Symrise lowers margin target - likely to miss market expectations

19-Dec-2023

Symrise, the manufacturer of fragrances and flavors, is feeling the effects of a delayed reduction in inventories, negative currency effects and lower raw material prices. Due to the latter, inventories had to be devalued, the company announced on Thursday evening after the close of trading. The DAX-listed company from Holzminden is now looking more confidently at its own sales development, but more cautiously at its profit margins. The company is therefore likely to miss analysts' current expectations for 2023. The Symrise share price fell by 5.7 percent to EUR 100 on the Tradegate trading platform compared to the Xetra close. This would mean that the annual profits on Xetra would be lost again.

The adjusted earnings margin before interest, taxes, depreciation and amortization (EBITDA) and before special items is now expected to reach 19 to 19.5 percent in 2023, instead of around 20 percent as previously planned. Revenue is expected to grow by more than 7 percent in 2023 under its own steam - i.e. excluding exchange rate effects and the purchase and sale of parts of the company. The previous target was 5 to 7 percent.

This would result in an annual turnover of around 4.7 billion euros, the statement continued. In 2022, the figure was 4.6 billion euros. Analysts currently expect average revenue of almost 4.8 billion euros and an operating profit margin of 19.9% for 2023.

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The stronger euro had already eaten up some of the organic growth in the first nine months of the current year. Of the 7.4 percent increase in revenue from organic growth - also thanks to demand for food additives, fine fragrances and cosmetic active ingredients - 3.3 percent nominal growth remained at the end of the period.

Analyst Charlie Bentley from investment firm Jefferies emphasized in an initial reaction on Thursday evening that organic growth is likely to have slowed in the final quarter. He now expects more than 5.8 percent. Although this is more than generally expected, it is less than he had previously thought. The Lower Saxony-based company plans to present detailed annual figures on March 6.

Meanwhile, Symrise has increased its stake in pet food specialist Swedencare in recent months. It now holds around 35 percent, as a spokesperson recently said when asked.

In June, the DAX-listed company had to submit a mandatory takeover bid for the Swedes after reaching the 30 percent threshold. However, this was unattractive from the point of view of Swedencare shareholders, and the company itself did not see its long-term potential adequately reflected. However, mandatory offers are often designed in such a way that shareholders are not offered an attractive premium on the current share price. The major shareholder then often slowly increases its stake.

Symrise joined Swedencare in 2021. Pet food products are an important growth driver in the industry. However, in the wake of rising interest rates on the capital markets, Swedencare's share price collapsed in 2022 - like the share prices of many growth companies - by a good 80 percent.

Due to the slump in the share price, Symrise had to write off 126 million euros on its then almost 30 percent stake at the end of 2022. However, the Swedencare share price recovered strongly in 2023 with a doubling./mis/nas/men (dpa)

Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.

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