Symrise AG outstandingly capitalized on the economic recovery in 2021 and successfully continued the profitable growth course. The Group once again significantly increased sales and earnings. Symrise grew Group sales in reporting currency by 8.7 % to € 3,826 million (2020: € 3,520 million). Without taking into account portfolio and currency effects, organic growth amounted to 9.6 %. Earnings before interest, taxes, depreciation and amortization (EBITDA) at € 814 million were significantly above the prior-year figure of € 742 million. The Group maintained profitability at a high level with an EBITDA margin of 21.3 % (2020: 21.1 %). Against the backdrop of the positive development, the Executive Board and the Supervisory Board of Symrise AG propose a dividend increase for the 12th year in succession. Shareholders are to participate in the success of the company with a dividend of € 1.02 for the fiscal year 2021.
“2021 was a successful year all round for Symrise. We made good use of the tailwind generated by the global economic recovery and we aligned our sails accordingly. As a consequence, we very successfully continued our course of profitable growth. Additionally, we were also able to realize trailblazing purchases and investments. This allowed us to strategically diversify our know-how and our portfolio, further increase our appeal to customers and differentiate our profile in the market. Since September, Symrise has also been a member of the DAX, Germany’s leading index. As a result, our share has continued to gain a higher profile and enhanced appeal, particularly on the international capital markets. Part of our capital market philosophy is for our shareholders to participate in the successful development of Symrise AG. The Executive Board and Supervisory Board therefore propose the twelfth dividend increase in succession in the amount of € 1.02 for the year 2021,” said Dr. Heinz Jürgen Bertram, CEO of Symrise AG. “For the current fiscal year, we confirm our long-term target to achieve an average increase in sales of between 5 and 7 % (CAGR) and to exceed market growth. Furthermore, we are once again targeting high profitability for 2022 with an EBITDA margin of around 21 %, in spite of the increasing raw materials costs and energy prices.”
Economic recovery drives demand and leads to strong sales growth
The impacts of the coronavirus pandemic significantly diminished in large parts of the world over the course of the year. The behavior of consumers normalized and demand surged. Symrise increased sales in reporting currency by 8.7 % to € 3,826 million (2020: € 3,520 million). Organic sales growth amounted to 9.6 %. Symrise not only exceeded the average growth of the relevant market but also the most recent sales forecast issued in November 2021 of around 9 %. Regarding the regions, Latin America once again recorded the strongest organic growth of 13.5 %, followed by Asia/Pacific with 10.3 %. The regions EAME and North America also delivered very good growth with 8.8 % and 8.5 % respectively.
Significant increase in EBITDA and net income
In fiscal year 2021, Symrise increased earnings before interest, taxes, depreciation and amortization (EBITDA) to an outstanding € 814 million. The Company exceeded the prior-year level by 9.6 % (2020: € 742 million) in spite of the increased raw materials costs and costs of strategic growth initiatives amounting to € 174 million.
The group-wide EBITDA margin rose in the second year of the pandemic to 21.3 % and therefore exceeded the prior-year level (2020: 21.1 %).
Symrise increased net income by € 68 million to € 375 million (2020: € 307 million). Earnings per share rose to € 2.74 (2020: € 2.27). In view of this positive development, the Executive Board and the Supervisory Board will propose to the annual general meeting on 3 May 2022 a dividend increase to € 1.02 per share for the fiscal year 2021 (2020: € 0.97).
Net debt with 2.4 in targeted margin range
As of 31 December 2021, net debt including pension and leasing liabilities decreased to € 1,964 million (2020: € 2,029 million). This corresponds to a ratio of net debt to EBITDA of 2.4.
The business free cash flow amounted to € 486 million (2020: € 564 million).In spite of the increase in earnings, it was defined above all by higher investments, an increase in inventories (strategic stockpiling in order to mitigate the risks due to delays in international supply chains) and a high level of trade receivables as a consequence of the strong growth in sales.
In a year-on-year comparison, the equity ratio rose from 39.8 % to 49.0 %. Symrise thus has a very solid foundation for continued sustainable growth of its business in the future.
Taste, Nutrition & Health segment
In April 2021, Symrise merged the former two segments Flavor and Nutrition into a new segment and renamed it Taste, Nutrition & Health to reflect the purposefully implemented portfolio expansion. It is intended to align the expanded activities even more closely with customer needs and hence make know-how, technologies and product knowledge a shared asset. Over the course of the year, Symrise strengthened the activities through the acquisition of the Canadian manufacturer Giraffe Foods and invested in a stake of the Swedish animal health company Swedencare. The core business no longer includes the food color application areas which have been sold to Oterra as well as the Drinkstar Velcorin activities. The distribution model with Lanxess was terminated effective 1 January 2022.
Taste, Nutrition & Health increased sales by 8.5 % to € 2,335 million (2020: € 2,151 million). Organic growth even amounted to 10.6 %. The change in behavior in out-of-home leisure activities and the increasing trend of on-the-go consumption resulted in a particular high demand for beverage applications. Furthermore, the segment benefited from very dynamic growth rates in the Pet Food segment.
