IFF sells business unit to fund debt after tumultuous Q1
International Flavors & Fragrances (IFF) is making significant financial changes to manage its debt and refocus its operations. IFF reported a net loss of US$1.02 billion in Q1, mainly due to a goodwill impairment. The company is launching a financial strategy to repurchase some of its outstanding debt in investor loans to strengthen its balance sheet. IFF will fund the buyback program with proceeds from last week’s sale of IFF’s Pharma Solutions business unit to Roquette.
These connected actions reflect IFF’s plan to reduce debt, simplify its business, and concentrate on its core areas, including scent and biosciences.
IFF’s CEO Erik Fyrwald forecasts more economic headwinds in the upcoming year. However, he remains optimistic that the company’s financial strategizing will suffice to keep IFF afloat.
“As we navigate the heightened macroeconomic uncertainty in today’s environment, we remain focused on what we can control — collaborating with our customers to drive growth, investing in innovation, and delivering increased productivity,” says Fyrwald.
“We are maintaining our full-year financial guidance ranges but recognize that the uncertain environment has potential for more challenges, yet we remain confident in our long-term strategy and the actions we are taking to strengthen IFF.”

Dancing with debt
IFF has announced an offer to repurchase up to US$1.8 billion of its outstanding investor loans (notes).
The company expects the move to lower future interest costs and improve its credit profile.
Core segments including scent and biosciences remain central to IFF’s growth plans.The debt buyback is divided into two pools. The first includes notes due between 2025 and 2030, with a maximum purchase of US$1 billion. The second includes notes due between 2040 and 2050, capped at US$800 million.
Investors who choose to sell their notes early, by May 15, will receive a US$30 bonus for every US$1,000 in notes. The offer ends on June 2. Once the notes are repurchased, IFF will cancel them, permanently removing that debt from the company’s balance sheet.
Cushioning Q1 losses
IFF’s financial results for the first quarter were US$2.84 billion in sales, down 2% from the same period last year. However, on a comparable currency-neutral growth basis, sales rose 3%. Taste, Scent, and Health and Biosciences were the strongest performing business units.
The Scent segment, which includes Fine Fragrance, Consumer Fragrance, and other personal care products, made US$614 million in sales. This was down 5% from last year but showed a 4% increase when adjusted for currency effects. Scent also had an adjusted EBITDA of US$144 million, with a margin of 23.5%.
The Health and Biosciences segment brought in US$540 million, a 2% increase from the previous year and a 5% rise on a currency-neutral basis. This segment earned US$138 million in adjusted EBITDA, with a 25.6% margin reflecting continued demand in the wellness, hygiene, and microbiome science sectors.
Despite these positives, IFF reported a net loss of US$1.02 billion in Q1. The loss is mainly due to a one-time goodwill impairment of US$1.15 billion. A goodwill impairment signals that a business unit is no longer worth what it once was, which may occur during reorganizations or divestitures. While it does not affect cash flow directly, it does reduce reported earnings.
A targeted trim
Scent continues to be a strong performer for IFF, supported by demand in fine and consumer fragrances.
In March last year, IFF announced that it had agreed to sell its Pharma Solutions business to Roquette for up to US$2.85 billion. However, when the deal was finalized last week, the company did not disclose the exact amount it received from the sale. The completed transaction was mentioned in both the divestiture announcement and the Q1 2025 financial results, but neither document specified the final sale price or net proceeds.
The transaction closed two months ahead of schedule, with CEO Fyrwald saying it helped the company meet its target of reducing net debt to below three times credit-adjusted EBITDA.
The sale also allows IFF to focus more on its central business units. “This is an important step as it allows us to focus on our core strategy — capitalizing on the exciting growth opportunities within our key businesses — as we maximize long-term value for our shareholders,” Fyrwald says.
While Pharma Solutions had 8% sales growth and a 20.3% profit margin in Q1, IFF chose to sell it as part of a strategy to simplify its portfolio.