Outlook
We are focused on continuously
developing and nurturing our core business, attaching particular
importance to outperforming the market through organic growth.
Our product portfolio will continue to show a constantly increasing proportion of “AND” and “smart” products with higher added value.
Our customer base will further develop in two dimensions. We will expand our position with our international key accounts, paying special attention to furthering our partner relationship. Simultaneously, we will foster our business with regional, mid-size customers, which, from our point of view, serve to reduce a one-sided dependence on a few key customers.
Symrise’s business environment is still positive. Global economic growth is estimated at around 4% p.a. until 2008; growth of 3% is expected for the industry. Thanks to our presence in the growth regions and improved positioning on the North American market, we are confident that our sales growth will be significantly higher than industry growth. Our focus on innovations and products with added value also contributes to sales growth and boosting profitability. To safeguard long-term profitable growth, we have realigned our business portfolio in order to concentrate on the growth fields where Symrise can market its technological strengths. Our business divisions are well positioned to gain market share and boost profitability.
With the balance of price increases and increased turnover with higher value products, on the one hand, and continuing price pressure, on the other, we expect sales prices to remain constant for 2008. We do not foresee a declining price trend on the procurement market and assume that energy costs will remain high.
Overall, average local currency sales growth of around 5%-6% p.a. is budgeted for the two-year period 2008 to 2009. Profitability expressed as the EBITA margin is expected to increase from 18.2% in 2007 to above 19%. Accordingly, we forecast EBITA to grow at approximately 10% p. a. on a local currency basis in 2008 and 2009.
Sales growth for the Scent & Care division is forecast to outnumber the overall industry. It is expected to grow faster than the market rate until 2009. In the Scent & Care division, the EBITA margin is forecast to improve considerably by 2009.
In the Flavor & Nutrition division, sales growth is forecast to remain well above market growth until 2009. The EBITA margin is set to increase slightly by 2009.
We expect that Symrise will grow significantly more than the industry average over the coming years. In 2008, cash flow will be influenced by a planned growth-driven increase in working capital and a dividend of 50 cent per share of our net profit.
The planned investments in intangible assets and property, plant, and equipment will be in line with the level of prior years. The major share of planned capital expenditure will be for assets for the production of flavors and fragrances and for the support functions.
Strategic acquisitions are planned which must meet our specific criteria. Suitable targets for acquisition must fit our core business from a strategic point of view, add to our technical skills, and meet our revenue and earnings targets.
A number of factors could prevent the progress and results described above or impact their timing. These factors include rising raw material costs, energy costs and interest, delays or difficulties in integrating acquisitions, major exchange rate fluctuations, and geopolitical uncertainties. Opportunities will arise from economic growth rates which are higher than the anticipated growth rates stated above. Additionally, our portfolio should present further opportunities which will allow us to draw advantages from high demand for our products and solutions in the fast-growing emerging markets.