Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Symrise AG (SYIEF, Financial) achieved strong organic growth of 8.7% in 2024, driven by an 8.9% increase in volume.
- The company reached a milestone with EBITDA surpassing EUR 1 billion for the first time, reflecting a 14.4% increase.
- The EBITDA margin improved to 20.7%, supported by an improved product mix and strict cost management.
- Net income increased by more than 40% to EUR 478 million, showcasing a significant turnaround from the previous year.
- The scent and care segment experienced double-digit organic growth of 10.2%, with strong performance in fragrances and cosmetic ingredients.
Negative Points
- The company faced a negative ForEx impact of EUR 104 million, representing a headwind of 2.2%.
- Hyperinflation-related pricing in Argentina negatively influenced organic growth in Q4 by 5%.
- The pet nutrition segment experienced price-driven negative growth due to challenging market conditions in EAME and North America.
- The scent and care segment's EBITDA margin, although improved, remains below the 20% target, indicating room for further enhancement.
- The company anticipates a slow start to 2025 due to high comparables from the previous year, potentially impacting early-year growth.
Q & A Highlights
Q: Did I hear you, Jean-Yves, say that you had a light start to the year due to comparables? Could you give more color on what you're seeing across divisions and regions?
A: Yes, last year we had a strong start, and while this year is also good, the comparables are tough. However, we are committed to delivering 5% to 7% growth. The phasing will differ from last year, but we are confident in achieving our targets. Regarding margins, we aim for around 21%, focusing on profitability while investing in restructuring and innovation.
Q: Can you share your expectations for pricing trends this year, especially for aroma and pet nutrition? Also, which parts of the portfolio are lagging in profitability?
A: Our growth will be driven by two-thirds volume and one-third price increase. We have strong pricing power and expect a light increase in raw material costs, which we will manage through pricing, reformulation, or sourcing changes. In pet nutrition, egg prices have decreased, leading to price adjustments without affecting gross profit. In terms of portfolio, taste, nutrition, and health are above 20% EBITDA margin, while scent and care are below. We continuously assess our portfolio, especially in scent and care, to maximize value.
Q: What gives you confidence in achieving 5% to 7% organic sales growth for 2025, given tough comparables in the first half? Also, can you explain the slowdown in pet food growth in Q4?
A: We expect continued strong growth, with a shift towards more price elements and ongoing volume growth. Our innovation and regional expansion support this. For pet food, the slowdown in Q4 was due to FX and pricing effects, but underlying volume growth remains strong. We continue to gain market share in a resilient market.
Q: Can you provide more details on the organic growth for pet in Q4 and the split between palatability and nutrition? Also, where does the EBITDA margin for pet stand today?
A: The split between palatability and nutrition is around three-quarters to one-quarter. In Q4, both segments had similar pricing and volume dynamics, with slight negative pricing and strong volume growth. We prefer to stay at the segment level for detailed data, but pet margins are slightly above the 22% reported for taste, nutrition, and health.
Q: What is the status of the leadership team in scent and care after Andreas' departure, and how does it affect the Elevate 27 strategy? Also, what are your targets for improving working capital in 2025?
A: I am currently overseeing scent and care during the transition, and we have a strong leadership team committed to the Elevate 27 strategy, which focuses on growth and profitability. We are on track to deliver on this strategy. For working capital, we aim to reduce the ratio to 30%-32% in the mid to long term, focusing on inventory efficiency and procurement improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
