THE NATURE OF OUR BUSINESS – STABLE GROWTH - Symrise

Dr. Gerold Linzbach, speaking
with Dr. Thomas Quinn
2008 was a difficult year for many companies and industries.
Are you satisfied with Symrise’s performance?
Satisfied, no. Not because our performance wasn’t good, but
because good can quickly become the enemy of better. Those who
are satisfied won’t necessarily get better. I think we can still improve
on our good performance. That remains our goal. Again this
year, we sought to grow faster than the market, and we succeeded
despite the unfavorable environment. With a sales growth of
6.5% we reached the high level of our previous record year. Our
EBITDA margin of just under 20% was slightly weaker than in the
previous year. But compared to other industries it is a very good
margin. It shows how robust the flavors and fragrances (F&F) market
is. Within this robust industry we rank in the Top 4. This confirms
our strategy. But this confirmation is no reason for us to be
satisfied. Instead, it’s an incentive for us to continue to pursue our
strategy.
What factors played the biggest role in the 2008
business results?
The environment was difficult. Raw materials prices were high, and
in the context of the increasingly severe financial and economic
crisis in the second half of the year it wasn’t possible to completely
balance out the raw materials price increases through higher
prices. In this environment, our customers’ ordering behavior was
more conservative than otherwise. This negative trend became noticeable
in established European markets.
On the positive side: This year we again achieved good growth in
the rapidly growing markets in Asia. In Europe, the situation is
more differentiated. The markets in Eastern Europe are growing
faster than in Western Europe. We improved our position in the
former. In Western Europe, the market was more restrained overall.
We were able to keep pace with our competitors there, but we
couldn’t outperform them. We achieved good growth in the US,
despite the costs of integrating Chr. Hansen Flavors, Manheimer
Fragrances and Continental Fragances.
Fourth quarter numbers were not good. What is the
explanation for this negative development?
The fourth quarter was worse than expected, especially in comparison
with the previous year. There is a small consolation. In a
sense there is no historical comparison to what happened to the
entire global economy last year. The fourth quarter directly reflected
how the overall economic uncertainty grew towards the
end of the year. At Symrise this expressed itself in different ways.
Annual Report 2008 Symrise AG 29
For example, despite the negative environment the Scent & Care
division – including the acquisitions of Intercontinental Fragrances
and Manheimer Fragrances – grew by about 8.5%, at local currency
by 7.2%. In geographical terms, the emerging markets were
the growth drivers. From the viewpoint of products, our “AND”
products were growth drivers. We even managed to grow in the
US, because we gained positions on two important core lists.
These results show that our strategy is on the right track. In the
Fragrances area, especially in fine fragrances and the luxury segment,
sales declined. In Europe the economic downturn was particularly
evident.
How important are the acquisitions in the US?
In spite of the economic uncertainties prevailing in the United
States, the US market will remain important for the entire F&F industry
in the future. It is large and very competitive; presence and
image play a big role there. With the acquisitions, we acquired expertise
that has strengthened both divisions and firmly established
our company’s presence in the United States. The integration went
according to plan and was successfully concluded by the end of
the year. The acquisitions are examples of strategic decisions
which are hardly recognizable in the results for 2008 but which
will be decisive for the future.
What were last year’s future-oriented strategic decisions?
Strategic decisions are always geared to the future. For this reason,
we never evaluate our results for a given year in isolation, but
always critically in the context of a longer-term, sustainable strategy.
It is never a matter of a single decision. Our strategy is the
sum of many critically examined individual decisions in different
markets, which further expand our technology and innovation competencies
and heighten our proximity to our customers and end
consumers.
You repeatedly stress the Symrise strategy. What are the
main elements of this strategy? Has it changed since the
company went public at the end of 2006?
The three pillars of the strategy remain the same – “The Power of
AND,” “indispensable” and being “bold.” Let me begin with “indispensable.“
On the one hand, we want to be on the so-called
core lists of our biggest and most successful multinational customers,
and on the other hand we want to have a strong presence
with regional and local customers in the rapidly growing threshold
countries. Good customer relations and a strong position in the
most important markets are the prerequisites for stability and
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