At this time, I would like to welcome everyone to the IFF Q4 and full year 2019 earnings conference call. All participants will be in a listen-only mode until the formal question and answer portion of the call. To ask a question at that time, please press star one on your touch-tone phone. If you would like to remove your name from the queue, please press the pound key. Participants will be announced by their name and company. In order to give all participants an opportunity to ask their questions, we request a limit of one question per person. I would now like to introduce Michael DeVeau, Head of Investor Relations. You may begin.
Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to IFF's Q4 and full year 2019 conference call. Yesterday evening, we distributed a press release announcing our financial results. A copy of the release can be found on our IR website at ir.iff.com. Please note that this call is being recorded live and will be available for replay on our website. Please take a moment to review our forward-looking statements. During the call, we will be making forward-looking statements about the company's performance, particularly with regard to the outlook for the Q1 and full year 2020. These statements are based on how we see things today and contain elements of uncertainty.
For additional information concerning the factors that can cause actual results to differ materially from our forward-looking statements, please refer to our cautionary statement and risk factors contained in our 10-K filed on February 26th, 2019, and in our press release. Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability. A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in our press release that we issued yesterday and is posted on our website. With me on the call today is our Chairman and CEO, Andreas Fibig, and our Executive Vice President and CFO, Rustom Jilla. We'll begin with prepared remarks and then take any questions that you may have. With that, I would now like to introduce Andreas.
Thank you, Mike, and a very special welcome to Rustom, our recently appointed CFO, who joined us about three weeks ago. We could not be more excited to welcome him to the IFF team, as he brings a strong track record over 30 years of operational and financial leadership across several international markets with significant experience in managing global finance teams, developing strategy, driving efficiency initiatives, and completing acquisitions. Welcome, Rustom. I would like to take the opportunity to thank Rich O'Leary for his service as our CFO and looking forward to his contributions as our integration lead for the DuPont Nutrition & Biosciences combination. He has deep institutional knowledge, insights, and perspectives, both financially and strategically, and will be enormously valuable as he takes on his new role as our integration officer.
On today's call, as usual, I will give an executive overview of our performance for the Q4 and full year 2019, including an update on the progress we are making with the integration of Frutarom. Following the discussion, I will ask Rustom to provide a financial review of the business and take you through our financial expectations for 2020. We will also recap IFF's transformational journey and the exciting opportunities we see with our combination with DuPont's Nutrition & Biosciences business, which we announced in the Q4 2019. Upon the completion of our prepared remarks, we will take any questions that you may have. Let's come to 2019. 2019 was a transformational year in IFF's history. It can be categorized as a year of great progress despite some challenges.
Over the course of the year, there were many positive accomplishments, including the development of our new strategy, strong progress against our integration synergy targets, unlocking incremental access to new businesses via core lists, and announcing our combination with N&B, unparalleled in our industry, as it will broaden our product offerings and create a global leader in innovative integrated solutions. I've also to acknowledge that there were several challenges, like continued raw material cost increases, impactful end market dynamics like de-stocking, isolated sales pressure, including delayed launches and dis-synergies, as well as the Russia and Ukraine compliance issue, which I'm pleased to say that has now been fully completed and closed. In that context, we surpassed $5 billion in sales for the first time and expanded adjusted operating profit margin, excluding amortization, a testament to our team's focus, dedication, and commitment to delivering strong results and executing our long-term strategy.
We ended 2019 with meaningful growth in the Q4, seeing 7% currency-neutral revenue growth, including the four percentage points related to the 53rd week. We also achieved currency-neutral adjusted EPS growth of 23%, excluding amortization, led by volume growth, integration synergies, productivity initiatives, the Brazil tax recovery, as well as more favorable tax rate and higher other income. In the Q4, the team was able to continue to exceed expectations on Frutarom cost synergies, capturing approximately $20 million cost synergies driven by procurement harmonization and manufacturing optimization. This very sustained focus across the organization ultimately positioned IFF to accelerate our vision through the announced combination with DuPont N&B business at the end of the year. The exciting combination will allow us to develop integrated solutions with greater global scale to meet what our customers demand, high quality products, innovative solutions, and strategic partnerships to deliver growth.
Let's take a step back and look at the full year 2019. I'm pleased to say we delivered solid top and bottom line results in a very challenging environment. We realized sales of $5.1 billion, expanded adjusted operating profit margin, excluding amortization by 30 basis points to 19.2%. We also delivered strong adjusted earnings per share, excluding amortization of $6.17, principally led by adjusted operating profit growth, realized synergies, and improved productivity. Ultimately, we had many strategic accomplishments that built momentum throughout the year and drove significant value creation. Our investment innovation include the opening of IFF Centers of Excellence and innovation hubs in New Jersey and Texas.
