Symrise AG : Symrise in 2011 again highly profitable with an EBITDA margin of 20 %

Symrise AG upheld its industry-leading profitability and achieved its targeted EBITDA margin of 20 % in Fiscal Year 2011. Despite the economic slowdown over the course of the year and the burden of increased raw material prices, the Group again demonstrated its earnings power. At an increase of 2 %, sales growth was moderate compared to the previous year which was characterized by catch-up effects. Sales amounted to € 1.58 billion at local currency and reflect both, the more cautious market environment and selective portfolio streamlining by discontinuing less profitable business. Symrise saw above-average growth in business with global customers, where sales rose by 7 %. Activities in Emerging Markets contributed 46 % of sales in 2011.

Dr. Heinz-Jürgen Bertram, Chief Executive Officer of Symrise AG, said: "We held our ground well in 2011 and proved that we can also achieve our ambitious earnings targets in a weaker economic environment. Given the widespread turbulence in many regions of the world and high volatility on commodities and capital markets, maintaining profitability was the top priority for Symrise. We therefore consequently discontinued businesses which were not making a sustainable earnings contribution. And we continued our backward integration for strategic raw materials. Our industry-leading EBITDA margin of 20 % is thus the result of selective portfolio streamlining, intelligent raw material sourcing and restrictive cost management throughout the Group."

Dr. Bertram added: "At the same time we successfully grasped market opportunities in 2011 and expanded our business with global customers, growing sales by above-average 7 %. In addition, we continued to drive expansion in Emerging Markets. In 2006, just 37 % of our sales came from Emerging Mar-kets, whereas by 2011 the figure has risen to 46 %. Bottom line our net income increased by 10 % compared to the prior year. In view of our solid overall performance, the Executive Board and Supervisory Board will propose a dividend increase to € 0.62 to the Annual General Meeting."

Sales Increase to € 1,583.6 Million

In 2011 Symrise reported sales of € 1,583.6 million. This was even higher than the previous year, which was characterized by catch-up effects (2010: € 1,571.9 million). The increase of 1 % (2 % at local currency) was comparatively modest. This is due to the more subdued business cycle and the consequent discontinuation of low-margin activities.

Latin America was the fastest-growing region with a sales increase of 3 % (5 % at local currency). Symrise particularly benefited from strong demand for beverage applications, savory products and cosmetic applications. Sales growth in the Asia/Pacific region was comparatively modest at 2 % (at local currency 2 %). This is largely due to portfolio streamlining and a weaker performance in beverage applications. Sales in the EAME region went up by 1 % (2 % at local currency), mainly reflecting the political unrest in the Middle East and North Africa as well as weaker demand in the application areas Fine Fragrances and Household. North America was not able to continue its strong prior-year growth rates due to ongoing weak consumer demand. Sales declined by 4 %, rising slightly by 1 % at local currency. The region saw strong increases in vanilla and menthol, among others.

Targeted EBITDA-Margin of 20 % Achieved - EPS up 10 %

In Fiscal Year 2011, Symrise generated earnings before interest, taxes, depreciation and amortization (EBITDA) of € 315.9 million (2010: € 331.2 million). The result reflects the modest sales performance, as well as the higher cost base caused by the sharp rise in raw materials prices. The backward integration nonetheless secured Symrise's access to sufficient quantities of high-quality strategic raw materials. Despite the challenges on the cost side, the Group succeeded in keeping profitability at its target level, achieving an EBITDA margin of 20.0 % (2010: 21.1 %).

Net income rose by around 10 % to € 146.5 million (2010: € 133.5 million). Symrise benefited from the positive effects of the refinancing completed in 2010 and the corresponding reduction in financing expenses. Earnings per share went up from € 1.13 in the previous year to € 1.24. In view of the solid overall performance in Fiscal Year 2011, the Executive Board and Supervisory Board propose a dividend increase of € 0.62 (2010: € 0.60) at the Annual General Meeting to be held on May 15, 2012.

Debt Ratio of 2.2 at the Lower End of the Targeted Range

Cash flow from operating activities amounted to € 200.9 million (2010: € 235.1 million). The change is due to the slightly lower earnings and the cash outflow for tax payments for which provisions were made in prior years. The ratio of net debt including pension provisions to EBITDA amounted to 2.2 (2010: 2.2) and was at the lower end of the targeted range of 2 to 2.5.

Market Presence Strengthened in Emerging Markets

In the past fiscal year, Symrise consistently pursued its expansion in fast-growing Emerging Markets. In 2011, the Group started operations at the plant in Moscow from where it supplies the entire Russian market as well as the CIS states. At the site in Singapore, which serves the emerging Asian markets, the third phase of a S$ 40 million investment program was completed.

Symrise generated 46 % of its total sales for 2011 in Emerging Markets. The year-on-year sales increase in these countries was modest, up just 3 % at local currency. This is primarily due to portfolio streamlining.

Dynamic Growth in Business with Global Customers

Sales from activities with multinational food and consumer goods companies grew faster than average in 2011. Intensive key account management and a stronger position on core lists paid off yet again. It enabled Symrise to boost its sales with this customer group by 7 % at local currency, significantly outperforming sales growth for the Group as a whole. At 31 % (2010: 30 %) the share of business with global customers was slightly up on the previous year.

