Symrise Earnings: Strong Organic Growth; Outlook for 2023 Maintained

Wide-moat Symrise SY1 reported 10.6% organic growth in its first-quarter trading update. This beat the Vara consensus of 8.6%. The taste, nutrition, and healthcare segment was the main contributor to the positive development. Despite high inflation and market volatility, Symrise remains optimistic about the rest of the year, with a confirmed outlook aiming for organic sales growth of 5% to 7% and an EBITDA margin of around 20% for the current fiscal year. The company expects to increase sales by 5% to 7% annually until 2025, with an EBITDA margin in the range of 20% to 23%. This is in line with our forecast, and as a result, we are maintaining our EUR 98.5 fair value estimate. At current levels, the shares look overvalued.

The scent and care business segment achieved a solid organic growth rate of 4.2%, bolstered by the impressive performance of its fragrance business, which experienced high demand from cleaning and hygiene products. While the cosmetic ingredients division continued to make notable progress in EAME regions and Latin America, the aroma molecules division faced significant headwinds from stiff competition from Asia and overstocking by customers, leading to a dip in sales.

In the taste, nutrition, and health segment, the pet food division delivered a stellar 14.6%, driven by robust performance in EAME and Asia/Pacific markets, along with its strategic expansion of production capacity in Brazil, Mexico, and North America. The food and beverage division also enjoyed significant growth, particularly in the Latin America and EAME regions, driven by rising demand for quality products.