Specifically, our new Center of Excellence for food service and seasonings in Carrollton, Texas, the opening of our home and fabric innovation center at Bell Works in Holmdel, New Jersey, and the openings of our global service center in Budapest and L'Atelier du Parfumeur in Grasse, France, reflects our commitment to environmentally responsible real estate development. We also modernized our largest creative centers in New York and Paris, and continued our investment in Greater Asia, including two new plants in India and China, which will be completed in 2020. We took another bold step forward in leading our industry on sustainability when we articulated IFF's new purpose, to redefine and transform how we live and care for the resources of the world.
In line with this mission, we accelerated our global industry leadership in sustainability, opening the industry's largest solar array of our facilities in New Jersey, and signing on to the United Nations pledge to help limit global temperature rise. Most recently, IFF was named once again to CDP's A List for Climate Change and Water Security, placing our company among a prestigious group of global environmental leaders with double A distinction. Just a week ago, we were named to Barron's 100 Most Sustainable Companies list for the third consecutive year. Throughout the year, we continued to complete the important work of bringing our colleagues at Frutarom more fully into the IFF family. We have addressed the most significant outstanding challenges related to bringing these businesses together, and are now in a position to accelerate growth by capturing new opportunities and delivering the solutions our customers need.
Perhaps most importantly, we have continued to achieve significant cost synergies throughout the integration process. Well ahead of our year one cost synergy target, including approximately $50 million cost synergies in 2019. This mainly driven by procurement excellence, but we also have made progress on our operational footprint. We have closed 10 sites in 2019, and I really believe we are on track to deliver more than $145 million in synergies, further supporting the business and driving value to our shareholders. We expect to substantially complete the Frutarom integration by the end of 2020. The efficient operational execution was complemented by solid year one run rate revenue synergies of approximately $15 million. We've identified a strong pipeline of cross-selling opportunities of more than 1,000 projects, representing approximately $150 million of sales, and plan to build on this momentum in 2020.
We have accelerated the expansion of our Tastepoint model to serve the fast-growing local and regional customer segment through increased speed and agility, enabling them to win in the marketplace. We will fully consolidate Frutarom into our legacy IFF business. As we refine our structure and reporting, we're aligning our talent, organization, and responsibility based on our new structure. With this in mind, starting in Q1 of 2020, we will report financial results as Taste and Scent, incorporating most of Frutarom within our Taste segment. Lastly, we continue to generate strong cash flows as operating cash flow was up $261 million year-over-year in 2019. We continue to deleverage our balance sheet, improving our net debt to EBITDA ratio from 3.6x to 3.2x , putting us on track to deliver on our commitment to be below 3x by the end of 2020.
With that, I would like to turn it over to Rustom to take us through our financial performance in greater detail.
Thank you, Andreas. First, let me say how delighted I am to have joined IFF at this exciting time as we move past the integration of Frutarom, to the combination with DuPont's N&B business, and the many opportunities and challenges this will bring. For my part, I expect to focus on, first, improving execution and accountability. Second, enhancing effective collaboration across the business. That's legacy IFF, Frutarom, and soon N&B. Third, strengthening our cost discipline. Finally, delivering solid ROI. Now, on to the numbers. Reported sales increased by 29% in 2019, with three additional quarters of Frutarom being the major driver. Excluding Frutarom, currency neutral sales grew 3%, with 2019's 53rd week contributing 1%.
I'll provide more color on sales by segment as we go through those slides. Our full-year adjusted operating profit margin, excluding amortization, rose by 30 basis points, driven by productivity initiatives, acquisition-related synergies, and a Brazilian tax recovery. Also worth noting that in our Q4, our currency neutral EPS ex-amortization grew a robust 23%, driven mostly by acquisition-related synergies, volume growth, lower incentive compensation, a Brazilian tax recovery, and a lower effective tax rate, which more than offset a headwind from higher raw material costs and mix. As the IFF team has done in previous quarters, I would like to highlight the impact of emerging market pricing on our growth rates to better compare to our peers.
As a reminder, for a variety of reasons, many of our sales transactions in the emerging markets occur either in U.S. dollars or other hard currencies, or are indexed to hard currencies when we have to invoice in local market currencies. When reporting our currency neutral sales growth, we exclude foreign exchange related price changes in emerging markets. This is different from our peers. We believe that our reporting standard provides investors with a truer assessment of underlying currency neutral growth, especially when there are large emerging market devaluations relative to the U.S. dollar or EUR. However, it's important to help all of you understand our performance relative to competition. For the Q4 of 2019, the stronger U.S. dollar environment, plus emerging market devaluations year-over-year in several key markets, had approximately a 1% currency impact on growth if we include emerging market pricing.
