Sensient's Q1 2025: Contradictions in Natural Colors Growth, EBITDA Targets, and Supply Challenges

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Revenue and Earnings Growth:
- Sensient Technologies reported revenue of $392.3 million in Q1 2025, showing an increase of 1% year-on-year.
- Adjusted operating income rose 10.3% in local currency, driven by strong sales execution and new product innovations.

Synthetic Color Ban Impact:
- The ban on synthetic colors in the U.S. represents a significant revenue opportunity for Sensient Technologies, with $110 million of synthetic color revenue potentially convertible.
- This conversion opportunity is expected to increase natural color usage, with a conversion factor of approximately 10:1 in revenue.

Tariff Impact and Pricing Strategy:
- Sensient anticipates a $10 million annual impact from tariffs, which will be addressed through increased pricing.
- This impact is more pronounced in the Color Group, with 2/3 of the effect attributed to it.

Capital Expenditure and Investment in Natural Colors:
- The company announced increased capital expenditures for the year, with expectations between $80 million and $90 million.
- This elevated spending is driven by investments in natural color capabilities, including botanical seed development and manufacturing capacity expansion.