Symrise Reports Lower-Than-Expected EBITDA Margin, Reaffirms Long-Term Guidance

Wide-moat Symrise SY1 reported 2022 EBITDA of EUR 922 million, a 13% year-over-year increase, before the fourth-quarter EUR 126 million impairment loss. EBITDA margin of 20% (excluding the Swedencare impairment) was below Vara consensus of 20.6% and guidance of 21%. The results were driven by price increases that could not fully offset the higher costs of raw materials, energy, logistics, and personnel, especially in the scent and care segment. For 2023, Symrise is guiding for organic growth of 5%-7%, above our forecast, and EBITDA margin around 20%, which is below our estimate and Vara consensus. However, we don’t see anything fundamentally changing the long-term outlook as the group reaffirmed its long-term profitable growth path. We don’t anticipate making a material change to our EUR 98.50 fair value estimate. The shares are trading in 3-star territory and down 3% intraday, but peers are also trading in negative territory.

The scent and care segment posted 5% organic growth for 2022; it benefited in particular from strong demand in the fine fragrances business unit in Latin America and Europe, Middle East, and Africa. The nutrition segment continued to be the star performer with 15% organic growth for 2022, fueled by the rebound in consumer behavior following COVID-19 and price increases that were passed on. Pet food and food and beverages were the two leading growth drivers, both with double-digit growth.

Symrise reported an increase in its net debt/EBITDA ratio to 2.9 for fiscal 2022. For 2023, however, it plans to keep the ratio between 2.5 and 2.7 and aims to achieve a free cash flow rate as a percentage of sales of 12%. It also plans to enhance its dividend for a 13th consecutive year, to EUR 1.05 per share from EUR 1.02 in 2021.