THE NATURE OF OUR BUSINESS – STABLE GROWTH - Symrise

Customer complaints about product quality are always possible.
We prepare for such risks by applying strict quality control measures
as well as through insurance policies.
Symrise is always exposed to issues if customers change their
technology of integrating our products into further operations.
This issue is countered by increased efforts to merchandise current
products in different markets and by highlighting the advantages
of current products.
Political events might result in trade embargos to relevant export
countries and therefore interrupt our product deliveries. At the
same time, payments of outstanding debts could be stopped due
to bank boycotts. We counter this risk by maintaining a constant dialogue
with customers and banks, closely observing the development
of political events and continuously optimizing our working
capital. Besides this, the current financial crisis in export countries
may also lead to payment interruption. Here we improve financial
control and adjust payment procedures wherever possible.
In the current critical financial environment there is also the
risk that customers may reduce their inventory levels in order to
optimize their working capital. Depending on the extent and duration
of this destocking, it can have a significant impact on the entire
supply chain. A prolonged recession in the global economy
can also influence the type of products that customers order. This
in turn can impact the growth of the F&F market. Nevertheless,
we feel that we are able to adapt quickly and successfully to such
changes.
Operational and IT Risks
Production continuity at some of our manufacturing facilities could
be adversely affected in the event of technical failure. Regular
tests, maintenance programs, modernization and targeted investments
are designed to counter this risk.
Also, stricter country-specific environmental regulations may
challenge our ability to comply with the law at all times and result
in fines or even shutdowns of our local facilities. Similarly, risks related
to the storage and handling of raw materials and products
may cause damage to assets (e.g. fire) or even personal injuries.
Equipment to improve safety or environmental conditions is regularly
evaluated and upgraded when necessary. Site security
workshops, comprehensive guidelines, supporting systems, management
reports and audits contribute to the management and
mitigation of these risks.
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Moreover, Symrise aims not only to adhere to regulations but also
proactively takes care of matters that could negatively impact its
neighbors (e.g. noise, odor). Symrise’s regulatory team closely follows
the latest regulations and makes sure compliance is maintained.
For example, some time ago the company dedicated
resources and rolled out several projects to coordinate activities
required to comply with the European REACH regulation (Registration,
Evaluation and Authorization of Chemicals).
The integration of new businesses and affiliates into the Symrise
world also gives rise to supply chain and production issues.
Business acquisitions, supported by toll manufacturing as an interim
solution, will be followed by issues of material and formula
harmonization. The integration of new operations into the existing
setup of facilities might lead to interruptions because of production
transfer and to breakdowns as a result of over-utilization.
These risks are mitigated by Total Productive Maintenance (TPM)
measures, contingency plans and possible fall-backs, the exchange
of best practices, and ongoing operational improvements.
Symrise uses different telecommunications and IT systems to run
its business.
In addition to technical precautions already in place, security enhancements
and system updates are constantly being implemented
to counter potential risks that could disrupt their
functioning or stability. A common IT system is currently being
rolled out, and outdated communication technology will soon be
replaced. The IT services are supplied by an external party that
has significant resources and the global expertise to manage any
potential crisis.
Procurement Risks
Procurement is an essential activity at Symrise. In its daily business,
the company deals with a complex and very large portfolio
of raw materials, both natural and of petrochemical origin. On the
one hand, it seeks quality and reliability; on the other, it seeks low
prices. This constellation involves several risks, which are described
in more detail below.
Unexpected increases in energy and petrochemical commodities
prices that could negatively impact the costs of goods are mitigated
by means of dynamic and intelligent sourcing strategies.
Market or weather conditions may result in highly volatile prices for
some important raw materials and can also have a negative impact
on their quality and availability. Besides negotiating long-term
global contracts and having alternative suppliers whenever feasi-
Group Management
Report