Symrise’s flavor, scents and nutrition business boosted by economic recovery

02 Mar 2022 --- Flavor and fragrance giant Symrise saw its business boosted by the global economic recovery in 2021 and has reported significantly increased sales and earnings in its annual overview. 

The impacts of the COVID-19 pandemic significantly diminished in large parts of the world over the course of the year, leading to normalized consumer spending and causing a surge in demand.

The group’s EBITDA rose to €814 million (US$902 million), exceeding the prior-year level by 9.6%. This is in spite of the increased raw materials costs and costs of strategic growth initiatives amounting to €174 million (US$193 million).

“2021 was a successful year all round for Symrise. We made good use of the tailwind generated by the global economic recovery and we aligned our sails accordingly. As a consequence, we very successfully continued our course of profitable growth,” remarks Dr. Heinz Jürgen Bertram, CEO of Symrise.

“Additionally, we were also able to realize trailblazing purchases and investments,” he continues. “This allowed us to strategically diversify our know-how and our portfolio, further increase our appeal to customers and differentiate our profile in the market.”

Symrise strengthened the activities of the acquired Canadian manufacturer Giraffe Foods.Symrise joins DAX index
Dr. Bertram comments: “Since September, Symrise has also been a member of the DAX, Germany’s leading index. As a result, our share has continued to gain a higher profile and enhanced appeal, particularly on the international capital markets.”

Symrise’s executive board and supervisory board is proposing the twelfth dividend increase in succession in the amount of €1.02 (US$1.13) for the year 2021.

“For the current fiscal year, we confirm our long-term target to achieve an average increase in sales of between 5 and 7% (CAGR) and to exceed market growth,” continues Dr. Bertram. 

“Furthermore, we are once again targeting high profitability for 2022 with an EBITDA margin of around 21%, in spite of the increasing raw materials costs and energy prices.”

Economic recovery drives demand
Symrise increased sales in reporting currency by 8.7% to €3,826 million, US$4,241 million.

Organic sales growth amounted to 9.6%. Symrise not only exceeded the average growth of the relevant market but also the most recent sales forecast issued in November 2021 of around 9%. 

In regional performance, Latin America once again recorded the strongest organic growth of 13.5%, followed by Asia/Pacific with 10.3%. The regions of Europe, Africa and the Middle East (EAME) and North America also delivered good growth with 8.8% and 8.5%, respectively.

Significant increase in EBITDA and net income
The group-wide EBITDA margin rose in the second year of the pandemic to 21.3% and therefore exceeded the prior-year level (2020: 21.1%).

According to Symrise’s estimates, the global economy will slow down slightly in the current fiscal year after the strong recovery in 2021.

Since 2020, Symrise increased net income by €68 million (US$75 million) to €375 million (US$416 million).

As of December 31, 2021, net debt including pension and leasing liabilities decreased to €1,964 million, US$2.176 million (2020: €2,029 million, US$2,248 million). This corresponds to a ratio of net debt to EBITDA of 2.4.

The business free cash flow amounted to €486 million, US$539 million (2020: €564 million, US$625 million).

Taste, Nutrition & Health segment developments
In April 2021, Symrise merged the former two segments Flavor and Nutrition into a new segment and renamed it Taste, Nutrition & Health to reflect the purposefully implemented portfolio expansion.

Over the course of the year, Symrise strengthened the activities of the acquired Canadian manufacturer Giraffe Foods and invested in a stake of the Swedish animal health company Swedencare.

The core business no longer includes the food color application areas, which have been sold to Oterra as well as the Drinkstar Velcorin activities. The distribution model with Lanxess was terminated effective 1 January 2022.

Taste, Nutrition & Health increased sales by 8.5% to €2,335 million (US$2,590 million). Organic growth amounted to 10.6%. 

The change in behavior in out-of-home leisure activities and the increasing trend of on-the-go consumption resulted in a particular high demand for beverage applications. 

Meanwhile, Taste, Nutrition & Health increased EBITDA to €531 million (US$598 million). The EBITDA margin at 22.7% was at an “outstanding level” and significantly exceeded the prior-year value (2020: 21.9%).

The increase in global travel activities led to a strong recovery in demand in the Fine Fragrances and Cosmetic Ingredients divisions.

Scent & Care segment
The Scent & Care segment increased sales in the fiscal year 2021 by 8.9% to €1,491 million (US$1,653 million). 

This takes into account a portfolio effect of €40.9 million (US$45.4 million) arising from the takeover of the fragrance business from US-based company Sensient. Without portfolio and currency effects, the segment achieved organic sales growth of 7.9%.

The increase in global travel activities led to a strong recovery in demand in the Fine Fragrances and Cosmetic Ingredients divisions, which even posted single-digit and double-digit percentage growth, respectively.

Activities of the Aroma Molecules division benefited from strong demand for applications with menthol and also underwent double-digit growth. Meanwhile, the Consumer Fragrance and Oral Care segments increased their sales in comparison with the “exceptionally high” prior-year single-digit percentage growth.

Symrise’s 2022 forecast
According to Symrise’s estimates, the global economy will slow down slightly in the current fiscal year after the strong recovery in 2021. 

The company is now aiming to increase average annual sales by 5 to 7% (CAGR). This objective also applies to the current financial year 2022, in spite of increasing raw material costs.

Symrise also looks to scale its recent acquisitions of the Dutch company Schaffelaarbos in January and the Chinese Wing Pet Food in February.

Profitability is projected to remain at a high level in 2022 with an EBITDA margin of around 21%. Over the medium term until the end of fiscal year 2025, Symrise has a target of achieving an EBITDA margin in the corridor of 20 to 23%.

Edited by Benjamin Ferrer