Symrise has issued its 2019 financial overview, outlining growth for its segments amid fluctuating raw materials prices. The acquisition of the ADF/IDF Group, a leading US supplier of poultry and egg-based protein specialties, completed last November, notably contributed approximately €32 million (US$36.3 million) to group sales. By 2025, the German flavor house plans to increase its sales from €5.5 billion (US$6.2 billion) to €6 billion (US$6.8 billion) by means of organic growth at an annual rate of 5 to 7 percent (CAGR), combined with targeted complementary acquisitions.
“Symrise again posted strong growth in 2019. With the acquisition of ADF/IDF, we have continued to expand in fast growing, high-margin business areas. We have also further diversified our product portfolio in the attractive pet food market and expanded our position in North America. In addition, we made investments to expand our capacities over the course of the year and rolled out new technologies around the world. These targeted growth initiatives, combined with our disciplined cost management, are clearly reflected in our operational development in recent quarters,” details Dr. Heinz-Jürgen Bertram, CEO of Symrise.
Sales increased by 8 percent to €3.4 billion (US$3.9 billion). Earnings before interest, taxes, depreciation and amortization, as well as normalized for one-time effects resulting from the acquisition of ADF/IDF increased by €76.7 million (US$87 million) to €707.2 million (US$802.4 million). The acquisition notably reinforced Symrise’s position in North America and expanded its product portfolio in the pet food market and in natural product solutions for the food industry.
“Along with our customers, the capital market has also responded favorably to our performance. The share price has increased by 42 percent in 2019. We want our shareholders to participate in our success again this year. At the Annual General Meeting of Symrise, the Executive Board and Supervisory Board will propose a dividend increase to €0.95 (US$1.08) per share,” states Dr. Bertram.
In the year under review, Symrise benefited from good capacity utilization and strong demand in all segments and regions. The group has reportedly exceeded the average market growth rate in 2019, which was in the 3 to 4 percent range, according to estimates.
Expansion amid fluctuating raw material costs
The markets for raw materials remained tense, especially in the first half of the year, notes Symrise. Despite this, the company continues to invest in global capacity expansion. Major investment projects included the new manufacturing site in Nantong (China), the expansion of production capacity for menthol and natural extracts in the US, and for pet food in Colombia and France. In addition, the company has invested in a new “high speed-to-market” innovation center in the Netherlands together with Unilever.
Symrise’s Flavor segment achieved a 5.6 percent increase in sales amounting to €1.3 billion (US$1.5 billion). After adjusting for exchange rate effects, the organic growth amounted to 3.8 percent. This positive trend was carried by all regions and application areas. Flavor benefited in particular from dynamic demand in Asia/Pacific, where the segment achieved organic growth in the high single-digit percentage range. This was driven by flavorings for applications for sweet and beverage products, above all in Indonesia, Malaysia and China.
Meanwhile, the company’s Nutrition segment achieved a 14.5 percent increase in sales to €731.5 million (US$830.3 million) after sales of €638.8 million (US$725.1 million) in 2018. This included a total of €32 million (US$36.3 million) in sales from the ADF/IDF Group. Through the initial consolidation of the group in November 2019, the fourth quarter showed a strong sales increase of 28.7 percent. The segment also achieved significant organic growth. Once again, this growth was driven by product solutions in the Pet Food sector. The strongest impetus came from North America and Latin America, where growth was in the double-digit percentage range.
Expectations for 2020
In 2020, Symrise expects all of its segments to grow notably faster than the global market. Assuming raw material costs at their current levels and a stable EUR/USD exchange rate, the company currently anticipates an EBITDA margin of over 20 percent in all segments for the current fiscal year.
By 2025, the company further plans to increase its sales from €5.5 billion (US$6.2 billion) to €6.0 billion (US$6.8 billion) by means of organic growth at an annual rate of 5 to 7 percent (CAGR), combined with targeted complementary acquisitions. In the long-term, Symrise aims to achieve an EBITDA margin within the target corridor of 20 to 23 percent.
