Givaudan Stock

Ladies and gentlemen, welcome to the Givaudan 2026 Half Year Results Conference Call and Live Webcast. I am Valentina, the Chorus Call operator. [Operator instructions]. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Stammkoetter, CEO. Please go ahead.

Thank you, Valentina. Dear ladies and gentlemen, good morning, and welcome to our 2026 first half year results conference call, my first one as the CEO for Givaudan. Stewart Harris, our CFO, joins me today, and all documents related to the results are available on our website. I will lead you through the business highlights before Stewart will share more details on our operating performance, and we will remind the 2030 strategy and outlook before we open the Q&A session. So let's get started. Let me start a bit with my first month. Over my first 5 months as the CEO at Givaudan, I focused on listening and immersing myself with customers, employees and investors, discovering firsthand the strength of the business model and the passion across the organization while gaining a deep understanding of the business.

I've been traveling to many of our sites, visiting both divisions across Europe, NORAM, LatAm, Asia and SAMEA. I met with many customers and also with partners to learn about the unique upstream model we have in the sourcing of unique natural ingredients. What stands out is Givaudan's unique combination of creativity, science and operational excellence supported by a strong customer-centric culture and long-term relationships.

I have great respect for what has been achieved here and for the teams who make it happen. As shared before, my agenda is built around 3 priorities: optimize, future-proof and together. Optimize means fine-tuning the strategy where needed while driving strong execution, productivity and disciplined capital allocation. Future-proof focuses on investing selectively in innovation, data, digital and AI capabilities to support long-term growth and strengthen Givaudan's unique moats and together reflects our collaborative culture working closely across teams, customers and partners to create value.

I look very much forward to sharing more on our strategic priorities at the summer conference that we hold in Zurich at the end of August. So in short, I've listened, I've learned, and I'm obviously now in action mode focused on aligning the organization to amplify what already works while addressing areas where we can accelerate.

And I look forward to delivering on our 2030 ambition together with this exceptional team and to updating you as we progress. Now let's come to the business highlights of H1. We are pleased with our sustained solid financial performance in the first half of 2026. Despite ongoing geopolitical and macroeconomic challenges, our business continued to display good growth momentum and industry-leading profitability.

Group sales for half year 1 were CHF 3,799 million, up 3.6% on a like-for-like basis and minus 1.7% in Swiss francs. Like-for-like growth was primarily volume-led across both divisions, and we achieved balanced growth across customer groups and geographies, underscoring the natural hedges in our business and broad-based customer traction. In half year 1, we incurred CHF 103 million of nonrecurring costs, mainly related to litigation settlements and provisions with 2 items that are worth mentioning, a settlement agreement in Fragrance and Beauty related to the antitrust investigation and a provision related to court litigation in Taste & Wellbeing.

Stewart will comment more on it in his part. On an adjusted basis, EBITDA amounted to CHF 923 million, corresponding to a margin of 24.3% compared to a very strong 25.2% in half year 1 of 2025. Half year 1 reported net income was CHF 475 million compared to CHF 592 million in prior year.

Excluding one-offs, adjusted EPS in Swiss franc was CHF 60.25 compared to CHF 66.71 in the prior year period. Adjusted free cash flow was minus CHF 119 million in half year 1, reflecting increased investments and timing-related working capital movements with stronger cash generation expected in the second half, and we remain confident in our ability to reach above 12% adjusted free cash flow margin over the 5-year strategic cycle. Stewart will provide more details on the operational performance shortly. So turning to Slide 6 regarding the divisional sales performance. Half year sales were encouraging with clear strength in Fragrance and Beauty and first sequential improvement in Taste & Wellbeing.

Growth was predominantly volume-driven with only limiting pricing and ForEx impact. The modest pricing we did see largely reflects logistics and tariff pass-through. The acquisition of Belle Aire and Vollmens Fragrance and Beauty contributed 1.4% growth on group level. Fragrance & Beauty sales were at CHF 2,010 million, up 2.9% in Swiss franc and plus 6.5% like-for-like, driven by strong demand across both Consumer Products and Fine Fragrance. Taste & Wellbeing recorded CHF 1,789 million, down minus 6.3% in Swiss franc and plus 0.5% on a like-for-like basis. Importantly, showing a first sequential step in the right direction in the continued challenging market environment in some of our regions. And now going into more granularity by division on the next 2 slides, starting with Fragrance & Beauty on Slide 7.

The division delivered strong results in Fine Fragrance and Consumer Products, reflecting the portfolio's breadth and its natural hedges across categories and geographies. Fine Fragrance delivered a strong like-for-like growth of plus 7.3% on top of a very strong prior year comparable of plus 18%, underlining the continued momentum of the business, benefiting from broad geographic exposure and strong relationships with local and regional customers as well as with global customers. Consumer Products, the largest segment, representing more than 60% of the division, posted an excellent performance, growing 9.2% like-for-like. This strength is rooted in creativity, innovation and a well-balanced customer mix, which together drive a healthy project pipeline and win rate.

Fragrance Ingredients and Active Beauty sales decreased by minus 4.1% like-for-like with Active Beauty facing a very high comparison base from last year and Fragrance Ingredients continues to experience price competition in parts of the portfolio, which explains the softer performance. Moving to the next slide to Taste & Wellbeing. As mentioned earlier, Taste & Wellbeing showed a clear sequential pickup in Q2, moving to plus 1.5% in quarter 2 from a minus 0.4% like-for-like growth in quarter 1, reflecting the first positive effects of our optimization and commercial action, although the market environment remains challenging. You see Europe was broadly stable at plus 0.3% like-for-like.

SAMEA showed a strong recovery in the second quarter with plus 8.1%, leading to plus 0.5% like-for-like for the half year on top of a double-digit comparable. And also Asia Pacific showed clear momentum driven by ongoing strength in China and a continued acceleration across Southeast Asia. The opening of a new production site in Indonesia demonstrates our confidence in the region's growth prospects. North America remains more volatile at minus 1.5% like-for-like as consumers remain selective, particularly at lower income levels, but we see encouraging areas of growth in reformulation, natural colors and GLP-1-related brief.

And last, in Latin America, temporary headwinds in specific markets, notably Mexico, continued leading to overall minus 1.5% like-for-like sales growth. However, we are beginning to see early traction from targeted action and remain confident in our market positions and ability to progressively strengthen performance over time. So overall, Q2 marked a clear step in the right direction and supports our confidence in continued sequential improvement into half year 2, supported by healthy leading indicators and easing comparables. Turning to the regional view on group level on Slide 9. We delivered balanced broad-based growth across geographies with high-growth markets up 5.2% like-for-like and mature markets up 2.0%. EAME maintained good momentum and contributed 3% like-for-like for the half year on top of a high comparable.

North America increased plus 2.3% like-for-like, although Taste & Wellbeing, as seen before, remained more challenged in the region. This was offset by a continuously strong momentum in Fragrance and Beauty across both Consumer Products and Fine Fragrance. Asia Pacific increased by 9.2% like-for-like, reflecting continued strong growth across key markets, particularly China and India, and also strong growth, especially in Indonesia. And Latin America recorded a minus 3.9% like-for-like growth in half year 1 2026, influenced by temporary market conditions in Mexico and Taste & Wellbeing, alongside a strong prior year comparison in Fragrance & Beauty.

So in conclusion, our balanced exposure across mature and high-growth markets continues to provide solid, consistent growth and resilience in a complex environment. Yet we are conscious that there are areas where we are actively working to further optimize our performance step by step. Now moving to Slide #10. This slide illustrates our 2030 strategy in action, concrete examples of how we extend customer reach, deepen geographic presence and innovate for differentiation and care for our people, nature and communities. We secured the seventh consecutive CDPA for climate action and achieved the CDPA for supplier engagement, reflecting continued progress towards our net zero ambition and 2030 purpose goals. We continue to invest in our footprint to deepen our geographical presence.

We broke ground on an expanded fragrance manufacturing complex in Pedro Escobedo, Mexico, and we opened a new state-of-the-art production site in Cikarang, Indonesia to support Taste & Wellbeing growth in Southeast Asia. And we continue with our M&A strategy that is supporting our 2030 strategy to extend our customer reach, especially in local and regional customers. For example, through the acquisition of a strategic majority stake in Eurofragrance, a highly creative, regionally rooted fine fragrance house. Together, these milestones show our 2030 strategy being put into practice, advancing sustainability, unlocking differentiated innovation and expanding our local presence to capture growth.

On the next slide, Slide 11, shows how we turn insight and science into customer value, practical innovations that address clear consumer trends. The examples here span taste, fragrance and beauty and illustrate our focus on application-ready solutions and enabling technologies. Let me highlight a few for Fragrance and Beauty. In Active Beauty, we launched PrimalHyal NeuroU, an advanced hyaluronic acid technology supporting skin longevity, firmness and sensory perception, opening new opportunities in skin health and beauty. We strengthened our fragrance performance toolbox through a strategic equity investment and collaboration with Microcaps AG to expand our high-precision microencapsulation capabilities, enhancing fragrance longevity and performance across fine fragrance and beauty application, including alcohol-free formats.

Now let me highlight House of Suits, which reimagines laundry as a multisensorial experience, helping customers create emotionally engaging scent concepts and differentiated product formats across generations. In Taste & Wellbeing, we focused on GLP-1 and broad awareness trends that are increasing demand for lower calorie and functional products. We combine consumer insights with taste, delivery and masking technology to help customers reduce sugar, fat and salt while maintaining indulgent taste, helping customers turn GLP-1 and especially briefs and functional beverage, one of the fast-growing subsegments into winning products. Our hot and spicy where our Chefs Council in Mexico combined culinary expertise with sensory science to develop cutting-edge hotness technologies and practical flavor solutions that help customers win in spicy and flavor-forward segments.

And in February, we opened the House of Lime in Mexico, an immersive co-creation space, combining flavor expertise, sensory tools and digital capabilities to help customers accelerate innovation and speed up [indiscernible]. So across both divisions, our focus is clear, translating science, insight and creativity into differentiated solutions that help customers innovate faster and grow. And with this, let me pass the word to Stewart Harris, who will go into more detail regarding our performance in half year 1. Stewart, over to you.

