Symrise Ag Ord

Thank you very much, Moritz, and welcome to everybody in the call or in the live stream to our presentation of the results of 2023. How nice to have you in the meeting. We published all related documents on our webpage this morning in the section Financial Results, where you probably entered the live stream to this meeting. With me today are Heinz-Jürgen Bertram, our CEO, Olaf Klinger, our CFO, and Jean-Yves Parizeau, our President for Taste, Nutrition and Health and incoming CEO. After the review of 2023 numbers and the outlook for 2024, we will open the lines for your questions. With this, I hand over to Heinz-Jürgen Bertram. Please go ahead.

Thank you, Tobias. Good morning, ladies and gentlemen, and welcome also from my side. I am delighted that so many of you have taken the time to join our call today. As usual, I will highlight the results of 2023. Olaf will provide a deep dive into the financials, and I conclude with our key strategic initiatives and an outlook for the road ahead. Before we look at the numbers, I would like to take the opportunity to address some personal words. Last week we announced the CEO change in our company. I will step down from the CEO position effective March 31st. This is based on a very close alignment and by mutual agreement with our advisory board. And I will step down, and I think after 15 years as CEO, it's now a good time for such a change. Jean-Yves Parizeau, our President, Taste, Nutrition and Health, and member of the Sumrise Executive Board, will take over as CEO. Jean-Yves was appointed by the supervisory board on February 29th and I am delighted that he is also here with us today. We will come back to the CEO change later in this call. Let us first look at our results 2023, starting with the financial highlights on chart 4 of our presentation. 2023 was marked by strong business growth in what was once again a challenging environment. And once again, we managed to outperform the market. At the same time, the economy has faced ongoing geographical and geopolitical challenges such as the war in the Ukraine and the crisis in the Middle East. Rising inflation and high raw material prices intensified the pressure on our business. On the other side, our diversified portfolio combined with our broad regional presence and our customer base yet again enabled us to continue on our strong growth path even in these difficult times. What did we achieve in 2023? Let's look at a few KPIs. We grew sales by 2.4% to over 4.7 billion euros. Organic growth was above 7.9%. Adjusted EBITDA was slightly lower, down 2% to 903 million euros. Therefore, the margin came out at 19.1%. This was lower than our guidance and below last year's. Our profitability suffered from increased raw material prices and operating costs. On top of this, we were hit in November and December by the unexpected currency devaluation in Argentina and an extraordinary sick leave rate in Holzmin of approximately 20%. These events we could not compensate. Net income of €340 million was 16% below previous year, which corresponds to €2.44 per share. Our dividend proposal amounts to €1.10 per share for fiscal year 2023. Let's be very clear about this. We have delivered for our shareholders year after year. And this proposal represents the 14th consecutive increase in our dividend. Let's take a look at our sales growth on chart 5. Group sales increased to over 4.7 billion euros, including 35 million sales contribution from M&A. On the downside, we experienced a negative FX effect of minus 290 million euros. Organically, the group achieved strong growth of 7.9%, driven by both segments. With this, we outperformed the market growth and we also outperformed our guidance of 5 to 7%. In both segments, we enjoyed good growth momentum and increased demand as slide 6 illustrates. The taste, nutrition and health segment generated sales of almost 3 billion euros. Organic growth amounted to strong 9.3%. A key growth driver was once again our pet food business, which we grew in the double-digit percentage range. Food and beverage applications showed also high growth areas. The segment benefited from broadening its competencies beyond flavors and nutrition. Our scent and care segment also performed well. Sales rose to around 1.75 billion euros and organic growth came in at 5.6%. Fine fragrance and cosmetic ingredients are experiencing ongoing strong growth. Let's move to the development of our regions on chart 7. We grew across all regions, with EME being the strongest one in delivering organic growth of more than 15%. Latin America achieved an organic growth of almost 15%. Asia Pacific also generated good organic growth rates of 4%. In North America, we faced the destocking effect and comparatively low project vitality. In addition, we missed sales due to the production incident in Colonel Island. All these effects resulted in a decrease of 1.8%. Overall, we can report a very sustainable performance, as you can see on chart 8, with constant strong growth in both of our top and bottom line. Since our IPO in 2006, we have delivered an annual compensated sales growth of 8.3%. Our EBITDA CAGR amounted to 8%. Allow me to thank all our employees across and around the world for their commitment and dedication. We all can be very proud of what we have achieved together. As chart 9 shows, given our strong momentum, we outperformed over time both the MDAX and DAX indices. We consider this value creation as a confirmation of the attractiveness and results. And also it reflects the trust investors put in our strategy and the long-term vision they share with us. We're very grateful for that. Let me stop here for the moment and hand over to Olaf. He will now provide the details on our financials.