Taste, Nutrition & Health increased EBITDA to € 531 million (2020: € 471 million). The EBITDA margin at 22.7 % was at an outstanding level and significantly exceeded the prior-year value (2020: 21.9 %).
Symrise confirms long-term growth and profitability targets
According to experts estimates, the global economy will slow down slightly in the current fiscal year after the strong recovery in 2021. Symrise is excellently positioned with its robust business model, the diversified application portfolio and its broadly based regional presence and customer base. The Company therefore confirms its long-term growth and profitability goals. Symrise continues to target above market growth and increase average annual sales by 5 to 7 % (CAGR). This objective also applies to the current financial year 2022, in spite of increasing raw material costs.
Symrise is committed to organic and inorganic growth, which includes the acquisition of the Dutch company Schaffelaarbos in January 2022 and the Chinese Wing Pet Food in February 2022. Furthermore, Symrise will maintain strict cost consciousness and continue the holistic sustainability management in all its divisions.
Profitability is projected to remain at a high level in 2022 with an EBITDA margin of around 21 %. Over the medium term until the end of fiscal year 2025, Symrise has a target of achieving an EBITDA margin in the corridor of 20 to 23 %.
In the reporting currency, the Symrise Group achieved sales growth of 4.8 % to € 1,908 million (H1 2020: € 1,821 million). The acquisition of the Fragrance and Aroma Chemicals business from the US company Sensient in April 2021 contributed € 14.4 million. In spite of the weaker prior-year figures due to the pandemic, organic sales growth was even stronger: During the first six months, Symrise increased sales by 9.7 %. Alongside catch-up effects in the first quarter resulting from the cyber-attack in December, the good dynamic in the second quarter made a contribution. Due to the accelerating business and higher demand, sales increased organically between April and June by 8.8 %.
The Scent & Care segment
Scent & Care, the business with fragrances, aroma molecules and cosmetic ingredients, achieved very good organic sales growth of 9.0 % in the first half year of 2021. Taking currency translation effects into account, sales amounted to € 749 million in the first six months and rose significantly compared to the prior-year period (H1 2020: € 711 million). The Fragrance and Aroma Chemicals business from Sensient contributed € 14.4 million to this. Particularly during the second quarter, normalization of consumer demand began to emerge as battling the pandemic progressed. Sales in the Fine Fragrances business unit and Cosmetic Ingredients division increased strongly.
The Flavor & Nutrition segment
The combined Flavor & Nutrition segment increased its sales organically by 10.1 %. Sales in the reporting currency increased to € 1,159 million and thereby significantly exceeded the prior-year figure (H1 2020: € 1,110 million). In the second quarter, the segment recorded gradual normalization of consumer behavior. The increase in out-of-home consumption exerted a positive effect on demand for beverage products. At the same time, the trend towards healthy cooking at home and the continuing high demand in pet food solutions ensured strong growth.
Applications for beverages recorded very good organic sales growth in the double-digit percentage range. The biggest growth was generated in the US market, China, Brazil as well as Germany, the United Kingdom and Ireland.
To date, AGRANA had been expecting an overall annual EBIT in 2020/21 of at least € 87.1 million. Following a provisional review of the figures, the Group is now expected to achieve provisional earnings before interest and tax (EBIT) in its 2020/21 financial year in an amount of € 78.7 million (prior year: € 87.1 million). Group revenue will amount to around € 2,550 million (2019/20: € 2,480.7 million).
Besides the anticipated, significantly weaker, operating performance in the fourth quarter 2020|21, extraordinary items in the fruit preparations business are the main reason why EBIT in 2020|21 is below the level of the prior year.
The 2020/21 annual report will be published as planned on 11 May 2021.
• Despite difficult overall economic conditions, consolidated revenue increased in 2019 by 2.7 % to €3.96 billion.
• Order intake, at €4.08 billion, was up 3.2 % year-on-year.
• Profitability affected by high personnel costs and one-time expenses for restructuring and impairments. The EBT margin is 1.1 % (prior year 5.3 %). Without one-off effects, the EBT margin would be 2.8 %, in line with the guidance of around 3 %.
• Krones is making good progress in implementing structural measures for a sustained improvement in earnings.
Krones, the world’s leading manufacturer of filling and packaging technology, achieved its 3 % growth target in 2019 despite the difficult overall economic environment. Revenue increased by 2.7 % year-on-year, from €3,854.0 million to €3,958.9 million.
The company’s order intake improved by 3.2 %, from €3,957.3 million in the previous year to €4,083.5 million in 2019. Krones benefited from a strong year-end. The contract value of orders was up 10.7 % year-on-year in the fourth quarter of 2019. At the end of 2019, the company had orders on hand totalling €1,385.7 million. This exceeded the already high prior-year order backlog of €1,261.1 million by 9.9 %.
