Dusseldorf The antitrust investigations against the German fragrance and aroma manufacturer Symrise are ongoing. The Dax group and its three major competitors are suspected of having coordinated their pricing policy and prevented smaller competitors from supplying certain customers. At the beginning of March, the authorities launched investigations, and the Symrise headquarters in Holzminden, Lower Saxony, were also searched.
“Since our offices were searched, there have been no new developments,” Symrise boss Hans-Jürgen Bertram told the Handelsblatt on Wednesday. The antitrust authorities have viewed documents and understood how Symrise interacts with customers. Bertram added that the authorities had not informed the company of the specific allegation even when asked.
Along with the Swiss companies Firmenich and Givaudan and the US manufacturer International Flavors & Fragrances (IFF), Symrise is one of the four major fragrance and aroma manufacturers. Together, these corporations control more than 60 percent of the 39 billion euro global market. For observers, it therefore does not seem impossible that collusion could have taken place.
The Swiss Competition Commission (Comco) published the investigations at the beginning of March. One is currently in the investigation phase, it is said on request. The investigators evaluate the confiscated data, market participants are questioned. In addition to Weko, the EU Commission and the antitrust authorities in the USA and Great Britain are also investigating. The investigation can take up to two years. Until then, the presumption of innocence applies, according to the Weko.
“We are not affected by the allegations and have nothing to hide,” said Symrise boss Bertram after the investigation became known. You will be heard as a witness in the proceedings. The two Swiss companies left a Handelsblatt inquiry about the current status unanswered. IFF only announced that it was cooperating with the authorities, but did not want to give any details.
The companies face fines of up to 15 to 20 percent of the affected sales, with a maximum of ten percent of the company’s annual sales. However, the penalties are often lower. Symrise achieved sales of 4.6 billion euros in 2022.
Symrise increases sales significantly
In the current year, these could be higher again because the group achieved a stronger increase in sales in the first quarter than was expected by observers. The group announced on Wednesday morning that its own revenue rose by 12.8 percent to 1.2 billion euros. Symrise does not name profit figures on the occasion of its quarterly results.
Symrise benefited from a strong sales increase of 14.6 percent in flavor solutions for food and beverages, pet food and healthy nutrition. The classic business with fragrances and perfumery applications grew by 4.2 percent.
“At the beginning of the year, Symrise was able to seamlessly continue the positive business development of the past year.”
(Photo: Symrise)
The group now generates a third of its revenues outside the traditional sector – in high-margin areas such as pet food, health or care cosmetics. That’s why Symrise is growing faster than the competition. “At the beginning of the year, Symrise was able to seamlessly continue the positive business development of the past year,” says Bertram.
His company is not in the public eye, even though consumers come into contact with Symrise products an average of 20 to 30 times a day. These ensure that toothpaste tastes like mint or ice cream like vanilla.
Margin pressure weighs on share
For the current year, Symrise continues to expect organic sales growth of five to seven percent. The group continues to aim for a profit margin before interest, taxes, depreciation and amortization (Ebitda margin) of 20 percent. Profitability is only at the lower end of the medium-term ambitions of 20 to 23 percent.
Symrise is feeling the effects of increasing expenditure on raw materials, logistics and energy. According to the company, the majority of the cost increases have already been passed on. But the subdued purchasing behavior for everyday goods also has an effect on the supplier. Hardly any cosmetics or food manufacturer can do without Symrise applications.
Margin pressure weighs on share performance. At just under 108 euros, the paper is only at the previous year’s level and has developed weaker in the current year with an increase of six percent than the Dax, which rose by 13 percent. At the beginning of the year, the share also suffered from a write-down that Symrise made on an investment.
Industry observers expect the pressure from raw material costs to ease over the course of the year and demand to pick up again. Symrise is aiming for sales of 5.5 to 6 billion euros by 2025.
Symrise is considered the economic miracle of the 2010s. Since 2006, sales have grown by almost eight percent a year on average, and the group is highly profitable with a margin of around 20 percent. In 2021, the company was promoted to the leading index Dax.
More: Why the unknown Dax newcomer Symrise has been growing for years