The fragrance and flavor manufacturer is raising its sales expectations and now expects comparable growth of well over 7 percent instead of the previous 5 to 7 percent, as it announced in Holzminden.
In the first half of the year, business grew on a comparable basis – i.e. excluding the sales contributions from acquisitions made in the meantime and exchange rate effects – by 10.2 percent. Nominally, Symrise’s sales rose by 18.5 percent to 2.26 billion euros, also due to the boost from the appreciation of the dollar.
The operating result (EBITDA) also climbed significantly, but at 15.7 percent to 486 million euros not quite as strongly as the income. The high raw material costs caused the margin to drop from 22 to 21.5 percent. However, despite cost inflation, the DAX group stuck to its target of around 21 percent EBITDA margin for the year as a whole.
According to a consensus compiled by Vara Research, analysts had expected 9.2 percent organic growth and a 20.8 percent margin.
Scent & Care, the fragrances, perfumery applications and cosmetic actives business, grew organically by 6.3 percent, while Taste, Nutrition & Health, the flavors and nutritional ingredients business, reported a comparable increase of 12.7 percent.
“Demand has risen significantly in many areas. Customers are particularly interested in applications for cosmetics, fine perfumery and pet food,” said CEO Heinz Jürgen Bertram.
The Symrise boss is also not worried about a possible lack of gas deliveries from Russia. The company would only be affected by this at its headquarters in Holzminden, Lower Saxony, where Symrise operates a gas-based power plant. “We believe that we can immediately replace 70 percent with alternative sources such as heating oil if we have to.” The board is also working on a solution for the remaining share. Symrise has almost ensured its ability to deliver and does not expect any production interruptions. “We have the situation very well under control.”
Betram also draws his optimism from the broad range of the group, which covers the entire field of fragrances and flavorings with more than 30,000 products, from the mint flavor of toothpaste, the vanilla in Magnum ice cream to perfumes. “We have the widest range of applications in our industry” – that still applies, even after the merger of the Swiss company with DSM. Symrise will therefore come through the expected weakening of the global economy better than others. In addition, the group benefits from its “backward integration”: “We want to manufacture the products that we use ourselves as far as possible and that’s obviously the way to go these days.”
This is how the Symrise share reacts
Symrise shares were volatile on Tuesday: First they won, then they turned negative. In the meantime, however, the papers have worked their way back into the profit zone, temporarily gaining 0.35 percent via XETRA to EUR 113.40.
The word on the market was that customers were expecting significant price increases this year and could therefore already have filled their warehouses well. However, if the supply chain problems normalize again later, the positive effects for Symrise could subside again, so the fear. So far, Symrise has not raised the targets for 2025, but only confirmed them.
Since the two-year low of just over 94 euros in mid-June, Symrise shares had already recovered by more than a fifth, so that some market participants were now inclined to take profits in the weaker overall market according to the motto “sell the rally”.
The Holzminden-based company’s figures for the second quarter were nevertheless very good. Goldman Sachs concludes that they are unexpectedly strong.
Baader Bank said that Symrise had basically shown the same business trend in the first half of the year as its competitor Givaudan. At Symrise, however, organic growth is more dynamic and the decline in margins is smaller. According to Baader analyst Andreas von Arx, the rather high valuation of the papers compared to the industry limits the upside potential, although in the current environment the papers are actually a “must-have” for investors who want to rely on defensively positioned growth companies.
FRANKFURT (Dow Jones) / (dpa-AFX) / Reuters
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