At this time I would like to welcome everyone to today's International Flavors & Fragrances third quarter 2009 earnings conference. Just as a reminder, today's call is being recorded. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. (Operator instructions) I would now like to introduce Michael DeVeau, Investor Relations Manager. Please go ahead, sir.

Thank you, operator, and thanks, everyone for joining us this morning. We me on the call is Kevin Berryman, Executive Vice President and CFO, Hernan Vaisman, Group President of Flavors, and Nicolas Mirzayantz, Group President of Fragrances. Our call is being recorded and will be available for playback on our Web site. Please keep in mind that this call we may make forward-looking statements about the Company's performance. These statements are based on how we see things today and may contain elements of uncertainty. For additional information concerning factors that could cause actual results to differ materially from forward-looking statements, I ask you to refer to the cautionary statement and risk factors contained in today's press release and in IFF's filing with the SEC. Some of today's prepared remarks will exclude those items that affect comparability. These items are laid out in our non-GAAP reconciliation, which is also available on the Investor Relations section of our web site. With that, let me turn the call over to Kevin.

Thanks, Michael, and good morning, everyone. Before I begin, I would like to update everyone on our recent executive management changes. As you know, Doug Tough, current CEO of Ansell Limited, has been elected our new Chairman and CEO, effective no later than the end of the first quarter 2010. Until Doug is able to join us full time, we are thankful that he will be able to add value to his role as non-Executive Chairman of IFF. Prior to joining us full time, Doug continues to work through his current commitment to Ansell and its shareholders, while devoting as much time as possible to IFF duties. He is not able to join us today as he is in Europe on Ansell business. We look forward to introducing him as soon as we have the opportunity. Turning to our quarterly results, it is clear that the operating environment in which we do business has improved since the first half of 2009. Specifically, our worldwide local currency sales in Q3 turned positive, growing 2 plus percent year-over-year, an improvement versus our first half decline of 3%. Our continued focus on cost and productivity initiatives has helped provide a year-over-year improvement in operating margin. We continue to manage controllable costs with discipline, which will help support enhanced margin levels as we look to future growth. This continued cost discipline demonstrates our ability to drive organizational efficiency while continuing to support key growth initiatives in each of our businesses. We have improved operational performance, which has strengthened our foundation and set the stage for future success. The end result of the improved top-line dynamics, combined with the continued disciplined approach to our cost structure, has allowed us to report the highest adjusted quarterly EPS in Company's history. I'm very proud of our team. We have the right combination of strategic initiatives, and extremely talented workforce, and a diverse geographic portfolio that will help us capture growth opportunities and create long-term value for our shareholders. I'm now happy to introduce Hernan Vaisman, our Global President of Flavors. He will provide you with additional commentary and insight related to the Flavors business, which continues to deliver strong results.

Good morning, everyone. As Kevin has previously noted, it is clear that the operating environment in which we are conducting business has in fact improved versus the first half of 2009. Flavor local currency sales increased 2% over the comparable 2008 quarter. All regions reported positive results. Overall growth was driven by new wins in North America, particularly in Savory combined with stronger volumes and new wins in confectionary and dairy in the EAME regions. Underlying demand in emerging markets remains strong. However, in beverage, the loss of non-strategic business in Latin America and customer-specific volume weakness in greater Asia did impact results. In North America, local currency sales increased 5%, and we experienced double-digit growth in Savory, driven by new wins and strong demand. Our industry-leading efforts in R&D and creative expertise continue to drive our strong performance. Particularly, Savory has been our most consistent performer over the past few years and has been the main component behind our 17 consecutive quarter of consolidated local currency growth. Looking at EAME, local currency sales were up 1% year-over-year. Stronger volumes growth and new wins in Confectionary and Dairy provided solid results. Our team has done a good job capitalizing on our strong share position in Confectionary to leverage new business opportunities. And while Dairy is a smaller activity for us, I am pleased with the progress our team is demonstrating. We are tracking well against our objective to improve our market share positions as we continue to win new business. Turning to Latin America, local currency sales increased 1%. We did experienced isolated weakness in the beverage category as we look some non-strategic business and we're dealing with the strong comparisons year-over-year. However, going forward, we believe we are better positioned from a margin perspective. Finally, in greater Asia, local…

