Dr. Bertram, Symrise celebrated its ten-year anniversary in 2013. What were the most memorable moments for you from these last twelve months?
First of all, we invested a great deal in all of our key regions and markets over the past ten years – both in areas like research and development, production and various sales channels as well as in sustainability and our employees. The establishment of two new research and development centers in Brazil and here in Holzminden – where we also expanded production of menthol, our largest single product – are just one example from the last year. After winning the German Sustainability Award in 2012, we were certified as a Green Company in 2013 in recognition of our production processes as well as our efforts in areas like occupational safety and environmental protection. We also placed a greater focus on HR policy – on topics such as the advancement of women and working time models for all employees, for example.
How would you rate the 2013 fiscal year overall?
It was a very good year, in which we once again achieved new records. In terms of sales, we grew by 6 % growth to € 1,830 million and achieved an EBITDA margin of 20.4 %. We have grown continuously since our Initial Public Offering (IPO) in 2006. These accomplishments are enabled by the three pillars of our corporate strategy: Growth – in which we generate sales with international, regional and local customers with an increasing focus on the emerging markets. Efficiency – which focuses on improving our processes sustainably. And our portfolio – which we enhance and in which we occasionally strengthen promising fields with acquisitions and partnerships.
How important is constant growth for Symrise?
We have been growing organically for years. We reinforce this growth through investments: In Brazil, we built a new development center to tap into one of the largest perfume markets. At the same time, we have been operating in China for 30 years. There, we are experiencing above-average growth and are further expanding our capacities. In addition, we are planning to build a new regional center in Singapore. And a new production plant for vanilla extraction will go into operation in Madagascar in 2014.
Do you also invest in your headquarters in Holzminden?
The site remains the heart of our operations. Along with the menthol production facilities, we recently invested in the consolidation of our mixing plant for flavors, which saves on costs and promotes greater efficiency. We will also be opening an extraction facility in 2014 that will help us extract more natural flavors from fruits, vegetables and spices from around the world. Energy efficiency is another area we are focusing on: At the moment, we are planning a new power plant, which should significantly reduce our dependency on fossil fuels.
When you look at the company’s portfolio, how do you see it developing in the coming years?
Over the past several years, we have closely examined the market and its customers. Developments like demographic change and the trends towards more health, naturalness and sustainability influence our business. Alongside our traditional areas of business, we are also becoming more active in the Life Essentials, Consumer Health and Aroma Molecules segments – areas that are underrepresented in our competitors’ portfolios. Symrise is well-positioned for this: We can utilize the synergies of our two business divisions Scent & Care and Flavor & Nutrition. Through the acquisition of Belmay in the USA, we have enlarged our product and customer base in the fragrance segment and we gained valuable know-how in probiotics via our stake in the Swedish company Probi.
You have already set very concrete corporate goals for 2020. Why are you taking such a long view?
As a publicly listed company, we may submit quarterly reports, but we formulate long-term strategies and goals as well. We want to continually increase the value of our company while taking all our stakeholders into consideration. That’s why we have established targets for the year 2020. These are meant to facilitate an even greater interlinking of our corporate and sustainability strategies.
This includes the EBITDA margin between 19 and 22 %. How do you arrive at this figure?
We take the industry’s average margin and add a little to it. The reason for the range, rather than one fixed figure, is to account for various uncertainties. For instance, raw material prices fluctuate from year to year. These account for about 40 % of our sales and are therefore the largest cost factor we have. Additionally, the current trend towards natural raw materials from renewable sources means increased purchasing costs. In order to compensate for this, we are increasingly shifting production to the larger markets and procuring goods locally. We are also implementing greater backward integration for our most important raw materials. This is one of our key goals for 2020.
“We are optimally positioned to further expand our business in the core segments and growth regions. We view the achievement of our set targets as confirmation of our proven strategy.”
Symrise’s thoughts and actions are guided by both commercial and sustainable principles. The corporate strategy is oriented towards long-term goals. Under the heading “Agenda 2020,” Symrise has summarized the areas of focus that will guide its corporate activity in every region and market around the globe for the coming years.
Symrise aims to increase its overall sales by more than € 1 billion by 2020, which would amount to total annual sales of € 2.7 to 2.8 billion. The average target growth rate for each year should therefore be between 5 and 7 %. At the same time, the company wants to increase EBITDA to more than € 500 million. This corresponds to an annual EBITDA margin between 19 and 22 %.
Symrise intends to grow with a clear focus on the emerging markets, such as China, India, Eastern Europe and Latin America. In the future, these markets should account for two-thirds of overall sales. At the same time, the company will maintain its robust customer structure, with each segment (global, regional and local customers) accounting for one-third of our business.
Symrise also set various goals for 2020 to ensure its continued sustainable supply of high-quality raw materials. The most important ten to twelve natural materials – including vanilla, oranges, cloves, lavender, eucalyptus and onions – should come from 100 % sustainable sources by 2020. To ensure availability of these raw materials and therefore the basis for production, backward integration will be further expanded. It will grow to cover 40 % of the company’s sourcing.
Symrise is constantly researching new products and technologies that support further growth. The company will continue to place a particular focus on innovations – for instance, the promising fields of Life Essentials and Consumer Health, which Symrise can serve particularly well thanks to its organizational structure with the Scent & Care and Flavor & Nutrition divisions.
For years, Symrise has been committed to a more environmentally friendly and therefore more sustainable business. An increasing amount of products, buildings and individual processes are being replanned or converted to consume less energy, steam and heat while also reducing waste. By doing so, the company aims to reduce the CO2 footprint of its products by 33 % by the year 2020.
With our new research center,
we want to strengthen our expertise in research and development, which represents the basis for our competitive position as well our accelerated growth. A special point of emphasis was placed on researching functional ingredients for healthy nutrition and conscious personal care.