Symrise AG : Symrise Continues to Focus on Earnings Power and Achieves EBITDA Margin of 20.1 %

Symrise remains on course with an EBITDA margin of 20.1 % for the first nine months of 2011. The Group achieved its targeted margin despite a further economic slowdown in the third quarter and sustained high raw material prices. In certain regions Symrise discontinued selective activities with low margins and continued strict cost discipline throughout the Group. Group sales increased about 2 % compared to the strong prior-year figures which were characterized by catch-up effects. The flavor business as well as activities with global customers significantly contributed to this growth. The Emerging Markets also continued to provide positive impetus for growth.

Dr. Heinz-Jürgen Bertram, CEO of Symrise AG, said: "The market dynamics have continued to slow in the third quarter due to weaker economic prospects and continuing tension on the raw material and foreign exchange markets. We made notable gains in our business with global customers. At the same time, however, we saw customers returning to more careful order patterns in certain regions and sectors. To secure our profitability on a long-term basis we continued to focus our business on profitable activities during the third quarter. We aim to growing, however, not at the cost of our earnings power."

Dr. Bertram continued: "We do not expect volatility to decline in our markets until the end of the year. Accordingly, securing our strong profitability takes first priority. From today's point of view and despite the current macroeconomic challenges we continue to be confident that we will achieve an EBITDA margin of 20 % for the full year of 2011. After using this year to consequently focus on optimizing our earnings, we are well prepared for various economic scenarios that may occur in the coming year."

Emerging Markets Account for 46 % of Total Sales

In the first three quarters of 2011, Symrise generated Group sales of € 1,206.3 million (previous year: € 1,207.7 million). This corresponds to an increase of about 2 % at local currency. The Group continued to grow in the Emerging Markets, though not at the exceptional pace of the previous year. Symrise rose sales in Emerging Markets by about 2 % and generated 46 % of its total sales in those markets.

In the EAME region, Symrise posted sales gains of 2 % (2 % at local currency). At the same time, sales growth in the Asia/Pacific region was moderate at 2 % (2 % at local currency) mainly due to portfolio optimizations. In Latin America, sales development remained behind the above-average growth rates seen last year with a gain of 1 % (3 % at local currency). Sales in this region also reflect the conscious decision to discontinue less profitable activities. In North America, sales decreased 8 % compared to the strong prior-year-figures, which is mainly due to negative exchange rate effects, as well as reserved consumer sentiment in the region. At local currency, the decline in sales amounted to a moderate 1 %.

Successful Expansion of Business with Global Customers in Both Divisions

Both divisions took advantage of their strong position as core suppliers to international food and consumer goods manufacturers and further expanded their business with those key customers. Scent & Care increased sales in this customer segment by 4 % while Flavor & Nutrition posted sales gains of 7 %.

In total Symrise increased sales with global customers by 5 %. The segment accounted for 31 % of Group sales.

Excellent Profitability despite Burdens from High Raw Material Costs

Symrise's earnings situation was negatively affected by sustained high raw material costs and volatile exchange rates in the first nine months of 2011. To counteract these burdens, Symrise focused on strict cost management throughout the entire Group and on a conscious discontinuation from activities with weak margins. These steps significantly contributed towards securing profitability and achieving an EBITDA margin of 20.1 % (previous year: 22.2 %). Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to € 242.6 million during the reporting period compared to € 267.7 million during the same period last year. Net income for the first nine month totaled € 117.4 million (previous year: € 127.3 million). This corresponds to earnings per share of € 0.99 (previous year: € 1.08).

Inventory Reduction Allows Decrease in Working Capital

After a temporary build-up of important raw material inventories in the first half of the year, Symrise has reduced its working capital by € 35.3 million in the third quarter. Cash flow from operating activities amounted to € 130.1 million in the first nine months of 2011 (previous year: € 155.6 million).

