Dusseldorf The fragrance and aroma manufacturer Symrise is crisis-proof. Despite the war in Ukraine, the energy crisis and rising raw material costs, the Dax group increased its sales in the first half of the year by 10.2 percent to almost 2.3 billion euros. Before interest, taxes, depreciation and amortization, Symrise achieved a profit (Ebitda) of 486 million euros – 15.7 percent more than in the first half of 2021. The group announced this on Tuesday morning and exceeded analysts’ expectations.
“In the current volatile market environment as a result of rising raw material prices, ongoing global supply bottlenecks and the Ukraine war, we have once again succeeded in continuing our profitable growth course,” CEO Heinz Jürgen Bertram is quoted as saying in a corporate statement.
The company, based in Holzminden in Lower Saxony, is not in the public eye, even though consumers come into contact with the company’s products 20 to 30 times a day on average. The company’s products make toothpaste taste like mint or ice cream like vanilla.
Hardly any cosmetics or food manufacturer can do without supplies from Symrise. Customers include Persil manufacturer Henkel, Nivea manufacturer Beiersdorf and cosmetics giant L’Oréal.
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The Dax group does not expect business to slow down for the rest of the year, but is even increasing the sales forecast. Organic sales growth of well over seven percent is now expected in Holzminden. So far, the group had assumed five to seven percent. The company is benefiting from its diversified portfolio and broad customer base. Because of the improved prospects, Symrise stocks were in demand in pre-market trading and rose by 1.5 percent.
Rising costs squeeze margins
The group is not immune to the consequences of inflation, rising raw material costs and supply chain disruptions. However, Symrise has managed to pass on the cost increases to its customers through price increases, the company explains.
The cost pressure is reflected in slightly lower profitability: The margin was 21.5 percent – 0.5 percentage points below the value for the first half of 2021. As before, Symrise expects a margin of 21 percent for the year as a whole.
The company was promoted to the leading index Dax last autumn.
(Photo: dpa)
Symrise’s business is based on two pillars: The “Scent & Care” division includes fragrances and additives for cosmetics. In the “Taste, Nutrition & Health” area, Symrise produces flavorings for food, beverages and animal feed. The Group was able to increase sales and earnings in both.
Both divisions benefited from the relaxation of the corona virus. Symrise is seeing increasing demand for perfumes, for which it produces fragrances. In addition, consumers are increasingly going out to eat and drink again. The group benefits from this because it produces flavorings for beverages and spices.
Significant growth
Symrise’s fragrances and flavorings business has grown significantly in recent years. Since 2006, sales have increased by almost eight percent annually on average. The margin was always more than 20 percent. In addition to the basic need for food and drink, megatrends such as health and care are driving demand, also in the long term.
Symrise, which was promoted to the leading index Dax last fall, relied early on on close cooperation with raw material suppliers in order to stabilize the supply chains. In addition, the management has made clever acquisitions in recent years, especially in the profitable aroma business with pet food. The group is increasingly penetrating higher-margin business areas outside of the traditional flavor and fragrance sector. He already generates a third of his turnover with this.
Symrise has recently come under more pressure after its Swiss competitor Firmenich and the Dutch chemical group DSM announced a merger at the end of May. This will create a new industry giant in the fragrance and aroma market. The Symrise share reacted negatively to the announcement in the summer, but recently gained again.
>> Read more: Merger of billions: New chemical giant takes hold Evonik and Symrise
Analysts at DZ-Bank write that size is not the only value driver in a market characterized by very individual product needs. “In view of the high level of innovation, we see Symrise as well positioned in the new competitive environment.”
Along with the future DSM-Firmenich, the Swiss company Givaudan and the US group International Flavors and Fragrances (IFF), Symrise is one of the four major manufacturers that together control more than half of the global market worth 38 billion euros. The manufacturers are thus in an oligopoly and have an easier time passing on cost increases to customers.
More: Perfume via AI goes into series production: How the computer learns to smell.