Olaf. Thank you, Heinz-Jürgen, and also a warm welcome to everybody on the phone from my side. Let me add some details on our growth on slide 11. Our ongoing price increases helped us to compensate for the higher input cost we suffered from With around 80% pricing and around 20% volume, we achieved an industry-leading organic growth of 7.9%. As expected and communicated at the beginning of last year, pricing came down in the course of the year while volumes went up. In Q4, we saw 50% pricing and 50% volume growth totaling to 9.5% organic growth. The portfolio Impact for the full year was 35 million sales or 0.8% off for two acquisitions actually. Wing Biotechnology was around 20 million euros and Group Neroli Romani was around 15 million. Both acquired in 2022 and therefore no longer in the portfolio pillar in 2024. FX translation effects continue to be negative with minus €290 million for the full year 2023 and minus €112 million in Q4 attributable to multiple currencies across the world. Please turn to the group profitability on slide 12. The cost of goods sold increased slightly faster than sales. Raw material cost and production costs were still up. In addition, fire-related downtime costs of the Cullinan Island site and related revaluation of piled-up inventory, the revised scent and care strategy and costs for the cartel investigation caused high one-time effects in scent and care, which we adjusted for. Unfortunately, November and December delivered significant lower operating results, mainly due to revaluation and provisions for inventory, underutilization and downtime, as well as higher sales, general and admin costs. And the devaluation of the Argentinian peso. In December, we specified our margin targets to a corridor of 19 to 19.5%. Ultimately, we reached an adjusted EBDA margin of 19.1%, which is substantially below our own ambitions. On slide 32, in the appendix of the presentation, we give you an overview about all one-offs we adjusted for. Let's turn to taste, nutrition, and health on slide 13. We enjoyed a healthy organic growth of 9.3%. Driven by price, as already mentioned for the group, also in T&H, pricing came down while volumes went up in the course of the year. Q4 already showed around two-thirds price and around one-third volume, achieving 9% organic growth for Q4 in the segment. On the margin, the lower than expected volumes in the first nine months, especially in pet food, led to certain underabsorption and revaluation of inventories, including some scrubbing. The EBDA margin came slightly down from 21.6% in 2022 to 21.1% reported or 21% adjusted in the segment. Let's turn to sent in care on slide 14. For the full year, we reached 5.6% organic growth with around 50% for price and around 50% for volume. Frequencies achieved high single-digit growth and cosmetic ingredients enjoyed even double-digit growth. Aroma molecules was burdened from the fire-related stoppage in the colon and iron plant and a difficult market environment in the chemical sector, which together led to a high single-digit growth decline. Since the reopening of the plant in August, the volumes in aroma molecules have recovered. In Q4, organic growth in scent and care reached 10.6%, only driven by volume. The adjusted EBDA of the scent and care segment decreased 4.9% to 276.7 million. The adjusted EBDA margin reached 15.8% after 17.1% in 2022. Please turn to slide 15 for our bottom line. The financial result of minus 94 million was 22 million below last year, mainly due to higher interest expenses for financing, which was 19 million, and interest on pension provisions, which was another 16 million. This was partly compensated by higher interest income and FX gains. Our tax rate of 25.8% is almost unchanged and within our expected mid-term corridor of 25 to 27%. Net income was €66 million below last year, mainly due to the mentioned negative one-time effects. EPS decreased 16.2% to Euro 2.44 per share. On slide 16, I would like to comment the amortization from business combination, which was driven from the merger in 2003 and major acquisitions in 2014 and 2019. We saw the peak in 2022 and still had 99 million in 2023. Spreading the 99 million over around 140 million similar shares, it impacts each share with around 70 cents. This might be one reason for the huge bandwidth and EPS projections in the market. Working capital coming to slide 17. Working capital, I would like to mention that the huge increase in inventories in 2022 was necessary to ensure supply availability and reliability. In 2023, we could reinforce our working capital management and reduce the working capital quota to sales from 35.8% to 34.6%. And we have taken various measures already to further improve and to get us to 30% to 32% by 2025. On slide 18, you see the positive impact from the significant improvement of working capital on the business free cash flow. But let me start with the cash flow from operating activities, which was significantly above the level of the previous year. Lower earnings were offset by a reduction in working capital and lower tax payments. The operating cash flow rate relative to sales was 15.2% after 7.8% in 2022. Cash outflow from investing activities amounted to 358 million, mainly due to payments made primarily in connection with increasing the company's stake in Swedencare, as well as to payments for investments in intangible assets, as well as property, plant, and equipment. There were no new financing activities in the reporting year, and net cash flow outflow for financing activities amounted to 264 million, due primarily to payment of the dividend and interest on financial liabilities. As a result, the business-free cash flow increased 83.7% to $553 million after $301 million in 2022. This corresponds to 11.7% of sales after 6.5% in 2022. Our ambition is to further increase the business-free cash flow to around 12% in 2024 and to even 14% mid-term. Please also see slide 31 in the appendix for the bridge from the consolidated cash flow statement in the financial report to the business-free cash flow calculation, which I actually mentioned during the Capital Markets Day last year. Please move to our net debt development on slide 19. Our net debt came slightly down to 2.16 billion after Euro 2.23 billion in 2022. The debt ratio was slightly up due to weaker earnings performance and still high working capital. It is currently at 2.4 times adjusted EBITDA without pensions and leasing obligations and three times adjusted EBITDA including pension and leasing obligations. This is slightly above our mid-term net debt guidance, which is 2 to 2.5 times EBITDA, including pensions and leasing obligations. We are confident to get back into our self-defined corridor within the next 12 to 18 months' time frame. In summary, we are very satisfied with our debt profile. The group has sufficient credit lines available, i.e. in the form of a revolving credit facility, totaling to 500 million and that was not utilized as of December 31st, 2023. We have no covenants, very supportive and solid bank relationships and no major refinancing in 2024. All in all, we want to remain a strong investment grade profile. My last slide shows our solid balance sheet. Increase in assets were mainly from higher PPE Inventories came slightly down and our equity ratio is at a healthy level of 47% after 46.4% the year before. To summarize, 2023 was another challenging year for us with the fire and market-related growth and margin decline in aroma molecules and the unexpected market-related volume slowdown in pet food. Both could not be fully compensated by our very strong food and beverages, fine fragrances and cosmetic ingredients businesses. Nevertheless, we trust in our broad and industry-leading portfolio and we are confident to further outgrow the market in sales also in the future. With an increasing focus on efficiency and portfolio optimization, we are confident to return to our mid- to long-term EBITDA margin guidance soon again. And with this, I would like to hand back to Hans-Jürgen. Thank you very much.