High costs, product mix and structural measures hit profitability
Krones’ earnings were hit in 2019 by high cost increases, especially for labour. The product mix also had a negative impact on profitability. In the first half year, the company had poor production capacity utilisation in plastics technology due to temporarily weak demand. Consolidated earnings before taxes (EBT) decreased from €204.3 million in the previous year to €41.7 million in 2019. The EBT margin dropped from 5.3 % to 1.1 %. It should be noted in this connection that Krones recognised provisions and impairments totalling around €70 million in the fourth quarter of 2019 for measures to cut personnel expenses and streamline the portfolio. About €30 million of this relates to expenses and provisions for the job reductions in 2020. Impairment losses totalling around €20 million were incurred for certain direct printing technologies that Krones is partly not pursuing further. A further amount of approximately €20 million relates to goodwill impairments. Without these expenses the EBT-margin would be 2.8 %. As a result Krones is in line with the revised margin target of around 3 % published in July 2019.
Mainly because of the new IFRS 16 accounting standard and the impairment losses, Krones’ depreciation and amortisation rose substantially in 2019 to €183.3 million (previous year: €102.7 million). EBITDA, which is unaffected by this, decreased less sharply than EBT in 2019, falling from €305.9 million to €227.3 million. The EBITDA margin was 5.7 % (previous year: 7.9 %).
High working capital reduces free cash flow
Free cash flow went down in the full year 2019 to a negative €94.4 million (previous year: positive €120.7 million). The reduction in free cash flow was mainly due to higher working capital at year-end. However the average working capital over the past four quarters as a percentage of revenue decreased from 27.3 % in the previous year to 26.9 % and was slightly above the 26 % targeted for 2019. Net cash and cash equivalents, meaning cash and cash equivalents less bank debt, came to €38.1 million at the end of the reporting period (previous year: €215.1 million). The equity ratio was 41.3 % (previous year: 43.2 %). Overall, Krones continues to possess a robust financial and capital structure. All stated figures are preliminary and are subject to change in the course of auditing by the independent auditors.
Krones making good progress with structural measures
Krones publishes its Annual Report for 2019 and outlook for 2020 on 19 March 2020. On the same day, the company will also provide further details of structural measures to secure sustained improvements in Krones’ efficiency and profitability. Krones is making good progress with implementation of the measures, which include a reduction in the workforce. The Executive Board is confident that the measures will already have a positive impact on earnings in 2020.
Based on the actual available figures Krones, the world’s leading manufacturer of filling and packaging technology, adjusts its earnings outlook for the fiscal year 2019. The uncertain macroeconomic developments, like the unsolved trade conflict between China and USA, as well as the discussion about the sustainability of PET-Packaging, negatively influence the customers of Krones and their willingness to invest. Nevertheless, the revenue growth of Krones in the first six month of 2019 were still satisfactory. However, the earnings before tax (EBT) for this period will be significantly below the expectations of Krones.
Increased costs and unfavorable product mix burden the profitability
The profitability of Krones is influenced by high costs, in particular the material cost ratio remains on high level. Krones expected, that the weaker economic outlook in other important industries in 2019 would have resulted in a small easing in the increasing of material costs. Also, the additional measures, which are implemented by Krones to reduce the material costs materialize with a delay. Furthermore, the product mix has an unfavorable effect on the earnings for the period January till June 2019. Especially in the second quarter 2019 the sales of products with a high own value added, like machines and lines for the plastic technology, were lower than expected. In the plastic technology Krones offers extensive products and services for the packaging and filling of beverages in plastic containers like PET-bottles. However, the current discussion about the PET-packaging solution will open opportunities for Krones for innovative solutions.
Another important reason for the actual earnings development is the sales growth of the high-margin after sales business (LCS), which were in the first 6 month of 2019 below expectations. This results from the demand of the customer of Krones for some parts of the LCS product and service offering, which were negatively influenced by the macroeconomic uncertainties. In the second half year this LCS business is expected to recover.
Krones still expects an unchanged growth target of 3 % in 2019. The EBT margin is planned around 3 % (prior target: around 6 %). For its third target, working capital to revenue, Krones expects an unchanged figure of 26 %.
The board has taken measures in order to counteract the earnings decline. This includes among others a hiring freeze and measures to reduce the material costs. The current global footprint is on track. For example, the new plant in Hungary is according to budget and time schedule. During the second quarter of 2019, Krones will increase its production in Hungary with a positive margin contribution in 2020.
By its global footprint Krones will not only use competitive cost advantages, but also take advantage of regional market opportunities. The closer Krones is to its customers, the better the company can understood customer needs and local requirements.
The strategic measures that Krones has introduced so far, like the price increase and the development of the global footprint are however not sufficient to reach the ambitious targets. Hence, the board is working in additional structural changes in order to strengthen its earning level in the long run. Focus areas are reduction of complexity, an agile reaction to market needs as well as a corporate structure, which serves the customer even better.
Krones keeps its mid term targets. Depending on the macro economic environment and development of Krones markets, the board envisages a year-on-year revenue growth of 3 to 5 % without acquisition effects, an EBT margin of 6 to 8 % and a working capital to revenue ratio of 22 to 24 %.
Krones will publish the interim report as of June 30th of 2019 by 25th of July 2019.