By Matteo Allievi and Jagoda Darlak
(Reuters) - Symrise said on Wednesday it expects its core profit margin to grow to 20% in 2024 as the German flavour and fragrance maker looks to accelerate cost management measures and sell less profitable parts of its business.
Symrise, whose fragrances go into the perfumes of French luxury giants LVMH (EPA:LVMH) and Kering (LON:0IIH), reported a core profit (EBITDA) margin of 19.1% for 2023.
Annual adjusted EBITDA was 903.5 million euros ($981.9 million), below analysts' consensus forecast of 916.0 million, hit by higher raw material costs, negative currency effects and one-off expenses.
Chemical companies have been under pressure for more than a year as they were forced to reduce inventories on lower demand from industrial clients.
However, CEO Heinz-Jürgen Bertram said he was optimistic about the 2024 outlook, as the group plans to divest businesses that are not profitable enough to improve margins.
Symrise is selling 51% of its beverage unit to distribution partner Th.Geyer, and said it plans to sell another business area later this year, without specifying details.
Bertram said no layoffs are planned as part of cost savings.
The shares rose 7% to 103.25 euros at 1216 GMT.
"After December's profit warning, this guidance is a relief and it is reassuring investors, although the company rather prefers to stay on the cautious side as the economic uncertainty is still pretty high," Vontobel analyst Arben Hasanaj said.
The group recorded one-time costs of 51.8 million euros during the year due to a production stoppage at its Colonel Island plant and expenses associated with an European Union antitrust investigation.
Swiss peer Givaudan said in January sales volumes were stabilizing after destocking trends began to normalise towards the end of 2023.
Symrise said it would propose an annual dividend of 1.10 euros per share, up from 1.05 euros a year earlier.
($1 = 0.9201 euros)