Former Chairman & Chief Executive Officer, International Flavors & Fragrances
International Flavors & Fragrances CEO: Frutarom Takeover | Mad Money | CNBC
The market may seem sour, but could a company like International Flavors & Fragrances sweeten your portfolio's performance? Jim Cramer sits down with the CEO to hear the latest.
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About Andreas Fibig
Andreas Fibig, former Chairman and CEO of International Flavors & Fragrances (IFF), discussed the company's performance and strategic direction in several media appearances during 2020. In May 2020, Fibig appeared on CNBC's "Squawk on the Street" to discuss IFF's first-quarter earnings, noting that demand was thriving in flavors and ingredients for packaged foods, hand sanitizers, and detergents during the pandemic, while fragrances and cosmetics sales declined. He stated that all 110 of IFF's manufacturing facilities remained open, with safety measures including split shifts, face masks, and temperature checks. Fibig also mentioned that IFF had produced over 70 metric tons of hand sanitizer, branded "Hope 2020," distributed free to frontline healthcare workers and police departments. Fibig also discussed IFF's merger with DuPont's Nutrition & Biosciences (N&B) unit, announced in July 2020, describing it as a combination that would create a global leader in ingredients with a broad portfolio and double the R&D of competitors. He highlighted the company's ability to provide integrated solutions, such as combining flavors, texturizers, and plant-based proteins for products like plant-based burgers. Fibig had previously overseen IFF's acquisition of Frutarom in 2018, which he described as a complementary combination focused on growth. He stated that IFF's mid- to long-term growth guidance was 5 to 7 percent, expressing confidence in achieving that target.
Transcript (21 segments)
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Jim Cramer0:05
Okay, on a day when the Dow is down really 700 points at its lowest, what could actually work in this hideous environment? You might want to circle back to companies like International Flavors & Fragrances as we keep heading lower. I have that thing, vintage proprietary sense and taste for all sorts of consumer packaged goods, everything from personal care products to household cleaning products, food and beverages. I'm sure you've smelled their stuff, you've tasted it. They're like an arms dealer for the soft goods industry. Now last May, IFF CEO Andreas Fibig came on this show. He made a bold prediction. His company just announced a major $7.1 billion acquisition of Frutarom, and the market hated it. But he told us that Wall Street will come around, and sure enough, that's exactly what has happened before this epic market meltdown. So, good IFF be worth taking through this weakness. Let's check back with Andreas, he's the Chairman and CEO of IFF, to get a better sense of where the company said it sits. Welcome back to Mad Money. Good to see you. You said, 'Look, we're going to have to do an equity offering,' which is amazing. Most people say, 'I bought now we're talking about,' and that it would mark a great level. The stock came down, and you also said that it would probably end up being priced above. Could there be so much demand? That's exactly what happened, then it went up. So it's obvious to me that Wall Street has really warmed up to this deal well before it actually closed.
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Andreas Fibig1:14
Yeah, no, absolutely. And we closed in record time. We said in May six to nine months, we were ahead of time. We are very happy about it because it gives us a head start to integrate the business. I think the cross-selling, you've got to explain that to people because to me, it's marvelous, it's really such a natural fit. What is fantastic is that right now we have the largest and broadest customer base in our industry, and we have more than 30,000 customers. No one else has it. And we are starting to take their natural solutions, like natural colors or like their antioxidants, to sell them into our customer base, and taking our technology, which we have shown to some of their managers already, to sell into their customer base. We actually believe that's the greatest value driver for us going forward.
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Jim Cramer1:58
Well, you're one of the few people I know who recognizes that perhaps the old consumer packaged goods customers, they're good customers, not saying that. But they don't have the growth that these newer, smaller, medium-sized companies can be the next big ones. And that, that there's just a huge amount of this, there's a natural for your regular businesses. 70% of their customers are basically small, local, and regional customers. It's very helpful. And when you have that kind of company, I mean, what I believe is that you have taught me that tastes are regional. So if you have a regional food company, then you've got a natural audience. Maybe they can even take those tastes to another place, but that's what you need to be in besides just the gigantic companies we all know. It's super helpful for us and for our business. And your simple? In the last couple of quarters, and in particular, the local and regional customers had a very good performance. But now I was concerned: raw material costs hitting you too, can they possibly stabilize at some point? We all seem to think that they can just do nothing but go straight up.
