Symrise AG will harness technology acquired in the $1.8 billion takeover of Diana Group, its largest purchase ever, to expand further into nutritional supplements.
Symrise will develop Diana’s technology capable of producing vegetable extracts from plant cells, Chief Executive Officer Heinz-Juergen Bertram said in an interview today. The unit’s access to natural ingredients, including bananas in Ecuador, can be exploited across Holzminden, Germany-based Symrise’s product range, he said.
“We’re not just focused on flavors or fragrances, we are looking at a wider area of wellbeing and well-appearance,” Bertram said. “Nutrition expansion was logical.”
The deal also moves the company into pet food, where market growth is outpacing that for perfume fragrances -- dominated by Givaudan SA, International Flavors & Fragrances Inc., Symrise and Firmenich International SA. Symrise is now the biggest supplier of flavors for pet food at a time when Nestle SA and Mars Inc. are introducing new brands with extra additives and nutritional supplements.
Symrise reported second-quarter earnings before interest, taxes, depreciation and amortization of 104.6 million euros ($139 million), beating the average analyst estimate of 102.3 million euros in a Bloomberg survey. Its shares rose 0.8 percent to 38.67 euros in Frankfurt, taking the advance to 15 percent this year.
Growth in Latin America helped spur earnings with Symrise benefiting from having multiple locations to serve each country in the region rather than using a single, large hub, Bertram said. The company is also gaining market share, mainly from medium- and smaller-sized competitors, as it builds out a range of cosmetics and personal-care products, the CEO said.
“I don’t see any slowdown, I think the market is ready to pick up new products if they deliver,” Bertram said, adding that ingredients for skin and hair-care is one area where the company is gaining ground.
While the flavors and fragrance market is growing at 2 percent to 3 percent a year, demand for pet-food additives is expanding faster at about 4 percent, Bertram said in the interview. Symrise eyed Diana previously yet wasn’t ready to target such a major acquisition amid investor concerns about its debt levels at the time, Bertram said.
Diana has about 40 percent of the market in pet-food flavorings, Bertram said.
Nestle said today that its pet-care division continued “strong momentum” in the first half, helped by sales of Dog Chow, cat snacks and luxury dog-food brand Revena.