Thank you very much, Christian. I would like to add my warm welcome to all of the participants on the call. On the following slides, I'll give you an overview of the 2026 half year operating performance of the group and that of the 2 divisions as well as the financial performance of the group. Let me start with the performance highlights on Slide 13. As Christian already noted, group sales in the first 6 months of 2026 were CHF 3.8 billion, an increase of 3.6% on a like-for-like basis over the same period in 2025 and a decrease of 1.7% in Swiss francs due to the continued strength of the Swiss franc. The adjusted EBITDA was CHF 923 million compared to CHF 973 million in the first half of 2025, a decrease of 5.2% in Swiss francs, whilst when measured in local currency, the adjusted EBITDA increased by 0.8%.

The adjusted EBITDA margin was 24.3% in the first half of 2026 compared to 25.2% in the same period in 2025. Due to the nonrecurring costs that Christian already touched upon and that I will expand upon in the coming slides, the net income decreased to CHF 475 million, and the net income margin was 12.5% of sales. The adjusted free cash flow of the group was minus CHF 119 million in the first half of 2026 or minus 3.1% of sales, mostly due to the higher investments and temporary working capital effects. The net debt-to-EBITDA ratio was at 2.8x at the end of June 2026 compared to 2.5x in June 2025 and 2.1x in December '25, with the increase in leverage driven by the impact of the aforementioned nonrecurring costs in EBITDA.

In order to ensure consistency and comparability over the strategic planning cycle 2026 to 2030 and ahead of the introduction of IFRS 18 in 2027, the group has updated the definitions of some of its key performance metrics, notably by replacing comparable EBITDA with adjusted EBITDA and introducing adjusted free cash flow and adjusted earnings per share. Please turn to Slide 14, which shows the overview of the exchange rate development in the first half of 2026. This slide shows the comparison of the exchange rates in the first half of 2026 versus the same period in 2025. The Swiss franc continues to strengthen against most major currencies in which the group operates with an impact on the group's reported results in Swiss francs. This is particularly evident in the year-over-year comparison of absolute Swiss franc results in the first half of 2026 versus the comparable prior year period.

However, as we have consistently noted, our operational and geographical spread provide good natural hedges to mitigate the currency impact, and our EBITDA margin remains well protected against currency fluctuations. Please turn to Slide 15 for an overview of the half year operating performance of the group. The gross margin slightly improved to 44.5% in the first half of 2026 compared to 44% in 2025, with the continued impact of the Fragrance Ingredients competitive environment evident in H1, more than offset by good operational leverage in both divisions. On the EBITDA level, the EBITDA was CHF 820 million in the first half compared to CHF 945 million in the same period in 2025, mainly impacted by higher distribution costs, negative currency impacts and by the nonrecurring costs of CHF 103 million.

The group recorded CHF 83 million of litigation settlements and provisions in the first 6 months of 2026 as well as CHF 20 million of acquisition, restructuring and project-related costs compared to CHF 19 million in the prior period. After adjustment for these nonrecurring costs, the adjusted EBITDA margin continued to be strong at 24.3% compared to 25.2% in 2025. On the following 2 slides, I will take you through the operating performance of the 2 divisions. And if you turn to Slide 16, we will start with Fragrance & Beauty. Fragrance & Beauty recorded an EBITDA in the first half of 2026 of CHF 492 million compared to CHF 525 million in 2025.

With the decrease mainly driven by slightly lower gross margin, investments in growth as well as currency impacts and nonrecurring costs. In the first half of 2026, the Fragrance & Beauty division reached a settlement agreement in relation to certain civil proceedings of CHF 30 million in connection with the broader competition authorities' investigations into the fragrance industry. And furthermore, incurred acquisition, restructuring and project-related costs of CHF 4 million compared with CHF 15 million in the first 6 months of 2025. The adjusted EBITDA margin of the division was 26.2% in 2026 compared to 27.6% in 2025, continuing the excellent financial performance profile of the division.

If you would like to turn to Page 17, we will look at the operating performance of the Taste & Wellbeing division. Taste & Wellbeing recorded an EBITDA of CHF 328 million in the first 6 months of 2026 compared to CHF 420 million in the same period in '25. The decrease is mainly due to negative currency impacts as well as the nonrecurring cost of CHF 69 million. In the first half of 2026, the Taste & Wellbeing division recorded a provision of CHF 53 million in relation to an adverse judgment against Givaudan in the state of Missouri in the United States in connection with long-standing butter flavor litigations involving alleged pulmonary injury.

The outcome in this case is exceptional and inconsistent with the broader litigation history over the past 20 years, and we are considering all available legal options in terms of possible next steps. In addition, the division recorded restructuring and project-related costs of CHF 16 million, mostly related to operational restructuring expenses compared to CHF 4 million in the prior period. After adjustments of these nonrecurring items, the adjusted EBITDA margin of the division was 22.2% compared to 22.7% in the first half of 2025. Please turn now to Slide 18, where we look at the net income. The net income before tax was CHF 580 million in the first half of 2026 compared to CHF 713 million in the same period in 2025, largely driven by the nonrecurring costs of CHF 103 million, which we have already covered.

The effective tax rate was 18% compared to 17% in the half year of 2025, mostly driven by the progressively increasing safe harbor rate under the OECD minimum tax initiative. Net income after tax was CHF 475 million in the first 6 months of 2026 compared to CHF 592 million in the same period with the net income margin at 12.5% in the first half year 2026. When adjusted for the nonrecurring cost, including tax effects, adjusted basic earnings per share were CHF 60.25 in the first half of 2026 compared to CHF 66.71 for the same period in 2025. Please now turn to Slide 19, where we see the adjusted free cash flow performance. In the first half of '26, the group had adjusted free cash flow of minus CHF 119 million or minus 3.1% of sales compared to minus 0.4% in the same period in 2025.

This difference is largely driven by temporary working capital effects as well as higher investments at a group level. At this stage, the only adjustment to the prior definition of free cash flow is the CHF 30 million settlement agreement reached in the Fragrance and Beauty division, as previously noted. Net investments were CHF 207 million in the first 6 months of the year, representing 5.4% of sales compared to 4.4% of sales in the prior year period due to the timing of key investment projects. As a reminder, we have guided to a net investment range of 4% to 5% of sales in the strategic planning period 2026 to 2030. Net working capital was 30.8% of sales in the first half of 2026 compared to 27.1% in the first half of 2025 due to sales phasing and temporarily higher inventory effects.

We continue to balance our working capital ambitions with the business needs, and we expect to see a meaningful improvement in working capital by the end of the year. Please turn to Slide 20 on the debt and leverage profile. This slide shows that the group continues to have a well-balanced and stable debt portfolio with interest rates, which have been locked in at attractive rates. At the end of June 2026, the net debt was CHF 4.6 billion with a weighted average interest rate of 2.12% compared to 1.94% in December 2025 and 1.9% in June 2025. There is a relatively large portion of short-term debt within 1 year due to the traditionally higher short-term debt at the half year and some maturing bonds in the first half of 2027 being reclassified as short term.

At the end of June 2026, the net debt-to-EBITDA ratio was 2.8x compared to 2.1x in December '25 and 2.5x in June 2025. with the leverage being impacted by the nonrecurring costs, as explained previously. This concludes my section of the presentation. I would like to thank you for your attention and hand back to Christian.

Thank you, Stewart. So now let's look forward to our 2030 strategy and outlook. Our 2030 strategy is about purposeful evolution, building on the strong foundation of our proven model, combining innovation, customer partnership and disciplined execution to deliver sustainable growth while preparing for what's next. As I mentioned earlier, my focus is centered around 3 priorities: optimize, future-proof and together, priorities that build naturally on the strength of Givaudan and the opportunities we see ahead. Our success is rooted in close collaboration with our customers, suppliers, partners and teams around the world, delivering differentiated solutions with excellence, agility and care for people, nature and communities. I look very much forward to sharing more detail on our strategic priorities and ambition at the summer investor conference in Zurich at the end of August.

Now on the next slide, a reminder on our targets for the 2030 strategic cycle. So what I can confirm is that we are committed to our 2030 performance ambitions, delivering 4% to 6% like-for-like sales growth and adjusted free cash flow margin above 12% on average over the 5-year period from 2026 to 2030, together with our purpose-linked targets. As you know, we've consistently managed the business against midterm ambitions rather than annual targets, which remains the right approach for our project-led business model, giving our teams the flexibility to focus on sustainable growth and long-term value creation. It also supports disciplined execution and agility while ensuring the right balance between delivering short-term performance and investing for the future.

On the next slide, I can share a few words on the outlook. As highlighted earlier, we delivered another solid underlying set of results in the first half of 2026 against high comparables of 2025, with continued good growth momentum and industry-leading adjusted profitability despite an environment that remains marked by geopolitical and macroeconomic uncertainty.

We continue to see strong momentum in Fragrance and Beauty, and we see the start of what we call the sequential recovery in Taste & Wellbeing in line with our expectations. Based on this and easing comparables, we are looking ahead with confidence towards H2 and overall on delivering our targets for the strategic cycle 2030.

And while we have some areas to optimize, we are convinced of the resilience of our business model, supported by our diversified portfolio across customers, geographies and product segments as well as a healthy project pipeline and encouraging lead indicators. At the same time, the external environment remains uncertain, and we continue to closely monitor the geopolitical development and broader macroeconomic conditions. Our input costs we now expect to be low single-digit inflation in the second half of the year. As always, we're working closely with customers to appropriately manage these developments and to offset those input costs while continuing to prioritize supply reliability and service quality.

On the U.S. tariffs, the situation remains fluid. Following the Supreme Court decision, we have started to receive partial refunds of previously paid tariffs, and we expect these to be passed back accordingly to customers, broadly offsetting the inflation-related pricing impact within like-for-like growth. With that, we are at the end of our 2026 half year result presentation. So let me hand back to the operator for the instructions to open the Q&A. Stewart and I are looking forward to taking your questions.

[Operator Instructions]. The first question comes from Alex Sloane from Barclays.

Two from me, please. The first one on cash flow and working capital, obviously, free cash flow is weaker than expected and you highlighted quite a significant working capital build in the half. Presumably, part of that build is maybe Givaudan carrying higher inventories amid supply chain disruption concerns or raw material availability concerns.

