Dusseldorf The fragrance and aroma manufacturer Symrise expects lower profits than expected for the past year. The Dax group announced this in an ad hoc announcement on Friday after the stock market closed.
The main reason for this is a write-down of EUR 126 million on the stake in Swedencare, a manufacturer of nutritional supplements for pets. In the summer of 2021, Symrise took a good five percent stake in the Swedish company.
Swedencare’s share price has fallen by almost 70 percent to EUR 3.13 over the past twelve months. The company is suffering from the global uncertainties resulting from the Russian war of aggression in Ukraine. Exchange rate effects are also having a negative impact. Swedencare does a lot of business in the US.
The poor development of the investment is now also noticeable in Symrise’s balance sheet. Including the value adjustment, earnings before interest, taxes, depreciation and amortization (Ebitda) in the past year were 795.4 million euros – a drop of a good two percent compared to the previous year. The market had expected 956.6 million euros.
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The Ebitda margin (earnings before interest, taxes, depreciation and amortization relative to sales) fell to 17.2 percent, analysts had assumed 20.9 percent. However, Symrise exceeded expectations with another key figure: sales rose to 4.6 billion euros in the past year. In 2021 it was still 3.8 billion.
Consumers come into contact with Symrise products around 20 to 30 times a day. The Dax group ensures that toothpaste tastes like mint or ice cream like vanilla. Hardly any cosmetics or food manufacturer can do without the company’s supplies. Symrise also supplies corporations such as Nestlé or Mars, which are also large animal feed producers.
Growing pet food market
The company from Holzminden in Lower Saxony is considered the economic miracle of the 2010s. Since 2006, sales have grown by almost eight percent annually on average. Even during the pandemic, the group was highly profitable with a margin of around 20 percent. In autumn 2021, the company was promoted to the leading index Dax.
>> Read also: Economic miracle of the 2010s: Why the unknown Dax newcomer Symrise has been growing for years
In the past, Symrise was often more successful with its acquisitions. The most important and daring takeover of 2014, at EUR 1.3 billion, was that of Diana, a leading French manufacturer of flavors, primarily for the pet food industry.
Despite the setback, Symrise intends to continue to hold on to Swedencare, a spokesman told Handelsblatt. The aroma business with pet food, in which Symrise is also considered a leader through its acquisitions, has strong margins and is growing by ten percent every year. Many customers are willing to spend large sums of money on their limbers. Symrise also benefits from this.
It is not without reason that Symrise is expanding production in this area, new plants for animal feed flavorings are being built in Brazil, France and the USA. In 2025, CEO Heinz-Jürgen Bertram wants to convert 1.5 billion euros in this area, most recently it was around 600 million. “The market for premium pet products offers great growth potential,” said Bertram on Friday evening.
Symrise reaffirmed its long-term goals. The group wants to increase its sales by five to seven percent annually and thus grow faster than the market. By the end of the 2025 fiscal year, Symrise is aiming for an Ebitda margin in the range of 20 to 23 percent.
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