For the full year, this impact represented approximately a 2% currency impact on growth. Breaking it down a little further, let's move on to scent on slide 11. In the Q4, currency neutral sales increased year-over-year by 6% to $478.3 million. Q4 performance was strongest in consumer fragrance, increasing in the high single digits from the prior year, driven by growth in home, fabric, and hair care. Fine fragrance grew in the mid-single digits year-over-year, led by double-digit growth in both Greater Asia and in Latin America. At the same time, fragrance ingredients declined in the low single digits from last year, as price increases were offset by volume declines, mainly as a result of industry destocking. For the full year, currency neutral sales increased by 4% from 2018 to $1.9 billion, with growth across all regions and in all categories, especially those that are a strategic focus.
Both fine fragrance, with record new win contribution, and consumer fragrance grew in the mid-single digits from 2018. Our performance in fine fragrance was driven by double-digit growth in EMEA and Greater Asia, while, as in the Q4, consumer fragrance was led by strong improvements in home and fabric care. For the year, fragrance ingredients improved by low single digits, driven by price increases. For the full year, currency neutral segment profit grew 6% and margin expanded 30 basis points to 17.3%. Drivers included raw materials-driven price increases, as well as benefits from productivity initiatives that ran the gamut from manufacturing, procurement, and make versus buy to innovation. Moving on to taste on slide 12. In the Q4, currency neutral sales increased year-over-year by 8% to $429.9 million. This performance was led by double-digit growth in Greater Asia and high single-digit growth in North America.
Sales to multinationals, which had been under pressure in the last few quarters, grew mid-single digits, indicating an inflection point in Q4. We also saw much stronger growth from regional and local customers. From a category perspective, we were strongest in beverage and savory, helped greatly by strong new win performance. For the full year, currency neutral sales increased by approximately 2% to $1.7 billion, driven by high single-digit growth in Greater Asia and low single-digit growth in EMEA. As discussed during the year, we had some challenges in North America and Latin America related to volume declines with multinational customers. As in the Q4, full year 2019 growth was strongest in beverage and savory. For the full year, Taste posted an industry-leading 22.1% segment profit margin with $383 million in segment profit, which was supported by productivity increases, integration-related synergies, and lower incentive compensation expense.
Let's move on to Frutarom's performance on slide 13. In the Q4, Frutarom currency neutral sales increased year-over-year by 6%, including the net contribution of acquisitions and divested businesses, which is a sequential improvement in underlying performance. Organic currency neutral growth for the quarter was 2%, essentially led by our taste and savory businesses. As discussed in past calls, Frutarom experienced compliance and portfolio-related transitory headwinds. Excluding these, organic currency neutral growth would have been 6%. For the full year, sales were $1.5 billion for the segment, up 3% on a currency neutral basis from the prior year, including the net contribution of acquisitions and divested businesses. In 2019, organic sales growth was flat, if you exclude the transitory issues, organic currency neutral sales growth was 3%, driven by solid growth in taste and savory solutions.
The fastest growing categories at Frutarom include double-digit increases in food protection, inclusions, and algae. For the full year, Frutarom's segment profit was $127 million, or $286 million excluding amortization, and we finished the year with a strong quarterly segment profit increase of 24%, led by acquisition-related synergies. The full-year operating margin, excluding amortization, was 19.2%, supported by delivering on our acquisition-related synergies and by disciplined cost management. Slide 14 provides some additional color on cash flow. As you will see, operating cash flow for the full year was up significantly from $438 million in 2018 to $699 million this year, a $261 million or 60% increase. This was driven primarily by higher cash earnings from Frutarom, with Frutarom included for the entire year. Core working capital defined as inventories, accounts receivables, and accounts payables improved year-over-year with progress in all three metrics.
Inventories still remain at elevated levels, primarily due to raw material cost increases and safety stocks within the scent division. In the Q4, we saw continued positive trends. For 2019, CapEx as a percentage of sales was approximately 4.6%, which is a significant investment in the future. Throughout the year, we made new plant and capacity investments, mainly in Greater Asia, as well as creative centers, and we invested in high return integration-related synergy projects such as manufacturing optimization. Bringing all this together, we had a strong $195 million increase in free cash flow for 2019, representing a 73% increase year-over-year. Moving on to slide 15. We expect full year 2020 sales of between $5.15 billion and $5.35 billion, with adjusted EPS excluding amortization between $6.20 and $6.45.
At this point in time, we expect a modest impact on sales from the recent coronavirus outbreak, but we are unable to quantify this as there are just too many variables and uncertainties. In addition, we have already incurred some relatively modest costs related to the outbreak as we acted to mitigate the impact on our supply chain. Right now, it's too early to quantify the impact on our results, but we did widen both our sales and adjusted EPS ex amortization guidance ranges to make some allowance for this, as well as for continued volatile operating environment. The next slide provides some additional color about what we expect to drive our core sales growth for the year. Looking into our 2020 sales growth expectations, and given the several moving parts, we felt it was important to give you an overview of the drivers.