Both business divisions increased their sales from global customer activities by above average, with Scent & Care reporting a sales increase at local currency of 6 % and Flavor & Nutrition saw sales with major customers climb by 8 %.

Scent & Care Division

Scent & Care reported sales of € 801.4 million (2010: € 804.5 million). Compared to the previous year's strong figures, this represents a slight decrease of 0.4 %. At local currency, Scent & Care achieved a slight sales increase of 1 %.

In all regions, the division benefited particularly strong from demand for menthol and was able to increase sales in this application area at a double-digit rate. The strong performance confirms the decision taken in 2010 to double production capacities in this area. Symrise plans to put the new menthol plant in Holzminden into operation over the course of the year. Within the division, the Life Essentials business unit and the Oral Care application area both developed particularly well. This was offset by a decline in sales due to the discontinuation of low-margin business in the Household application area. In addition, the economic slowdown caused sales to fall at Fine Fragrances, where demand is more dependent on consumer sentiment.

Latin America was the fastest growing region for Scent & Care, with sales rising by 6 % at local currency. Demand for menthol and for cosmetic ingredients was particularly good. The second strongest region, with sales growth at local currency of 3 % was North America. Strong increases in Fine Aroma Chemicals, Oral and Personal Care were the main drivers. In the Asia/Pacific region, the division generated growth of 2 % at local currency and benefited from healthy demand for cosmetic applications, UV Protection and Fine Aroma Chemicals. This was offset by portfolio adjustments. Sales in EAME fell by 2 % at local currency as business was adversely impacted by the political unrest in the Middle East and North Africa.

EBITDA for the division totaled € 157.6 million, compared to € 160.8 million in 2010. The EBITDA margin of 19.7 % was slightly below of the previous year's figure of 20.0 %.

Flavor & Nutrition Division

Flavor & Nutrition saw sales increase by 2 % to € 782.2 million (2010: € 767.4 million). Adjusted for exchange rate effects, this corresponds to growth of 3 %. The division benefitted above all from its business expansion and its strong position with global customers.

The fastest growth rate came from Flavor & Nutrition in EAME, with a sales increase at local currency of 5 %. The division generated new business both in developed Western European economies and in Emerging Markets. In Latin America the sales increase at local currency amounted to 2 % and reflects strong comparables, as well as the discontinuation of unprofitable businesses, and non-core activities in Mexico. Compared to the strong development in 2010, sales growth at local currency in Asia/Pacific was also comparatively modest at 2 %. This was due to slower economic growth as the year progressed, especially in beverage applications. Whereas business in North America benefited from catch-up effects in the previous year, it was marked by the difficult market environment and delays in receiving customer orders in 2011. Sales in the region fell by 2 % at local currency.

In the course of adding innovative solutions for rapidly growing segments to the portfolio, Flavor & Nutrition developed new product solutions and expanded existing platforms in the Consumer Health business. The unit launched the new umbrella brand Actiplants®, under which all functional botanical extracts are brought together. In addition, Flavor & Nutrition expanded its research in the ar-ea of functional food and intends to add further expertise in 2012 as part of the expanded partnership with the Swedish company Indevex Biotech.

Flavor & Nutrition generated EBITDA of € 158.3 million (2010: € 170.4 million). Despite modest sales growth and the higher cost of raw materials, the EBITDA margin was maintained at 20.2 % (2010: 22.2 %).

Outlook for 2012

For Fiscal Year 2012 Symrise is anticipating the following economic conditions: Consumer confidence is expected to remain stable compared to last year. The uncertainty caused by the sovereign debt crisis will persist, especially in Europe. Prices for raw materials will continue to be volatile and will remain on a high level overall.
The Group expects that after a modest start into the year, the global economy will pick up in the second half of 2012. Particularly positive momentum is again expected to come from Emerging Markets.
In the current year, Symrise will put the new production plant for synthetic menthol into operations in Holzminden. In connection with this substantial increase in capacity, Symrise is expecting ramp-up costs in the first half of the year, which will be neutralized over the remainder of the year. The additional capacity will strengthen Symrise's position as the leading global producer of menthol and enable the Group to meet the high demand for menthol even better.
In 2012, Symrise will continue to concentrate on generating profitable growth. At this point in time the Group expects to increase sales by between 2 and 4 %. Furthermore, Symrise remains committed to maintaining its industry-leading profitability with an EBITDA margin of around 20 % for the full year.

Key Figures of the Group

About Symrise:

Symrise is a global supplier of fragrances, flavorings, cosmetic active ingredients and raw materials as well as functional ingredients. Its clients include manufacturers of perfumes, cosmetics and foods, the pharmaceutical industry and producers of nutritional supplements.

Its sales of €1.58 billion in 2011 place Symrise among the top four 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 Latin America.

Symrise works with its clients to develop new ideas and market-ready concepts for products that form an indispensable part of everyday life. In doing so, Symrise combines its insights into consumer trends with cutting-edge technologies, focusing on innovative trend and lifestyle products that have additional practical value for the consumer.

Media contact:
Bernhard Kott
Phone +49 (0)5531 90-1721
bernhard.kott@symrise.com

Investor contact:
Tobias Erfurth
Phone +49 (0)5531 90-1879
tobias.erfurth@symrise.com