The company entered into an agreement to sell its Cosmetic Ingredients business, expected to close in Q1 2024. This action aligns with the company's strategy to optimize its portfolio and focus on high-growth areas.

The company is implementing a strategic transformation plan, including enhanced cost and productivity initiatives. These initiatives are aimed at improving efficiency and profitability.

The company is expanding its presence in emerging markets, which exposes it to risks such as fluctuating disposable income, weak legal systems, and government actions. The company is closely monitoring these risks.

The company announced the departure of Frank K. Clyburn Jr. as CEO, effective February 6, 2024, and appointed J. Erik Fyrwald as the new CEO. This transition introduces uncertainty.

The company's inventory reduction program negatively impacted manufacturing absorption, contributing to a decline in gross profit margin. This indicates a potential challenge in balancing inventory levels with production efficiency.

The company is focusing on sustainability and ESG initiatives, including commitments to climate action, responsible sourcing, and diversity & inclusion. ESG metrics are tied to executive compensation, indicating a commitment from the top.

The company has a substantial amount of indebtedness, $10.071 billion as of December 31, 2023, which could limit its ability to return capital to shareholders, make needed investments, and affect credit ratings. Covenant relief has been extended to mitigate this risk.

The company's strategic transformation, including portfolio optimization, involves complexities and may result in unanticipated issues. Failure to meet challenges could materially impact business.

The global economy continues to experience high rates of inflation. Inflationary pressure and price uncertainty is expected to continue in 2024. If the company is unable to increase the prices of its products to its customers to offset inflationary cost trends, or if we are unable to achieve cost savings to offset such cost increases, we could fail to meet our cost expectations, and our profits and operating results could be adversely affected.

The markets in which the company competes are highly competitive, with competition from large global companies, mid-sized companies, regional manufacturers, and consumer product companies that develop their own competing products. This intense competition could result in loss of sales, reduced pricing, and margin pressure.

A significant portion of the company's sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for the company's products and profitability.

The company's success depends on attracting and retaining talented people within its business and its management team. Changes to management, including turnover of top executives, and significant shortfalls in recruitment, retention or transition of employees or the management team could adversely affect the company's ability to compete and achieve its strategic goals.

Supply chain disruptions, geopolitical developments, including the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), or climate-change events (including severe weather events) may adversely affect our suppliers or our procurement of raw materials, and thus may impact our business and financial results.

Efficient inventory management is a key component of the company's business success, financial returns and profitability. To be successful, the company must maintain sufficient inventory levels and an appropriate product/sales mix to meet our customers' demands, without allowing those levels to increase to such an extent that the costs associated with storing and holding other inventory adversely impact our financial results.

The company is focused on optimizing its global operations footprint to efficiently deliver value to customers. This includes increasing capacity and investing in key technologies.

R&D expenses increased $33 million to $636 million (5.5% of sales) in 2023 compared to $603 million (4.8% of sales) in 2022. The increase in R&D expenses was primarily driven by higher operating expenses for R&D related activities, offset in part by the net impact of the change in business portfolio mix.

The company relies on patents, trademarks, copyrights and trade secrets to protect its intellectual property rights. The company often relies on trade secrets to protect its products, manufacturing processes, extract methodologies and other processes, as this does not require the company to publicly file information regarding its intellectual property.

The use of AI by us, our employees or any of our third-party partners may result in unauthorized disclosure of personal data, proprietary information and trade secrets, commercially sensitive or confidential information of IFF, our employees or our partners. Similarly, we may become, through the use of AI and unbeknownst to us, recipients or users of such information provided by other parties, which may enable, among other things, third parties to claim that we infringed on their intellectual property rights.

The company's capital allocation strategy is primarily focused on debt repayment to maintain its investment grade rating. We will also prioritize capital investment in our businesses to support the strategic long-term plans.

We paid dividends totaling $826 million, $810 million and $667 million in 2023, 2022 and 2021, respectively. The cash dividend declared per share in 2023, 2022 and 2021 was $3.24, $3.20 and $3.12, respectively.

We have evaluated and re-prioritized our capital projects and expect that capital spending in 2024 will be approximately 4.9% of sales (net of potential grants and other reimbursements from government authorities).

Federal, state, local and foreign governments, our customers, consumers and shareholders are becoming increasingly sensitive to environmental and other sustainability issues. In response, we have committed to a sustainability strategy to better understand the opportunities and risks in our sustainable efforts.

To enhance accountability in line with evolving stakeholder expectations, the Company has launched ESG metrics tied to executive compensation, while expanding oversight for ESG at the Board of Directors level.

Focusing on the sustainability value proposition and growth for all new innovations as we assist customers in achieving their own ESG goals by delivering an expanded suite of sustainable solutions for the market.

International economic, political, legal, compliance and business factors could negatively affect our financial statements, operations and growth. These risks, which can vary substantially by location, include the following: governmental laws, regulations and policies adopted to manage national economic and macroeconomic conditions.

At the same time, climate-change related disruptions, may affect the availability, quality and pricing of raw materials. There is growing evidence that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather and precipitation patterns, growing and harvesting conditions (both on land and in the sea), and the frequency and severity of extreme weather and natural disasters, such as floods, wildfires, droughts and water scarcity.

Geopolitical developments, such as trade wars, the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), could adversely impact, among other things, our raw material, energy and transportation costs, certain of our suppliers, distributors, customers and local markets, global and local macroeconomic conditions, and cause further supply chain disruptions.