Boosted by a recovering world economy, emerging markets, strong overall demand and increased business with top customers, Symrise AG reported full-year 2010 sales of €1,571.9 million, a gain of 15% year-over-year. EBITDA margin for the period totaled 21.1%. The company grew its operating cash flow to €235.1 million (2009: €225.7 million).
The outcome resulted from a 21% sales growth in Asia-Pacific, particularly demand in fine fragrances and aroma molecules; 18% sales growth in Latin America; 16% sales growth in North America; and 12% sales growth in Europe, Africa and the Middle East (EAME), led by increased demand in fine fragrances and personal care.
Emerging markets now account for 46% of total sales for Symrise; sales in those areas rose 13% in 2010.
Meanwhile, the company grew its business with its top 10 customers by 14%, driven by its inclusion on new core lists and new projects associated with existing lists. Top customers now account for about 30% of total sales.
Flavor and Nutrition
Flavor and nutrition division sales grew 13% in 2010 to €767.4 million, driven by the beverage category (and its citrus technology) and a 15% increase in sales to top 10 customers. The division's EBITDA rose 25% to €170 million (2009: €137 million). Sales in Latin America rose 15% at local currency, while sales in Asia-Pacific and EAME both grew 10% at local currency. The company reported high demand in Russia. North American sales grew 7%, led by new and existing core listings.
Scent and Care
Scent and care division sales grew 18% to €804.5 million, driven by a 13% increase in sales to top 10 customers, double-digit growth rates for all application areas and regions, and strong performance in personal care and fine fragrances. The division's EBITDA grew 48% to €161 million (2009: €109 million). Boosted by oral care and fine fragrances, North America and EAME sales both grew 13%; fine and special fragrances helped Asia-Pacific grow 12%; and Latin American sales grew 10%.
Symrise focused on cost management in 2010, particularly sharp rises in the cost of some key raw materials. According to an official statement, "Symrise benefited from a number of factors including backward integration in the purchasing of key raw materials such as vanilla, as well as from relatively favorable conditions which had been secured early on."
Looking back on 2010, CEO Heinz-Jürgen Bertram said, “We capitalized on the strong tailwind of the economic recovery and ran our utilization at very high levels the whole year round. Besides continued strong growth in emerging markets, we benefited from a strong revival in demand in Western Europe and other established markets. This resulted in record growth of over 15%, with double-digit sales increases in all regions and in both divisions. With an EBITDA margin of 21.1% we have operated on a very profitable basis. We would like our shareholders to participate in this success and are proposing a 20% dividend increase to €0.60 per share.
"In fiscal year 2010 we systematically continued to implement our proven strategy: Our innovative business units such as Life Essentials and Consumer Health launched new products which pick up on consumers’ needs for a balanced diet and healthy lifestyle. Our traditional flavor & fragrance business has been extended by significant investments, including a two-fold increase in our menthol production capacity. In 2011 we will continue to focus on sharpening our specific profile.”
Looking ahead, the company is focused on emerging markets and further growing business with top customers in order to reach a 3-5% local currency sales increase and EBITDA margin of more than 20%.
“[W]e do remain realistic: Following the outstanding year 2010 which was also driven by economic backlogs we are expecting more moderate growth for 2011," says CEO Heinz-Jürgen Bertram. "In this context the course of the crisis in the Middle East plays a role; another determining factor will be the oil price development which is difficult to predict and its influence on consumer behavior. At the same time we expect raw material prices to be one of the main challenges which we will keep a close eye on. Since this already became apparent in the middle of 2010, we implemented initiatives at an early stage: we expanded our backward integration of our supply chain, entered price negotiations with our customers and continued our consequent cost discipline. We are therefore sticking to our aspiration of permanently being one of the most profitable companies of our sector, and working on the basis of a sustained EBITDA margin of above 20%.”