And if that's the case, do you think of your customers may have also behaved similarly in any regions or segments. I'm thinking could any of the very strong consumer products performance in fragrance, particularly in Asia, have benefited from the same dynamics? And if so, is there any kind of unwind risk to think about there in the second half or into next year, if relevant? That's the first one.

The second one would be on Taste & Wellbeing. I mean, good to see the sequential improvement and that you're confident in that continuing in the second half. If I could maybe just ask specifically on North America, which remains, I guess, one of the weak spots in the quarter. Is this just weak end markets? Or is there any market share loss challenges for Givaudan do you think perhaps associated with the litigation provision that you've disclosed today?

And I think last year at the Investor Day, you had talked about efforts to accelerate growth in North America taste and well-being through expansion into food service and going after private label. So maybe you could give a bit of an update in terms of where we are on those initiatives.

Okay. Thank you, Alex. I'll maybe ask Stewart to take the first question, and then I will take the second one on Taste & Wellbeing.

Yes, Alex, thanks for the question. So yes, I think on the cash flow, you've seen as you called out. And if you look at the constituent parts of cash flow, you will see in receivables, we are up and in inventory we are up. So I think those are temporary effects. We would expect, as I said in my speaker notes, to have a meaningful improvement in working capital in the second half of the year.

To specifically address your questions and where it may translate into customer order activity. We said in Q1 that we didn't see any evidence of prebuying or stocking on the customer side. we saw the evidence of that coming through in the second quarter. And we have the same position today actually. We don't see any across the business. We don't see anything other than strong recurring demand and no evidence of any stocking that we would expect to unwind in the second half.

Okay. And then on Taste & Wellbeing, particularly in North America, Yes, I think we see, obviously, a continued difficult market environment in North America on the end consumer side when it comes to demand, but that is probably not all behind the performance. We also know that there is some shifts that we see, for example, when it comes to subsegments.

So when you look in -- for example, within beverage, you still see fast growth in functional beverage, even fueled by GLP-1. You would see that still the high protein market is growing very fast. And I think for us, what will be important and what we're really working on is to ensure that we're capturing the right growth in the right subsegments.

So deleveraging even more on our strategy in North America and that's what gives me confidence is that I see the pipeline inflow. We see a good pipeline inflow, of course, also in natural colors. That is obviously, kind of the shift with the Maha movement towards natural colors. So the pipeline is strengthening. The area also where we are weaker, and that's something which we are looking at and working on is we're also having natural ingredients that we sell where, for sure, we are not so happy with the performance.

So it will take a bit more time on our side as well to really capture the shifts in the segments because you know that we are a project-based business that transforming pipeline into kind of actual revenue is always with a bit of a time lag. But really, you're looking at the pipeline, I'm very confident that [indiscernible] on our side will turn around also sequentially also the shift, we talked last time about private label, for example, you mentioned again, foodservice. So all this, unfortunately, as we're not selling final products, but we are basically selling we're into projects, we're into briefs we need a bit of time to convert pipeline into revenue.

Next question comes from Nicola Tang from BNP Paribas.

First, I wanted to ask about input inflation. So thank you for quantifying the low single digits in the second half of the year but percentage in the second half of the year. Can you share more detail on what you're seeing in terms of natural [indiscernible]? And also how it impacts the 2 divisions? Is there a different view on inputs for the 2 divisions?

And linked to this, when you gave this helpful sensitivity, this 100 -- sorry, $10 move in oil price, roughly having a 1% impact on synthetic raw materials. I was wondering if you could help us understand the -- what oil price assumption is baked into this input guidance that you've given. I appreciate it's pretty complicated and you're not buying oil, but there's clearly a lot of volatility in oil price.

So I was just wondering if the oil price stays where it is now, which is higher than it was earlier in the quarter. Should we assume that, that means higher synthetics, say, in another 6 months' time. And then maybe just on the natural side. I think previously, you've talked a bit about potentially higher costs with fertilizers or with weather impacts like El Nino. So again, if you could share what sort of -- what you're seeing and what's baked into the guidance?

Well, Nicola, thanks. A lot of different elements there. So let me try to unpack them and keep it as simple as possible. So I think if one looks at naturals versus synthetic, I think historically, as you know, we've seen naturals more or less progressively increasing consistently over time. a little bit more volatility in synthetics.

But I think if we look to the second half, we see a fairly balanced picture at those levels across synthetic and natural input costs. So no major a weighting towards one division or the other. In terms of the -- in terms of the oil price assumption, it's relatively easy for that one in so far as we basically are looking now at contracted raw material prices for the second half. So we don't anymore have an underlying oil assumption based then. Those are now based on firm contractual commitments that we have. So that gives us a good level of confidence about the indication we've provided.

More broadly, you touched on El Nino effects and others. I think it's fair to say that we don't expect those effects to be evident in 2026. We expect those more to be evident in 2027, and we would update that more, of course, in the normal rhythm in January of 2027. So I think for second half in '26, in summary, evenly split between the divisions and confidence in the contractual basis that we have, that we have a good visibility on that for the rest of the year.

The next question comes from Matthew Yates from Bank of America.

I think I'd just like to follow up on a couple of things. I think as Alex mentioned. Stewart, just going back on receivables. If my math is right, I think that was up 13% on what is effectively a slight sales decline for the group. So is that telling us something about the strength of your June activity? Or is there any issue here around sort of overdues? If you just elaborate a little bit more on the receivable element.

And then maybe for Christian, following up on the U.S. discussion. You mentioned there's a variety of opportunities around GLP-1s, but presumably, there's also some risks in terms of calorie destruction. So when you take those 2 things together, net-net, do you come to the conclusion that this is an overall a negative, neutral or positive dynamic for Givaudan looking forward?

Okay, Matthew, I'll kick off. So you've been busy doing your calculations in the first part of the morning. So I can confirm there's no challenge related to overdues or that. It's more in relation to phasing of sales.

Okay. And then on the GLP-1. Net-net for Givaudan, I see GLP-1 as a significant opportunity. And let me explain a bit why I see that. I think if you look at the strengths that we have, for example, in suite modulation, the strengths that we have in protein masking, all those are basically segments that are winning. And of course, whenever you go beyond flavor into Taste solution, where protein masking is part of it, where sweet modulation is part of it. That is something that is positive for us because we are increasing the share in the final customer product.

So all these reformulations that come are something that I see as positive because they come with a higher share on kind of what we can provide to the customers. And there, we have some unique capabilities, bioscience solutions that we can apply. So for me, GLP-1 is positive. The same, by the way, on the discussions that you have on kind of sugar reduction, on salt reduction, on kind of fat reduction because also here, we are very well set with our technologies.

Let me give you an example of something that gains popularity not just in the U.S., everywhere, which is air fry, because air fry is seen as a healthier form of preparing your food. Still the consumer wants the same kind of tastiness that you are used from normally fried products. And I think that is the solutions that we provide, so that in the end, when you use air fry, kind of the taste that you want this richness that also comes from frying in fat is maintained.

So those trends that we see are positive for the solutions so that in the end, when we look at the net-net, we believe that those movement is positive for us. We lead to more briefs, we'll lead to more innovation and that we can leverage this going forward.

The next question comes from Celine Pannuti from JPMorgan.

My first question is on Fragrance & Beauty. In fact, I have 2 focus here. One on fine fragrance. We continue to see a positive development. But as well, we see that some of the end market seems to be slowing and some of the customers have even declined or noting decline in Europe. So can you talk about your outlook for this division, what do you see in terms of maybe regional or customer mix and whether you continue to expect Fine Fragrance to remain positive as a subcategory? And likewise, on consumer products, which did very well, could you flesh out in the second quarter. You said there's been no prebuying regions or categories drove that performance?

And maybe my second question is going to be shorter. Given what you said on tariffs being given back to your customers as well as some pricing to offset cost inflation. It seems there probably will be not much pricing in the second half. Is it fair to expect that the volume robustness that we've seen in Q2 should recur in the second half of the year? And do you don't give guidance on yearly, even less on the quarterly, but whether the 4% to 6% range is something you can continue to achieve now that you have recovered that level in Q2.

Okay. So thank you for the question. So when you look at the fine fragrance performance that we see, you see that we've been growing 7.3% over outstandingly high comparables of plus 18% in S1. And even if you would look at quarter 2, and you know that normally, we don't like so much to look at quarters as a project-based business. But even if I look at quarter 2, we had comparables of 19%. So quarter 2 was a very, very strong quarter last year.

So overall, we see the trend strong because, of course, we are serving kind of multiple price segments, brands, global customers as well as local and regional customers. And that's also why we continue to see kind of the positive momentum in Fine Fragrance really across the kind of the world, right? So that's why we continue to be very positive on the momentum and the momentum that you see today also in half year 1. And even when we look at our pipeline, the pipeline remains really good.

On Consumer Products, we're not giving details, but we really see broad-based growth in Consumer Products. I mean, you saw we had a very strong quarter 1. We had a strong quarter 2, it's also interesting when you look into the customer groups. We always talk about the natural hedges, but we also see in consumer products. We see strong performance in local regions, but we also see strong performance in our global customers.

We see in segments, when you look at Fabric Care, for example, we see continued strong momentum there. I think it's right now just that we see that consumer love fragrance in also the consumer product path and that our customers are reflecting it in with their investment into fragrance into their formulas or into their products. And that is a trend that we see also, again, looking at pipeline broad-based going to continue.

So that's why, obviously, it's very strong growth, but I think the general growth momentum is strong. So as Maurizio Volpi was presiding the category, what I always said, I think it's probably no better time to be in fragrance than today because really consumer of fragrance. And then maybe for pricing, trade, et cetera, Stewart, do you want to take that?

Yes. Celine, thanks for the question. So indeed, I think as we mentioned, we have started to receive refunds of tariffs. We have not -- none of that is reflected in the half year results, but we expect to give that back to clients in the second half, which, as you say, will be the offset to the price pass-through on the low single-digit second half input costs.

So I think your assumption is a correct one that on a net basis, we shouldn't expect to see any meaningful contribution of pricing in the second half. In respect to the overall posture in relation to the second half, I think you've held us we go into the second half with a lot of optimism. I think the lead indicators are positive. We expect to see continued good momentum in fragrance and beauty.

