Tobias Erfurth – Investor Relations Olaf Klinger – Chief Financial Officer

Thomas Wrigglesworth – Citi Heidi Vesterinen – Exane BNP Paribas Gunther Zechmann – Bernstein Virginie Boucher-Ferte – Deutsche Bank Daniel Buchta – MainFirst Thomas Swoboda – Societe Generale Stephanie Bothwell – BofA Merrill Lynch Patrick Lambert – Raymond James Knud Hinkel – equinet Cathal Kenny – Davy Research Chetan Udeshi – JPMorgan Sebastian Satz – Barclays

Thank you very much, Jasmine. Good morning, and welcome, everybody, to our analyst and investor Q&A call on our Q1 results 2017.

As already announced in the invitation for this call, we have decided to scale down our Q1 and our Q3 publications in line with the general reporting trend. In this period, we have also agreed on a new and lighter format for this call.

With me today is our CFO, Olaf Klinger, who will take on the lead for this Q&A session. Over to you, Olaf.

Thank you, Tobias, ladies and gentlemen, a warm welcome also from my side, and I hope that you all appreciate our leaner format. Before we open the floor for questions, please let me give you a brief summary of our performance of the first three months.

As you can see on Slide 2, we got off to a good start into 2017, both in terms of growth and profitability. Despite a more challenging market environment, we increased group sales by 4.6% to €765.2 million.

Organic growth was 5.3%, in line with our long-term guidance, light. And in comparison to our very high organic growth of 7.3% in Q1 2016, we see this as a strong signal for the continuation of our growth ambition.

In terms of segments, Flavor & Nutrition both reported high dynamics with an organic growth even above the already high growth during the prior year quarter, while Scent & Care remained below our long-term growth corridor of 5% to 7% in the first quarter. Sales [indiscernible] came in particular from Latin America and EAME while Asia/Pacific recorded a slower start to the year.

North America showed a mixed picture with good growth, both in Flavor and in Nutrition, while business activities in Scent & Care, except for Aroma Molecules and oral care, were slightly slower. The portfolio effect of minus 2.1% stemmed from the acquisitions of Nutra Canada and Nutraceutix last year, which was overcompensated by the divestiture of Pinova Inc.

in December also of last year. Foreign exchange was somewhat mixed between the three segments.

Overall, it was favorable in the first quarter, resulting in a positive impact of 1.3%. Looking at earnings.

EBITDA rose by 4.4% to €165.5 million. Our EBITDA margin of 21.6% in Q1 benefited from a onetime gain of €4.7 million related to the final purchase price adjustment of Pinova Inc.

EBIT rose by 4% to €117.3 million. Naturally, the margin of 15.3% was also impacted by the aforementioned onetime gain.

For comparison purposes, please keep in mind that the prior year Q1 EBIT did not include the purchase price allocation of Pinova at that time, which have not been finished at this point in time. Therefore, Q1 2016 showed around €4.4 million less D&A than it should have.

The PPA effect for the first six months was then booked in quarter two 2016. So we will revisit this in the half year report.

Please turn now to the next slide, Slide 3, for the segment review. Scent & Care reported sales of €332 million – €333.2 million.

It was moderate organic growth of 1.1%. The sale of the Pinova industry application business, which was part of our Scent & Care Aroma Molecules division, resulted in a negative portfolio effect of minus 6.9%.

Otherwise, Aroma Molecules reported high demand for fragrance ingredients and menthol. In Fragrance, we saw good momentum, for example, in fine fragrance in Asia or in home care in Latin America.

Oral care significantly increased sales in EAME and North America whilst beauty care showed lower dynamics across almost all regions. In Cosmetic Ingredients, weaker demand in UV filters offset the very good performance of cosmetic actives.

Looking at earnings of Scent & Care, we saw a slight decrease in EBITDA of €0.6 million compared to the normalized quarter one 2016 whilst the margin improved to 21.6%. Coming to our Flavor business on Slide 4.

We are delighted to report another very strong quarter with 8.8% organic growth and total sales of €270.2 million. A key driver for this strong result was our business with sweet applications and in particular, the region EAME with double-digit growth.

But EBITDA rose to €56.9 million, the margin of 21.1% was slightly diluted by around 60 basis points compared to last year. This was mainly the result of higher prices for certain natural raw materials, as well as increased expenditures for research and development.

