Symrise Earnings: One-Off Hit To Profit Sends Shares Lower and Makes for Attractive Entry Point

Wide-moat Symrise reported first-half 2023 EBITDA of EUR 446 million, below our forecast of EUR 484 million and Vara consensus of EUR 479 million. This was primarily due to a one-off hit of EUR 29 million recorded in the scent and care segment, related to a temporary shutdown of its Colonel Island production plant, a business reorganization, and the costs associated with antitrust procedures that were initiated in March by the European Commission. Otherwise, the 8.0% organic growth for the first half was broadly in line with our forecast and the consensus (8.1% in our forecast and 8.6% for consensus), primarily driven by pricing actions. Management reconfirmed the 2023 full-year guidance of organic sales growth at between 5% and 7% and a normalized EBITDA margin (excluding one-offs) of around 20%, which is aligned with our forecast. We don’t expect the one-off impact to be too material to our valuation and maintain our EUR 108 fair value estimate. The share price was down around 2%-3% in early trading, resulting in upside of around 14% to our fair value estimate.