And as Christian has mentioned, sequential improvement in taste and well-being. So whilst as you know, we don't guide on a full year basis. I think we've given you the overall elements, which lead us to be optimistic about the second half and ultimately for the full year.

The next question comes from Lisa De Neve from Morgan Stanley.

My first one is a follow-up on this well being, you've talked during the presentation a lot about improvements in this market and the initiatives you're taking. Can you just detail to us a little bit of the initiatives you've taken across the different regions? And also in terms of time line of momentum and when you expect to see the fruits from this initiative? That's really my first question.

Then secondly, would you mind us taking us through the key bridge items for EBITDA in the second half or for the full year that we should take into consideration given the pricing input and sort of tariff refund effects next to your easier comps? That would be very helpful.

And the last question I had is a bit of a different one on natural colors. I can see that in the U.S., there's a lot of traction on natural colors, but there's a lot of recent research that points to actually an increased association of risk for diabetes and cancer, both in artificial colors and natural colors.

So my question to you is, do your customers really look at implementing natural colors because of a regulatory shift in that environment? Or do they think broader and actually want to completely derisk themselves from the potential negative association of consuming any type of in their products? Any thoughts on that would be great.

Okay. So I'll take first and the third question and then Stewart will take the second question. I suggest. So on Taste & Wellbeing, obviously, as we said, right, I mean, we are in a more difficult environment on -- overall on the food and beverage categories and particularly in some regions like Latin America and North America that is more visible because the consumer today really is constrained also in North America coming out of inflations in '22, '23, the high inflation period but now coming again out of some of the price hikes that you see linked to petroleum prices when they have to fill that tank, et cetera. So that's why you see shifts into, for example, private labor.

We have to be kind of -- and that's what we're working on, and that's also what we're going to share more of end of August in the way we're going to leverage the opportunities better. And for this, I think we have to be even more deleveraging between what we call segments or categories, subcategories to ensure that we are focusing and doubling down on the areas of growth, right? I was talking about, for example, high protein and our capabilities in protein masking, functional beverage that is growing very fast.

And here, when you look at our ability and flavor, in masking because many of those functional ingredients, they come with not a nice taste. In natural color, all that is elements where in this very big segment, we should be increasing our market share faster. So we are deleveraging more into segments, subsegments also by region.

We talked about food service. And I think we have started that, and we already see some of that come through. The pipeline is really strengthening. So I think the pipeline inflow is very strong. But as I mentioned before, we need to give a bit of time to turn pipeline and into revenue. And that's why we have always been talked about sequential recovery, and it's not like going from 1 quarter to the next, where you would see this resolved.

A great example I could give is even when last year, we talked about an issue on Indonesia. It took some time. But today, Indonesia is, for example, in a very strong performance, and again, strongly contributing. So that's on Taste & Wellbeing. But again, we will share more end of August, but it doesn't mean we're waiting. I mean, we're already in kind of working in execution mode. On the natural colors, I take the third question before I pass to Stewart Harris.

So we see today a big demand from the consumer to move out of artificial color into natural color. The concerns that you share, we don't really see them because what we see with the vast majority of consumers, the consumers love food also when it is having colors when it is bright when you look into beverages when -- because that is part of the overall taste and sensorial experience of food. So you would not imagine many of the products that they would go well in a completely uncolored or the way they would otherwise look.

So we believe that -- and we see the pipeline also on projects. It will take some time, right, because it's significant reformulation projects because there's -- you have to get the right color, you have to get the right masking of the natural color, et cetera. So it is taking time. But the pipeline is very strong. And from the consumer research we do. We really see their demand to move out of artificial color into natural colors and keeping natural colors. So here, we are very confident on that particular trend. And then maybe, Stewart, you take the one on EBITDA?

Lisa, thanks for your question. So I'm going to maybe focus a little bit on the -- I got you the distillation of your question around maybe phasing of the margins. So if we look, I think, 24.3% adjusted EBITDA in H1, so we're really happy with that, particularly when you look at the improvement versus the second half of last year when we had, for example, the onset of tariffs and more competitive environment in Fragrance & Beauty treatment ingredients, for example. So I think that's very positive.

If we look to the second half and the full year, we don't expect that to be the same level of half year to full year contraction as we saw in 2025, but more similar to '24, which ensure brings us to -- based on everything we know today, at least brings us into the range of plus/minus 24% on a full year basis for the EBITDA outlook.

The next question comes from Ranulf Orr from Citi.

Just 2 on cash flow for me, just to wrap that up,, please. The first one is just on your confidence in the working capital normalization, this -- are you comfortable that you can sufficiently deliver that to get towards your kind of long run 12% of sales free cash flow target this year, appreciated [indiscernible] as an annual target, but curious on that.

And then secondly, just on the new definition of adjusted free cash flow, just kind of curious to understand whether that gives you more flexibility to achieve that long run 12% of sales target?

Thanks for the question. I think on working capital, we have traditionally seen it. Higher at the half year, I think we are always looking at the business requirements. First, I think we have consistently demonstrated that we're able to manage working capital very effectively. We've been in the 23%, 24% of sales. And we know the levers and we have the discipline in the organization to be able to implement that impact.

As you rightly said, we're not providing annual guidance. We remain, as we've said, consistently confidence in the overall free cash flow guidance over the strategic planning period. When one looks at the adjusted definition, and I think that's why I was keen to be clear on the only item we've adjusted from the historic definition of free cash flow.

So the only item we've adjusted is the settlement in relation to the Fragrance & Beauty division item we covered during the presentation. So in simple terms, no, it doesn't give us additional flexibility. We will continue to be very stretched around any adjustments, which we make to free cash flow. And our commitment is to ensure that the underlying business performance delivers in line with our free cash flow targets.

The next question comes from [ Eric Wilmer ] from Kempen.

I was wondering if you could say a few words on the recent botanical extracts and natural colorants disposal by one of your key peers. I realize there's probably a bunch of other things in there as well. However, the asset also includes 2 of your mentioned, 2 of the mentioned segments, so mechanical extracts and natural colorants that you also seem to quite strongly believe in. So I was wondering, was the asset not as complementary to your business?

Okay. So thank you for the question. I think first, I don't think we comment on disposals of assets from kind of our competitors because I don't think it's right, and I think it's basically on their business decisions. What I said before is I think we strongly believe in the opportunity in natural colors. And we believe that the opportunity in natural colors of course, is accelerating also with the Maha movement because it brings together what is really close to our heart, right?

It brings together the creation because it's a creative on technology and science-based process, but it also leverages our flavor knowledge on masking those natural colors because they come with a taste versus synthetic colors, they don't come with a taste. So we believe that natural colors is a very strong area to be in.

And then what I also mentioned is that botanical extracts, there's many. You have to -- you would have to deleverage. We see in some areas, we see good growth, but I was also mentioning before, particularly also in North America that there's other areas which are more kind of challenging, which are more commoditized and which are also today compared to our core business in flavor and taste solutions, underperforming, right?

So that is what is kind of a segment. So natural colors obviously is absolutely critical. And we also have work to do on some of the botanical extracts, and that's what we're actively working on. So that's where I can leave it.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Stammkoetter for any closing remarks.

Okay. Good. So thank you all for your questions and for the strong interest shown today. And before we close the call, let me briefly highlight a couple of upcoming events. So first of all, we're very much looking forward to welcoming you, either in person or via webcast to our summer investor conference on August 27, 2026 in Zurich.

I also want to remind that we are planning an investor field trip at the end of September, which will take us this year to Naarden in the Netherlands where we will visit one of our key European sites for the Taste & Wellbeing business and where we have time also to go into the discussion on Taste & Wellbeing. And we look forward, of course, to continue the dialogue with many of you over the coming months. A big thank you, and I wish you all a very nice summer. Thank you very much.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Givaudan 2025 Full Year Results Conference Call and Live Webcast. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Gilles Andrier, CEO of Givaudan. Please go ahead.

Thank you, Valentina. Dear, ladies and gentlemen, welcome to our 2025 full year-end results conference call. Actually, my first one was in 2006, which makes this one my 21st conference call as well as my last year-end conference call as CEO. Stewart Harris, our CFO, joins me today. All presentation documents are available on our website.

So before moving into the performance discussion, let's take a moment to look at the leadership transition. So as announced end of last August, Christian Stammkoetter will succeed me as CEO as of March 1, 2026. But today, we also announced two changes to our Executive Committee team. The first one, Christina Yeo, will become Head of Business Solutions and IT, and that will be effective May 1, 2026. She succeeds Anne Tayac, who after more than 30 years at Givaudan, will retire.

Fanny Iglesias will take over as Chief Legal and Compliance Officer, replacing our current Legal and Compliance Head, Roberto Garavagno, effective April 1, 2026. Roberto will also retire after close to 30 years. Fanny will join the Executive Committee as an additional member to the EC team. For sure, I would like to thank Anne Tayac and Roberto Garavagno for their many contributions in leadership over the many years.

And I would like to turn to Slide 4. On the Board composition side, as announced late August 2025, we have Calvin Grieder, who will step down. And I will stand for election as Chairman at the upcoming AGM in March. All Board members except Tom Knutzen will stand for reelection. And furthermore, Ester Baiget, CEO of Novonesis, is proposed as a new member to the Board, bringing strong innovation and sustainability expertise.

Now let's turn to the business performance review, starting on Slide 5. 2025 marks another year of very strong results. On top of record prior years and in a continuous volatile external environment, it also marks the successful completion of our 5-year strategic cycle, which started in 2021, for which we delivered on all financial and nonfinancial ambitions, confirming the strength and resilience of Givaudan's business model.

Moving to Slide 6. I'd like to take you through the key financial highlights for 2025. So sales amounted to close to CHF 7.5 billion, representing an increase of 5.1% on a like-for-like basis and 0.8% in Swiss francs. This is a very solid result achieved against a very high comparable base of more than 12% growth in 2024. Growth was again achieved across all markets with sustained strong growth of 8% in high-growth markets. This means growing close to 4x the rate of the growth in mature markets. And as well, we grew with local and regional clients close as well to 4x faster than global.

On a comparable basis, the EBITDA margin stood at 24.2%, slightly below 24.5% in 2024, yet still the second highest margin in the past 15 years. Net income reached CHF 1,071 million, corresponding to a net profit margin of 14.3% of sales. Finally, we generated a free cash flow of CHF 1,053 million, so basically more than CHF 1 billion, representing 14.1% of sales. This is the second consecutive year being above CHF 1 billion in free cash flow.

