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Purchasing sustainable raw materials, training and educating employees, expanding production capacities or optimizing existing ones: Symrise is investing at many levels in its business, which experienced its thirteenth year of growth in a row in 2018. In an interview, Dr. Heinz-Jürgen Bertram explains how the company can constantly further develop its resources, enabling it to be successful in its business. The CEO of Symrise says that the foundations for a promising future have been laid, and he provides insight into the company’s new long-term goals for the year 2025.
Dr. Bertram, Symrise has grown steadily since its IPO in 2006. How did things go in 2018?
We set a sales record once again, with € 3,154 million in sales and an EBITDA of € 631 million. Our profit margin is 20 %, falling within our target corridor of 19 to 22 %. Equally important for us is that we grow faster than the market with our diverse products. Our compound annual growth rate, or CAGR, was 8.2 % for the period from 2006 to 2018.
Do you see similar developments for the future, too?
In January 2019, at our Investor Day in Charleston, South Carolina, USA, we announced our new long-term goals for 2025. The figures show that we continue to pursue ambitious goals. We aim to increase sales to around € 5.5 to 6 billion by then, which means annual organic sales growth of between 5 and 7 %. At the same time – and this is particularly important to us – we aim to improve our profitability, which is already at a high level. By 2021, we want to be generating an EBITDA margin of between 20 and 23 %.
million in 2018 – a company sales record.
How do you plan to achieve that?
Years ago, we positioned ourselves well with our strategy. It is based on the three pillars of growth, efficiency and portfolio; the three of these together make up the foundation of our long-term profitable business. We will continue to focus on organic growth, and we intend to develop adjacent growth areas through combinations of our diverse skill sets. In addition, we are aligning the company closely to market requirements. We are further expanding our portfolio in the direction of innovative and high-margin products, diversifying it and at the same time achieving noticeable synergy effects. Last but not least, we are becoming increasingly efficient and sustainable. Furthermore, we want to continue to grow by making strategic acquisitions. This includes the agreement signed in January to acquire the American company ADF/IDF to strengthen our nutrition portfolio and our presence in the USA.
Keyword sustainability: The Corporate Report is titled “Developing resources.” How do you deal with the topic of raw materials?
In our sustainability goals, which we are developing in parallel with our new strategic goals, we have stipulated that we want to procure 100 % of our most important agro- and aquaculture raw materials from sustainable sources by 2025. Our efforts can be seen, for example, in the stories of this report’s magazine when we look at the raw materials that are so immensely important for perfumery, such as patchouli, in Indonesia, or lavender, in France. We work closely with local producers to promote sustainable agriculture while ensuring the availability of high-quality materials for us. This is particularly important to make us less dependent on the volatile raw materials markets. At the same time, we are focusing on more naturalness, which our customers and, above all, consumers want.
How far can you restructure the raw materials portfolio when it comes to naturalness?
Very far. In the Flavor and Nutrition segments, we place great emphasis on close cooperation with the producers of our natural raw materials. The topic of “naturalness” can be illustrated by other examples as well, which we have also described here in the magazine. We are increasingly utilizing the byproducts that arise from raw materials processing for food production, replacing artificial cosmetic ingredients with products from sustainable and renewable sources or using byproducts from the paper industry for the development of fragrances that are certified as sustainable.
»In recent years, we have grown quickly and therefore had to expand our production capacities, also in order to increase our global presence.«
In December 2018, Symrise received the German Sustainability Award in the Category “Germany's Most Sustainable Large Corporation” for its Business Activity. What does that mean for you?
A great deal, because, for the second time since 2012, the jury recognized that we are seriously interested in promoting the topic of “natural and sustainably produced raw materials” and in counteracting climate change and the decline in biodiversity. Our numerous employees all over the world are very dedicated to these goals. But for me, the award also means that we are treading this path in exactly the right way: We have identified the key areas in which we can make a difference for our stakeholders – and can thus combine sustainability with economic success and achieve the best results.
You just spoke to the employees. They’re an important resource too, aren’t they?
They are the ones who make our success possible. That’s why we do so much to attract the brightest, most skilled and most motivated minds to our company and to keep them with us. With us, employees can develop their skills in their fields or pursue very unusual career paths. In this Corporate Report, we show how different these career paths can be.
The researchers and developers in your workforce play an important role when it comes to innovation. Symrise holds a lot of patents. How important are they?
We patent a lot of developments, that’s right. But it’s not the number that matters so much. We have to look at the relevance of innovations – and we can be very satisfied with this: We hold around one third of all market-relevant patents in our industry. This puts us in a leading position. Our only shortcoming, which we also share with other companies, is that we still get too few of these innovations market-ready very quickly. But we are working on this and, as a major advantage, also have a suitable raw material base in a variety of product areas.
We currently generate around of our sales in emerging markets.
An important focus in the industry is currently on digitization. Where are you focusing your efforts in this regard?
We want to move from being a product developer and manufacturer to a comprehensive solutions provider – and for this purpose we are increasingly establishing digitized and networked processes. But when it comes to digitization, we can also come back to the innovations. Here’s one example: Together with IBM’s Thomas J. Watson Research Center and with the help of artificial intelligence, we developed two market-ready perfumes for the Brazilian market. We want to test and apply new methods like this in the future as well.
Your own resources also include the production facilities in which you are currently investing heavily. Why is that necessary?
In recent years, we have grown quickly and therefore had to expand our production capacities, also in order to increase our global presence. In addition to that, we have redesigned a number of facilities to make them more efficient and sustainable. With our new warehouse in the Port of Hamburg, we have also expanded our logistics and created a connection between the world markets and our production at our headquarters in Holzminden. In recent years alone, we have invested in this area particularly strongly. We will complete most of these major investment projects by 2022. By 2025, we want to again reduce our CAPEX, i.e., capital expenditure, to 4 to 5 % of sales.
You spoke previously about the customers, their wants and needs. How are the markets developing for Symrise?
Our customers are located all over the world – and we want to continue to grow everywhere. We currently generate around 43 % of our sales in emerging markets; in the future we want to increase this to 50 %. The trend clearly points in this direction: In 2018, we are recorded a growth rate of 16.2 % in Latin America and 12.4 % in Asia / Pacific. At the same time, we want to retain our balanced customer portfolio, which is made up of one-third global, one-third regional and one-third local clients.
How do you rate the product portfolio of Symrise?
We have the broadest range in the industry, and we also cover the most fields because we strategically moved beyond the traditional fragrance and flavor business at an early stage. We now generate one-third of our sales with pet and baby food, probiotics, active cosmetic ingredients and functional, health-promoting ingredients. This share is to increase further until 2025, when we intend to generate about a quarter of sales each in the areas of Flavor, Fragrance, Care and Nutrition.
Can you also generate synergy effects with these many approaches from very different industries?
Yes. Take our innovations, for example: We can apply them not only in one, but in many business areas. And our probiotics experts work together with colleagues from such diverse areas as Cosmetic Ingredients, Oral Care and Pet Food. We always strive to network as many parts of the company as possible and thus create added value. And in this way, too, we will help the company to grow further.