Karl Lagerfeld wrote the quote “a fragrance has to evoke the best moments in life”, and Coco Chanel once said that a woman who does not wear perfume has no future.
Fragrances have always been used not only to arouse emotions, they also earn a lot of money today.
One of the global market leaders in the development, manufacture and marketing of perfumes, flavors and functional ingredients comes from Germany, employs more than 10,000 people and until recently was considered something of the eternal Dax candidate.
Now Symrise has finally arrived in the top German stock market league.
After 14 years of membership in the M-Dax, the company has been represented in the Dax since September 20.
With a current market capitalization of around 16.5 billion euros, the company from Holzminden can be found in the lower quarter of the index.
The fact that Symrise was able to achieve average annual growth rates of 8 percent in sales and earnings before interest, taxes, depreciation and amortization (EBITDA) from 2006 to 2020, was one reason why the share was repeatedly discussed for a DAX- Rise was.
Finally arrived in the Dax
Long-standing shareholders shouldn't care about the fact that they have only just made it to the top. Anyone who invested 10,000 euros in Symrise ten years ago can now look at a deposit position of more than 63,000 euros. To achieve such a return with the world of fragrances and flavors without any hectic rush - there are probably much more stressful stocks for an investor. According to the latest analyst assessments, this development should not end quickly. Among other things, Deutsche Bank and Goldman Sachs have confirmed the buy recommendations and increased the price target to 135 euros. The current rate is 119 euros.
In addition to applications for fragrances and flavors, Symrise now also develops and sells functional ingredients that are used, for example, in cosmetics and care products.
The company has also continuously expanded its range of product solutions for healthy nutrition and has invested significantly in the expansion of its pet food activities in recent years.
Solid quarterly balance sheet
The latest quarterly figures made it clear that Symrise also benefited from the effects of the reopening of the economy after Corona. Strong figures were presented in the third quarter, while the sales forecast for the full year was raised once again. Organically, sales in the September quarter increased by 8.3 percent compared to the previous year. Between January and September the increase was even 9.2 percent. Taking into account the portfolio effect of the fragrance business acquired from Sensient as well as exchange rate effects, consolidated sales rose by 6.7 percent to 2.9 billion euros in the reporting period.
The recovery following the reopening of the economy was particularly noticeable in applications associated with increased travel or leisure. These include, for example, sun protection products, perfumery items, but also applications for beverages and culinary products.
The grand reopening has also resulted in a higher forecast.
Organic growth is expected to be around 9 percent in 2021.
Previously, the management had only expected a value of 7 percent.
In this way, Symrise aims to once again significantly outperform the relevant market for fragrances and flavors.
This should be 3 to 4 percent.
In addition, the profitability target was confirmed with an EBITDA margin of over 21 percent.
By 2025, sales are even expected to rise to 5.5 to 6.0 billion euros.
The company aims to achieve this with annual organic growth of 5 to 7 percent as well as complementary, targeted acquisitions.
According to the management forecast, profitability should be in a target corridor of 20 to 23 percent in the medium term.
On to new heights
In view of the fact that Symrise operates in an industry that is geared towards defensive end consumer markets, shareholders should continue to take a relaxed look at the share's chart performance:
After the Symrise share price climbed to a record high of 121 euros in October 2020, the prices plummeted to 96 euros by February of this year.
The price then went up to another all-time high of 127 euros by August.
The Symrise share is quoted well above the 200-day line, which means that the trend arrows point technically upwards from the point of view of the chart.
A breakout above the historic high of August at 127 euros would be a strong buy signal.