Net debt (incl. pension provisions) amounted to € 743.2 million as of September 30, 2011 (December 31, 2010: € 733.7 million). The ratio of net debt (incl. pension provisions) to EBITDA amounted to 2.4 at the end of the reporting period (December 31, 2010: 2.2) and therefore remained within the targeted range of 2 to 2.5.

Scent & Care

Compared to the prior year period, which was characterized by catch-up effects, sales in the Scent & Care division declined to € 609.7 million in the reporting period (previous year: € 621.8 million). At local currency, the figure is nearly unchanged. The sales development reflects the discontinuation of less profitable orders.

Additionally, lower demand in consumer-related areas, such as luxury perfumes, were noticeable in the results. However, Scent & Care continued its positive growth trends in the Life Essentials, Aroma Molecules, and Oral Care application areas. In the menthol business, Symrise achieved double-digit growth. The application area Cosmetic Ingredients posted considerable growth, particularly in the Emerging Markets.

In Latin America, sales developed at a more moderate pace after experiencing very dynamic growth in the previous years. Scent & Care increased sales in the region by 3 % at local currency. In Asia/Pacific, the division managed a slight gain of 1 % (at local currency). The comparably lower growth rate is mainly due to portfolio pruning and exiting low-margin business activities. After the strong growth realized last year sales in the EAME region decreased by 2 % during the reporting period. Sales in North America remained stable.

EBITDA for the division totaled € 117.3 million (2010: € 131.2 million). The EBITDA margin was 19.2 % (previous year: 21.1 %).

Flavor & Nutrition

Flavor & Nutrition grew sales by about 2 % to € 596.6 million (previous year: € 586.0 million) during the first nine months of 2011. At local currency, this corresponds to an increase of 3 %.

The strongest region in terms of growth was EAME, with solid demand in all of the important country markets and a jump in sales of 6 % (at local currency). Beverage applications and Consumer Health developed particularly well in this region. In comparison to the strong performances seen in the previous year Asia/Pacific and Latin America generated more moderate growth with each region posting a growth of 2 % at local currency. Selective portfolio optimizations had an effect on both regions. In Latin America Symrise benefitted particularly from solid demand for savory applications and citrus products. The ongoing reserved consumer sentiment in North America led to a sales decline of 4 % at local currency.

EBITDA amounted to € 125.3 million (previous year: 136.5 million) while the EBITDA margin came in at 21.0 % (previous year: 23.3 %).

Outlook: Targeted EBITDA Margin of 20 % Confirmed for the Full Year

Symrise remains confident to largely achieve its targets for fiscal year 2011. Based on the results of the first nine months, the Management Board reaffirms the goal of achieving an EBITDA margin of 20 % for the full year. Considering the overall high raw materials prices and the softening economic development, Symrise's industry-leading EBITDA margin represents a considerable achievement.

For the current fiscal year Symrise aims at increasing Group sales by around 2-3 % at local currency. In view of the short-term volatility seen in important sales markets, the Management Board has placed the focus on profitable growth. Thus, Symrise consciously declined business in certain cases to avoid diluting its earnings power.

Thanks to its global footprint, innovative power, and focus on global customers Symrise is well-positioned to benefit from the medium-term intact growth trends in its core markets. Should the global economy improve in the coming year, Symrise will use its strengths to accelerate its profitable sales growth. Should the economic environment continue to deteriorate, Symrise will be well-positioned to assert its profitability.

Key Figures for the First Nine Months of 2011

About Symrise
Symrise is a global supplier of fragrances and flavorings as well as cosmetic base materials and substances for the perfume, cosmetic, and food industries.

Its sales of € 1.57 billion in 2010 place Symrise among the top four companies in the global flavors and fragrances market. Headquartered in Holzminden, Germany, the Company is represented in over 35 countries in Europe, Asia, the United States, and South America.

Our innovative products are used by perfume, cosmetic, and food manufacturers and are an indispensable part of daily life. We combine our insights on consumer trends with cutting-edge technologies, focusing on innovative trend and lifestyle products that have additional practical value for the consumer.

www.symrise.com