added about 2%. A weaker dollar made foreign sales worth more once converted.
Strip both out and the like-for-like comparison is $1,916 million versus $1,812 million, i.e. +6%. The 10-Q attributes the growth primarily to higher volumes, with price increases helping in Taste.
Segment performance
Segment
Q2 2026 sales
Reported growth
Comparable currency-neutral sales growth
Adj. op. EBITDA
Adj. op. EBITDA margin (Q2 2026 / Q2 2025)
Comparable currency-neutral EBITDA growth
Taste
$688M
+5%
+4%
$124M
18.0% / 17.9%
+6%
Health & Biosciences
$601M
+8%
+5%
$150M
25.0% / 24.9%
+6%
Scent
$665M
+10%
+8%
$134M
20.2% / 20.1%
+5%
Total (continuing)
$1,954M
+2%
+6%
$408M
20.9% / 20.8%
+6%
Taste (flavors for food and drinks): growth came from both higher volumes and higher prices in the Flavors business, with growth in every region. Profit grew faster than sales (+6% vs. +4%), so the margin edged up.
Health & Biosciences (enzymes, cultures, probiotics, animal nutrition, grain processing): volume gains across its business units; the earnings release says Grain Processing, Food Biosciences and Animal Nutrition led. It remains IFF's highest-margin segment at 25.0%.
Scent (fragrances for perfumes, detergents and personal care): the fastest grower at +8% like-for-like, driven by volume in Fragrance Compounds (the finished fragrance blends IFF sells to consumer-goods brands). The 10-Q says this was partly offset by lower volumes in Fragrance Ingredients (the raw aroma chemicals). Fine Fragrance (luxury perfume) grew only low-single digits, which IFF attributes to the Middle East conflict. This is the one segment where profit lagged sales: comparable currency-neutral EBITDA grew 5% against 8% sales growth, and on that like-for-like basis the Scent margin slipped from 19.9% to 19.4%. The reported margin (20.2%) looks flat only because currency helped profit more than sales.
What sank reported earnings
Adjusted EPS excluding amortization rose from $0.77 to $0.82, yet GAAP EPS from continuing operations fell from $2.14 to $0.13. Both years' GAAP numbers are distorted, in opposite directions:
Q2 2025 was inflated by one-offs. Last year's quarter included a $488 million gain from buying back IFF's own bonds below face value ($1.45 per share after tax) and a one-time tax benefit from reorganizing IFF's legal-entity structure ($1.40 per share). These were partly offset by a $111 million loss on selling Pharma Solutions and Nitrocellulose ($0.97 per share). The net result was a negative tax rate (−25.6%) and $550 million of net income from continuing operations.
Q2 2026 was weighed down by a legal provision. IFF booked $71 million of "regulatory costs" — mostly provisions for the ongoing competition investigations into its fragrance business (the European Commission, the UK Competition and Markets Authority and the Swiss Competition Commission, which began with unannounced inspections of IFF sites in March 2023), plus legal fees. The 10-Q adds that new investigations were opened in 2026 in Singapore and India relating to employment practices in the fragrance industry. Because the provision is not tax-deductible, it cost $0.27 per share on its own and pushed the quarter's tax rate to 48.4%. There was also a $27 million write-down on CitraSource, a small Scent business sold on July 1, 2026 for a fair value (less costs to sell) of $41 million.
IFF says it cannot predict the outcome or duration of the investigations or whether they will materially affect results. The provisions reflect IFF's best estimate as of June 30, not a settlement.
Cash flow, debt and the use of sale proceeds
Cash generation improved sharply. Operating cash flow for the first half (including the businesses being sold) was $679 million versus $368 million a year earlier; after $301 million of capital spending, free cash flow was $378 million versus $94 million. The 10-Q attributes the gain mainly to lower working capital (less cash tied up in inventory, and more of it held back through later payments to suppliers) and a smaller incentive-compensation payout in 2026 for 2025 results, partly offset by higher customer receivables.
Debt. Net debt (borrowings minus cash) was $5.17 billion at June 30, 2.5 times trailing credit-adjusted EBITDA (a leverage measure used in IFF's loan agreements, including the businesses being sold).
Proceeds plan. From the ~$3.8 billion Food Ingredients sale, IFF plans to pay down more than $1 billion of debt, targeting leverage of 2.0x–2.5x. The Board raised the buyback authorization to $2.5 billion (including about $400 million left on the old one): a $500 million accelerated repurchase in the second half of 2026, and the remaining $2.0 billion after the sale closes, targeted for completion by the end of 2027. The sale is expected to close by the end of Q2 2027; IFF keeps a ~10% stake in the business.
Stranded costs. About $100 million a year of corporate costs previously charged to Food Ingredients will stay with IFF after the sale. IFF expects to eliminate about two-thirds within the first year after closing and substantially all within two years.
Tariff refunds. After the Supreme Court ruled on February 20, 2026 that the IEEPA tariffs were unlawful, IFF had recorded about $18 million of tariff refunds (net of amounts owed back to customers) by June 30, which helped gross margin.
Takeaway: Strip away last year's one-off gains and this year's $71 million non-deductible legal provision, and IFF's remaining three businesses grew sales 6% and core profit 6% like-for-like, mostly on higher volumes. The GAAP drop to $0.13 per share comes from one-off items in both years, not from the operations — but the fragrance antitrust probe is now a recurring cost with no known end point, and Scent, the fastest-growing unit, was the one whose like-for-like margin slipped.
Outlook
IFF issued new full-year 2026 guidance covering only continuing operations:
Management says the underlying performance of the three businesses is consistent with its previous guidance. For context, in the first half IFF already ran at the top of the range: comparable currency-neutral sales grew about 4% ($3,743 million vs. $3,590 million) and comparable adjusted EBITDA about 8% ($803 million vs. $745 million). Holding the range rather than raising it implies IFF expects slower growth in the second half. The full-year EBITDA range also implies $689–759 million in the second half, below the $841 million earned in the first.
Our read: the operating trajectory is steady rather than accelerating — volume-led mid-single-digit growth with margins roughly flat on a like-for-like basis. The larger near-term drivers of per-share earnings are outside the day-to-day business: the $500 million buyback this half, debt paydown and buybacks once the sale closes, how quickly the ~$100 million of stranded costs is actually removed, and the size and timing of any further fragrance-investigation charges. Watch Scent margins and Fine Fragrance demand in Q3; if Scent profit keeps lagging its sales, the segment carrying IFF's growth would also be the one diluting its margin.
Source: IFF Form 10-Q for the quarter ended June 30, 2026 (filed August 4, 2026), with segment detail from IFF's Q2 2026 earnings release (Exhibit 99.1 to the Form 8-K filed the same day). Non-GAAP measures are IFF's own definitions as reconciled in those filings.