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Symrise Chief Considers New U.S. Plant Amid Inflated Valuations

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Nov. 7 (Bloomberg) -- Symrise AG Chief Executive Officer Heinz-Juergen Bertram said he will expand flavors and fragrance factories or add new sites in the U.S. to fulfill growth ambitions if potential acquisition targets remain over-priced.

Symrise must expand in the U.S. as it’s under-represented there, Bertram said. The Holzminden, Germany-based company is gaining market share as it competes with Givaudan SA, International Flavors & Fragrances Inc., Firmenich International SA as well as smaller, regional players, according to the CEO.

“An acquisition would help,” Bertram said in a telephone interview today. “Before we do something dumb, we will wait and react level-headedly. If nothing comes along, we’ll do it organically.”

The North American market -- which generates about 18 percent of Symrise’s $2.1 billion in annual sales -- is ripe for consolidation as there are a large number of regional flavor companies, according to Bertram. While Symrise has the financial clout for an acquisition and has looked at various options, the price tags placed on assets are “expensive” and prevent deals from being executed, he said.

The growth ambitions coincide with the temporary shutdown of two production plants in the U.S. affected by the blackouts and flooding caused by Hurricane Sandy. Power is expected to be restored to both sites by the end of the week, and there will be no significant costs attached to the stoppages, Bertram said.

‘Black Eye’

“We’ll get away with a black eye,” Bertram said, adding that one of the sites makes liquid aromas for drinks and sweets, and stores citrus that has to be kept cool so the power failure may result in supplies becoming unusable. The other plant manufactures savory ingredients such as yeast.

Sales in North America in the first nine months of 2012 gained 19 percent, helping offset near stagnant western European markets as consumers scaled back spending amid the region’s debt crisis and worries about jobs.

The maker of perfume ingredients for Dior’s Fahrenheit is also growing in emerging markets and is “significantly” expanding its Asian headquarters in Singapore, Bertram said today. Singapore will help serve the growing markets of Vietnam, Indonesia, Myanmar, Thailand and China, he said. The company now generates almost half of its sales from emerging markets.

Symrise’s revenue in the most recent quarter gained a more-than-estimated 14 percent to 448 million euros ($574 million), with earnings before interest, tax, depreciation and amortization totaling 90.3 million euros, in line with predictions. Analysts estimated sales of 434 million euros.

Bertram, who today reiterated a full-year sales goal of 3 to 5 percent growth, said the company would reach the top end of the range “comfortably.” Analysts predict Symrise will beat its own sales target by about 2 percentage points, according to a Bloomberg survey.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at

To contact the editor responsible for this story: Benedikt Kammel at

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