Symrise restructures as first quarter profits suffer
Although sales remained stable for the first quarter of 2009, profits for the fragrance and flavour supplier dropped 16 per cent compared to last year’s quarter.
CEO Gerold Linzbach said the company has been involved in a restructuring plan for some time and had already implemented some changes, mainly in Western Europe. Symrise spokesperson Katja Derow confirmed that more changes are planned for the future, involving a small number of job losses, but details could not be given.
European market suffered
The Germany-based company does most of its business in the Europe and Middle East (EAME) region where sales dropped by 12 per cent (11 per cent in local currency).
Strong sales in the North American market, increasing by 48 per cent (33 per cent in local currency), were fuelled largely by acquisitions but helped shore up total sales.
Good performances in the South American and Asia-Pacific markets also helped counter EAME’s weak sales, and total sales for the company were up 2.6 per cent on last year’s quarter.
However, this figure was pushed by a positive currency environment and in local currencies the sales were down 0.3 per cent.
Commenting on the results, Linzbach said: “The market environment still poses a huge challenge for the whole industry. Customers are continuing to reduce their inventory levels and their ordering behaviour remains volatile.”
“Symrise has succeeded in holding its own in this environment, although we are not satisfied with the earnings position.”
The company put the16 percent decline in net income down to high raw material prices combined with stagnant sales and higher integration and restructuring costs.
Flavours stronger than fragrances
Scent and care was, once again, the weaker of the company’s two business segments, posting a sales decrease of 3.3 per cent in local currency (stable at actual rates).
Fine fragrances and personal care fell further which the company believes is due to a drop in demand in the luxury segments.
The flavour and nutrition segment posted a 5.5. per cent increase (3.3 per cent in local currencies) but Symrise said developments were affected by clients reducing inventory levels.
Symrise also announced it has taken out a €75m loan that will mature over four years. Derow explained that the loan had little to do with the first quarter results but instead was an attempt to compensate for the hit cash flow took last year when acquisitions were made.