Thank you, Hernan, and good morning, everyone. Similar to the comments my colleagues have made, we are in fact seeing an improvement in business conditions during the third quarter of 2009. Specifically, our Fragrance business unit has reversed its recent downward trend, and posted local currency sales growth of 3% in the quarter. Importantly, our total local currency sales growth represents the first quarter of year-over-year improvement since the second quarter of 2008. Our team has done an excellent job at managing through a very challenging environment to deliver much improved results. The Fragrance business unit delivered sequential local currency sales improvement in every category except for Fine Fragrance. We specifically saw strong double-digit growth in Fabric Care, in Europe, Greater Asia and Latin America. In addition, toiletries and hair care performed very well in the emerging markets. In Fine Beauty Care, local currency sales decreased 6% as weakness in Fine Fragrance more than offset low double-digit growth in Beauty Care. Within Beauty Care, toiletries and hair care posted solid results, driven by new win performance. Fine Fragrance in the developed markets of North America and Europe, although still declining showed significant improvements compared to first half 2009 results. This change reflects strong new win performance, a significant reduction in customer destocking, along with some underlying improvement in consumer demand. While this is much improved, we do not foresee a recovery to normalcy in the Fine Fragrance market in Q4. As consumers continue to be prudent, and the economy remains (inaudible), we continue to be cautious on the outlook for this part of our business. We did have a stellar performance in Functional Fragrances as local currency sales grew 10%. Importantly, not only did every category within Functional Fragrances post solid results, but we also delivered positive growth in every…

Thanks, Nicolas. On our Q2 Conference Call, we outlined our expectations on four key trends. I would like to now update you on how we measured up versus these previously communicated objectives. First, we communicated that local currency sales trends were expected to improve. Both the Flavor and Fragrance teams delivered improved commercial performance, including continued strong new win success, resulting in 2 plus percent consolidated local currency sales growth. Second, we highlighted that we would see an improving margin picture. This did happen as both the adjusted gross margin and adjusted operating profit margins improved versus the year ago period in the second quarter. Adjusted gross margin improved 70 basis points to 40.7% as price increases, moderating input cost, and cost-recovery and margin improvement initiatives aided results. When combined with strict discipline in the management of our research, selling, and administrative expenses or what we call RSA, and despite the continued currency headwinds, we still managed to deliver 20 basis points of adjusted operating margin improvement. Third, we said we would continue to challenge every aspect of our business in order to improve our business model and cost footprint going forward. And our recent announcement regarding the European facility rationalization confirms that commitment. Fourth, we noted that we would be able to grow EPS sequentially versus the second quarter of 2009. The combination of our improved operational performance as well as some below the line leverage allowed us to do just that. Specifically, interest expense decreased $5 million year-over-year, principally due to the elimination of cost currency interest rate swaps and lower borrowing costs. The effective tax rate, excluding the tax implications related to the European facility rationalization and the executive management change, decreased approximately 110 basis points to 26.8% versus the year ago period. As a result, adjusted…

(Operator instructions). Jeff Zekauskas of JPMorgan has our first question. Silka Koopf – JPMorgan: Good morning, this is Silka Koopf for Jeff. How are you?

Good morning, Silka, how are you? Silka Koopf – JPMorgan: I'm doing okay.

Very good. Silka Koopf – JPMorgan: It seemed there was a lot of emphasis on price this quarter, which also benefited margins. Can you outline what the pricing benefit was in the quarter when we look at your organic 2% improvement in volume on pricing?

Silka, we actually highlighted some of the pricing activity in our second quarter as well. So I don't know that there is an incremental focus on it in this quarter. And as a matter of fact, as we have communicated in the past, our pricing actions that we took, which were kind of at the end of 2008, and in the beginning of 2009, we're starting to lapse some of that. So actually the pricing benefit associated with our Q3 results are starting to decelerate versus the first half of the year. We actually saw volume growth in both of our businesses. And so you can imply from that that the pricing activity is actually declining over time. Silka Koopf – JPMorgan: When I look at like a 2% organic growth year-over-year, is that then 1% volume, 1% price?

