Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Symrise AG (SYIEF, Financial) achieved a strong business growth in a challenging environment, with sales increasing by 6.3% to EUR2.6 billion.
- The company reported an organic growth rate of 11.5%, driven by excellent performance in both segments.
- EBITDA increased by 11.5% to EUR530 million, with the EBITDA margin reaching 20.7%, a 1% point increase from the previous year.
- Symrise AG (SYIEF) realized 50% of its targeted efficiency savings of EUR50 million, contributing to improved profitability.
- Net income increased by EUR52 million to EUR239 million, with earnings per share rising to EUR1.71 from EUR1.34 in the first half of 2023.
Negative Points
- High inflation persisted, leading to increased costs, although Symrise managed to offset most of them through strict cost control.
- The company experienced a negative impact of EUR16 million from the divestiture of its beverage trade business in the UK and a EUR110 million headwind from FX.
- The EBITDA was impacted by extraordinary expenses, including EUR9 million in severances and an EUR8 million write-off related to a legal dispute.
- An impairment of EUR17.9 million on plant and machinery in the taste, nutrition & health segment affected EBIT growth.
- The net debt-to-EBITDA ratio is slightly above the midterm guidance, at 2.3 times adjusted EBITDA without pensions and leasing obligations.
Q & A Highlights
Q: Can you please share the moving parts towards currently sticking to your 2024 EBITDA margin guide of 20%? How do you see the second half EBITDA margin evolving? And should we apply fairly normal seasonality where first half margins are typically a bit better in the second half? And are there any incremental exceptional elements that we should take into consideration?
A: We are sticking to the around 20% EBITDA margin guidance. The first half showed a good picture, and the second half is typically a bit softer. We have not foreseen any specific exceptionals for the second half of this year. (Olaf Klinger, CFO)
Q: Can you provide us with an update on your growth CapEx pipeline in TNH? And which expansions you're currently scheduling to come online in the next 12 months? And can you also share on the impairment you took, whether this is a temporary suspension of the North American pet food plant? Or it's a permanent suspension and you're not targeting to bring that back over time?
A: We are being very prudent about CapEx, ensuring profitable growth and return on investment. The North American pet food plant suspension is temporary, reflecting a realistic approach to volume forecasts. We are investing in a liquid blending facility in Holzminden, which is on track. (Jean-Yves Parisot, CEO)
Q: Could you comment on the trends you're seeing in July? Are they broadly similar to Q2? Have you seen any step down?
A: The trend in July is quite good, with continued volume increase, making us confident for the second part of the year. However, we remain realistic as one month is only one month. (Jean-Yves Parisot, CEO)
Q: On the impairment charge in the first half of about EUR17 million. Why didn't you strip that out and report it as a normalized EBITDA given that it is clearly a one-off?
A: We prefer not to normalize EBITDA for operational and specific items, except for last year due to the magnitude of special items. We flag these items for understanding but avoid adjustments. (Olaf Klinger, CFO)
Q: Can you touch a bit more on the organic growth outlook for the second half? Are there any specific areas where you're seeing a bit of a slowdown?
A: We are confident for the second part of the year and expect to reach the 5% to 7% organic growth target. There is no significant slowdown anticipated. (Jean-Yves Parisot, CEO)
Q: Can you give a bit more color on the cost efficiencies that you've been delivering so far?
A: The cost efficiency program includes strict cost management and operational efficiencies. We have already delivered half of the EUR50 million target, with further efficiencies expected from indirect materials, raw materials, and operational asset efficiency. (Jean-Yves Parisot, CEO)
Q: Could you provide more information on the Pet Food growth in H1 and the outlook for H2?
A: Pet Food growth is driven by volume rebound in palatability and transactional pricing in nutrition. The growth trend is expected to continue in H2. (Jean-Yves Parisot, CEO)
Q: Can you elaborate on the drivers of easing organic sales growth in scent & care in Q2 versus Q1?
A: Scent & care growth was strong in H1 and is expected to continue in H2. The easing in Q2 was due to competitive pricing and operational adjustments. (Jean-Yves Parisot, CEO)
Q: Could you give an overview of your planned investments and any planned delays?
A: There are no planned delays in investments. The delay in the US Pet Food plant is a strategic decision for disciplined capital expenditure. Other investments are on track. (Jean-Yves Parisot, CEO)
Q: Can you talk about the terpene environment and pricing headwinds in Aroma Molecules within scent & care?
A: The terpene environment is impacted by additional competition and higher raw material costs. We are dealing with price weakness but remain positive about the strategic importance of natural-based fragrance ingredients. (Olaf Klinger, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