As you see from this slide, sales growth for 2020 is expected to be approximately 1%-5% on a currency neutral basis. This includes a headwind of about 0.5 percentage point impact from portfolio adjustments, namely the carryover impact from compliance and CitrusSource, an estimated 1 percentage point impact related to the 53rd week in the prior year period. Excluding these impacts, our core currency neutral sales growth is expected to be approximately 2.5%-6.5%, which includes approximately 2%-5.5% from the organic business, 0.5%-1% from cross-selling, and little to no impact from M&A. Now let's move to slide 17 for some additional color on what is driving our EPS growth. Adjusted EPS, excluding amortization growth for 2020, is expected to be approximately 3.5%-7.5% on a currency neutral basis.
This includes a headwind of approximately 5 percentage points related to an incentive compensation reset, which is due to our performance versus our internal budget in 2019, an anticipated 0.5% impact due to the portfolio adjustments, and an estimated 1 percentage point impact related to the 53rd week in the prior year. Excluding those impacts, core currency neutral adjusted EPS ex amortization is expected to grow in a range of 4%-8%. We also expect to have a 6% positive contribution from integration synergies, which when added to our core growth, puts us in the double-digit growth range. Moving on to slide 18. I'm pleased to tell you that we remain on track to deliver on our commitment of delevering down to below 3x net debt to EBITDA by the end of 2020 while maintaining an investment-grade rating.
We're already down to approximately 3.2x , down from 3.6x a year ago. We will continue to focus on improving working capital, tightly managing our CapEx while making the necessary investments, and of course, growing our cash earnings. To further support achieving this goal, management incentives are aligned to repayment of debt. With that, let me turn the call back to Andreas.
Thank you, Rustom. Very well done. I now want to spend a few moments in highlighting the evolution of IFF from a traditional leader in the flavor and fragrance space, to now sit uniquely positioned to redefine our industry at the time when consumers' demands are forcing changes across our customers. With Frutarom, we took the first big step. We can now reach one of the broadest set of our CPG customers of all sizes in the world, and added critical depth to our position as a top provider of flavors, savory solutions, and natural taste solutions. As I mentioned, we are seeing some excellent cross-selling opportunities, further supported by our Tastepoint model. With N&B, we take the next leap forward in delivering integrated solutions that allow us to partner with our customers to solve their most pressing problems. It is a truly powerful combination.
IFF's leadership in natural solutions and N&B's leadership in clean label, including cultures, enzyme, and soy proteins, will be a vital component in creating solutions that meet customer needs for better-for-you products. Our complementary product portfolio will be among the most balanced in the industry. Together, we will have number 1 or number 2 positions in the high-value, most in-demand ingredients categories across our shared end markets of food and beverage, health and wellness, and home and personal care. Ultimately, what we are doing is strengthening IFF's position to serve our customers. We are witnessing powerful trends that are forcing all of us to think differently. We have received very positive customer feedback about that combination. We will be a very powerful leader with even better R&D and application development capabilities, and even deeper and more robust product development pipeline.
In addition to a portfolio that will be among the most balanced in the industry. Importantly, our shared cultures, led by science and creativity, will drive our strengths to unlock the potential of this combination. Again, it's really about how we can deliver highly compelling value propositions to all of our customer types. For many of our global multinational customers, we will bring deep experience with high growth segments, faster speed to market, and very deep consumer insights. For local and regional organizations, we will provide global reach to support regional and/or global expansion, paired with a strong local presence and a culture of collaboration. For new brands, we will be their end-to-end partner from idea to production, providing the reliability of scale and the power of global reach.
The opportunity before us is clear and compelling, and we are taking the right steps to ensure that we are positioned to bring these two businesses together as efficiently as possible. As we announced along with Rustom's appointment back in December, Richard O'Leary has been named as the lead the N&B integration efforts for IFF. Similarly, Angela Naef, N&B's SVP of Global Tech and Innovation, will oversee the N&B integration lead. Each brings unparalleled knowledge of their respective businesses and a diverse operating perspective to this team. We believe that their combination of experience and leadership best positions us to bring this combination to life. As I have had the opportunity to meet with leaders from across the N&B business, each of these conversations has reaffirmed that IFF and N&B are perfect partners.
While we look forward to hitting the ground running, the deal close is targeted for the Q1 of 2021, providing significant runway for planning and integration-related execution. As you can see, we have already been diligently working on planning to execute our roadmap to integrate these businesses. On slide 22, we are showing that while our N&B integration planning has started and is working in parallel with our ongoing Frutarom integration work, we do expect the business integration work of Frutarom to be completed in the Q3 of 2020, with 90% of the manufacturing consolidation complete as planned. This ensures that we are ready to begin the DuPont N&B integration. We will tap the combined integration muscle of both IFF and N&B, along with robust external subject matter experts.