Well, I would say we talked about a 2 plus percent number, and I would say that we had talked pricing in the neighborhood of 2.5% in the past. We're down from that level, and we did see relative volume growth versus year ago period. So we're declining in terms of the impacts of price, specifically in the third quarter. And we would expect that that would continue to be reduced in the fourth quarter of this year and again in 2010 as well. So, yes, some slight volume growth for both of the businesses, with the balance being some pricing. Silka Koopf – JPMorgan: Okay. In terms of the food flavor sales in North America, which are very strong, up 5% this quarter, is that sustainable that rate given that fourth quarter trends may be more difficult?

And Silka, you are specifically talking in North America? Silka Koopf – JPMorgan: Yes.

Flavors. I think ultimately it is the level of performance that we have seen in Flavors in North America, specifically, there is a long track record of very, very strong performance. So whether or not this is that much higher than what we have been able to show historically, I'm not sure exactly that's the case. But I think we have a long track record of performing very well in North American Flavors, driven specifically by some strong performance in Savory. I would ask Hernan to add any insight if he feels appropriate. But I think we actually have a strong track record of good solid growth in that particular region in Flavors.

Thank you, Kevin. Yes, I agree with Kevin and we have a very good track record. Specifically, I mean, these track records are coming from new wins as I explained before. So in some way I expect to keep on I mean this trend going forward. Silka Koopf – JPMorgan: Okay. And if I can ask a last question on cost savings and I'll get back into queue. How much of the $17 million to $20 million run rate do you expect to achieve in 2010? I understand that you try to get the full amount by 2011, given that the plants are being shut down and the people will roll off, there should be benefits in 2010 that are measurable? And you can achieve half of that or can you explain if there are any offsets, why you wouldn't see some of these benefits in 2010?

Yes, the bulk of the savings obviously is driven by the plant closure and that ultimately doesn't fully occur until the end of next year. So the bulk of the savings really are going to be realized over the course of the 2011 year. What we said is that we will realize the full benefits in 2011 specifically. There may be some incremental benefits over the course of 2010, but we will have some transition costs as well that could potentially offset those. So we're not calling for a significant improvement in 2010. As we get closer and we see how the transition is playing out, we could provide some better insight. But I wouldn't necessarily count on some substantial improvements in 2010, as it relates to that restructuring, given that the plant closure ultimately happens near the end of the year. Silka Koopf – JPMorgan: Thanks. I'll get back in the queue.

Thanks, Silka.

(Operator instructions). We'll go next from KeyBanc we'll go to Mike Sison. Mike Sison – KeyBanc: Hi, guys, nice quarter.

Good morning, Mike. Thank you. Mike Sison – KeyBanc: In terms of Fine and Beauty, you started to see, looks like in most of the regions except for Europe, some pretty good improvement year-over-year. Has the inventory destocking in Europe started to abate? And then to some degree, what are your customers there talking about in terms of the holiday season? And then when organic sales growth turns positive for Fine Fragrances, how much of a profit impact is that on the business? That's my one nice question.

Okay. Well, look, let's take the European discussion first. Look, in terms of the Fine and Beauty Care part of the business, specifically, Europe and North America were those regions most impacted by the Fine situation. That's where the large customer base is, and so clearly that is where we have seen the biggest pressure points in terms of the Fine Fragrance business. I think clearly the improvement in the Q3 performance is certainly potentially some underlying demand, but certainly a big part of an elimination of destocking. Our customers have continued to act in a way that it appears that there's not much inventory left in the system, and so whether or not there is still an ability to drive down inventories or not is we're not exactly clear. But I think that at the end of the day, we're not necessarily counting on our Fine Fragrance business returning to normalcy for us to be successful. I think Nicolas talked about that in his comments .It's still a fluid situation; it still has implications as it relates to the Christmas season, and what's going to ultimately happen from that perspective. And so it's unclear that we're going to get back to any kind of normal growth environment from that perspective. So I think that would be a high-class part at least from our perspective if we're able to realize growth in that business in the very near future. It does impact our margin profile. It is one of our highest margin businesses. We haven't gone into specifically the implications on what the margin profile is. But as you have seen the mix dynamic over the course of the last 18 months be negative, if Fine would start to become positive in terms of its business, we'd see a positive mix going into different direction. Nicolas any other comments to add?

Good morning, Michael. As Kevin was saying, it is very difficult to predict at this time. We know that the outlook is uncertain at this moment. And Christmas being such a big part of the total year revenue for partners, I think it will be a mixed milestone or barometer to understand the strength of consumer demand in that category. We probably see more destocking happening in the U.S., which is more centralized in terms of the retail landscape than in Europe. So we saw some improvement because of the destocking in Fine Fragrance. Mike Sison – KeyBanc: Okay. Thank you.

