Flavors and fragrances specialist Symrise has reported “strong revenue growth” for the first half of the year and a “dynamic business development.” The company reports high customer demand which led to an increase in organic sales of 6.2 percent. In addition, net income for the H1 was €11 million higher compared to 2018, while net debt decreased by roughly €207 million. Symrise also notes that it continues to expect a sales growth of 5-7 percent for the current fiscal year. The target is to significantly exceed the growth of the relevant market in 2019, which is estimated to grow by 3-4 percent worldwide.
The company reports that accounting for currency translation effects, sales increased by 7.4 percent (€1,692 million compared to €1,576 million in 2018). Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to €342 million and therefore are up 7.7 percent over the previous year’s level (€317 million). The profitability of the Group remained at a high level with an EBITDA(N) margin of 20.8 percent.
In the beginning of 2019, Symrise presented its long-term targets, which underpin the company’s ambitions and extend to the end of fiscal year 2025. Symrise intends to increase sales to about €5.5 to 6.0 billion by then. This increase is to be achieved through annual organic growth of 5-7 percent (CAGR). As part of its 2025 strategy the company is identifying and entering growth opportunities in the areas of naturalness and health. The company also plans targeted investments in additional organic growth and through strategic acquisitions and remains committed to generating more than half of its sales in emerging markets.
The company’s sharpened focus on health and naturalness taps into the growing trend of today’s mindful consumers who are seeking exciting sensory experiences that preserve their health and well-being. It also comes as naturalness in flavors is expected to lead the way in 2019, although classic flavors are still anticipated to be in high demand across all categories.
In May, Symrise formed a new strategic partnership with US-based Califormulations LLC, a unique platform designed to deliver “end-to-end beverage innovation” to consumer packaged goods (CPG) companies and their brands. In July, the company opened a new liquid flavoring production line at its expanded Rogovo, Russia site. The move expands the German company’s target customer group to include suppliers of sweets, dairy products and beverages, from its previous base of snack and ready meal suppliers.
“After a dynamic start to the year, we continued our growth and further expanded our business,” says the CEO of Symrise AG, Dr. Heinz-Jürgen Bertram. “All segments increased sales and contributed to the Group’s growth. This positive development is accompanied by continued good demand from our customers. That is why we are looking ahead to the coming months with confidence, even if the economic prospects are slowing down in some regions of the world. Symrise has proven in the past that our business remains very robust even in such times. We therefore stand by our annual goals as well as our long-term ambitions.”
Last year, Symrise said it overcame most headwinds such as increasing raw material costs, to retain its earning power and take “full opportunity” of growth opportunities in 2018.
The Flavor segment
In the first half of 2019, Flavor achieved organic sales growth of 3.7 percent over very high comparable figures from the previous year. The Savory business unit and the Asia/Pacific and EAME regions significantly increased sales. In the Sweet business unit, the increase in sales was modest after the high level of momentum in the previous year. Accounting for currency translation effects, the segment’s sales in the reporting currency grew by 5.4 percent to €637 million (H1 2018: €605 million).
In the EAME region, the Flavor segment realized single-digit organic growth rates. Significant growth stimuli came from applications for savory products in Russia and the Middle East. The Asia/Pacific region recorded double-digit growth rates in the Beverage and Savory products application areas. Latin America also was also dynamic and achieved double-digit organic growth. The application areas for savory and sweet goods did particularly well in Brazil, achieving double-digit growth. In North America, sales growth was in the single digits. In particular, the savory products application area developed positively.
The Nutrition segment
Nutrition achieved strong organic growth of 11 percent in the first half of 2019. Accounting for currency translation effects, sales in the reporting currency amounted to €343 million and were 10.5 percent above the previous year’s level (H1 2018: €311 million), according to the company.
In the Food business unit, the regions of Asia/Pacific and Latin America posted double-digit growth, especially in China, Australia and Mexico. Sales in the EAME and North America regions fell slightly.
The Nutrition segment generated an EBITDA(N) of €67 million in the first half of 2019 (H1 2018 EBITDA: €62 million). The segment’s EBITDA(N) margin reached 19.5 percent, which was below the prior-year period (H1 2018 EBITDA margin: 20.0 percent). The slight decrease in margin was mainly due to production delays at Diana Food’s new site in North America and increased raw material costs at Diana Pet Food.
