Symrise reports strong organic growth of 7.5 percent in Q1

“We are off to a dynamic start in the fiscal year 2018 and consider ourselves very well positioned with our strong market presence. Despite extensive investments, volatile exchange rates and higher raw material prices, we operated very profitable,” says Dr. Heinz-Jürgen Bertram, CEO of Symrise AG. “The targeted expansion of our product portfolio and our raw material base has paid off. Along with strong demand from our customers, this was the foundation of our success in the first quarter. All segments generated substantial new business and contributed to the growth of our Group. We are looking ahead with confidence at our business development for the coming months. We will remain focused on profitable growth, especially through the further expansion of our capacities.” 

 
Strong organic sales growth
All segments experienced healthy demand. Considering portfolio effects – such as the sales contributions of the recently acquired companies Cobell and Citratus – and exchange rate effects, Symrise increased its sales by 1.5 percent to €776.9 million (US$925.4 million) (Q1 2017: €765.2 million (US$911 million)).

Double-digit sales growth in the Flavor segment 
Sales in the Flavor segment, which encompasses the business activities with flavors for foods and beverages, grew organically in the first quarter at a very dynamic rate of 11.0 percent. All business units and regions showed significant increases in sales. Taking into account exchange rate effects and the Cobell acquisition, sales in this segment were up 7.8 percent in reporting currency in the first quarter to €291.2 million (US$346.5 million)(Q1 2017: €270.2 million (US$321.5 million)). 
 

In the EAME region, applications for sweet and savory products delivered the biggest organic increases, above all in the national markets of Germany, France, Russia and Egypt. The Beverages business unit benefited from the Cobell acquisition.

 
The Asia/Pacific region achieved in all business units high single-digit or even double-digit percentage growth rates, with particularly satisfactory results especially in China, Japan and Singapore.

 
The North America region also saw significant year-on-year gains in sales. The Beverages application area showed a particularly dynamic trend resulting from an extensive new business.

 
The overall trend in the Latin America region was positive, with an organic growth rate in the medium single-digit percentage range. The biggest impetus came from the Sweet business unit, with good demand in the markets of Brazil and Mexico.

 
In the Flavor segment, EBITDA increased to €61.0 million (US$72.5 million). This result was €4.1 million (US$4.8 million) higher than in the same period a year earlier (Q1 2017: €56.9 million US$67.7 million)) despite unfavorable exchange rates, and represents an increase of 7.2 percent. The EBITDA margin, at 20.9 percent, was down slightly (Q1 2017: 21.1 percent), mainly as a result of the Cobell acquisition.

Nutrition with strong demand for Food and Pet Food applications 
The Nutrition segment, which includes the Diana division, with Food, Pet Food and Baby Food applications as well as Probiotics, achieved organic growth of 2.9 percent in the first quarter. This reflects above all an announced reduction in orders from a relevant probiotics customer. Adjusted for the business unit Probi, the growth rate was 8.0 percent. In consideration of unfavorable exchange rates, sales in reporting currency, at €153.8 million (US$182.8 million), were lower than in the same period in 2017 (Q1 2017: €161.8 million (US$192.3 million)). 

 
The Food, Pet Food and Aqua business units achieved growth rates in the high single-digit range. In the Food business unit, the strongest growth was seen in the North America and Asia/Pacific regions. Pet Food applications experienced the highest increases in Latin America and North America, especially in Mexico, Argentina and the USA. EBITDA in the Nutrition segment amounted to €30.1 million (US$35.7 million)in the period under review. Due to negative currency effects, the loss of contributions to earnings through the lower sales in the Probiotics business unit, and start-up costs for the new plant in Georgia, USA, EDITDA was lower than in the first quarter of 2017 (Q1 2017: €36.7 million (US$43.6 million)). As expected, the EBITDA margin was 19.5 percent (Q1 2017: 22.7 percent).
 

Guidance affirmed
After a good start to the year, Symrise affirms its growth and profitability targets for the current fiscal year. The group remains confident that it will continue to achieve growth on a sustainable basis. The target remains, again in 2018, to significantly exceed the market growth rate, which estimates indicate will lie between 3 percent and 4 percent. In mid-2018 the capacity expansion for cosmetic ingredients in South Carolina will be completed, and the new Diana site for food ingredients in Georgia will be opened in the second half of the year. 
 

Symrise aims to be highly profitable yet again in 2018 and to achieve an EBITDA margin of approximately 20 percent. The medium-term targets through to the end of the fiscal year 2020 remain in effect, including a compound annual growth rate (CAGR) in the 5 – 7 percent range and an EBITDA margin between  19 – 22 percent.