Thanks Mike.

We'll go to Oppenheimer's Edward James [ph].

Hi, good morning, Kevin.

Good morning, Ed. How are you doing?

Good. On Functional Fragrance, local currency up 10%. What drove that? Was that market share gains or a big product launch? And would there be any similar lumpiness on the upside in the upcoming quarters?

Yes, I think Nicolas commented a little bit on that in his commentary. I'll turn it over to Nicolas to provide some reemphasis on some of the key drivers.

Good morning. What is important is first of all across all the regions, across all the subcategories within Functional Fragrances, and we had a strong pipeline of new introduction across the board. So I'm pleased to see that it's really across the different categories and across different regions, and across different segments of customers.

Nicolas, just to follow up. I mean the category itself isn't growing 10% local currency. Is it globally?

No, it is not. But we're gaining a lot of market share in that category at the moment.

Okay, great. On the Flavor side, you mentioned some isolated weakness in Latin America and Asia, would like some additional detail there. And one of your competitors I think previously noted that there were some delayed product launches, especially within Beverages. Are you seeing that as well?

Ed, just a couple of quick comments before I turn it over to Hernan. Look, I think that you have to put certainly the third quarter performance also within the context of a long-term historical level of growth that we've been realizing in this business. And there were some isolated pieces that Hernan has alluded to, which impacted the numbers for Q3. We fundamentally believe that the underlying strength of our portfolio and our position in new win performance is going to translate into continued strong growth going forward. Perhaps, Hernan, I don't know if there is any other things to add, but certainly, we're feeling good about our position in that particular part of the world.

In fact, I mean, you explained very well, Kevin. Basically was two isolated cases, one in Latin America, where we decided to walk away from non-strategic business, I mean low-margin business, we decided not to compete in this business. And the other one was specifically in one country in Asia. It was the first time that over-stocking and this customer which is a key for us in Asia, went through de-stocking process. But I think the key elements in this is what Kevin mentioned. I mean we have been growing very fast in the last two years, three years in the Beverage category. It's a key category for us. We were growing at double-digit growth in almost all regions. So the key element here is that (inaudible) to keep on growing.

That's very helpful. What about just the overall market? Are customers delaying any product launches?

Look, I think that our customers have continued to be prudent in terms of the current economic environment of which they've been operating. However, we continue to be seeing a lot of activity as it relates to requests for innovation, requests for innovation relative to becoming more efficient in terms of how we're interacting with them. So, there is a desire for our customers to continue to win, and win ultimately means some level of innovation. Whether or not there is a marked change as it relates to delays, I'm not so sure we could say that in a total affirmation basis, but there are one-off examples of certainly that happening.

Thank you for your help.

(Operator instructions). We'll move next to Lauren Lieberman of Barclays Capital.

Great. Thank you. First, just following up on the questions around Flavors in Latin America and Asia. So first-off, Asia didn't really seem like much of a change in trend to begin with it. So I wanted to know if this sort of isolated weakness has already been in play for several quarters so we're nearing the end of it. And then with respect to Latin America, where there was a significant sequential change in trend, should we think about that as sort of lasting through the flow of top line for another three quarters, until you lap that decision to walk away from the business?.

Thanks for the question, Lauren. I think the actual discussion on Greater Asia is the fundamentals are very strong there. And there just was this one particular issue that has impacted our results. So if anything, we would have been reporting a stronger robust picture for Q3. So that's what we're trying to communicate there. In terms --

I'm sorry, Kevin, but I'm understanding is that in Q1 and Q2, and broadly speaking, demand in Asia has still been pretty strong, right? Recession or no recession, it's been strong sort of throughout. So that business also only posted 1% or 2% growth in the first half. So to what we can see it doesn't look like a change in trend.

And what we're trying to communicate is that there really is a change in trend.

Okay.

This was the last most recent periods because there was unique aspects of Q3. That's what we're trying to communicate.

And then Latin America, should there be that similar kind of drag for the next three quarters?

No, I don't think we're expecting that kind of drag. There are some one-offs that Hernan has alluded to, but we're also seeing good win performance as well. So while we certainly will have some implications of those businesses kind of going forward, they are being quickly replaced and then some.