In summary, we delivered solid top and bottom line results and took clear and significant strategic steps on our journey to lead our industry as an invaluable partner for our customers. In 2019, we surpassed $5 billion in sales for the first time, and expanded adjusted operating profit margin, excluding amortization by 30 basis points. I'm pleased that we ended the year with a significant acceleration in growth, seeing a 7% currency neutral revenue increase and a robust 23% increase in currency neutral adjusted EPS, excluding amortization. Reflecting on the year, we have lots to be proud of. Our key accomplishments include significant integration related synergies, strong progress in cross-selling, great strides in sustainability, and completion of the Russia and Ukraine compliance issue.
At the end of the year in the Q4, we also saw fundamental improvement in our taste segment, a key inflection point as we head into 2020. I also want to acknowledge that not everything went in our favor in 2019. We experienced significant raw material cost increases across both segments, and sales came in lower than expected across all segments for the various reasons we explained earlier. As we look ahead in 2020, leveraging the key learnings from 2019, our priorities are very clear. Drive growth and profitability in our business, substantially complete the Frutarom integration, and lay the groundwork to begin successfully combining with N&B. With continued focus on execution, we will be well-positioned to become a global leader in innovative, integrated solutions and be able to deliver value creation for all of our stakeholders.
While we are early in 2020, we are pleased to say that start of the year strong was growth in all segments. With that, I would like to open it up for questions.
At this time, if you would like to ask a question, please press the star and one on your touch-tone telephone. You may withdraw your question at any time by pressing the pound key. Once again, to ask a question, please press the star and one on your touch-tone phone. We'll take our first question today from Mark Astrachan with Stifel. Your line is open.
Thanks. Morning, everybody.
Hey, good morning, Mark. How are you?
God, great. Thanks. Two questions from me. First, on the sales forecast range, so it's a bit wider than we're accustomed to seeing. It's a bit wider, I think, too, relative to some of your peers. I guess I'm curious why you're giving a wider range. I hear the China commentary, but was under the impression it wasn't particularly large as a percentage of business. Is there something from a macro standpoint, is there something from a customer standpoint that you're hearing or worried about? The second question is Frutarom. I get organic growth for Q4 of down about 4% if you back out the acquisition contribution and the pieces of the business from the closing of the prior year that you didn't own for the full quarter. That gets a full-year number down about 1%.
I guess the question there is, you've owned the asset now for a little over a year. What's a reasonable run rate of growth? You've talked about 6% as that target longer term, but it just seems like that's not the case anymore. Maybe you're still thinking six, but if you could kind of walk through how you're thinking about it, if that's the case, or what are the moving parts today, that'd be helpful.
No, Mark, thank you. First of all, on the guidance range, that was certainly a discussion we had internally. What do we do in an environment where we are in, which is pretty, let's say, volatile? It's on one hand, certainly the coronavirus situation, and I come to that in a second, and then also tariffs, which are not easy to plan. Coronavirus was probably the tipping point for us because it's very hard to quantify, but we know that it will have an impact. We had all manufacturing plants actually closed up to last Monday, Tuesday, where we opened it. We have relatively soft demand. We will see whether we will make it up. We have seen that we have also modest cost increases already, particularly on transportation.
We have to make sure that we manage our inventory well in this situation because you have, let's say, disruptions in the supply chain. One of our bigger customers also said that travel retail is actually pretty down because people are not traveling too much any longer. Just to give you one very personal example, my family came back from Europe yesterday. My wife told me in Frankfurt at the border control, there was nobody else. The airplane was a smaller one than before, and it was just half booked. Just as to validate what we are saying and reading. We said it's probably a prudent thing to widen the guidance range because we just don't know. We hope at least that we will make it up.
As I said, our manufacturing plants are open again, and we're starting to manufacture, and it seems to be all good. That's how we see it, and I hand it over to Rustom to talk a bit about the guidance.
Sure. Thanks. Thank you, hi, Mark. Very little to add there except specifically we didn't quantify on the coronavirus because it's too early. It's just too early to tell and understand it. What we did do was widen the ranges, we can come back at some point subsequent in the year as we know more.
Yep. Let me take now your second question on Frutarom. We believe when we cycle through, as we said, probably over the course of last year, through some of the one-time effects we see that this business has good potential of mid-single digit growth in average, and I come to some of the exceptions here. Where we have to cycle through is our compliance issues, issue we had in Russia. Thank God it's solved on the legal front. Now we have to make sure that on the business side it's running well. The second thing is the Citrus where one of our peer companies lost their big customer and they are our biggest customer in that business. Then we had the impact on raw material prices on natural colors.
