COVID-19 and cyber-attack cause headwinds for Symrise

09 Mar 2021 --- German flavor house Symrise has revealed it overcame COVID-19 challenges as well as a cyber-attack last December which led to temporarily significant restrictions in business workflows. As a consequence, organic Flavor sales growth in Q4 was negatively affected and amounted to only 0.7 percent.

The delivery backlogs caused by the cyber-attack have now been largely resolved, and the IT systems have been fully restored. Company CEO, Dr. Heinz Jürgen Bertram, says he “looks ahead with confidence” for the current financial year.

Taking adverse currency translation effects into account, Flavor sales in reporting currency were 2.6 percent below the prior-year figure. 

Consumer behavior amid COVID-19 impacts sales
The global trend toward cooking and eating at home led to strong demand for savory products in all regions. 

Symrise increased its profitability in the fiscal year 2020.At the same time, internationally reduced out-of-home leisure activities led to lower demand for beverage products and sweets. According to Symrise, Latin America was the only region largely unaffected by the pandemic and generated the most substantial fiscal year growth.

EBITDA in the Flavor segment amounted to €267 million (US$317 million), in comparison with 2019’s €268 million (US$319 million). Profitability in 2020 remained at a very high level with an EBITDA margin of 21.8 percent (2019: 21.4 percent).

Growth in nutrition segment
Nutrition achieved an increase in organic sales of 8.2 percent. 

Taking portfolio and currency translation effects into account, sales in reporting currency increased by 26.6 percent to €926 million (US$1.1 billion). 

The US-based ADF/IDF Group business, which was acquired in November 2019, developed very well and exceeded expectations. 

Overall, this business achieved sales of €209 million (US$248 million) in the fiscal year 2020.

The Nutrition segment increased EBITDA to €204 million (US$242 million) and thereby significantly exceeded the normalized prior-year figure.

EBITDA rose by 5.8 percent to €742 million (US$883 million) in 2020. Profitability reached an outstanding level with an EBITDA margin of 21.1 percent and was within the expected margin range. 

Against the backdrop of a “good” performance, the company’s executive board and the supervisory board propose a dividend increase to €0.97 (US$1.15) for the fiscal year 2020 to the annual general meeting.

Reflecting on a challenging year
“In the historically exceptionally difficult year 2020, Symrise achieved a very solid result,” says Bertram.

Despite the shifts in demand resulting from the global coronavirus pandemic, Bertram says the company did “an excellent job of staying on track until a criminal cyber-attack thwarted our progress on the final miles.”

“Even though we could not fully achieve our growth targets, we nevertheless kept our profitability at a high level and continued to increase earnings. “

“Battling the pandemic will continue to define people’s everyday lives and economic conditions in 2021. Against this background, we are targeting organic sales growth of 5 to 7 percent and an EBITDA margin of around 21 percent.”

Sales grow despite COVID-19Flavor sales were 2.6 percent below the prior-year figure.
In 2020, business performance was defined by the coronavirus pandemic. However, owing to its highly differentiated business model, Symrise reliably succeeded in continuing its profitable growth course. 

Organic sales growth amounted to 2.7 percent. Even in the challenging year, with its vast challenges caused by the pandemic, the group grew significantly faster than the relevant market for fragrances and aromas, which is estimated to have increased by 1.0 percent. 

However, organic sales remained slightly below the targeted increase of between 3 to 4 percent, which was specified in the middle of the year. 

Symrise confirms long-term growth targets
Overall, Symrise is looking ahead to the fiscal year 2021 with confidence. 

The group, therefore, wants to return to its original growth momentum and is targeting organic sales growth of 5 to 7 percent for 2021. Symrise would grow significantly faster than the relevant market, which is expected to grow by around 3 to 4 percent. 

In November, Symrise signed a purchase agreement to acquire the fragrance and aroma chemicals business of Sensient Technologies Corporation. 

Last month, Symrise revamped its online platform, The Ingredient Finder, for aroma raw materials. 

Edited by Elizabeth Green