Okay. And then in terms of margin expectations, gross margin specifically, should we think of this sort of rate of gross margin improvement in the quarter when we look forward, should that be increasing because the benefit of inflation turning to deflation is greater than the winding down of pricing?

Let me talk about Q4 specifically. Q4 tends to be one of our smaller quarters in terms of sales as you know. Let's call the gross margin, at the gross margin line there is some fixed cost absorption issues you need to think about. So the fact that there is less flow through on the top line will have some negative impact vis-à-vis other quarters in the year, just because we have less money flowing through the pipes so to speak. So there is going to be a dynamic there. There will be a positive associated with certainly the input cost continuing to be down, but again, that's going to be offset to some extent by the continuing reduction in the benefits of the pricing as we've talked about. So I'm not so sure the fourth quarter is one where we would be able to say there's a significant acceleration in gross margin improvement versus year ago, although we would expect that we will continue to show improvement.

Okay. And then finally, I was actually going to ask about the traditional seasonality in revenues. Might Q4 be I guess not quite as smaller percentage of the full year as usually is, because retailers and then thus manufacturers are delaying some of their Q4 purchases, right? Everything we hear about is that everyone is sort of being cautious, so orders are getting placed closer to the actual holiday season versus in Q3? And that should also impact your business, and I would think even at this point in the quarter you may be seeing some of that? So --

I think that the bulk of kind of the business that we see that is impacting the fourth quarter actions associated with our customers, specifically in the Fine area, the very, very large majority of that is occurring in the third quarter. There may be some minor stuff that occurs in the fourth quarter, but I would not give you an indication that there's going to be a significant rollover into the fourth quarter as there has been a delay of purchases from our customers. Given the supply chain, most of that is happening in our third quarter. And so I wouldn't necessarily give you a direction that there is a corresponding kick in the fourth quarter as it relates to this delay mechanism, relative to the upcoming holiday period.

Okay, great. Thank you.

Sure.

We'll move on to John Roberts of Buckingham Research.

Could you give us an update on the timing of when Doug Tough becomes fully focused on IFF?

Sure, John. Good morning. How are you?

Good, thanks.

We made the announcement in the beginning of September, and at that point in time, Doug had a commitment with his existing company that he had to give a six-month notice period. And so we are abiding by that process. What Doug is doing is working with the Ansell Board in a deliberate and thoughtful process to ensure that they have an appropriate transition and to help support their shareholders and the dynamics associated with that company. We're abiding by that. We hope that, that process will translate into an ability for Doug to get here sooner as opposed to later, but that's still being worked through. And we respect the requirements that Ansell, the Ansell Board and their shareholders have, as it relates to making sure they are taking care of business, as it relates to the transition. So Doug is currently our Non-Executive Chair, as I mentioned in the preliminary comments, and we're happy that he is here in that capacity. So he is adding value from that perspective, and we would hope that he will certainly be able to be here before the end of the first quarter of 2010. But that's all we can really say at this particular point in time, as they work through that process.

Secondly, I don't know if you can tell us, but are there any major strategic studies underway? Do you have the McKenzie guys inside doing any focused work or anything like that?

Well, look, let me answer the question in the following manner. The change in executive management is not driven by a fundamental difference of opinion, as it relates to our strategies. Our strategies are well-defined. Doug has been a Board member over the last year. He has been involved in those strategic discussions, and so as we sit here today, we're not providing any indication that there is a strategic redirection that's being considered. Organic growth is going to continue to be a very important part of our value proposition to our shareholders. We certainly have shown an ability to do that in the past, and we expect that we will continue to do it in the future. So, clearly, as Doug comes on board and becomes more integrated into our business, we'll be able to work through any potential adjustments as necessary relative to that. But certainly where we are right now and as we have communicated in this call, we're aligned and we're executing fully against that aligned strategy.

Okay. And then maybe a more detailed operational question. The strength that you had in Savory, is that in meat products, or is that in snack foods that have meat flavoring? And I ask that because there has been a lot of volatility in the meat supply chain and I don't know whether that is somehow backing up or affecting Savory flavors.

I would say that Savory flavors has been strong for an extended period of time, but I will say that we've actually seen some strength in some of the meat based as well. We have done some new work in that particular area on beef notes and chicken notes and then we're seeing good traction as it relates to those specific initiatives. So Savory is certainly a big part of the drive, but we have actually seen some success in the other area as well.