Finally, the Board of Directors will propose a dividend of CHF 72 per share at the AGM on March 19, 2026, marking the 25th consecutive dividend increase for our shareholders since the spinoff of Givaudan. Stewart will provide more details on the operational performance shortly.

On Slide 7, let's look in more detail at the divisional sales growth. The sales growth in 2025 was broad-based across markets, segments and customer groups against, again, very high comparables across the board. On a group level, we achieved a good like-for-like sales growth of 5.1% against the comparable of 12.3%. The growth was mainly volume driven with less than 1% contribution from real pricing or FX pricing.

Our local and regional customers continue to be an important growth driver in both divisions. Like the prior year, we continue, as I said, to grow with them close to 4x the rate we grew with global. Today, L&R clients represent now 60% of our total sales. To put this performance into context, the past 5-year strategic cycle has been more volatile than any before, marked by the COVID-19, then the supply chain disruptions, which turned into inflation, in the background geopolitical tensions and macroeconomic challenges.

We have managed, though, through this period particularly well, thanks to the strategic choices made and the natural hedges we have built in our business across -- I mean, natural hedges across geographies, customer groups and segments along with our strong execution capabilities. In this environment, our 5.1% like-for-like growth confirms the resilience and the structural strength of Givaudan, fully in line with our long-term growth algorithm.

The nature of our business and the singularity of Givaudan allows to deliver consistent results year-on-year. This is why I always remind, and probably this is the last time I repeat it, but maybe I did not repeat it enough, CAGR is your best friend when judging Givaudan's performance as opposed to looking at the last quarter or a given year. If we look at the last 5 years, our CAGR was 6.8%, so not only consistent results but also significantly higher paces than the two last 5-year cycle.

Fragrance & Beauty sales amounted to CHF 3,830 million, up 7.9% on a like-for-like basis on top of a 14% increase in prior year. I'd like to emphasize the strength and depth of our Fragrance & Beauty portfolio, which truly differentiates us from our peers. We have built a balanced and resilient business, combining scale and innovation across multiple categories. And we have invested in our future growth by expanding beyond our core and with our capabilities, from the development of Active Beauty over the past decade to our recent entry into makeup through b.kolor. This diversity gives us a unique competitive position to ensure sustainable growth.

In Taste & Wellbeing, sales amounted to CHF 3,642 million, up 2.4% on a like-for-like basis, a solid achievement in a more volatile market against a very high comparison base of more than 10% for the full year of 2024. Our diversified geographic presence, broad customer base and balanced portfolio continue to provide this resilience and position us well to capture future opportunities as market conditions evolve. While our peers have not yet reported, looking at the 9-month sales comparisons to peers, we remain confident that our performance will once again be industry-leading.

Let's take a closer look now at the geographic performance on Slide 8. High-growth markets grew by 8% and continued to be a key driver of our overall growth as they make up today 49% of total sales, almost on par with the mature markets. Our broad-based presence and the depth of our footprint in these markets provides resilience, with key markets such as the Middle East, China, India and Brazil which continued to grow at the high single to double-digit pace.

Mature markets grew by 2.4%, very much in line with the historic average of the past 10 years. In 2025, this growth was supported by the resilience of both Europe and North America. This strong geographic balance once again demonstrates the strength and diversification of Givaudan's global footprint, enabling us to deliver consistent growth even in a complex environment.

On Slide 9, we can have an even more granular look at the regional performance. Our largest region, EAME, delivered the highest growth in 2025 at 7% on top of a very strong prior year. This performance was driven by the continued strength of high-growth markets, particularly in the Middle East and Africa, which now represents around 27% of the EAME sales. We also saw solid contribution from mature markets including France and Iberia.

In Asia Pacific, like-for-like sales growth reached 5% in 2025 with China, India and Japan contributing strongly, particularly in Fragrance & Beauty, whilst Southeast Asia was slightly negative in Taste & Wellbeing, though showing an improved momentum towards the end of the year.

In Latin America, last year's like-for-like growth was driven by FX-related pricing in Argentina, but the underlying growth was also positive in the mid-single-digit range. In 2025, growth that we have in LatAm is 3.6%, which reflects the lower FX pricing and some specific challenges in Mexico, while Brazil continued to deliver strong underlying growth, confirming the region's solid fundamentals.

North America sales grew by 2.6% on a like-for-like basis. The region remains more volatile, but as a large mature market, mid-single-digit growth is what one could typically expect. Towards the end of 2025, we also observed good brief inflows linked to MAHA, Make America Healthy Again, and reformulation trends, in particular around better-for-you snacks and hydration.

Turning now on the divisional view on Slide 10, starting with Fragrance & Beauty. As mentioned, the division delivered continued strong growth of 7.9% on top of the 14% comparable last year. Fine Fragrances continued its record excellent growth at 18.3%, virtually matching last year's other record at 18.4%, a performance we should truly celebrate. Since the pre-COVID baseline of 2019, we more than doubled our Fine Fragrance business on a like-for-like basis.

This sustained success reflects not only a healthy underlying market but, even more so, our own strength with a broad geographic exposure, particularly in the SAMEA region, which today is as large as North America and Latin America combined. And our strong relationships with local and regional customers, another key growth driver for Fine Fragrances. These strengths have allowed us to gain market share, reinforcing our leadership position in this segment.

At the same time, I'd like to emphasize that the division's performance is broader based than just Fine Fragrances. Fine Fragrances represents 21% of our sales. So the strong continuous performance of the Fragrance & Beauty division is not just about Fine Fragrances. We have a strong core in Consumer Products, which represents close to 2/3 of the division, where we sustain very solid growth across all categories, building on a very strong prior year. Actually, the 5 years' average growth for Consumer Products has been 6.2%, and the combined Active Beauty plus Fragrance Ingredients, an average of 7% for the last 5 years. So this is actually close to the division's average.

We have also deliberately strengthened our natural hedges and invested in our future growth capabilities by developing Active Beauty, a business reaching now CHF 300 million of sales, which have been built over the last 8 years and now expanding into another adjacent space of beauty, which are color cosmetics through the acquisition of b.kolor. The only soft area this year was Fragrance Ingredients, where sales declined due to an increased competition from Chinese players on a specific ingredient. However, these segments represent less than 10% of the Fragrance & Beauty sales. And with the portfolio strongly geared towards specialties, our exposure to market volatility is actually limited. Overall, Fragrance & Beauty continues to demonstrate strong broad-based performance, confirming its industry-leading position and the solid foundation for future growth.

Turning now to Slide 11. Let's look at the Taste & Wellbeing division. The Taste & Wellbeing division delivered a solid growth of 2.4%, which was volume-led and achieved against a very high comparison base of more than 10% like-for-like growth in 2024. Europe showed great resilience with 2.6% like-for-like growth, while SAMEA continued its very strong momentum, growing 7.8% on top of the 21% growth in 2024. North America remained solid at 3% growth.

And in Latin America, growth of 0.7% was temporarily impacted by a weaker performance in Mexico, as we also saw at the group level. In Asia Pacific, the division was broadly stable at minus 0.8% with continued good performance in key markets such as China and Japan. But we also saw a clear improvement in Southeast Asia towards the end of the year, where we were facing a particularly high comparison base and some specific challenges since the past year.

Now from a product segment perspective, growth was broad-based across snacks, dairy and sweets. Overall, the Taste & Wellbeing division delivered a solid performance on the challenging conditions, further proving the resilience of our business model and positioning us well for future growth. While our peers have not yet reported, we remain very confident that our performance will once again be the industry-leading one.

I will share a detailed review of the 2025 strategic cycle, including our key innovations and achievements against nonfinancial targets after Stewart has walked you through the operating performance. Stewart, over to you.

Thank you very much, Gilles. I would like to add my warm welcome to all of the participants on the call. And on the following slides, I would like to give you an overview of the group's operating and financial performance as well as the operating performance of the two divisions.

Please turn to Slide 13. As Gilles mentioned, group sales in 2025 increased to CHF 7.472 billion, an increase of 5.1% on a like-for-like basis and an increase of 0.8% in Swiss francs. The reported Swiss franc sales also includes the sales of Vollmens from the date of acquisition in September 2025 and the sales of Belle Aire Creations from the date of acquisition in December '25.

The reported EBITDA was CHF 1,751 million compared to CHF 1,765 million in 2024, a decrease of 0.8%, mainly due to foreign exchange impacts. When measured in local currency, the EBITDA increased by 4.5%. On a comparable EBITDA basis, the underlying EBITDA margin was 24.2% compared to 24.5% in the prior year, a very strong result when considering the volatile external environment that we have been operating in, and maintaining the margin close to historically high levels.

Driven by the solid operating profitability, the net income was CHF 1,071 million and the net income margin was 14.3% of sales. The group achieved a free cash flow of CHF 1,053 million or 14.1% of sales, surpassing CHF 1 billion of free cash flow generation for the second consecutive year. As a result of the strong cash generation and operating performance, the net debt-to-EBITDA improved further to 2.1x at the end of the year compared to 2.3x in December 2024.

Please turn to Slide 14, which shows the overview of exchange rate developments in 2025. This slide shows the comparison of the exchange rates in '25 versus 2024. In the current year, as we've become used to, the Swiss franc has continued to strengthen against most of the major currencies in which the group operates with the corresponding impact on the reported results in Swiss francs. However, when one looks at the group margins, the foreign exchange impact is limited as a result of our operational and geographical balance, which continues to provide good natural hedges. And our EBITDA margin remains well protected against currency fluctuations.

Please turn to Slide 15 for an overview of the operating performance of the group. The gross margin decreased from 44.1% in 2024 to 43.5% in '25, with the decrease resulting from the mechanical margin dilution related to higher input costs, including tariffs, as well as some impact from the softer market conditions in part of our Fragrance Ingredients business. With increased input costs, the company continued to successfully implement price increases in collaboration with its customers to fully offset these higher input costs including tariffs.

