Symrise AG has released its 2018 financial results, which includes yearly sales totaling €3,154 million – a 5.3% increase from 2017 numbers of €2,996 million.
In 2018, the company experienced strong demand across all segments and regions and achieved an organic growth rate of 8.8%. Taking into account the acquisition of Cobell and Citratus and exchange rates, the group sales were up 5.3%. For the year, the group achieved earnings before interest, taxes, depreciation and amortization (EBITDA) of €631 million, a slight increase from 2017’s results of €630 million. Net income for the group increased by 1.9% to €275 million from €270 million in 2017. Profitability remained healthy and within the target corridor of 19-22%, with an EBITDA of 20%.
While the company experienced growth across segments and regions, the growth driver at the regional level was Latin America with an organic growth rate of 16.2%. EAME and North America regions registered a 6.4% and 6.1% organic rate, respectively. In Asia Pacific regions, the company saw an organic growth rate of 12.4%, while emerging markets saw growth at 11.7%.
Per segment, its scent and care segment saw sales increase to €1,324 million with an organic growth rate of 8.9%. This segment posted a 4.8%, despite incurring costs from the Citratus acquisition and currency effects. Particularly strong growth was seen in its cosmetic ingredients division, which saw double-digit organic growth. Strong interest was seen in China, Brazil and Japan markets. Symrise’s aroma molecules and fragrance division also performed well with strong demand for menthol for fine fragrance and personal care products. The segments EBITDA increased to €254 million, as opposed to €248 million in 2017. The EBITDA margin was 19.2% (19.6% in 2017) and was mainly caused by higher raw material costs, especially in perfumery raw materials.
For the flavor segment, the company saw strong organic growth at 9.5% with sales increasing to € 1,191 million, up from € 1,102 million in 2017. Taking into account currency effects and the acquisition of Cobell, the segment grew by 8.1%. All the regions and application areas contributed to the positive growth, including double-digit growth in EAME regions and overall growth in sweets and beverage products. The EBITDA for the flavor segment was at €244 million, slightly higher than 2017’s numbers of €243 million. Influenced by the lower profitability of the Cobell business and higher raw material costs, the EBITDA margin lowered to 20.5% from 22% in 2017.
In its nutrition business, organic sales grew by 7.4% to €639 million from 2017 numbers of €631 million. Including portfolio and currency effects, the segment grew by 1.2% with particularly strong growth in its pet food application area. For the year, the segment achieved an EBITDA of € 132 million, a decrease from €139 million in 2017. The decline in earnings was attributed to investment in its Diana Food location in the United States and a lower contribution to earning from Probi due to a temporary inventory decrease by a major customer in the first half of the year (sales returned to normal in the third quarter). Despite these effects, the EBITDA margin was 20.7%, lower than 2017’s numbers of 22.1%.
Planning for 2019 and Beyond
Looking ahead to 2019, the group aims to exceed the overall growth rates in the relevant market. Symrise is targeting an EBITDA margin of 20%, despite an anticipated economic slowdown and ongoing volatility in exchange rates and tight markets for raw materials. By 2025, the company aims to increase sales to around €5.5-6.0 billion with an annual organic growth rate of 5-7%. To achieve these goals, the group will take advantage of megatrends and expand its portfolio to adjacent, high-margin applications like naturals, sustainable product solution and digital business processes.
"In 2018 we seamlessly continued our success story. Symrise again grew profitably and outperformed the market. We identified and successfully capitalized on growth opportunities in every business segment. We also invested in future growth and added to our capacity. Although we were not able to counteract all of the headwinds caused by high raw material prices and negative currency effects, we still operated with a healthy profitability. We want our shareholders to participate in this success. At the annual general meeting, the executive board and supervisory board will propose a dividend increase to €0.90 per share for the fiscal year 2018," said Heinz-Jürgen Bertram, CEO of Symrise AG. "Despite the anticipated economic slowdown, we have made a confident start to the new fiscal year. We have substantiated our long-term ambition with the updated forecast. It extends into the year 2025 and provides for a strong increase in sales with further improved profitability."