Symrise fulfills 2017 targets and dynamically starts into current fiscal year
— Sales up by 3.2 % to € 2,996.3 million – adjusted for portfolio and currency effects organic growth of 6.3 %
— EBITDA increase to € 630.3 million
— EBITDA margin at a very healthy 21.0 %
— Net income up 2 % to € 270.3 million
— Dividend increase to € 0.88 per share proposed
Symrise AG achieved profitable growth in the fiscal year 2017 and reached all of its targets. The Group increased sales by 3.2 % to € 2,996.3 million (2016: € 2,903.2 million). Excluding portfolio and currency effects, organic sales growth even amounted to 6.3 %. Symrise profited especially from the dynamic performance of the Flavor and Nutrition segments and strong demand in the EAME and Latin America regions. Despite currency effects and investments into the expansion of capacities, the Group raised its EBITDA by 1 % to € 630.3 million (2016 normalized: € 625.2 million). With an EBITDA margin of 21.0 %, Symrise exceeded its 20.0 % target and was once again one of the most profitable companies in the industry (2016 normalized: 21.5 %).
"2017 was yet again a successful year for Symrise. For the twelfth year in a row we achieved very satisfactory increases in sales and earnings, especially in terms of organic growth. Despite further investments into our expansion, volatile exchange rates and rising raw material prices over the course of the year, we operated yet again highly profitable. To allow our shareholders to participate in this success, the Executive Board and Supervisory Board will therefore propose a dividend of € 0.88 at the Annual General Meeting," said Dr. Heinz-Jürgen Bertram, CEO of Symrise AG. "We are also optimistic about our prospects in 2018. We have made a dynamic start and feel confident that, with our strong market position, increased internal sourcing of raw materials, and the targeted expansion of capacity, we are very well positioned."
Dynamic organic growth in sales
Symrise increased its sales to € 2,996.3 million (2016: € 2,903.2 million) and benefited from strong organic growth of 6.3 %. Taking portfolio effects into account – in particular the sale of the industrial activities of Pinova in December 2016 and the acquisitions of Nutraceutix, Nutra Canada and Cobell – as well as exchange rate effects, sales grew by 3.2 %.
Strong demand especially in Latin America and EAME
The largest sales growth was realized in Latin America, where sales were up by a substantial 7.6 %. Sales in North America showed a 4.1 % year-on-year decrease due to the divestment of Pinova's industrial activities in December 2016. The Asia/Pacific region achieved a modest increase of 1.4 %. With a strong 7.4 % rise in sales, the EAME region showed an even more dynamic development than in the previous year.
The share of Emerging Markets in the Group's total sales was slightly higher, at 44 % (2016: 43 %). Symrise achieved an overall 7.6 % increase in sales at local currency in those countries.
High profitability maintained
Despite unfavorable currency effects, higher costs for raw materials and investments in expansion, Symrise was able to increase its EBITDA to € 630.3 million (2016 normalized: € 625.2 million). At the same time, the Group was highly profitable, with a very good EBITDA margin of 21.0 % (2016 normalized: 21.5 %).
Net income of the Group increased 1.8 % to € 270.3 million (2016 normalized: € 265.5 million). Earnings per share improved to € 2.08 (2016 normalized: € 2.05). The Executive Board and Supervisory Board will therefore propose an increase in the dividend from € 0.85 to € 0.88 per share at the Annual General Meeting on 16 May 2018.
Increase in operating cash flow
The Group grew its operating cash flow by approximately 17 % to € 396.2 million (2016: € 338.8 million), mainly as a result of higher earnings and a lower increase in working capital.
At the reporting date, net debt including provisions for pensions and similar obligations was € 49.2 million lower, at € 1,921.6 million (2016: € 1,970.8 million). The ratio of net debt, including provisions for pensions and similar obligations, to EBITDA stood at 3.0 (31 December 2016: 3.1). Due to the realized acquisitions, the value is temporarily above Symrise’s target corridor of 2.0 to 2.5.
The equity ratio increased from 36.4 % at the end of 2016 to 37.8 % at 31 December 2017. Therefore, Symrise has a solid capital base to continue advancing the Group's future sustainable development.
Scent & Care segment
The Scent & Care segment achieved total sales of € 1,263.1 million (2016: € 1,311.3 million). This year-on-year decrease of 3.7 % resulted from the sale of the industrial activities of Pinova in December 2016 and a slower first half of the year. Adjusted for portfolio and exchange rate effects, the segment reported healthy organic growth of 3.9 % – buoyed in particular by the strong fourth quarter, with an increase of 5.8 %. The strongest growth was posted by the Cosmetic Ingredients division. Strong demand was seen especially in the Asia/Pacific and EAME regions.
EBITDA in the Scent & Care segment amounted to € 248.1 million (2016 normalized: € 257.8 million). The 3.8 % decrease reflects higher raw material costs, the sale of the Pinova industrial activities and expenses for research and development. The EBITDA margin remained stable at 19.6 % (2016 normalized: 19.7 %).
Sales in the Flavor segment increased to € 1,101.9 million in the year under review (2016: € 1,015.9 million). The segment achieved very strong growth of 8.5 %. Excluding the portfolio effect from the acquisition of Cobell and currency effects, organic growth amounted to a very healthy 9.3 %.
All regions and application areas contributed to the positive sales development. The segment continued the successful trend of recent years, particularly in Europe, Africa and the Middle East (EAME) as well as in North America. Growth was particularly strong in the Sweets and Beverages application areas as a result of new business with vanilla flavorings.
EBITDA in the Flavor segment amounted to € 242.9 million (2016: € 233.8 million). This represents a 3.9 % increase as compared with 2016. The EBITDA margin was a very satisfactory 22.0 % (2016:
Nutrition posted a substantial 9.6 % year-on-year plus in sales to € 631.3 million (2016: € 576.0 million). Adjusted for portfolio and currency effects, organic sales growth in the segment amounted to 6.5 %.
The pet food application area was again one of the strongest growth drivers, with at least single-digit and sometimes even double-digit sales growth in local currency in all four regions.
The segment increased its EBITDA by 4.3 % to € 139.4 million (2016: € 133.7 million). The EBITDA margin was at an outstanding 22.1 % (2016: 23.2 %).
Confident outlook for 2018
After a dynamic start in the first quarter, Symrise is confident for the further development in the fiscal year 2018. The Group is expecting a healthy global economic growth. However, the debt situation of some countries will continue and some currencies will remain volatile. Moreover, Symrise expects overall raw material costs to increase significantly. The Group has been actively pursuing backward integration in key natural raw materials for years. As a result, Symrise is in a good position through close cooperation with producers and long-term contracts.
For the current fiscal year, Symrise remains committed to its target of growing faster than the relevant market at Group and segment levels. Estimates place worldwide market growth in the 3–4 % range. Moreover, despite the currently tense raw material situation, Symrise intends to maintain its strong profitability, and is therefore targeting an EBITDA margin of around 20 %.
Symrise is also reaffirming its objectives set for the end of the fiscal year 2020: a compound annual growth rate (CAGR) of 5–7 % and an EBITDA margin in the range of 19–22 %.
Symrise is a global supplier of fragrances, flavors, cosmetic active ingredients and raw materials as well as functional ingredients. Its clients include manufacturers of perfumes, cosmetics, food and beverages, the pharmaceutical industry and producers of nutritional supplements and pet food.
With sales of approximately € 3 billion in 2017, Symrise is among the global leaders in the market for flavors and fragrances. Headquartered in Holzminden, Germany, the Group is represented with more than 90 sites in Europe, Africa and the Middle East, Asia, the United States and Latin America.
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