Symrise optimistic in face of financial crisis

By Gavin Kermack

- Last updated on GMT

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German flavour and fragrance manufacturer Symrise remains confident of seeing growth for the remainder of this year and next, despite the financial downturn which is gripping the world markets.

The company stressed in its third quarter interim report, released today, that the majority of its products focus not on luxury items but “on satisfying basic human needs”​, and thus expects that the current economic situation will have only “a limited effect”​ on the large part of its portfolio.

The report shows that overall sales during the first nine months of 2008 sales grew by 6.1 per cent at local currency to €1,009.5m, equating to growth of 2 per cent at actual rates.

In spite of the sales increase, operating profits during this period were down. EBIT was 2 per cent lower than the same time last year, from €161.6m to €158.5m, with a drop in margin of 0.6 percentage points to 15.7 per cent. EBITDA fell from €219m to €211.5m, a difference of 3 per cent, with a margin drop of 1.1 percentage points to 21 per cent. The company blames this on increased operating costs.

However, net income was up from €84.3m in the first nine months of 2007 to €84.9m this year.

Three pillars

Looking at Q3 alone though, there is a large net income drop from €31.7m to €24.1m, which the company says “must be understood in comparison to the extraordinarily strong third quarter in 2007”​. It also points out that sales in August 2008 were hit by “the uncertainty of customers concerning the financial crisis”​, and highlights the fact that a direct comparison between Q3 this year and last shows an increase of 4.9 per cent in local currency (1.6 per cent in actual rates) to €333.5m.

Communications officer Katja Derow told that while the company had experienced a decrease in orders when the financial crisis hit, it was hopeful that sales during the Christmas season would increase profits during Q4.

CEO Gerold Linzbach was positive about the figures in the report, saying it was down to his company’s commitment to its company strategy, based around ‘three pillars’: creating innovative and intelligent products; being top of all its customers’ call lists; and being active in emerging markets.

“We see our good numbers in these bad times as a strong confirmation of our corporate strategy,”​ said Linzbach. “And we see the bad times as an additional reason to pursue it with the same focus and consistency as in the past.”

Nothing to worry about

Symrise’s flavour and nutrition division has seen more success than its scent and care sector in 2008. Its acquisition of Danish firm Chr. Hansen’s flavours division earlier this year affected its profit margin due to integration costs but nevertheless it saw growth of 10.9 per cent at local currency (6.9 per cent at actual rates) to €499.8m. Its EBITDA grew by €0.1m to 108.9. Flavours and nutrition performed particularly strongly in emerging markets, with local currency growth of 11 per cent compared with last year.

Scent and care saw sales drop from €521.8m last year to €509.7m, and its EBITDA from €110.2m to €102.7m.

Derow re-emphasised that the reduced sales of luxury items like fragrances was down to the economic situation, and that there was no cause for concern, especially given the strong performance of the company’s flavour and nutrition division.

“We’re not nervous,”​ she told “When people stop eating – then we will get nervous.”

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