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Emerging markets and flavours a boon for Symrise

By Jess Halliday , 29-Jul-2008

Symrise has reported good sales growth in local currencies the first half of 2008 driven by flavours and emerging markets, although fragrance growth was hit by the drop-off in consumer spending on luxury goods.

The German flavour and fragrance firm reported sales of €676.9m in H1 2008 – up 6.7 per cent in local currencies on the same period of last year. However when currency “headwind” are taken into account, the actual rate increase is 2.3 per cent.

Against a backdrop of the industry as a whole, these are good-looking figures. Industry growth over the same period is said to be 2.5 per cent in local currencies.

Earnings (EBITA) were up to €123.6m compared to €123.1m last year. The company says this represents a 6 per cent increase in local currencies.

On the back of the results, it has adjusted its full year outlook to a 6 to 7 per cent increase in sales and 6 per cent EBITA growth, both in local currencies.

Like most companies in the sector, Symrise has been stung by rising costs of raw materials, energy and transportation.

“These cost increases were partially compensated for by strong cost management and an ongoing programme of production efficiency improvements,” said the company.

Emerging markets

Symrise has cited the emerging markets in which it is active as having a very positive effect on its first half results.

European, Africa, & Middle Eastern (EAME) sales were up from 186.4m to 188.9 in local currencies; and Asia Pacific from €62.9 to €66.5. Only South America saw a small dip, from €22.8 to €22.3.

Over the last quarter Symrise has announced more investment in emerging markets, with the opening of a new creative centre in Shanghai, China, that will conduct consumer research for the Scent and Care division.

This centre will also be the new regional hub for the company in northeast Asia.

“Flavor & Nutrition has also invested in the Latin American market and expanded its site in Mexico City via highly modern lab facilities for the development and implementation of various flavours on the Latin American continent,” said CEO Gerold Linzbach.

Flavor & Nutrition

The flavour side of Symrise’s business performed exceedingly well in H1, with growth in sales of 11.4 per cent at local rated (7.1 per cent actual) to reach €333.m.

In the last quarter Symrise completed its acquisition of Chr Hansen’s seasonings (spice blends), savoury, sweet and dairy flavour businesses. This move was intended to strengthen Symrise’s position in the US market.

The business started making a positive contribution to sales straight away, of €8.3m. Once the new owner had accounted for one-off expenses associated with the acquisition, however, the impact on profits was “negligible”.

Scent & Care

Scent & Care represent something of a dark mist over Symrise’s otherwise sunny outlook, due to “global pressure on consumer spending in the second quarter”.

Sales growth in local currencies was just 2.5 per cent in local currencies, reaching €342.7m.

The recession has hit products that are seen as luxurious in particular, with lower demand seen in the Fine fragrances and parts of Personal Care. More mainstream offerings, however, like Mint and Life Essentials, were seen to keep up previous string growth rates.

Here, Symrise has recently taken action on its selling prices to combat rising raw material and energy costs; it announced some selective price increases of 10 per cent during H1, and more hikes in early July.

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