Symrise AG has exceeded its sales and earnings goals for Fiscal Year 2010. The Group benefited from the global economic recovery and strong boost in demand, as well as the excellent positioning in emerging markets and in the business with large customers. Symrise increased sales by 15.4 % to € 1.57 billion and exceeded its target to achieve sales growth of at least 8 %. The EBITDA margin rose to 21.1 % and bet the aspired mark of more than 20 %. On another positive note, Symrise succeeded in further reducing its net debt thanks to operating cash flow being at a high level again.
“We capitalized on the strong tailwind of the economic recovery and ran our utilization at very high levels the whole year round,” said Symrise AG Chief Executive
Officer, Dr. Heinz-Jürgen Bertram. “Besides continued strong growth in emerging markets, we benefited from a strong revival in demand in Western Europe and other established markets. This resulted in record growth of over 15 %, with double-digit sales increases in all regions and in both divisions. With an EBITDA margin of 21.1 % we have operated on a very profitable basis. We would like our shareholders to participate in this success and are proposing a 20 % dividend increase to € 0.60 per share.”
“In Fiscal Year 2010 we systematically continued to implement our proven strategy: Our innovative business units such as Life Essentials and Consumer Health launched new products which pick up on consumers’ needs for a balanced diet and healthy lifestyle. Our traditional flavor & fragrance business has been extended by significant investments, including a two-fold increase in our menthol production capacity. In 2011 we will continue to focus on sharpening our specific profile.”
With a view to 2011, Heinz-Jürgen Bertram continued: “We’re optimistic about the current financial year and have set ourselves the goals of again outperforming market growth and winning market shares. At the same time, we do remain realistic: Following the outstanding year 2010 which was also driven by economic backlogs we are expecting more moderate growth for 2011. In this context the course of the crisis in the Middle East plays a role; another determining factor will be the oil price development which is difficult to predict and its influence on consumer behavior. At the same time we expect raw material prices to be one of the main challenges which we will keep a close eye on. Since this already became apparent in the middle of 2010, we implemented initiatives at an early stage: we expanded our backward integration of our supply chain, entered price negotiations with our customers and continued our consequent cost discipline. We are therefore sticking to our aspiration of permanently being one
of the most profitable companies of our sector, and working on the basis of a sustained EBITDA margin of above 20 %.”
15 % rise in sales – double digit growth in all regions
Fiscal Year 2010 Group sales rose 15.4 % (11 % at local currency) to € 1,571.9 million (2009: € 1,362.0 million). The Group benefited from both, a rebound in customer confidence in its established markets, as well as continued strong consumption in emerging markets. Asia/Pacific was again the fastest growing region with 21 % sales growth (11 % at local currency). All application areas developed positively there, with demand for cosmetic ingredients, fine fragrances and aroma molecules rising particularly
strong. Latin America was able to build on the previous year’s dynamic trend and – despite high comparables – generated 18 % sales growth (12 % at local currency). North America successfully returned to the growth path and reported a 16 % sales growth (10 % at local currency). EAME, which includes Europe, Africa and the Middle East, also benefited considerably from the economic recovery. Demand in the application areas Fine Fragrances and Personal Care rose particularly strongly here, contributing to an overall sales growth of 12 % (11 % at local currency) in the region.
Emerging markets account for 46 % of Group sales
The growth seen in 2009 in emerging markets continued unbowed in 2010, with sales rising 13 % in these markets. Overall, Symrise generated 46 % of Group
sales in emerging markets. Symrise expanded its footprint in these regions with the inauguration of a production site in Moscow, the integration of Futura Labs
– acquired at the start of the year – in the Middle East and North Africa, and the opening of the first academy for perfumers in India.
14 % increase in business with large customers Business with multinational food and consumer goods manufacturers remained a key strategic focus: Symrise won further core list positions with large customers and augmented existing listings with additional projects in 2010. Group sales realized through business with Top 10 customers rose 14 % at local currency.
Overall, activities with this customer group which is strategically particularly important, accounted for around 30 % of Group sales.
Flavor & Nutrition boosted sales with Top 10 customers by 15 % at local currency and achieved strong growth in all application areas and regions.
Scent & Care increased sales with Top 10 customers by 13 % at local currency, benefiting particularly from the expansion of the business in the USA.
35 % rise in EBITDA – EBITDA margin at 21.1 % at a high level
After € 245.6 million in 2009, Symrise reported 2010 earnings before interest, tax, depreciation and amortization (EBITDA) of € 331.2 million. This 35 % increase was attributable to strong sales growth, high utilization and consequent cost management. Despite sharp rises in individual raw material prices in the third and fourth quarters, the overall raw material costs were kept stable over the full year. Symrise benefited from a number of factors including backward integration in the purchasing of key raw materials such as vanilla, as well as from relatively favorable conditions which had been secured early on.
The Group’s EBITDA margin improved to 21.1 % (2009: 18.0 %) thereby exceeding the company’s target of achieving an EBITDA margin of more than 20%. Net income went up 58.4 % to € 133.5 million (2009: € 84.3 million). Earnings per share rose accordingly to € 1.13 from € 0.71 in 2009. Year on year operating cash flow rises despite higher working capital. Although working capital went up as a consequence of the high utilization levels, Symrise succeeded in increasing its operating cash flow to € 235.1 million (2009: € 225.7 million). The ratio of net debt including pension provisions to EBITDA fell from 3.1 at year end 2009 to 2.2 at December 31, 2010, thereby fulfilling the aspired target.
In the fourth quarter of 2010, Symrise arranged a comprehensive refinancing and aimed at an early redemption of existing debt in the amount of € 621 million; this net debt was originally due at the end of 2011. Besides a long term loan of US$ 175 million from US investor Prudential (Pricoa), Symrise was able to raise € 300 million on the capital markets through an inaugural bond issue. The Group finalized the refinancing in December with the conclusion of a € 300 million revolving credit line and now operates on the basis of a longer-term oriented financial structure which is more diversified in terms of its maturity profiles and financing sources.