On the EBITDA level, the EBITDA was CHF 1,751 million in 2025 compared to CHF 1,765 million in '24. As noted previously, the slight decrease is mainly due to foreign exchange rate impacts. And when measured in local currency, the EBITDA increased by 4.5%. The published EBITDA margin was 23.4% versus 23.8% in 2024. After adjustment for nonrecurring costs of CHF 39 million as well as CHF 17 million of expenses related to the Louisville accident, the comparable EBITDA margin was 24.2% compared to 24.5% in 2024, maintaining the margin at close to historically high levels and partially compensating for the decrease in the gross margin.

On the following two slides, I will spend a few minutes on the operating performance of the two divisions. And if you turn to Slide 16, we will start with Fragrance & Beauty. The EBITDA of the division in 2025 was CHF 985 million, flat compared to 2024. However, when measured in local currency, the EBITDA of the Fragrance & Beauty division increased by 4.2%.

The division incurred acquisition, restructuring and project-related costs of CHF 31 million compared to CHF 32 million in 2024, with those costs being mainly due to those incurred in relation to the ongoing competition authorities' investigations.

The comparable EBITDA margin of the division was 26.5% in 2025 compared to 27.8% in 2024, with higher input costs, the Fragrance Ingredients impact and targeted investments in growth impacting slightly the EBITDA margin. The continued strength of the financial performance of Fragrance & Beauty illustrates their market-leading position across all areas of their business.

If you would like to turn now to Page 17, I will take you through the operating performance of Taste & Wellbeing. The Taste & Wellbeing division recorded an EBITDA of CHF 766 million compared to CHF 780 million in the prior year, a decrease of 1.8%. However, again, this is mostly due to foreign exchange impacts. As when measured in local currency, the EBITDA increased by 4.8%. On a comparable basis, after restructuring costs of CHF 8 million as well as CHF 17 million of expenses related to the Louisville accident, the comparable EBITDA margin improved to 21.7% compared to 21.3% in 2024, showing continued positive sequential margin progression over the past 3 years.

Please turn to Slide 18 on the net income of the group. The net income before tax was CHF 1,305 million in 2025 compared to CHF 1,313 million in 2024. The effective tax rate increased to 18% compared to 17% in 2024 as the OECD minimum tax project continues to be implemented. The net income was CHF 1,071 million in 2025 and the net income margin was 14.3% compared to 14.7% in 2024. Basic earnings per share were CHF 116.08 in 2025 compared to CHF 118.17 in 2024.

Please now turn to Slide 19, which highlights the free cash flow performance. In 2025, the group generated for the second consecutive year over CHF 1 billion in free cash flow. Free cash flow was CHF 1,053 million or 14.1% of sales compared to 15.6% of sales in 2024. Total net investments were CHF 285 million in 2025, representing 3.8% of sales, a similar level to investments as in the prior year as the group continues to invest in its growth and also in capturing exciting opportunities in the digital space. Net working capital was 22% of sales in 2025 compared to 23.4% in 2024 with the group continuing to have a strong focus on the effective management of all aspects of working capital.

Please turn to Slide 20. Since Givaudan became a public company in 2000, the company has generated a cumulative CHF 13.9 billion of free cash flow. Including the proposed dividend for 2025, the 25th consecutive increase, Givaudan has returned over CHF 9 billion to shareholders in the form of dividends or share buybacks, clearly underlining the strong commitment of Givaudan to shareholder returns. The Board of Directors will propose to the Annual General Meeting of Shareholders a further increase of the dividend to CHF 72 per share from CHF 70 per share in 2024, an increase of 2.9%.

Please turn to Slide 21 to look at the debt and leverage profile of the group. The group continues to have a well-balanced and stable debt profile as shown on this slide with interest rates, which have been locked in at attractive rates. At the end of 2025, the net debt was CHF 3.7 billion with a weighted average interest rate of 1.94% compared to 1.75% in 2024. The net debt-to-EBITDA ratio was 2.1x at the end of '25, representing continued improvement compared to the 2.3x of December 2024.

The strong improvement in leverage over recent years is a result of our sustained focus on the balance sheet, whilst continuing to invest in the growth of our business and in shareholder returns. We are very pleased to enter the new strategic cycle with a strong balance sheet, which will support us in pursuing our strategic priorities both in the established business and also in M&A.

This concludes my section of the presentation. I would like to thank you for your attention and hand it back to Gilles.

Thank you, Stewart. So this year also marks the successful completion of our 2025 strategic cycle, during which we have delivered on all our financial and nonfinancial ambitions. So let's have a look back at the last 5 years before we move into the next 5 years with our 2030 strategy and outlook for this year.

So we have created value over the past 5 years by building on our commitment to grow with purpose. We have proven that strong financial performance can go hand-in-hand with responsible purposeful action. We have further built resilience, delivered innovation and created value that endures well beyond 2025.

Let's have a look on our key achievements on Slide 24. The first one. We have strengthened our natural hedges. Our balance across geographies, customer segments and product categories has further strengthened. We have continued to focus on our core fragrance and flavors business while expanding decisively into adjacent spaces.

Our exposure to high-growth markets has increased significantly. In absolute terms, these markets are now almost at par with mature markets, but they are growing faster. And importantly, we have further diversified our customer base. Local and regional customers now represent 60% of our sales, up from 46% just 4 years ago. And this shift has been a major growth driver to our resilience and growth overall.

Second, we have obtained consistent industry-leading results. The strategic relevance of the before-mentioned choices is clearly reflected in our outperformance vis-a-vis the market and peers in general, seen not only in sustained growth but also in significantly higher margins and free cash flow generation compared to our peers. These results reaffirm our position as a market leader and the strength of our long-term approach.

Third, we have leveraged M&A to support our strategy and expand our reach. We have made targeted acquisitions that strengthen our position in fast-growing segments and deepen relationships with local and regional champions.

Fourth, we have realized a major digital transformation. We have built advanced digital capabilities across the business from customer engagement and market insights to operations, supply chain and innovation. Digitalization is embedded end-to-end, enabling smarter decisions, faster execution and more connected collaboration. This transformation is making us more agile, more efficient and fully future-ready.

And finally, through all this progress, we have remained focused on our purpose-related commitments. Everything we do continues to be guided by our ambition to create for happier and healthier lives with love for nature at the heart of our business. Together, these achievements demonstrate not only just strong performance, but the power of a strategy that is balanced, forward-looking and deeply aligned with our purpose.

On Slide 25, you can see the strong delivery against our 2025 financial targets. We have achieved an average like-for-like growth of 6.8% in the period '21 to '25, exceeding our target of 4% to 5% growth, a further increase compared to the previous 2 cycles. Also on the comparable EBITDA, with 22.9% average over the period, we have continued the steady increase cycle over cycle, further distancing our peers. And also against the ambitious free cash flow target of over 12%, which is, by the way, the highest in the industry, we delivered, again, over the last 5 years an average of 12.5%.

To even better show the strength of the cycle in past year, let me give you some historic context on the following two slides. Let's look at our sales growth achievements over the last 3 strategic cycles. Our 5.1% like-for-like growth in 2025 is a very strong result. While some may see it's a slowdown compared to recent highs, it's essential to view it in context. The '21-'25 period was one of the most volatile in our history, which I personally experienced, shaped by COVID, destocking, supply chain disruptions, inflation and geopolitical tensions. Delivering solid growth through that environment is a clear sign of resilience.

When we take a longer-term perspective, the picture becomes clear, Givaudan's growth has steadily increased across cycles. The '25 result is not a step down, but the continuation of our consistent upward path, proves that our strategy continues to deliver sustainable performance and of my usual saying, I will repeat it again, CAGR does matter. And there's another important point to highlight. Despite persistent headwinds from the strong Swiss franc, we have doubled the size of our business in absolute Swiss franc terms over the last 15 years. Both divisions, Fragrance & Beauty and Taste & Wellbeing, now contribute almost equally reflecting a well-balanced, resilient business model. So the key message is simple. Our '25 growth demonstrates the enduring strength of Givaudan, consistent, balanced and built for long-term success.

Turning to profitability. This slide shows the steady improvement of our comparable EBITDA margin over the last 3 strategic cycles. For many years, both divisions delivered very similar margins. In the most recent cycle, the margins have, though, diverged slightly. Fragrance & Beauty saw significant improvement, supported by the exceptional growth and a more favorable raw material environment and benefits from the performance improvement program that we introduced in 2024.

Taste & Wellbeing maintained solid margins in a more challenging context with more volume volatility and raw material inflation, partially compensated by recent improvement initiatives, as you see it from this chart when you look at the improving EBITDA margin of Taste & Wellbeing. Nevertheless, the operating strength of Taste & Wellbeing stands out clearly against peers with margins typically 300 to 500 basis points higher than the industry average.

In absolute terms, the progress has been remarkable. Our comparable EBITDA in Swiss francs has more than doubled over the past 15 years. And while back in 2011, the entire group delivered CHF 790 million comparable EBITDA. Today, our Fragrance & Beauty division alone contributes to more than CHF 1 billion of EBITDA.

We are proud that over the past 5 years, we made strong progress against our ambitious nonfinancial targets as well, fully aligned with our purpose, to create for happier, healthier lives with love for nature. Starting with our nature ambition. We reached a major milestone with the validation of our net zero targets by the Science Based Targets Initiative. Aligned with the SBTI net zero standard covering forest, land and agriculture emissions, our goal is to achieve a net zero greenhouse gas emissions across our value chain by 2045, a key step towards becoming climate positive.

By the end of 2025 and compared to 2015 baseline, we achieved an absolute 50% reduction in Scope 1 and Scope 2 emissions, and we successfully stabilized Scope 3 emissions despite, obviously, the continued business volume growth that we have seen over the last 10 years. We also reached our goal to purchase 100% of electricity from renewable sources, 1 year ahead of plan in 2024.

Turning to responsible sourcing. In 2020, only 20% of our natural ingredients were sourced according to our demanding responsible sourcing program called Sourcing for Good. At the end of 2025, that figure stands at 87%, showing an unwavering commitment to ethical and sustainable supply chains, protecting the biodiversity.

Finally, under our people ambition, we've continued to advance diversity and inclusion. At the start of the cycle, 25% of senior leadership positions were held by women. Today, that number has risen to 34%, reflecting steady and meaningful progress towards a more inclusive organization. Together, this achievement demonstrates how we combine purpose with performance, creating growth that is responsible, resilient and built to last.

