Symrise profits jump and solid global growth promised for FY2018
14 Mar 2018 --- Symrise AG achieved profitable growth in the fiscal year 2017, hitting its targets and increasing sales by 3.2 percent to €2,996.3 million, despite volatile exchange rates, the increasing costs of raw materials and investment expansions. This is excluding portfolio and currency effects, according to the company, with organic sales growth amounting to 6.3 percent.
Symrise says it particularly profited from the dynamic performance of the Flavor and Nutrition segments and strong demand in the EAME and Latin America regions. Despite currency effects and investments into the expansion of capacities, the Group raised its EBITDA by 1 percent to €630.3 million (US$779.4 million).
With an EBITDA margin of 21 percent, Symrise exceeded its 20 percent target.
“2017 was yet again a successful year for Symrise. For the twelfth year in a row we achieved very satisfactory increases in sales and earnings, especially regarding organic growth,” said Dr. Heinz-Jürgen Bertram, CEO of Symrise AG.
“Despite further investments into our expansion, volatile exchange rates and rising raw material prices over the course of the year, we operated yet again highly profitable. To allow our shareholders to participate in this success, the Executive Board and Supervisory Board will, therefore, propose a dividend of €0.88 (US$1.09) at the Annual General Meeting.”
“We are also optimistic about our prospects in 2018. We have made a dynamic start and feel confident that, with our strong market position, increased internal sourcing of raw materials, and the targeted expansion of capacity, we are very well positioned.”
Taking portfolio effects into account – in particular, the sale of the industrial activities of Pinova in December 2016 and the acquisitions of Nutraceutix, Nutra Canada and Cobell – as well as exchange rate effects, sales grew by 3.2 percent.
Strong demand especially in Latin America and EAME
The largest sales growth was realized in Latin America, where sales were up by 7.6 percent, while sales in North America showed a 4.1 percent year-on-year decrease due to the divestment of Pinova's industrial activities in December 2016.
The Asia/Pacific region achieved a modest increase of 1.4 percent. With a strong 7.4 percent rise in sales, the EAME region showed an even more dynamic development than in the previous year.
The share of Emerging Markets in the group's total sales was slightly higher, at 44 percent (2016: 43 percent). Symrise achieved an overall 7.6 percent increase in sales at local currency in those countries.
High profitability
Despite unfavorable currency effects, higher costs for raw materials and investments in expansion, Symrise was able to increase its EBITDA to € 630.3 million (2016 normalized: € 625.2 million).
At the same time, the group was highly profitable, with a very good EBITDA margin of 21.0 percent (2016 normalized: 21.5 percent).
Net income of the group increased 1.8 percent to € 270.3 million (US$334.2 million). The group grew its operating cash flow by approximately 17 percent to €396.2 million (US$490 million) mainly as a result of higher earnings and a lower increase in working capital.
Flavor segment
Sales in the Flavor segment increased to €1,101.9 million in the year under review (2016: € 1,015.9 million). The segment achieved very strong growth of 8.5 percent.
Excluding the portfolio effect from the acquisition of Cobell and currency effects, organic growth amounted to 9.3 percent. All regions and application areas contributed to the positive sales development. The segment continued the successful trend of recent years, particularly in Europe, Africa and the Middle East (EAME) as well as in North America. Growth was particularly strong in the Sweets and Beverages application areas as a result of new business with vanilla flavorings.
EBITDA in the Flavor segment amounted to € 242.9 million (US$300 million) which represents a 3.9 percent increase as compared with 2016. The EBITDA margin was a 22.0 percent.
Nutrition segment
Nutrition posted a substantial 9.6 percent year-on-year plus in sales to €631.3 million (US$780.7 million). Adjusted for portfolio and currency effects, organic sales growth in the segment amounted to 6.5 percent.
Confident outlook for 2018
After a dynamic start in the first quarter, Symrise is confident for the further development in the fiscal year 2018, with the Group is expecting a healthy global economic growth.
However, it says, the debt situation of some countries will continue and some currencies will remain volatile. Moreover, Symrise expects overall raw material costs to increase significantly.
The group has been actively pursuing backward integration in key natural raw materials for years. As a result, Symrise is in a good position through close cooperation with producers and long-term contracts.
For the current fiscal year, Symrise remains committed to its target of growing faster than the relevant market at group and segment levels. Estimates place worldwide market growth in the 3 - 4 percent range.
Elsewhere, Symrise Flavors has also developed a masking flavors toolbox specifically targeted to overcome the challenges of aftertaste and off notes of plant protein in non-dairy applications.
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