Symrise results boosted by COVID-19 surge of savory, bakery and cereal purchases

06 Aug 2020 --- In first half year results (H1), producer of flavors Symrise notes a rise in sales by 7.6 percent to €1.8 billion (US$2.1 billion) under challenging COVID-19-related market strains. The company attributes the rise in consumption of its savory, bakery and cereals ingredients to a spike in at-home cooking during the pandemic. At the same time, reduced out-of-home eating and drinking led to a lower demand for beverage products and sweets.

“In the second quarter, the coronavirus pandemic began to significantly impact the global economy and above all many people’s everyday lives,” says Dr. Heinz-Jürgen Bertram, CEO of Symrise. “We remained fully operational in the second quarter and were able to supply our customers in the usual reliable manner.” 

“Of course, it is hard to predict the course of the coronavirus pandemic. However, after our performance in the first half of the year, we are looking ahead to the second half with confidence. 

“For the full fiscal year 2020, we again want to grow faster than the market and expect that we will achieve increased profitability overall. We are therefore raising our guidance for the EBITDA margin to a range of 21 to 22 percent.”

The trend toward cooking and eating at home led to bolstered demand for products from Symrise’s Savory business unit and product solutions for baked goods and cereals.Against the backdrop of the coronavirus pandemic, the trend toward cooking and eating at home led to a strong demand for products from the Savory business unit and product solutions for baked goods and cereals. At the same time, reduced out-of-home eating and drinking led to a lower demand for beverage products and sweets.

In organic terms – excluding the portfolio effect of last year’s ADF/IDF acquisition and exchange rate effects – sales were up by 3.4 percent. All segments were noted as contributing to this positive development.

EBITDA increased by 11.9 percent to €393 million (US$466 million) as compared to the previous year’s level normalized for acquisition and integration costs for ADF/IDF (H1 2019: €351 million (US$416 million).

Symrise’s profitability developed particularly well, with its EBITDA margin rising to 21.6 percent, which the company highlights as “significantly higher than the profitability target for 2020.” The net income for the reporting period increased to €169 million (US$200 million).

Flavor segment performance
Symrise’s Flavor division achieved organic growth of 0.6 percent in the period under review. Taking currency translation effects into account, segment sales in the reporting currency amounted to €636 million (US$754 million) (H1 2019: € 637 million/US$755 million). 

In the EAME region, the Flavor segment suffered from significantly reduced demand for beverage products and sweets, while the savory business unit recorded a high single-digit growth rate. Germany and the Gulf region achieved the strongest gains. Overall, sales in the EAME region remained slightly below the figure for the first half of 2019.

Organic sales in North America were roughly on par with the same period of the previous year. While savory product solutions enjoyed great demand, beverage products and sweets sold less.

The Asia-Pacific (APAC) region reported organic growth in the single-digit percentage range, driven primarily by very strong demand for products from the Savory business unit, which showed organic growth in the double-digit percentage range. The largest increases came from the national markets of Indonesia, Thailand, Vietnam and Singapore.

The Latin America region achieved the strongest growth in the segment in the first half of 2020 and was largely unaffected by the coronavirus pandemic. All business units realized high organic growth in the single or double-digit percentage range. Strong gains were posted especially in the national markets of Brazil, Uruguay and Mexico.

The EBITDA of the Flavor segment, in particular, was up 2.2 percent to €147 million (US$174 million) (H1 2019: €144 million, US$170 million). The EBITDA margin improved from 22.6 percent in the first half of 2019 to a very strong 23.2 percent, mainly due to tight control on costs and proportionally lower raw materials costs.

Nutrition segment performance
Symrise’s Nutrition division achieved strong organic growth of 10.5 percent. Accounting for portfolio and currency translation effects, sales in the reporting currency amounted to €474 million (US$561 million) and were 38.1 percent above the previous year’s level (H1 2019: € 343 million, US$406 million). ADF/IDF contributed sales of €106 million (US$126 million).

The Pet Food business unit proved to be the growth driver of the segment, achieving high organic growth in the double-digit percentage range in all regions. Sales developed particularly dynamically in the US, Mexico, Brazil and Russia.

In Symrise’s Food business unit, the Asia/Pacific region stood out with double-digit growth, especially in China, India and Taiwan. In the EAME region, sales matched the previous year's level, while North and Latin America dropped slightly below the last year.

A strong impetus came from the company’s Aqua business unit, which achieved good growth especially in the EAME and Asia/Pacific regions. Probi – which joined forces with Symrise to develop probiotic-based ingredients with cosmetic effects – reported growth in the single-digit percentage range during the reporting period, primarily driven by the North America and Asia/Pacific regions.

The Nutrition segment generated an EBITDA of €100 million (US$118 million) in the reporting period (H1 2019 EBITDA: €67 million, US$79 million). The EBITDA margin in the segment increased by 1.5 percentage points to 21.0 percent (EBITDA margin H1 2019: 19.5 percent). The improved profitability is mainly attributed to the performance of Pet Food and the inclusion of ADF/IDF.

Edited by Benjamin Ferrer