Okay. Thank you.

Silka Koopf in line has another follow-up question and they are from JPMorgan. Silka Koopf – JPMorgan: Yes, thank you. So in fragrances if I look year-over-year, I think the sales were down $2 million, and the profits were up $2 million. And what you have told me previously is that your pricing is beginning to weaken and that raw material costs are up, and that there are no benefits from the shut down of these compounding plants until the end of 2010. So how did you do it?

How did we do the margin improvement? Silka Koopf – JPMorgan: Yes, your sales were down, and your profits were up.

Well, we were diligent in terms of some of the restructuring initiatives that have already been discussed in previous quarters. Those are coming through in terms of reduced levels of research, selling, specifically, administrative costs. We have seen continued efficiencies in terms of our factories. We are continually trying to drive efficiency and productivity in that area. And of course, we have some benefits associated with a proactive stand taken relative to pricing in late 2008, early 2009. So all of that translated into us being aggressive and proactive in terms of recognizing the environment, which we were operating in, and ensuring that we had the appropriate cost structure and base to make sure that we competed appropriately, and we're able to deliver margin enhancements in that environment. It hasn't been easy, but it has taken strong effort through the organization. Silka Koopf – JPMorgan: Is this sort of like a target of cost savings from previous restructurings that you are trying to achieve in 2009 that you may have taken out this year?

Yes, I think if you look at the RSA expenses, we keep talking about this $4 million reduction versus year ago kind of numbers. And on a quarterly basis it's $4 million versus year ago. That adds up to some pretty big numbers on an annual basis. And so those kind of expectations we are holding ourselves to in terms of delivering incremental efficiencies into the organization. Silka Koopf – JPMorgan: Like on an annualized basis, that sort of like $16 million, which is similar to what I guess tried to achieve with the new efforts as well.

Yes. Silka Koopf – JPMorgan: Okay. And one question of clarification. Were there any pension contributions in the third quarter? And how much do you expect to contribute in the fourth quarter?

As we noted in the presentation, Silka, we have a very strong cash flow that we've been able to realizing over the course of the first nine months. It's putting us in a position where we're feeling comfortable about some incremental contributions to the U.S. plant specifically. We're in the evaluation process as it relates to that, but we're thinking in the neighborhood of $20 million incremental contribution in the fourth quarter. Silka Koopf – JPMorgan: That's all I have. Thanks very much.

Mike Sison of Keybanc has a follow-up question as well. Please go ahead. Mike Sison – KeyBanc: Hey, guys, quick follow-up. Kevin, in terms of your outlook for the fourth quarter, you talked about sort of returning back to the long-term goal in terms of EPS growth and that has historically been 10% plus. For the fourth quarter of '08 you did $0.62, but at $0.12 sort of special items. So are you using the $0.62 or the $0.50 to grow that sort of that outlook in earnings for the fourth quarter?

When we talk we're always talking on an adjusted basis, Mike. Mike Sison – KeyBanc: Okay. So the $0.50. Then in order to hit that 10% plus growth, you've talked about historically that you need to grow local currency 4% plus. So is that sort of the general outlook for growth for the fourth quarter, to achieve type of earnings growth?

No, we didn't specifically give an indication of growth other than it was going to be positive. But we think that those objectives that we've talked about in the past are kind of longer-term dynamics and objectives that we are pointing to, Mike. They don't necessarily mean that that's what’s going to happen in the fourth quarter specifically. And given the dynamics of reduction in our cost structure and the pricing activities that have been taken, there are some unique circumstances that are occurring in the fourth quarter versus kind of what be historically the norm. So don't necessarily assume that, that kind of falls into the longer-term picture. Mike Sison – KeyBanc: Okay. Great. Thank you.

Eric Sjogren of Morgan Stanley has our next question.

Yes, hi, this is Eric Sjogren from Morgan Stanley here.

Hi, Eric.

