Symrise AG reports stable growth despite economic crisis

Despite the unfavorable environment, Symrise boosted sales by € 45.4 m to € 1.32 bn in 2008. Sales growth included the strategically important acquisitions in the US and equated to a local currency increase of 6.5%. Net of acquisitions, sales increased 3.5% in local currencies (0.8% at actual rates). Symrise again grew faster than the market in 2008. The EBITDA margin of almost 20% is on a par with the leading companies in the global fragrance and flavor industry. The Company generated a strong operating free cash flow of 9.3% of total sales. In line with the dividend policy of distributing about 50% of basic underlying earnings per share as dividends, the Company will propose a dividend of € 0.50 per share at the annual shareholders’ meeting on May 11, 2009.


In 2008, additional progress was made with the strategy of realizing new sales potential with large multinational customers and in the faster-growing emerging markets. Sales in local currencies to the ten largest customers rose by 7% at Scent & Care and by 11% at Flavor & Nutrition. Both divisions won new core list positions with key accounts. As last year, the emerging markets remained growth drivers. Sales in the emerging markets grew by 8% in local currencies and accounted for 39% of total sales in 2008. Symrise’s position has substantially improved in the US market, which had proved challenging to date. Sales in the US climbed by 25%; acquisitions in both divisions played a significant role here. Net of acquisitions, sales in local currencies rose by a robust 8%.


The strategically important “AND” products, Symrise´s innovative multifunctional products, similarly demonstrated good growth and again constituted a significant percentage of total sales in 2008. The Life Essentials portfolio from the Scent & Care division as well as all of the Taste For Life® products from Flavor & Nutrition showed particularly strong increases.


In the second half of the year, the financial and economic crisis got worse. The related decline in demand was most noticeably reflected in the luxury segments and in customers’ order patterns. In the second half of the year, many customers reduced their inventories in order to maximize cash flow and optimize working capital.
Earnings in 2008 were impacted by high raw material prices and acquisition-related integration costs. For the year as a whole, raw material prices were more than 5% higher than in 2007. Integration costs totaled € 6 million; additional integration costs of about € 3 million are expected in 2009.


In 2008 Symrise made a series of strategic decisions that position the Company to grow faster than the market once again in 2009. Worldwide the company invested € 179.2 m (2007: € 55.8 m). Investments and acquisitions in 2008 were focused on expanding the Flavor & Nutrition and Scent & Care divisions in the US.


In the Scent & Care division, the acquisition of the US businesses of Manheimer Fragrances and Intercontinental Fragrances has transformed Symrise into one of the leading fragrance manufacturers in the US air freshener and scented candle (air care) market. The North American market for air care products totals more than USD 300 m and constitutes 10% of the overall fragrances market in the US. In 2009 Symrise plans to open a global Air Care Center in the US.


In the Flavor & Nutrition division, the acquisition of the flavor business unit of Chr. Hansen has substantially enhanced competitiveness in the US market. The acquisition likewise reinforces the sales organization and facilitates access to a new customer base.


By opening a new Creative Center in Shanghai, the Scent & Care division has recognized the rising importance of China and the entire North Asian region. The Creative Center serves as a new regional headquarters for Northeast Asia, which will serve not only China and Taiwan but also Japan and Korea.
In 2008, Symrise also further expanded its market position in the area of citrus flavors: by opening a global Citrus Center in Sorocaba, Brazil, the Company has now direct access to first-class raw materials and innovative technologies.


Similarly, Symrise has strengthened its position in the rapidly growing markets in Southeast and Eastern Europe. The subsidiary in Vienna has been expanded in order to serve customers in these markets even better. In Moscow Symrise has opened a new development center as well as a new sensory and consumer research center, which will help to satisfy customer requirements in this important market more quickly.


In view of the high prices for raw materials in coming months and the negative impact of the economic crisis on customers’ order patterns, Symrise expects that the first half of 2009 will be weaker than the strong first half of 2008. For 2009 as a whole, Symrise expects to grow faster than the market once again. Due to the volatility of the current economic environment, precise forecasts regarding profitability and margin are not currently possible. Nonetheless, Symrise again anticipates strong operating free cash flow for 2009 as a whole. Symrise has secure financing through the end of 2011 and is able to pursue its corporate strategy in 2009 with full vigour.


“Despite the challenging business environment, we consider our core business to be as stable and robust as ever,” said Dr. Gerold Linzbach, Chief Executive Officer of Symrise. “As a result of the strategic decisions taken in recent years, we are well positioned to grow faster than the market in 2009 as well.”