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Symrise AG’s first-quarter net income rose 13% to €52 million as sales rose to €470 million from €458 million a year earlier with the largest growth coming from its scent and care unit.
Read the company's earnings release below or click here.
Symrise AG had a successful start into the fiscal year 2014. The Group benefited from persistent high demand in both divisions and increased sales to € 470 million in the first quarter (Q1 2013: € 458 million). Adjusted for currency translation effects, sales recorded an increase by 8 %. At the same time, Symrise boosted its earnings before interest, taxes, depreciation and amortization (EBITDA) by 9 % to € 101 million (Q1 2013: € 93 million) and achieved an EBITDA margin of 21.5 % compared to 20.3 % in the same quarter of the previous year. Net income for the period increased significantly by 13 % to about € 52 million. In April, Symrise moreover announced the planned acquisition of the French Diana Group. With this transaction, which is scheduled to be completed in the third quarter, the Company is reaching an important milestone in the implementation of its growth strategy.
Dr. Heinz-Jürgen Bertram, CEO of Symrise AG, said: “In the first quarter, Symrise seamlessly continued its strong performance from the preceding fiscal year. Demand from our customers remained at a high level. With the solid utilization of our capacities and an advantageous product mix, we achieved an excellent EBITDA margin. We also pursued our growth strategy at full speed and are taking a large step forward with the recently announced acquisition of the Diana Group. Within this context, we are expanding our market position, supplementing our portfolio of natural ingredients and are entering the highly profitable Pet Food market. We will also substantially expand our backward integration and secure our long-term access to important agricultural raw materials.” S
Sales Increase by 8 % at Local Currency
In the first quarter, Symrise increased sales in the reporting currency by 2.6 % to € 469.6 million. At local currency, sales rose by 7.9 %. In addition to good capacity utilization in both divisions, the Group benefited from considerable growth in the Emerging Markets. The highest growth was achieved in the Latin America region where Symrise noted a sales increase of 15 % at local currency. EAME and North America both recorded sales growth of 7 % while the Asia/Pacific region grew sales by 6 % at local currency. EBITDA Margin Increase to 21.5 % The positive sales performance made a notable contribution to improving the result of operations. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 9 % during the reporting period to € 101 million (Q1 2013: € 93 million). The EBITDA margin rose to 21.5 % (Q1 2013: 20.3 %). Net income for the period amounted to € 52 million compared to € 46 million in Q1 2013. Earnings per share grew over proportionately by 13 % from € 0.39 to € 0.44.
Cash Flow from Operating Activities Climbs to € 49.4 Million
Cash flow from operating activities significantly grew and increased to € 49.4 million (Q1 2013: € 26.4 million); it particularly reflects the strong earnings performance and low inventories from the first quarter. The ratio of net debt incl. provisions for pensions to EBITDA amounted to 2.0 (Q1 2013: 2.0).
Sales in Emerging Markets Up By 12%
Symrise again benefited from its strong presence in the Emerging Markets during the first quarter. Sales in these regions were up by 12 % at local currency. The share of Group sales attributed to the Emerging Markets amounted to 48 % and was on the same level as the prior year. Scent & Care Division Symrise grew sales in the Scent & Care division to € 255 million after € 245 million in the previous year. In local currency, this corresponds to an increase of 9 %. Particularly strong impulses came from the business units Fragrances and Life Essentials, which both realized double-digit growth rates. Due to the strong demand in menthol, the business unit Aroma Molecules continued to build on its strong currency adjusted sales level from the first quarter of 2013. Considerable sales growth for Scent & Care was recorded in the regions of Latin America (+13 % at local currency) and Asia/Pacific (+8 % at local currency). In both, North America and EAME, the division increased sales by 9 % at local currency. Scent & Care notably drove its EBITDA to € 58 million (Q1 2013: € 49 million). The EBITDA margin rose from 20.0 % in the previous year’s first quarter to 22.7 % in the reporting period.
Flavor & Nutrition Division
Flavor & Nutrition generated sales of € 215 million in the first quarter of 2014 (Q1 2013: € 213 million). This corresponds to an increase of 6 % at local currency. Similar to Scent & Care, the Emerging Markets, Latin America in particular, made a significant contribution to this result. Latin America posted the division’s strongest growth with a sales increase of 18 % at local currency, benefiting especially from global and regional customers in the application areas Savory and Sweet. The second strongest region was EAME, which recorded a sales increase of 6 % at local currency. Sales were developed particularly strong in the markets of Egypt, Russia, Nigeria and South Africa. North America achieved sales growth of 5 % at local currency in the first quarter. The Asia/Pacific region, particularly the markets of Indonesia, India, Malaysia and Thailand, delivered good growth; sales in the region grew by 4 % at local currency. EBITDA in the Flavor & Nutrition division was at € 43 million (Q1 2013: € 44 million), this is slightly lower than in the same period of the previous year. The EBITDA margin amounted to 20.0 % (Q1 2013: 20.6 %).
Expanding Market Position with Planned Acquisition of Diana Group
On April 12, 2014, Symrise announced the planned acquisition of the French Diana Group, the number one in the worldwide market for pet food and a leading provider of natural flavors. With the planned acquisition, Symrise will substantially expand its market position in the Flavor & Nutrition division, intensify the backward integration for agricultural raw materials and expand into the highly attractive pet food segment. The acquisition, valued at € 1.3 billion (enterprise value), will have a full positive effect on earnings starting in 2015. In the fiscal year 2013, Diana generated sales of about € 424 million and an EBITDA margin of roughly 21 %. According to French law, the transaction requires consultation with Diana’s employee representatives as well as approval from antitrust authorities. The acquisition is scheduled to be finalized in the third quarter of 2014.
Positive Outlook for 2014
After an excellent first quarter, Symrise is confirming its outlook for the fiscal year 2014. The Group expects to see further on solid demand and positive market developments in all regions and both divisions. Accordingly, Symrise is confirming its target to also outperform the global market for Fragrances and Flavors in 2014. Symrise furthermore aims at an EBITDA margin of more than 20 %. The targets defined for the 2020 fiscal year continue to apply to the expanded Symrise AG, including the addition of the Diana Group: Symrise aims at an annual sales growth (CAGR) of between 5 and 7 % and an EBITDA margin between 19 and 22%.