Apr 6, 2016
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Symrise says seeking growth rather than pushing margins

Apr 6, 2016

Symrise, among the world's four largest makers of scents and flavours, will place more importance on growth than on pushing profit margins as it invests in new businesses such as breeding vanilla varieties or developing probiotic skin creams, its CEO said.

Germany's Symrise is the fastest growing among its major listed rivals Givaudan and IFF but is also the one with the lowest margin.


Symrise widened its margin of earnings before interest, taxes, depreciation and amortisation (EBITDA) over sales slightly to 22 percent last year, trailing Givaudan's 24.3 percent. IFF's margin, reported only after one-off items, stood at 23.6 percent.

Yet the German group's Chief Executive Heinz-Juergen Bertram told Reuters he would favour expenditures on growth projects over profitability, should the EBITDA margin push the upper end of the medium-term target range of 19-22 percent.

"We're happy for the margin to move above 22 percent, but we will preferably invest in more growth," Bertram said.

"Our focus will not necessarily be on expanding into new fields of business but rather to better recombine what we have," said Bertram.

For this year, Symrise has said it was expecting its margin to narrow to 20 percent this year, mainly on costs related to folding newly acquired Pinova, a U.S. maker of perfume ingredients from wood and other natural sources, into its organisation.

Among its expansion projects, it will seek to make better use of Pinova's plant-based substances in chemical reactors that re-use waste streams.

It also plans to start vanilla breeding in the world's biggest exporting country, Madagascar, part of a drive to increase control over raw material supplies, the CEO said.

In addition, it is working on creams based on bacterial cultures that keep the skin healthy, together with Swedish biotech firm Probi AB, in which it holds a stake.

Helped by the recent purchase of Pinova and the 2014 takeover of French pet food ingredients maker Diana, Symrise is roughly tied for second place in the industry by market share with IFF and unlisted Firmenich.

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