Dusseldorf Despite consumer restraint, rising prices and the energy crisis, the fragrance and aroma manufacturer Symrise is growing. In the first nine months, the Dax group increased its sales from its own resources by 11.3 percent to 3.5 billion euros. The company, based in Holzminden in Lower Saxony, announced this on Wednesday morning. The group does not name key earnings figures on the basis of its nine-month figures.
The group, which was promoted to the leading index Dax last autumn, grew nominally by 21.2 percent in the first nine months. Analysts had expected an increase of 19.4 percent. The group seems to be getting through the crises better than its Swiss competitor Givaudan. This had recently grown more slowly than expected by the market.
“In what continues to be a challenging and volatile market environment, we have once again succeeded in continuing our growth course,” said Symrise CEO Heinz Jürgen Bertram in a corporate statement. The manager and his company are not in the public eye, even though consumers come into contact with Symrise products an average of 20 to 30 times a day.
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 either. On the contrary: Symrise is again raising its outlook for the year as a whole and is now anticipating organic sales growth of over ten percent.
In the summer, the group had assumed significantly more than seven percent, at the beginning of the year the Dax group spoke of five to seven percent. However, most of the sales growth is likely to be price-driven. The group recently stated that it passed on 70 percent of the increased costs to customers.
Cost pressure should ease
The rising costs for logistics, raw materials and energy are slightly depressing the Group’s margin. As before, Symrise expects an EBITDA margin of 21 percent for the year as a whole. In 2021 it was 21.3 percent. At an investor event, the group recently stated that the upward pressure on costs was easing. In 2023 there should still be cost increases due to high energy prices, but the group expects lower spending on logistics and raw materials.
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 its sales in both.
The company was promoted to the leading index Dax last autumn.
(Photo: dpa)
While the business with fragrances for perfumes benefited from the relaxation of the corona virus because more people are going out again, demand for hygiene products was below the previous year’s value. For example, consumers are now asking for fewer disinfectants than at the beginning of the pandemic. Symrise benefited from the warm summer and high demand for sunscreen. The group makes ingredients for it.
Despite the robust business development, the Symrise shareholders, who have been spoiled for many years, currently have little reason to be happy. In view of the inflation-related reluctance to consume and the general fears of a recession, the Lower Saxony price list has been down by more than 20 percent since the beginning of the year. The share lags behind the Dax.
Significant growth
Nevertheless, Symrise’s business with fragrances and flavorings has grown considerably 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.
>> Read more: Economic miracle of the 2010s: Why the unknown Dax newcomer Symrise has been growing for years
Symrise relied early on on close cooperation with raw material suppliers in order to stabilize the supply chains. This benefits the group, especially in the current situation. In addition, the management has made clever acquisitions in recent years, especially in the profitable aroma business with pet food. This area again grew in double digits.
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 is one of the world’s four largest fragrance and aroma manufacturers, which together control more than half of the 38 billion euro global market. The manufacturers are thus in an oligopoly and have an easier time passing on cost increases to customers.
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