However, the flavour and fragrance firm said the majority of its products focus not on luxury items but “on satisfying basic human needs”, and so it expects the current economic situation to have only “a limited effect”.
Commenting on the economic gloom, Symrise spokesperson Katja Derow said: “We’re not nervous. When people stop eating – then we will get nervous.”
Indeed overall sales kept growing in the latest quarter ending up 1.6 per cent at €333.5m in actual terms. Over the first nine months of 2008 sales grew 2 per cent to €1,009.5m and in local currency terms they were up 6.1 per cent. Symrise said it remains on target to achieve sales growth for the year in the 6 to 7 per cent range.
Scent and care sales suffer
But the flavor and nutrition division was the driving force behind this growth while scent and care sales struggled through the economic headwinds.
The perfume and cosmetics focused division reported a sales drop of 2.3 per cent at actual rates from €521.8m last year to €509.7m.
Fine fragrances and luxury personal care products were particularly badly hit by weaker consumer spending and western markets confronted the greatest drop off in demand.
Derow said reduced sales of luxury items was down to the economic situation, and that there was no cause for concern for the overall business.
Higher costs put pressure on profits
Looking beyond the overall sales figures, operating profits were down for the first nine months of the year on higher raw material and energy costs.
EBIT was 2 per cent lower than the same time last year, from €161.6m to €158.5m, with a drop in margin of 0.6 percentage points to 15.7 per cent. EBITDA fell from €219m to €211.5m, a difference of 3 per cent, with a margin drop of 1.1 percentage points to 21 per cent. The company blames this on increased operating costs.
However, net income was up from €84.3m in the first nine months of 2007 to €84.9m this year.
CEO Gerold Linzbach was positive about the figures saying it was down to his company’s commitment to its company strategy, based around ‘three pillars’: creating innovative and intelligent products; being top of all its customers’ call lists; and being active in emerging markets.
“We see our good numbers in these bad times as a strong confirmation of our corporate strategy,” said Linzbach. “And we see the bad times as an additional reason to pursue it with the same focus and consistency as in the past.”