# YEAR IN REVIEW

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_IFF_2019/NYSE_IFF_2019.mmd` · pages 1-7_

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YEAR IN REVIEW

Announced anticipated combination with DuPont's Nutrition & Biosciences (N&B) business

Named to Barron's 100 Most Sustainable Companies list for second consecutive year

Announced intention to expand Tastepoint™ model in multiple geographies around the world to serve dynamic middle-market customers

Opened the industry's largest solar array at its Union Beach, New Jersey property

Reduced net debt to EBITDA leverage by 40 bps to

3.2x

Reconfirmed commitment to mitigate climate change by signing the UN's Business Ambition for 1.5°C: Our Only Future pledge

FULL-YEAR 2019 RESULTS
Company Financials

SALES
$5.1
BILLION

ADJUSTED EPS*
$4.88

Awarded a place on CDP's prestigious "A" List for Climate Change and Water Security

Awarded a place on CDP's prestigious "A" List for Climate Change and Water Security

Achieved significant cost synergies of ~50M from Frutarom well ahead of our year-one targets

Delivered a significant increase in operating and free cash flow** - increasing 60% and 73% respectively versus prior year

ADJUSTED OPERATING PROFIT*
$793 MILLION

ADJUSTED EPS EX AMORTIZATION*
$6.17

* Adjusted Operating Profit, Adjusted EPS & Adjusted EPS Ex Amortization are Non-GAAP metrics.
** Free cash flow is defined as operating cash flow less capital expenditures.
Please see our GAAP to Non-GAAP metrics in Exhibit A at the end of this report.

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DEAR FELLOW
SHAREHOLDERS,
CUSTOMERS &
EMPLOYEES
Five years ago, IFF boldly re-imagined what this company could be. As a CEO new to the role, but not new to the company, I was committed to working with the innovators and visionaries within the IFF fold to re-establish the Company's leadership position and strengthen our value proposition for all our stakeholders.

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Fast forward to today and IFF has experienced a remarkable transformation that positions us to truly redefine our industry and better meet our customers' evolving needs. We've built on our successful effort to reassert our leadership in flavors and fragrances to set our sights on becoming the preeminent partner in taste, scent and nutrition. Our dedicated focus on our customers and the global consumer has led us to create sensorial experiences that range from developing Michelle Pfeiffer's Henry Rose fragrances made with EWG \( ^{®} \)  verified and Cradle to Cradle \( ^{™} \)  certified ingredients, to crafting bold flavors and satisfying mouthfeel for alternative protein products.

Following a full year of integrating the talent and technologies of legacy Frutarom into the IFF family, we have begun to realize the powerful potential of our combined capabilities that we identified when we first struck the partnership. With Frutarom, we now have the strongest innovation pipeline in IFF history and have exponentially expanded our capabilities in fast-growing categories such as food protection, inclusions, cosmetic actives and health ingredients.

But the acquisition of Frutarom was only the first step in our strategic journey. Our late-in-the-year announcement of an agreement to combine with DuPont's Nutrition & Biosciences business (N&B) represents the next leap forward for IFF as we advance toward delivering integrated solutions as a stronger innovation and creative partner for our customers. Our combination with N&B will create a new global leader with an enhanced ability to deliver full-scale solutions to thousands of customers across a broad range of end-use markets, including food & beverage, home & personal care and health & wellness. Upon completion, we expect our combined company will be valued north of $30 billion with a combined pro forma 2019 revenue of more than $11 billion and $2.6 billion of EBITDA – more than doubling where we are today.

In 2019, we launched Vision 2021 – building the next era of IFF – and unveiled our organizational purpose – to redefine & transform how we live in and care for the resources of our world. We also released an entirely unique brand identity, including our first logo change in 40 years. Together, these initiatives have laid the foundation for a thriving future with greater opportunities for our colleagues, customers and shareholders. By better defining our vision and purpose, the organization shares an aligned focus on our path to grow in the marketplace while empowering our employees to take even more ownership and do more good.
REDEFINING HOW
WE LIVE IN AND
CARE FOR THE
RESOURCES
OF OUR WORLD

We refreshed our talent and organization practices to embrace a high-performing corporate culture based on three main pillars: extreme accountability, bias for action and effective collaboration. Fundamentally, we've made strong advancements in our employee base by improving succession planning, objective setting and employee training. And organizationally, we've formalized diversity & inclusion even more thoroughly with the launch of three employee-led colleague communities, bringing our resource groups to a total of four - all of which operate locally at a grassroots level and work to direct the global path forward. The pervasive efforts of our employees have been recognized externally with a 2019 Noteworthy Award from Diversity Inc Top 50 Companies for Diversity, an EDGE certification (US) and a perfect score for the second year in a row on the Human Rights Campaign Foundation's Corporate Equality Index, earning us another Best Place to Work for LGBTQ Equality award. We've also made strong commitments towards parity in 2019 by adopting the UN Women's Empowerment Principles and signing onto the UN Global LGBT Standards of Conduct for Business.

As we've embarked on this ambitious growth trajectory, our sustainability priorities have remained a clear focus through each initiative. IFF's mission to do better for people and the planet only strengthened in 2019. Building on our EcoEffective+ environmental initiative that defines our 2025 emissions goals and our long-standing commitment to the Paris Climate Agreement, IFF became a signatory to the UN's Business Ambition for 1.5° C: Our Only Future pledge. Last year, for the fourth time, we placed on the CDP's Climate Change "A" list and, we are pleased to say, made our debut placement on the CDP "A" list for water security, placing the Company among a prestigious group of global environmental leaders with Double-A distinction. Additional distinctions for corporate responsibility included being named to CR Magazine's 100 Best Corporate Citizens and the Euronext Vigeo World 120 Index for Corporate Social Responsibility.

In addition to our responsible sourcing and partnering with others who hold our same environmental values, we're also exploring ways to make our manufacturing footprint more sustainable. In New Jersey, we've recently repurposed a brownfield by installing the industry's largest solar array, which is large enough to power our entire R&D facility. With all future facility investments and projects underway, we prioritize opportunities to build in ways that reduce waste, leverage clean renewable energy and increase water stewardship.

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Recent investments in our new Center of Excellence for Food Service and Seasonings in Carrollton, Texas, the opening of our Home & Fabric Care Innovation Center at Bell Works in Holmdel, New Jersey and the openings of our Global Service Center in Budapest and L'Atelier du Parfumeur in Grasse, France reflect this commitment to environmentally responsible real estate development.

I am pleased to say we delivered strong financial results in the year as well, including record-setting sales of $5.1 billion. We also expanded our adjusted profit margin* and delivered $6.17 of adjusted EPS* – a testament to our team's focus, dedication and commitment to ex amortization deliver strong results while executing our long-term strategy. We also delivered a significant increase in operating and free cash flow** – increasing 60% and 73% respectively versus prior year – and reduced our net debt to EBITDA leverage by 40 bps to 3.2x – exemplifying the strong cash generation of our business. For the tenth consecutive year, we increased our quarterly dividend reflecting our Board's confidence in our strategic vision and strong financial profile.

As mentioned, 2019 was a transformational year for the company but one where we positioned IFF – including our shareholders, employees and customers – for long-term success. If you look back at our 2014 Annual Report, you'll see that we promised a reinvention of our company – and thanks to our talent and leadership, I can proudly say we've delivered on that promise.

Looking ahead, I'm excited for what the future will bring and confident that IFF is well-positioned to become a new global innovation integrated solutions leader delivering even more value for all of our stakeholders.

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Andreas Fibig
Chairman and Chief Executive Officer