Let's move to Slide 5 for our and new segment, Nutrition. Compared to last year's quarter, we've increased sales by outstanding 17.8% to €161.8 million.

The strong performance was attributable both through an impressive 9.6% organic growth as well as inorganic growth from acquisitions. Our pet food business continued to show very strong dynamics, particularly in Latin America, whilst our food business recorded high demand across all application areas.

The portfolio effect of 5.9% was related to the acquisitions of Nutraceutix and Nutra Canada. EBITDA rose by 16.1% to €36.7 million.

The margin remained at a very strong level of 22.7%. To sum up on Slide 6.

We can say that quarter one was a good start to the year, especially against the high-growth comparables from quarter one 2016. All in all, we continue to see positive sales and earnings trend environment for our business segments, and we are on our way to again substantially outperform the relevant market.

The various investment projects to increase capacity will continue to facilitate organic growth. On top, we will open our new research and development center in Singapore in two weeks' time, supporting our market position and growth ambition in Asia/Pacific over the coming years.

That said, overall, we are very confident that we will reach our targets set for 2017. Thank you very much for your attention at the moment.

And now, we would like to open the call for your question. And I hand back for that to Tobias.

Thank you very much, Olaf. Turning to Q&A, we are now happy to take and answer your questions.

[Operator Instructions] Many thanks, and first question, please?

My two questions, if I may. In your organic growth of 5.3%, could you split that out between the price effect and the volume effect?

And then as a follow-on to that, could you talk a little bit about the raw material pressures that you're seeing across the business? And have they now peaked out by – have they been – or is there going to be a lag effect to running through into the second quarter from raw materials?

Yes, Thomas. Thanks for your question.

Happy to take that. So on the price volume, we see a pretty mixed picture.

Overall, we are around 1/3 price and 2/3 on the volume side. In Scent & Care, it's pretty much volume driven what you see at the moment.

While in Flavors, we have the raw material situation, especially with some natural raw material price increases. So there's more, 1/3, maybe 40% price and 2/3 is volume, 60% volume.

So that's the picture in Flavors. While in Nutrition, it's very much volume driven, so that's around 1/4 price and 3/4 of volume, which we see at the moment.

So pretty mixed across the different segments. When it comes to the raw material situation, I think we have a special situation for some natural raw materials like vanilla, like citrus, a little bit garlic, so very specific.

Overall, the portfolio is rather normal, I would say. If you take these natural situations into consideration, we probably see now 3% to 4% raw material headwind, and we are working hard to bring that into the prices.

And as we said before, it takes us a little while to bring that in. We are very close to the customers to manage that.

And from this, I'm not at all concerned at this point in time that it will have any material effect on our margins over the coming months.

Could you talk a bit more about some protection please, what is happening there and what are you doing to improve the situation there? And secondly, can you update us on the Pinova synergies?

Were there any already in Q1 or are they to come in future quarters?

Yes. So the recent situation at the moment is pretty much competition also, especially from Asia, China, which affects us there.

Luckily, we can compensate through the still very, very positive cosmetic actives business. So of course, we are very close to the situation on UV filters, which is more and more a commodity business.

So at this point, I can say we are working on the situation. It affects us, as you heard.

I cannot tell you at the moment how we will come out this situation at the end. I can tell you that we are very close in addressing the situation which we are facing at the moment.

Pinova synergies, we are seeing good progress on the process improvement site. Actually, we are using our production network to use the fragrance raw materials in another site.

So that's progressing as well from this. And we see the synergies coming in more and more over the coming months.

As we said before, it will take us quite some time because most of the synergies are process improvement related.

It's around one-off. Are there any [indiscernible] we should have on our radar screen as we go through the rest of the year?

You mentioned the €4.7 million one-off gain from Pinova. Are there others?

And also, along those lines was Easter and the calendar timing of the bank holidays this year compared to last year. Any effect and could you quantify that effect, please?

Yes. So the one-off of the €4.7 million is related to the final purchase price adjustment of Pinova Inc.

We had the normal working capital adjustment clauses in there and they were positive for us. So that's why we saw this one-off.

And that was important for me to mention that to you that we have a very clear understanding. We are no longer normalizing anything.

And this effect, of course, is a special one. And therefore, we count it out.

Otherwise, I don't see any specific one-offs for the remainder of this year at this point in time. It's, of course, a situation where we continue working also on the Pinova side.