Hi. I had three quick questions. First, could you comment a bit on customer behavior if you split it between your global (inaudible) national customers and your local ones, in terms of stock levels and innovation trends et cetera? Is there a valid split between those two? And secondly, on your cost realignment plans, is there also within this an intention to move towards kind of a product realignment? I'm thinking here more specifically about Fragrance Ingredients which has been volatile. Are you moving away from lower-margin products here? How should we some kind of portfolio rationalization impacting the sales over the next couple of quarters? Would there be any margin impact from that? And then finally, I just wanted to know on the working capital improvement, to what extent, is this driven by low raw material costs and/or actual volume decreases in the actual inventories? Thanks.

Okay. I'll take your three headed question in the order. As it relates to customers, I don't know that we would distinguish specifically between how some of the global players are playing versus the regional players other than the fact that it's very clear in our mind that many of the large consumer packaged goods companies as they are approaching their business today are rethinking about how to drive volume. Certainly, they benefited from taking pricing actions, historically speaking, and they feel as if it's important given the economic environment, which they are competing to be probably a little bit more focused on driving volume growth. We think that actually bodes well for us as we continue to work with them to help support that volume growth. In terms of the product realignment, we do that all the time actually. We're always focusing on evaluating our current portfolio of materials and whether or not there is lower margin items that we should consider exiting. And so that's an ongoing process that we have. So I'm not so sure that there's an incremental piece that we're facing. And then finally on working capital, certainly, the costs of raw materials coming down and help support. But as a matter of fact, at the end of the day, the material driver to our inventory levels are actually lower volumes in terms of the actual levels inventory.

Okay. Great. Thank you very much.

Go back to Lauren Lieberman of Barclays Capital.

Thanks. Just a quick one. Ingredient sales, I had sort of asked this offline when you guys talked about ingredient sales being one of the expected contributors to this quarter's better performance. So, looking forward, I have always wondered if seeing Ingredient sales pick-up can be thought of a precursor to a pick-up in compound sales. I know that business is generally lumpy overtime. But I thought maybe in this environment it may actually be a sort of leading indicator. So can you comment on that and sort of what you are seeing in terms of Ingredient sales at this point of the fourth quarter?

I would say I hope you are right in terms of the precursor. I think that in general, our businesses, as both Hernan and Nicolas have described, are started from a strong perspective off to a good start. And hopefully that will continue. But whether or not that's going to be ultimately a precursor, I certainly hope you are right. But I'm not exactly sure that that will be the case. I think at the end of the day, we're seeing is that destocking in the categories of our customers is certainly coming to an end, and that's having an ability for us to have a more reasonable kind of growth dynamic going forward. So there's still a lot of noise in those numbers, Lauren, because of that destocking versus non-destocking issue.

Okay. Great. Thanks so much.

Sure.

From Granahan Investment Management, we'll go to Susan McGarry.

Hi, I just want to revisit a previous question, and that was about product launches, Because a couple of companies in your space are serving similar customers have made a distinction between product development activity and product launches. And they have said that they definitely seen their customers being much more conservative on product launches. So I just wanted to be clear about what you have been seeing about launches versus product development. And then second part of the question is about competitive wins, and I'm curious about who you are gaining share from? Thanks.

Look, let me make the point in terms of the customer activity and level as it relates to their product launches. Clearly, as we said, they are being prudent in terms of their introductions. There's no doubt about it. And I think that there has long been a desire to throw out innovation out there and have new items every other moment. And I think that there is certainly a belief that they need to be thinking about being a little bit more thoughtful as it relates to that. I do think though that there is still continuing to be innovation and a desire to drive business, so I wouldn't necessarily disagree. I guess maybe the context of your question is effectively there's a nuance associated with it, but certainly customers are being thoughtful. I'm going to say (inaudible) word I would use as it relates to how they are approaching the environment in which they are competing today.

Okay. And on market share competitive wins?

Well, look, at the end of the day, it's difficult to say because there is not exactly great information as it relates to the industry information. But given the number of opportunities that are presented to us and given our win rates as it relates to those opportunities, the percentage is certainly greater than our current expected levels of share. So that's translating into us winning longer-term.

We have time for one more question.

And actually it appears that was our last question. I will turn the conference back over to you for closing remarks.

Great. Well, look, thanks everyone for spending some time with us this morning. As you can tell we felt pretty good about the ability for us to drive some improvements in our margins and growth for this Q3 and we hope it's a harbinger of things to come. So we look forward to following up and seeing you soon as it relates to further discussions on IFF. Thanks for the time.

And again, that does conclude today's conference, and we thank you all for joining us.