We believe that within the Q2 we will cycle through these effects, and we will grow this business around about mid-single digits. If you look at the different categories, some of these businesses are doing extremely well and have even double-digit growth like inclusions, where gelato is part of it, and the food protection business. We are driving this, and we see also that these businesses are helping us with our cross-selling activities, which is basically reflected in the guidance, by the way. Most of it's a Frutarom business. Okay?
Thank you. We'll take our next question from Mike Sison with Wells Fargo. Your line is open.
Hey, guys.
Hey, Mike.
Just wanted to get a little bit of color in terms of what's driving the growth of 2.5%- 6.5%. I know you have nice little color columns there. In terms of the organic business, can you maybe walk through, I think you've won some business in taste or maybe it's scent, I can't remember. What gives you confidence that you can actually grow organically in 2020?
Yep, okay. Absolutely. I take it with Rustom, you add here. First of all, as we said before, we have basically access to three more very important callers on the scent side. What we see is that the team is executing with the customer very closely now on new projects. We will see already some good wins in 2020. The bulk of it will probably come in 2021. We see that this is working out very well. I watched myself at the big Congress ACI, the American Cleaning Institute, and I talked myself to many customers and particularly the ones where we have won the new callers. That's very positive because they're happy with the innovation provided by IFF and the projects are already starting to ramp up. That's number one. Number two, and that was super important for us last year.
We saw the inflection point now with the Taste business. We had basically three, almost four quarters, not so great growth. It was Q4 in 2018, then up to the Q3 in 2019. We saw that many of our bigger CPG customers had very slow volumes. Not that we were losing businesses, just the volume was very low of our business with these customers. We had, on the other hand, a very good win rate over the course of the year. That started to materialize now in the Q4. We see already a good start into the Q1 as well with good January numbers. It looks like that we are coming back on the Taste business to our usually average growth rates.
When I go back here on my spreadsheet, the last three years, the average CAGR was 3.9, last five years, 3.7. That's certainly the number the business can achieve. On top of it, we look at the Food Home business. I just gave the answer to Mark. It's a bit backloaded in general because of the cycling through of the topics I just mentioned. What comes on top of it, we see actually a good activity now on the cross-selling. It started slower than we expected, but right now we have around about 1,000 projects which have significant value for us, where we see that we can combine products, that we can cross-sell products into combined customers. That's something which is really good and gives us confidence that the growth will be good in our core business over the course of 2020.
That's how we see it. I don't know, Rustom, whether you want to add anything.
Just one thing, probably in pricing, in scent pricing.
Good point.
Fragrance ingredients, but otherwise, I think you covered it all.
Okay, great.
We will take our next question from John Roberts with UBS. Your line is open.
Thank you. Welcome, Rustom. That was a good presentation for somebody only on the job a couple of weeks.
Thank you.
Now that the year one guarantees have expired for the key Frutarom employees, are you seeing any increase in turnover?
Yeah. John, that's a very good question. Let me address it into two parts. The first thing, if I look at total employee population of legacy Frutarom, we have actually lower attrition rates, voluntary attrition rates than we had before, which is actually pretty good. Knocking on wood, it stays like that. On the key employees, we didn't lose key employees we didn't want to lose. That's a good, let's say, message for us as well. Some of them are driving important businesses for us. For example, the leader of the inclusions business, which is really driving it, the savory solution business. They're all leader from the legacy Frutarom unit.
Okay. Do you have any update on the timing of a filing for the DuPont deal? Just remind us, what are the key long lead time critical items on the path to closing on Q1 2021?
Sorry?
John, this is Mike. There's no change from what we communicated back in December. As we progress through this year, obviously, there's this separation component that the DuPont team is working on from that standpoint. As we progress concurrently, we're working to look at doing the appropriate filings with the SEC, specifically the Form S-4. That will probably come, let's call it mid-year, and then after that, we'll move into the voting discussion.
Closing has not changed. We believe that Q1 next year is very realistic, and we don't expect any antitrust issues here with the two businesses.
We'll take our next question from P.J. Juvekar with Citigroup. Your line is open.
Yes. Hi, good morning.
Good morning.
My question is on taste. North America was challenged due to volume erosion from large multinational companies. I thought that destocking in packaged foods was mostly done by end of Q3. Is there incremental destocking or is this issue with underlying demand with these multinational companies? Thank you.
I think, P.J., good question. We are done with destocking for, let's say, Q3 last year. Q1 was already done. I think that has reflected very nicely in the rebound of our business in the Taste division. We are very happy with that.
My second question is, one of your priorities was getting IFF's technology into Frutarom and the cross-selling you had talked about. Can you give us an update on that and if that's happening through Tastepoint? Thank you.
