Investing.com -- Shares of Symrise (XETRA:SY1) climbed 3.5% as the company reported first-quarter sales that missed consensus estimates but showed stronger-than-expected organic growth.
The German flavor and fragrance manufacturer announced 1Q sales of €1,317 million, a slight decline from the consensus estimate of €1,329 million. However, the company’s organic growth stood at 4.2%, surpassing the consensus forecast of 3.5%.
The earnings before interest, taxes, depreciation, and amortization margin (EBITDAm) was approximately 21%, closely aligned with the consensus of 21.1%. Symrise also disclosed that it is exploring strategic options for its Terpene business within the Aroma Molecules division, which could potentially streamline operations and improve margins.
Symrise reaffirmed its targets for 2025 and 2028, maintaining its forecast for organic growth between 5% and 7%, which is in line with the consensus of 5.1%. The company also expects to maintain an EBITDA margin of around 21%, compared to a consensus of 21.1%, and aims for a business free cash flow of approximately 14%.
The strategic review of the terpene ingredients sector, which contributes over €100 million in revenues or about 2% of the group’s total, is significant given that its margins are close to zero. Optimizing this part of the business could support an improvement in overall margins by up to approximately 40 basis points.
Analysts at Jefferies commented on the developments, stating, "We expect a positive share price response."
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