Symrise: 1st Quarter 2011 Report – Increase in sales and earnings

Symrise_LogoSymrise AG has had a successful start to the Financial Year 2011 and was able to exceed its high prior year sales and earnings figures. In the first quarter 2011 Symrise benefited from the continued positive development of demand even though it was more moderate than in the previous year, which was characterized by catch-up effects. During the reporting period Symrise increased sales by 6.6 % to € 416.8 million, thereby growing faster than the market for flavors and fragrances. The growth was driven by business with major customers as well as activities in Emerging Markets, especially Latin America. The Group’s EBITDA rose 2 % to € 85.2 million. Despite a sharp increase in raw material prices Symrise achieved an EBITDA margin of 20.5 %. A high level of capacity utilization and continuous cost management significantly contributed to this development.

Dr. Heinz-Jürgen Bertram, Chief Executive Officer of Symrise AG, said: “As expected, markets have returned to more moderate growth following the extraordinarily strong year 2010. Thanks to our good strategic positioning we continue to benefit from the dynamic demand in important markets, especially the Emerging Markets in Asia and Latin America. With a 6.6 % increase in sales we again outperformed the market. We maintained our EBITDA margin at over 20 %; this demonstrates that we are able to successfully meet the challenges posed by raw material markets at present. We have set a good basis during the first quarter and are confident as we look to the coming months. However, uncertainties remain with regards to the political developments in North Africa and the Middle East, the effects of the natural disaster in Japan, and the price development on raw material markets.”

Emerging Markets drive sales growth

In the first quarter Symrise boosted Group sales by 6.6 % to € 416.8 million (previous year: € 391.0 million); this translates into a 4.3 % increase at local currency. The EAME and Asia/Pacific regions as well as Emerging Markets contributed significantly to the sales growth. Emerging Markets accounted for 46 % of Group sales. Latin America was by far the most dynamically growing region with a 21 % increase in sales (15 % at local currency). Symrise was able to build upon the strong growth of the previous year and benefited from a high level of demand in both divisions. EAME sales rose 5 % (5 % at local currency) and the established markets in Western Europe developed especially well. Asia / Pacific increased sales by 11 % (4 % at local currency) and particularly benefited from the demand for sweets and fine fragrances. Compared to the high prior year figures, sales in North America slightly declined by 1% (-2 % at local currency).

Core list positions drive growth in top 10 customer business

In the first quarter Symrise expanded strategically important business activities with globally active food and consumer goods companies. Sales generated by the ten largest customers of each division rose by 11 % (9 % at local currency), thereby exceeding the growth of Group sales as a whole. Both divisions contributed to these results. Business with major customers accounted for around 30 % of total Group sales; it was supported by good core list positions and good access to customers.

EBITDA margin of 20.5 % achieved

Symrise also remained highly profitable in the first quarter of 2011 and was able to maintain the EBITDA margin above the 20 % mark. Negative effects of increased raw material prices and currency developments were compensated through a high rate of capacity utilization and continued cost discipline.
Earnings before interest, taxes and depreciation (EBITDA) rose 2 % to € 85.2 million (previous year: € 83.3 million). The EBITDA margin was thus 20.5 % (previous year: 21.3 %). Net income for the period grew 2 % to € 41.1 million (2010: € 40.4 million). This corresponds to earnings per share of € 0.35 (previous year: € 0.34).

Temporary build-up of raw material inventories as a means of securing conditions ahead of time

The cash flow from operating activities declined from € 21.1 million in 2010 to € 6.4 million in the reporting period. Notable here were the seasonal increase in working capital as well as a targeted build-up of inventories in order to compensate for anticipated price increases and scarcity of certain raw materials ahead of time.
Net debt (incl. pension provisions) amounted to € 525.0 million at the end of the first quarter (31 Dec. 2010: € 521.0 million). The ratio of net debt (incl. pension provisions) to EBITDA remained at 2.2 which is the same level as at the end of 2010.

Scent & Care

In the first quarter Scent & Care boosted sales by 6.6 % (4.2 % at local currency) to € 218.4 million (previous year: € 204.8 million).
The Scent & Care division was thus able to build upon the extremely dynamic development of the previous year and achieved growth in all regions. The segments Fine Fragrances and Aroma Molecules even enjoyed double-digit growth. Positive economic developments and the strong demand in the luxury segment were especially noticeable in the Fine Fragrances segment. Scent & Care also benefited from business with major customers, as well as the launch of a number of skin care and cosmetic products in the Life Essentials segment. In Latin America the division achieved strongest growth with a sales increase of 17 % at local currency. In Asia sales rose 4 % at local currency and in North America by 3 % at local currency. With a 2 % sales increase (local currency) the EAME region developed slower than the other regions.
The EBITDA rose 5 % to € 43.0 million (previous year: € 41.1 million). The EBITDA margin remained at a high level of 19.7 % (previous year: 20.1 %).

Flavor & Nutrition

Flavor & Nutrition reported a 6.5 % increase in sales to € 198.4 million (previous year: € 186.2 million). This corresponds to an increase of 4.5 % at local currency.
The division also continued its way on the growth path in the first quarter. Symrise benefited from the high demand by established and Emerging Markets. The division also significantly benefited from business with major customers and the expansion of product initiatives such as citrus and vanilla. Also Flavor & Nutrition grew strongest in Latin America with an increase in sales of 11 % at local currency. EAME was the second-strongest region with an increase in sales of 7 % at local currency. Asia/Pacific reported 5 % growth in sales at local currency. North America was unable to maintain last-year’s high level and sales went down by 9 %.
EBITDA remained stable at € 42.2 million (previous year:€ 42.2 million). The division remained profitable with an EBITDA margin of 21.3 % (previous year: 22.7 %).

Outlook: Confidence based on first quarter developments

Based on the positive development of demand in the first quarter Symrise is confident about the outlook for the course of the financial year. The Group maintains its objective of again outperforming the market and aims at increasing sales between 3 % and 5 % at local currency. The Group aims at realizing an EBITDA margin of above 20 %, despite the impact from the political situation in North Africa and the Middle East, as well as the consequences of the natural disaster in Japan on the Asian region remain difficult to predict and
raw material markets are characterized by further volatility and inflation. Symrise will also carry out cost and portfolio management initiatives in the following quarters; in addition the Group will utilize its high degree of expertise in conjunction with innovative products and technologies.

[Logo/Text: Symrise]