Yes. Absolutely. It's happening through Tastepoint, and we're doing it for some of the bigger customers as well. What we see here is, in particular on the food protection side, very good sales. Food protection is basically antioxidants to increase the shelf life. That's something where cross-selling works very well. We see it in the first examples on natural colors and on the inclusion business, which is the legacy Taura one. We see it in the number of projects. As I mentioned, we have around about 1,000 different projects running with a value of more than $100 million. Not all of them will hit certainly this year, but it shows the strengths. If I would look back maybe a year and a half, I would have hoped it comes faster.
I have to say now, since we are having a really dedicated good team on it and exploring it more, it comes much better than we have expected. A little slower than I would have wished for, but higher in terms of the opportunities than we have seen before. I hope it helps, P.J.
Thank you. We'll take our next question from Faiza Alwy with Deutsche Bank. Your line is open.
Yes. Hi, thanks. Good morning.
Good morning.
I have two questions. One is just on gross margin. It looks like you took a step back this quarter, and I was expecting an improvement. Maybe if you could share with us what some of the puts and takes were there, and how we should think about raw materials and gross margin in 2020. My second question is just if you could give us a sense of how we should think about cash flow and CapEx in 2020. Thank you.
Hi, it's Rustom. Let me take this. In the Q4, our gross margin was negatively impacted by higher raw material costs and unfavorable mix, right? From what I've learned in my first couple of weeks, raw material costs can fluctuate monthly, quarterly due to inventories. In Taste in Q4, that's really where we saw it. They were primarily impacted by the timing of raw material costs from the balance sheet, the P&L. That's not much different from what happened the Q2, where Scent raw materials came in much more favorable. If you want to think about specific commodities, in Taste, it was primarily vanilla, and in Scent, it continues to be turpentine and China tariffs, right? CapEx, you wanted to-
Cash flow.
Cash flow, yeah. Roughly about 4.5% next year as well, 4.5% of sales. Sorry, 4.5% of sales on CapEx. Then the final part of your question, or at least the intermediate part of your question, was about raw materials and how that would flow through into next year, right? Look, in 2020, we believe that raw material costs will stabilize, specifically in the scent division, where we had the largest raw material increases. Our current purchases are stabilizing. Look, it's important to note they still remain at elevated levels, and that we will, as we always have, work with our customers on actions, including price increases to cover that exposure. I think those were your questions, right?
Yeah. Actually, I think that's perfectly fine, Rustom. Fantastic in the third week. Good answer. No, just one word on the CapEx to give it the contextualize a bit. As we said before, last year was our highest CapEx spending for all the reasons I said during the call, because we did a lot of investments. We have to finish up this year. From the next year onwards, the CapEx plan is much lower, and it goes more to a maintenance level of 3%-3.5%, because we are finishing up India and China this year. The creative centers are done, and then we have just the maintenance investments, which is actually a good sign for us, and it will have a positive impact on the cash flow.
Thank you. We'll take our next question today from Adam Samuelson with Goldman Sachs. Your line is open.
Yes. Thanks. Good morning, everyone. Just thinking about the 2020 plan a little bit, and maybe first, just to clarify on the coronavirus impact. I know the guidance doesn't officially contemplate an impact, but it also you've put a wider range to give some room there. Could you just contextualize for us the China sales exposure and also just fine fragrance, as far as you can tell, how much you think that actually goes through global duty-free and travel channels is probably the two areas most at risk. Similarly, on the production side, how much of your raw material production do you source from China?
Should I get started? I start. Hey, Adam. Good morning. We do around about 6% of our combined sales in China. That's China for China, so to say. On the travel retail, I can't tell you now because it has usually a time lag. It comes from our customers. If you look at one of our big beauty and cosmetic customers, they just made an announcement, and that made us think as well what the impact might be. The third piece is that we are sourcing some of our fragrance ingredients out of China, and we certainly have other suppliers in China as well. Here we feel much better because since the specific factory is open since last Tuesday, we are probably on safe grounds that we can supply our ingredients to the rest of the company.
That was a bit of a worry for us as well, whether we can export out of China. 6% China for China. Travel retail, we don't know. We're just listening to our customers because they are closer to the frontier. On production out of China, we believe we are good on this side.
Okay. Then just maybe following up on the prior question on the gross margin performance in the Q4, and clearly it came in below your plan, and I just want to be clear. If it was raw material costs and inventory, just I presumed you would have had more visibility to it. Was there a sharp kind of divergence in sales mix and the decline in fragrance ingredients? I would have thought it would have been a tailwind to the margin performance. Just want to clarify a little bit just the surprise relative to your own plan, to cycling back a couple of months, it seemed like a bigger variance than I would have thought.
Yes, look, sales mix, definitely. Sales mix was in there. Nothing structural, really, as we look at our, and we're probably going to see gross margins recover as we go into the early part of this year in 2020.
