Symrise Quarterly Profit Beats Estimats on Menthol Sales

Symrise AG, the fourth-largest maker of flavors and fragrances, reported first-quarter profit that beat analyst estimates on higher demand from emerging markets and for ingredients such as menthol for breath fresheners.

Earnings before interest, taxes, depreciation and amortization rose 9 percent to 101 million euros ($140 million), the Holzminden, Germany-based company said today in a statement. Analysts had predicted 97.3 million euros, according to a Bloomberg survey.

Chief Executive Officer Heinz-Juergen Bertram is expanding Symrise with the acquisition of Diana Ingredients SAS, a 1.3 billion-euro purchase that will add pet-food ingredients and bolster access to natural raw materials. This year’s Ebitda margin may exceed 20 percent of sales, with the first-quarter figure at 21.5 percent, Symrise said today.

“Demand from eastern Europe’s emerging markets, the Middle East and Africa showed particularly strong dynamic,” Bertram said on a conference call with journalists. Diana “is an excellent strategic fit and will add to earnings per share in the first year after closing.”

Symrise gained as much as 2.8 percent to 37.47 euros, the highest intraday price since April 11, and was trading up 1.8 percent as of 12:03 p.m. in Frankfurt. The stock has risen 11 percent this year, valuing the company at 4.38 billion euros.

Revenue Rises

First-quarter sales gained 2.6 percent to 469.6 million euros. Net income increased 13 percent to 51.9 million euros. Average annual sales growth will be 5 percent to 7 percent until 2020, Symrise reiterated today.

Bridge loans for buying Vannes, France-based Diana will be refinanced partly with equity, with a larger portion coming from new debt, Chief Financial Officer Bernd Hirsch said on the conference call. A sale of additional shares will probably come within 12 months of the transaction closing, which is expected in the third quarter, the CFO said.

Net debt will temporarily reach about 3 times Ebitda including pensions after the transaction, Symrise said. The figure was 2 times Ebitda during the quarter.

The acquisition will enable Symrise to narrow the gap with larger competitors such as Givaudan SA and International Flavors & Fragrances Inc. Diana’s offerings span food additives based on natural vegetable and animal-based products and colorings used in beverages, sweets and sauces.

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