"Volumes impacted by lower ingredient sales". DSM-Firmenich AG sees sales decline in Q2

For the first half of the year, DSM-Firmenich announced total sales of €6.15bn, which was a -5% decline compared to H1 2022. The company stated that much of the losses were due to “weakening of the vitamin market​.”

In early May, Swiss fragrance and flavours company Firmenich International SA merged with Dutch chemicals company DSM and rebranded as DSM-Firmenich AG.

The new business has over 30,000 employees organised into four businesses, Perfumery & Beauty, Taste, Texture & Health, Health, Nutrition & Care and Animal Nutrition & Health.

The company said it’s now working towards restructuring the vitamin asset footprint, creating a new separate vitamin unit within ANH, reducing working capital and inventories and establishing a new senior executive role to transform this sector.

Perfumery and Beauty down -2% for Q2​

For the first half of 2023, the Perfumery and Beauty category saw flat growth with sales of €1,87bn on a pro forma basis, compared to €1,88bn in the previous year.

While for the second quarter, pro-forma sales in the Perfumery and Beauty category were down by -2% at €903m, compared to €953m from the same period in 2022.

Given the current economic climate, the company considered that it had seen a: “Good performance in Perfumery, with strong growth in Fine Fragrances and solid growth in Consumer Fragrances​.”

It also said Personal Care performed well with good demand.

However, the company said the Ingredients sector was weak “owing to destocking and the shutdown of the Pinova plant in Georgia, US in Q2 2023”.​

In June, DSM-Firmenich permanently closed its Perfumery and Beauty Pinova facility in Georgia, US, after a fire at a terpene resins area had destroyed core production assets and infrastructure and caused all site operations to shut down.

Volumes impacted by lower ingredient sales​

In the earnings call, joint-CEO Dimitri de Vreeze, told analysts: “We have seen a positive momentum on the pricing with a positive effect around mid-single digital, with volumes impacted by lower ingredient sales.” ​

He also mentioned that closing the Pinova facility “had an impact on the Ingredient part.”​

De Vreeze reiterated that he believed in the current economic climate Perfumery, Fine Fragrance had a very good growth in the first half and that Consumer Fragrance had solid growth.

“The element that worked negatively for the volume was the ingredients part because of the destocking, but also because of the Pinova effect,” ​he said.

He was cautiously optimistic about sales for the rest of 2023 and said: “We expect that the volumes toward the end of the year will pick up a bit because then the destocking would be fading away toward the end of the year.” ​

As of 1 July, the Perfumery & Beauty business had appointed a new President, Emmanuel Butstraen, who had also retained his previous role of Chief Integration Officer.

DSM-Firmenich is also still facing potential lawsuits for allegations of a price cartel and other anti-competitive practices. In March, DSM-Firmenich (then Firmenich) was inspected by anti-trust authorities, along with other large fragrance companies Givaudan, Symrise and IFF.