Let's turn now to Slide 29, which highlights some of our key innovations from the past strategic cycle. Innovation, as you know, is the life blood of our business. This is what makes us relevant to our customers. It's what enables us to create unique, high-value solutions that drive consumers' preferences and shape the future of fragrance, beauty, health, wellness and nutrition segments.

Each year, we invest close to 8% of our sales, which means CHF 600 million, in research and development. This is an industry level of investment and what sets it apart is our focus. While peers may spread similar amounts across multiple ingredients portfolios, we concentrate our R&D on two divisions. Our R&D efforts bring together science, creativity and technology, advancing in biotechnology, green chemistry and digitalization. To take some examples.

In Taste & Wellbeing, we are developing natural and functional ingredients like our new range of natural colors and green banana powder that meet growing demand for healthier, more natural products.

In Fragrance & Beauty, Evernityl is a great example of innovation rooted in sustainable biotechnology, a marine-active developed through an upcycling process that transforms ocean algae into a high-precision ingredient for healthier, youthful-looking skin. And there are many examples that I'll let you read on this slide.

Finally, on the digital side, platforms like Myromi and Guardians of Memories show how we are connecting creativity with technology, bringing scent into immersive digital world. I'm sure all parents here know about Roblox, where Gen Z and Alpha spend much of their time. So yes, even there, we are shaping the future of scent experiences for the next generation of consumers. Together, these examples show how we transform insight into action, into products, tackle real customer challenges, embrace consumer preferences and make our business truly future-proof through innovation.

Having looked back at our '25 strategy achievements, let's now focus ahead on our 2030 strategy and outlook. As outlined at the summer investor conference end of August at the Widder Hotel in Zurich, our 2030 strategy is about purposeful evolution, building on the strong foundation of our proven model, combining innovation, customer partnership and disciplined execution to deliver sustainable growth while preparing for what's next.

We keep extending our customer reach to capture the fastest-growing opportunities. We continue to deepen our geographic presence, and we are expanding our categories and portfolios into high value-added adjacencies. How we will make it happen? By innovating for differentiating solutions that set us and our customers apart, by delivering value with excellence and agility, ensuring speed, quality and impact in everything we do and by caring for our people, nature and communities.

Financially, we are setting ambitious new targets for the next 5-year cycle. We aim for a 4% to 6% like-for-like average sales growth, slightly higher than our previous 4% to 5% guidance in the past cycle. This confidence reflects the continued strength of our business, rooted in expanding base of local and regional customers and our growing exposure to high-growth markets, which will continue to be key growth drivers for the future. We also reaffirm our industry-leading ambition of achieving over 12% free cash flow as a percentage of sales, maintaining a disciplined focus on profitability and cash generation. And beyond financial, we remain fully committed to our purpose targets for 2030.

Following our financial ambition, let's also remind ourselves on our purpose. Our purpose, creating for happier, healthier lives with love for nature. Let's imagine together, it's our lighthouse. It defines why we do, what we do and guides the choices we make every day, including acquisitions. Our purpose is fully integrated in our business strategy. With our 2025 strategy, we introduced for the first time a series of ambitious nonfinancial targets, reflecting our commitment to long-term value creation beyond the financial performance. We report our progress against these targets each year in our integrated report, covering both economic and ESG performance.

As we developed our 2030 strategic framework, we reviewed and evolved hose targets to ensure they remain strongly connected to our business performance objectives and aligned with the changing external environment. Our purpose continues to anchor us, inspiring innovation, driving sustainable growth and creating a positive impact for people, nature and communities.

Let me finish now with the 2026 outlook on Slide 34. We have successfully concluded the 2025 strategic cycle, confirming the strength and relevance of our current strategy. Building on this solid foundation, we are now initiating a new 5-year strategic cycle that will set the stage for sustainable growth and continued innovation. We remain confident in the strength of our portfolio and our leading market position across our businesses.

Looking ahead into 2026, we expect to navigate a continuous volatile geopolitical landscape and uncertain market conditions. Nothing new. But our strong natural hedges across product segments, geographies and customer groups will continue to provide resilience. We anticipate only limited impact from input costs at the group level, meaning raw materials, while tariffs-related effects remain uncertain, but we will manage through pricing actions with our customers. In addition, we expect some ongoing nonrecurring costs in 2026 to reflect specific one-off items related to costs for the investigation and further performance optimization.

With that, we are at the end of our 2025 full year results presentation, and I'd like to hand back to the operator for the instructions to open the Q&A session. We look, with Stewart, forward to taking your questions.

[Operator Instructions] The first question comes from Celine Pannuti from JPMorgan.

First of all, Gilles, well, I wanted to give you my congratulations for those impressive achievements that you showed us just now as you have led Givaudan over the past 2 decades. And of course, I wish you much continued success as the new role of Chair of the company. I have not followed 21 years of Givaudan, but a few of those, and I hear you when you say CAGR is your best friend.

So my first question, on trying to understand a bit how to look at 2026 in what you said is a volatile environment, and there's been as well volatility that you guys have experienced in the second half of the year. So if I look at CAGR in volume over the past, I think, 5 or even 10 years, it's around 3.5 to 4. Do you think that's a good proxy as we look into 2026? And how should we think about the pricing element in an environment where you mentioned limited cost inflation?

And then my second question would be on gross margin bridge. I would like to understand a bit the moving parts for 2026. There seem to have been some tariff impact in the second half that hit gross margin as well as extra investment, and I would like to understand how this will phase out in '26 and whether there will be any offset.

Thank you, Celine, for your kind words and supporting Givaudan always for many years, analyzing accurately our company. I'll answer your question. So yes, CAGR is your best friend. But especially, what I mean is really when we look at the quarter, you can actually look at the CAGR of the same quarter for many years and in a given year. So that's basically what I mean. It's always helpful to look at the CAGR, looking and projecting the way forward.

Now obviously, 2026, as you know, we don't commit on the number, on an actual number. We commit on the 5 years of the plan. What I can say though is basically looking ahead, so essentially, we have the Fragrance & Beauty, as you've seen for 2025 but also towards the end of the year, continues to be on a very good momentum. Probably, Taste & Wellbeing will take a few months to come back, given the softness of some of the multinationals, which are our clients and so forth.

Though I would like to remind again because this is a read across, which sometimes people are a bit too fast at doing, looking at the results of a multinational and reading across is what it means for Givaudan. Today, 60% of our sales are with L&R, and nobody has any visibility on their growth because they are usually sort of companies which are not public. So that means the relative exposure to multinational is lower. So essentially, if we look at comparables on Taste & Wellbeing, they will continue to be a bit tough in the first half, but easing out in the second half, and that's true for the group as well. There is a 2 or 3 points difference between the 2 halves, if you really want to dissect quarters and half. But again, the perspective is for full year.

We remain confident basically on one side to have a continued good performance on the Fragrance & Beauty and basically, good recovery on the Taste & Wellbeing on the back of lower comparables. That's maybe the way to look at and interpret my CAGR is your friend. And CAGR is your friend as long as you take 3 years, 2 years is not enough.

Then I would like also to give because that's what we usually give. It's basically the tonality on how active our plants are in terms of innovation because that's also the leading indicator on how the year is going to turn out because, as you know, we have a certain amount of erosion of our business every year, which is compensated by new wins and so forth. So if we look at those, we feel very good about the amount of new wins that we have accumulated in '25, which will roll over in '26. So that's the first very good positive indicator on all sides of the business, two divisions.

And the inflow that we have in terms of briefs and so forth going into '26 is also very good, which basically is a testament also to the way our clients view us, again, thanks to the strategic choices we made. So all of those things are positives going forward. So that's basically what I can say about the growth going forward.

I will reiterate because maybe I was not so clear enough. When you look at the chart, when we talk about the volatility of the 5 years, again, this really stands out as a cycle. And I think people don't realize that. COVID was the baseline creating a ripple effect, where that has created a lot of yo-yos in our own growth year-on-year. And so this is probably going to normalize and reduce this volatility going forward. But as you see, the average is still 6.8%, which is again one of the best, if not the best average we have had.

Then on the GPM -- sorry, on the pricing, so yes, there probably would be very mild pricing given the raw materials which are quite stable. And on the tariffs, well, it's going to depend on how it's going to evolve. But again, this is really -- the tariff pricing translation in ourselves is quite minimal, below the 1%. Let's see how it effects pricing. But again, I would like to reiterate something which is sometimes again misunderstood.

Pricing, which is my legacy. Pricing is not a growth strategy. It's not a growth strategy like our clients would have a growth strategy and it's not a growth strategy like some of companies selling standard or commodities ingredients when the market goes up. Our pricing strategy is just to reflect the increased cost that we incur, whether they are raw mats, tariffs and whatever.

And basically, one additional pricing is compensating one on the cost side. So 1 minus 1 equals 0. That means on the EBITDA level, it has no effect. On the margin side percent, it does because of the mechanical dilution. So I don't think we should look at pricing with such a myopic view because it doesn't drive real value growth.

And then the GPM bridge, maybe Stewart?

Yes, I can take that, Celine. So maybe we -- thanks for the question on the margin bridge. Maybe we back up to 2025 and then we take it forward from there. So I think the gross margin, as I mentioned, had come off about 43.5% versus 44.1%. And although we don't get gross margin information by the division, I think we have been clear that in this year, we had raw material inflation, which was more slanted towards Fragrance & Beauty than Taste & Wellbeing. And because of inventory cycles, the raw material effect tends to come through not evenly throughout the year, so a little bit more in second half.

As Gilles mentioned, we've got also tariffs coming through more consistently in second half than first. So we've got the mechanical dilution of those two effects. And then both of us mentioned in our narrative that the margin of Fragrance & Beauty being slightly impacted by the competitive situation around some specific ingredients in the Fragrance Ingredients portfolio. So that's a little bit at a high level the kind of two topics, the margin bridge in '25 and the split between H1 and H2 because I know there's been some questions about that.

Looking forward, we don't have a crystal ball particularly around tariffs. I think Gilles has mentioned on input costs, we see minimal impact, and we are relatively well covered at least for the first half. So we know relatively well where the input costs are going in H1. On tariffs, we need to see, of course. And as always, we will reflect any tariff impact with continuing pricing action with our clients. But that gives you a bit of a sense for, I think, what the key building blocks are of the margin bridge and how we would see that going forward.