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Andreas Fibig3:00
Yeah, what we have seen unfortunately in our industry is that even next year we expect some raw material increase. Do even? Yeah, because it peaks. It depends. For areas like vanilla, we actually believe it might even go down a little bit, but other areas are going up. And in our supply chain, some of our suppliers out of India and China, they had some issues as well, and we have to manage it. So it's okay. The good news is that at least we can deliver all the products to our customers. Some of our competitors can't.
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Jim Cramer3:28
Okay, can you tell me how you can?
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Andreas Fibig3:29
It all depends on your raw material and on your ingredient, and that's how we do it. And if you select the right ones, then it becomes a real good natural color. Next time when you're in one of our facilities, I really will show you how we can do it.
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Jim Cramer3:44
Can we do? Do you need all of them now that you've made this merger? And ten facilities?
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Andreas Fibig3:49
Yeah, we actually look at gross, at the merger we look how we can grow our top line. Certainly we will look what we can do with all of our facilities, but it's all about profitable growth, it's not just about cost cutting.
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Jim Cramer4:05
Okay, there was another thing that confuses my program. What does it mean to be in the meat business? Eat just a cow?
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Andreas Fibig4:13
No, look what they have. For example, they have a lot of interesting seasonings. Absolutely. And we have now even a little bit of a B2C brand in Europe. I did actually the day one celebration out of Salzburg. It's a big hub in Austria, and that's where this brand Bieber is located.
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Jim Cramer4:31
Is this located? What's like a vice right person problem?
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Andreas Fibig4:34
Yeah, we have some of these things where we can make them really nice, and the taste is unbelievable.
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Jim Cramer4:39
Okay, anti-aging and it's I Rico?
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Andreas Fibig4:43
Yeah, that's more for the cosmetic release.
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Jim Cramer4:45
Oh, I thought the answer. And that's a good business, it's a very good business.
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Andreas Fibig4:49
It's actually one of our fastest growing businesses. And you remember three years ago we bought a French Canadian company, lettuce myosin, that was very smart, and it's growing every single quarter double-digit, and we're very happy with the business.
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Jim Cramer5:02
You've been first in your conference call last a Fifth Avenue store. Now I might ask you to name, but just talk to us, tell people about what you see going on there, so people understand really what some of the nitty-gritty of what you do.
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Andreas Fibig5:13
If you look at fragrances, for example, that's what you might see in a Fifth Avenue. It's much more focused towards the more premium fragrances, the artisan fragrances, and that's something where we try to focus our attention as well, and more natural, natural rose essence for example. And we have great facilities to manufacture exactly that.
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Jim Cramer5:38
One of the... we talk about market volatility. One of the stocks I bought after the crash in 1987 was IFF, and I bought it because it admits to high single-digit growth. And I couldn't find any company, if we go into recession, that would be able to do that.
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Andreas Fibig5:48
Here we are again. Yeah, right. We got market volatility, but you're still able to do that kind of growth, and it really isn't dependent on the economy. We believe we can do it five to seven. That's our mid to long-term guidance, and we are very bullish that this can be done.
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Jim Cramer6:04
Well, it's certainly reasonable because your more than one-hundred-year history would indicate that it can be done. Thank you so much. Saying James, he's the chairman of IFF, International Flavors & Fragrances, a company that I started buying for clients when I was at Goldman in 1984. They have money back into the brain. Oh yeah, Jim Cramer here. From there buddy, thanks for watching. See me, see you on YouTube. Click here to subscribe and get the jump on my exclusives with CEOs, plus market news, investing advice, and a whole lot more.