IFF cuts FY23 revenue view to $11.3B-$11.6 from $12.3B, consensus $12.15B

The Company expects full year 2023 sales to be in the range of $11.3 billion to $11.6 billion versus approximately $12.3 billion previously, reflecting the Company’s expectation that volumes in the second half of 2023 will not recover as previously expected, driven particularly by continued customer destocking. For the year, volume is now expected to be down mid- to high- single digits (previously flat) on a comparable basis, with a significant decline in Functional Ingredients. The Company continues to expect a mid-single digit price increase for the full year 2023. The Company expects full year 2023 adjusted operating EBITDA to be in the range of $1.85 billion to $2.0 billion versus approximately $2.34 billion previously, which reflects favorable net price to inflation and enhanced productivity that are more than offset by lower volume, higher manufacturing absorption costs related to the Company’s inventory reduction program and the impact of the write-down of LBK inventory. IFF remains focused on achieving its targeted full-year working capital improvement. As such, the revised full year adjusted operating EBITDA guidance now includes approximately $180 million of higher manufacturing absorption costs related to the Company’s inventory reduction program versus approximately $100 million previously disclosed. Based on current market foreign exchange rates, the Company expects that foreign exchange will have approximately 2% adverse impact to sales growth and approximately a 6% adverse impact to adjusted operating EBITDA growth in 2023.