And would you still expect an impact from the ingredients portfolio to last until we count that in the second half of the year?

Yes, I think that's fair to assume that from the second half, we would see a more level playing field year-over-year in relation to the Fragrance Ingredients effect.

The next question comes from Alex Sloane from Barclays.

The first one on Fragrance Ingredients. Do you think there's any risk that sustained deflation there could spill over to your larger fragrance compounding businesses or customer negotiations elsewhere? Or are you confident that the pressures can be fully contained? And I guess, do you think we're kind of near the peak of those pressures on Fragrance Ingredients? That would be the first one.

And the second one on Taste & Wellbeing. I appreciate you don't manage it on a quarterly basis. There were some impacts that were temporary like Mexico. But obviously, like-for-like decline in Q4, not consistent with your medium-term aspirations for the business. Just thinking about how we get back there and the pathway. I mean, is it realistic to assume a pathway back to mid-single-digit growth for this business? Or do you think there could be any structural challenges to any specific end markets that could prevent that recovery?

Okay. Thank you for your question. So yes, so again, maybe it's worth explaining the Fragrance Ingredients business because, yes, Givaudan has a different strategy than maybe some of our peers or the ingredients industry at large. We have a long time ago, made a very conscious decision to, yes, make fragrance ingredients. We have chemical plants. So we are basically in-sourcing a number of chemical ingredients and the -- which most of them come out actually of our research. So it's a way to leverage innovation, to leverage research and to keep the IP on our ingredients and to make those ingredients so that they enrich the palette of our perfumers and then that gives a competitive advantage when you create a new compound, a new fragrances.

So that's why fragrance -- researching new fragrance ingredients, making them is absolutely key and essential to be competitive on the fragrance side. So that means -- what does it mean? It means that by construction, we are -- we don't have a fragrance ingredient business just to have a fragrance ingredient business. It's basically because, obviously, when you find a new ingredient, you develop a new one, you have -- you need to be cost effective, and that means large volumes. So at some point, whenever we have what we call a captive fragrance ingredient, we decide to sell it to the outside market, and that turns into a third-party sales, which becomes the FIB. So you see it's not that we are looking to have a very large FIB business and then figure out how to use that internally. It's exactly the reverse.

So that means that some of those ingredients at some point become attacked by pricing and so forth. So that's the case, one of which last year and clearly some Chinese competition, which dented a bit the performance on the FIB business, but this is not reflecting, I would say, the weakness of the portfolio because actually, we have a very large percentage of our FIB business, which are specialties, which are uniquely made and so forth. The second reason why though -- even though, despite this sort of weakness on one ingredient, we have seen a softness. Well, it's almost a bit ironic, but for me, it's a good signal because those ingredients are sold to competition. So the more we gain market share on the compound side, the less we do on the fragrance ingredients. So that's one way to look at it. That's why this weakness comes from the fact that maybe some of our clients in this industry are not growing as fast.

So then back to your question on does it reflect a deflation environment? Not -- no, it doesn't because we said that raw materials have become -- have been stable. And therefore, it doesn't have, I would say, a read across or an effect on the compounds business where clients would ask for. So basically, that's what we can say. It's quite isolated. And again, it's a very different portfolio mix that we have vis-a-vis competitors. So that means we are less exposed to those -- to this volatile environment that you have in Ingredients.

On Taste & Wellbeing, on the quarterly basis, essentially, again, back to the CAGR story. So actually, the average volume for Givaudan, if you take out price, is still strong over the last 5 years. But we can say about Taste & Wellbeing, so over the last 5 years, we actually grew 5.4%. So obviously, this is greater than the 4% we had from 2016 to 2020. So you see an acceleration. Yes, there was a bit more pricing, but volume continued to grow. If you go back to your question on the quarter, yes, we don't like to have a minus 1.1% quarter 4 in Taste & Wellbeing.

But again, CAGR is your best friend. We were at plus 10% in 2024. And if I even -- if I look at '23, 3 years CAGR, we're actually in the mid of 5% to 6%. So that basically, again, CAGR is your best friend to understand Givaudan. So going forward, we remain confident on the core business on flavors. We see the strength that we have, and we remain confident that we can grow in Taste & Wellbeing. Obviously, a big reminder that it's pretty obvious. We don't have Fine Fragrances in Taste & Wellbeing. So even if Fine Fragrances accounts for 20% of the division, but when growing at 18% every year, it has a big influence, obviously, on the average. So we don't have something called Fine Flavors. I think that's it with the questions.

The next question comes from Nicola Tang from BNP Paribas.

I just wanted to sort of reiterate Celine's best wishes to Gilles. In terms of questions, coming back on the topic of margins, I hear your comments on pricing -- or inputs and tariffs. Looking more specifically at the divisions, Taste & Wellbeing is still slightly below your sort of 22% to 25% EBITDA margin sweet spot. Do you expect to get that into the sweet spot range in 2026? And can you explain a little bit what some of the division-specific drivers are?

And then a similar question on the Fragrance & Beauty side. I think you've been increasing targeted investments. So do you expect that to step up again in 2026? And can you explain a little bit some of the moving parts on margins for that division? And then I try a bit on Fine Fragrance. Could you give us any more detail in terms of regional performance? And any color in terms of your forward-looking indicators, so your briefing activity in your own pipeline for 2026.

Thank you, Nicola. Thank you for your kind words and questions. Okay. So basically, you want to get a bit more color in terms of the margin evolution between the two divisions. It's true that when you look at what we showed in terms of the average by division, the difference between the two divisions has increased because over the last cycle, you have 3 points of difference between the two divisions when it was 1 point of difference in the -- from '16 to 2020.

I would say some reasons to that. Well, obviously, you have Fragrance, which has grown faster than Taste. So obviously, you have the operational leverage, which is probably the biggest EBITDA margin driver to explain the difference. The second point is, yes, the Fine Fragrance has a bit of mix effect, but let's not overstate it or overestimate it. Then I would say that in terms of evolution, what we are giving is a very clear target on the free cash flow, as you know, greater than 12%. And because we are very nice, we also gave a sort of a sweet spot brand with -- on the EBITDA margin, which is 22% to 25% EBITDA margin for the group without giving a specific target for the two divisions.

Though what I can say is that on the Taste & Wellbeing division, you can see the climbing up the mountain from 20% in 2022 to 21.7% in '25. So we are making progress. We are making progress, and that will continue to be. So thanks to efforts on the product portfolio margin improvement that we have, some of the ingredients that we have outside taste, on colors or on preservatives or other segments. So this is in works, and we are continuing to deploy some efforts at doing that, thanks to Antoine and his team.

I would say that efforts also on gaining efficiencies in the divisions, in operations. So I'm quite, let's say, confident and optimistic to continue the green line that you see on this chart, improving Taste & Wellbeing. We will not give a guidance for Taste & Wellbeing. But actually, the average for the last 15 years has been 21.5% more or less. So can we do better than this? Maybe. Can we be at the level of Fragrance & Beauty? Maybe not. On the other hand, it doesn't mean that Fragrance & Beauty, we'll stand down. There is no reason for this to happen going forward. And we remain confident that we can continue on a good profitable growth for Fragrance & Beauty as well. But again, bandwidth 22% to 25%, and you remember that we always commit on things that we can deliver.

So Fine Fragrances, to give a bit of color on Fine Fragrances. So there are many ways to look at it. Today, we broke really something I would never have expected, I said it. SAMEA for Fine is bigger than North America and LatAm combined. So first, that gives you an idea about the breadth of the portfolio in Fine that we have. But the second element of color, which I think is important because I've seen too many read across, again, of results of some of the lead beauty clients that we have and translated that into projection on the Fine Fragrance business of Givaudan.

Just to give you an idea, just rough numbers because I won't disclose them, but more or less, you have 1/3 of our Fine Fragrance business, which are driven by what we call prestige, which are really brands that you see in multinationals and the ones which are really visible and so forth. This has been growing for us mid-single digits, reflecting the market, but also gaining market share because we are doing very well with that. But that's only in a way 1/3.

The other 1/3 has to do with specialty retail and direct selling, which is a business model itself that you see a lot in the U.S. and that you see a lot in LatAm. This part has also grown mid-single digit. The third-third, if I may say so, has to do all with local and regional clients across SAMEA, across LatAm, across Asia, plus what we call the Haute Parfumerie, the Parfumerie, the niche, where Givaudan is clearly a leader. Many of you who attend the December Fine Fragrance hosting in Kléber in Paris, you've seen some of the presentations, so you have Fragrance actually, which is growing close to 60%.

So that gives you an idea that -- and that part nobody sees because no public reporting for many clients. And that's where also Givaudan is growing very strongly. So yes, maybe some of the multinational, the prices might -- is slowing down. But we have the other part, which is continuing to fuel our growth. So that is your perspective on how broad we are in Fine Fragrance both from a geographic standpoint as well as a channel standpoint and as well as the client standpoint.

But I can tell you, the world is spending better and better. When you look at the whole young generation, Gen Z, Gen Alpha, multi-layering, increasing dosage levels. So that's why -- and we are doing much better than competition. So that gives you a long story about Fine Fragrances, but worth it given the numerous questions we get on Fine Fragrances.

Ladies and gentlemen, that concludes our Q&A session. I would now like to turn the conference call over to Gilles Andrier for any closing remarks.

Okay. So that was our last question. Thank you. So closing remarks. Well, ladies and gentlemen, we are at the end of this results call. Before we close, allow me to take a brief personal moment because that's the only time I can do that and the last time probably.

So after 21 years of engaging with you, analysts and investors, many of you since my beginnings actually, this will be my last results call as CEO. And I really want to sincerely thank you for the many insightful discussions, the challenging questions, but which have always been an inspiration to me to think differently, to think ahead, and above all, for the trust and the support and the enjoyment and fun I had you've shown to Givaudan over the years.

It has been a privilege to share this journey with you, to see our company grow and evolve together with your continued interest and partnership. And I'm confident that under Christian's leadership, Givaudan's story will continue to be one of innovation, purpose and sustainable success, along with our more than 16,000 employees. Thank you again for your engagement and for being a part of this journey.

Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.