Yep. Absolutely. It's more timing than anything else on that one. The good thing is that the raw material prices are now softening again, which is helpful for this year. We certainly have taken last year, in a couple of moments, inventory positions just to make sure that we can supply our customers, but that seems to stabilize.
We'll take our next question today from Lauren Lieberman with Barclays. Your line is open.
Great. Thanks. Good morning.
Good morning, Lauren.
Hey, I just wanted to follow up again, just a bit on Frutarom. A few things here. One is that with Frutarom being folded into Taste, to what degree will we really get visibility into this inflection you're expecting in 2020? When I look at Frutarom in the Q4, even if I concede and say the 4 points that the things that you're calling transitory are in fact transitory, organic was still down 2%, even excluding those things in the Q4. I'm just struggling with why mid-single digits is comfortable and how and if we'll get visibility into that with it, again, being folded into Taste as we get into 2020. Thanks.
Lauren, it's Rustom. Let me have a crack first at the second part of how we track it and how we manage it. Yes, we are going to report as two segments, but what we are going to do over the course of the year in 2020 is we're going to, as much as possible, track the Frutarom elements separately too. Remember, as we continue to integrate, there will be some sales that come from Frutarom that now show up that naturally migrate over into the legacy Taste part of the business, right? It won't be perfect, but we're going to do our absolute best for ourselves as much as anything else to track and control that.
Yeah, I think the second question, just as a point for just a reminder perspective, I think Lauren was asking, looking at the organic growth from a Frutarom perspective, ex the 53 week, ex the three days, I think the run rate number or the right number is probably flat in the quarter.
How does that transfer as we go forward, the confidence level to.
I would say confidence level is pretty high right now. That when we cycle through these one times, and Lauren mentioned it, and maybe when we're next week at CAGNY, we have a bit more time to talk about it. When we go through the Russia topic, from the commercial point, legally, we are through. When CitrusSource is basically cycling through and we see a recovery of the natural color raw materials, then we will see actually good mid-single digit growth going forward. We will provide some visibility on this one as well. Where it is tough, and I'm building here on Rustom's comment, to create visibilities on the cross sales. You see cross sales is 0.5% to one percentage point growth for this year. Most of it actually comes out of the Frutarom portfolio, and that's tough to track.
I think you can model it that most part of it comes out of the Frutarom portfolio, and that should be helpful for you when you model the legacy fruit business. We are bringing them together with Taste. There's actually two reasons. One is a very practical business reason. It is helping with our cross-selling activities and bringing the technologies and the people very well together. That's number one. The second one is in gearing up for the N&B integration, it simplifies our structure because we will have then in the Q1 next year, another change, and we thought it's a prudent thing to do exactly that. I hope that helps, Lauren.
Thank you. We'll go next to Jeff Zekauskas with J.P. Morgan. Your line is open.
Hi, good morning.
Good morning.
Hi. In your remarks, you said that you knocked out $20 million in costs in Frutarom. The year-over-year increase in operating income is about $5 million. Even if you compare it to the Q1 of 2019, maybe you're $3 million up. Why isn't Frutarom earning, I don't know, $45 million if you've lowered your cost structure by that much? Why are the numbers so low?
Part of this would be currency, the currency impact as you go through with the numbers. Part of the, I guess, of the cost synergies that we have also, Carl, have been associated with extra cost that we put in as we take out the synergies too, right? Sometimes the double operation of factories and the migration over as we consolidate.
Yeah. That's a fair point because we had for some of these, we had a double running cost because when you close down a factory and basically the receiving end, you have to ramp up already and to get it into the new one, I think that's important. That will go away because we have closed down 10 factories last year. We will do another 12 probably until October of this year. These double running costs, at least for the 10 we have closed, it's gone. I think that's good. We had a couple of smaller divestitures versus previous year as well, and that's impacting it.
Should your Frutarom operating income grow at least $50 million next year as you realize incremental synergy costs? Or that's not the right number? I mean, even if the business doesn't grow at all.
Sorry, I was going to cut in there. That number is the right number, but it's going to be spread across the three businesses, the business units, well, two as we go into next year.
Yeah. Let me explain why. Many of the savings are coming from procurement, and we see procurement synergies also in the scent business because we just get some of the raw materials to better price. Transportation, we have significant savings, for example, or packaging material, and that's the reason why you see it in the different businesses as well. In general, the number is right.
Yes.
We have no further questions at this time. I'll turn the call back to Andreas Fibig for any final or closing remarks.
Yeah. Thank you very much for the discussion and the good questions. I hope I will see many of you during CAGNY next week. That's number one. We have certainly, as usual, a lot of one-on-ones planned. Have a good day, and see you soon.
This does conclude today's program. Thank you for your participation