We have some aftermath impacts from the sale of Pinova Inc. But again, I'm not a friend of big normalization.

So only if it's very specific, I would highlight that. And therefore, we mentioned the €4.7 million.

When it comes to the Easter timing, I don't see a material impact from this on our business compared to last year, and I couldn't specify the impact and quantify it.

Okay. And just a follow-up on that.

You don't expect to see any material impact in Q2 from less working days either?

No.

In your press release this morning, you're talking about lower demand in home care and beauty care in many geographies. Could you explain what's happening here, where the pressure is coming from?

Is it that your big customers are starting to cut more cost, as some of your peers have been talking about recently?

So this year, heterogeneous picture at the moment in our Scent & Care business. As you can see from the moderate organic growth, we have good regions, we have slower regions at the moment.

It's a little bit slower in Asia/Pacific. It's also – compared to last year, especially a little bit slower, for example, in Brazil.

On the other hand, other pieces are progressing well. So it's the cyclicality of the business, which we are facing at the moment on the Scent & Care side.

It's pretty much, as I said, volume driven. So price-wise, and you see that from other situations, competitors, as well as customers, it's a challenging environment at the moment to get through these price increases.

And nevertheless, we are optimistic for the – especially second part of this year. One reason for that is we were quite successful last year and again this year in either protecting core listings or entering into new core lists.

So that will, of course, take a little bit of time to get through. But it makes us and the business [indiscernible] especially also positive that in the second half of this year, Scent & Care should see an improved situation.

The first one is on Flavor & Nutrition. I mean, here, the organic growth rate was very good in both parts.

What are your expectations here for the coming quarter? And do you expect this strong pace to continue?

Or are you even looking for an acceleration due to – on the upcoming capacities you have in pet food and flavors, for example? And the second part on the environment in general, I mean, we see several of your larger customers to have difficulties to grow organic volumes.

This counts for both sides, the home and personal care business and the food and beverages. Do you see here already some general improvements on your customer side?

And what can we expect here over the coming quarters?

So as you rightly said, Daniel, we have extremely good growth environment for Flavor & Nutrition at the moment. We have that already last year and got better this year organic wise.

We benefited from capacity additions, for example, in the pet food environment. There is additional freight capacity coming on stream that supports the organic growth picture and the volume improvement, which I mentioned.

I would hesitate to say that it's the new normal now. Definitely, we would like to stick with our 5% to 7% gross guidance on a long-term basis.

I think that's an ambitious number already. So if we see more, we take it.

But I don't want to be this the new normal. So expect us to perform, that's the plan for this year.

And therefore, I'm optimistic, but I also see that the gross numbers, which we see in Flavor & Nutrition are quite outstanding at the moment. Customer wise, for home care, beauty care, I can see at the moment the mixed picture which I described across the regions.

That's what makes us positive. It's also what I said we are entering into, call it, new customer relationships and they should come through in the remainder of the year.

That puts us a little bit apart from the general customer environment. That's how I would describe it.

I will use two questions, if I may, both on UV filters. Can you gave a little bit more background in what areas are you actually active?

Are you in inorganic UV filters at all? And given the commoditization of organic UV filters, it's one of the measures you might be actually taking to be actually – and exit from this business.

And secondly, can you give us a hint how big actually this business currently rather is? Is it somehow like 5% of sales or rather 2% to 3%?

So Thomas, thanks for the question. So the UV filter go into the Cosmetic Ingredients environment.

We have a number – a turnover number, which is definitely substantially below 5%, and that's where we've put it. It's not something which makes us completely nervous and as I said before, we are addressing the situation.

The team is working on it. And we will come to conclusion as to how we continue with this business later this year.

There's nothing at the moment. It's just really putting us apart because of the situation.

It's profitable. It's something which is going slower.

It hurts us a little bit from a turnover perspective, but it's not something which is a concern, especially not profit wise.

Both are on margins. So firstly, within Flavors, you had a 60 bps decline in your EBITDA margin year-on-year.

Can you perhaps split up between what was the impact of raw material inflation and what was the increased R&D expenditure in the quarter? And the second question is on margins within Nutrition.

Can you give us a sense of what the EBITDA margin at the Nutraceutix business was during the course of Q1? Perhaps even relevant to the rest of the division to give us a sense in terms of why that came out.

So on the Flavor, the 60 bps, I think the majority of that is raw material price driven. Nevertheless, we invested more into the R&D space.

It's difficult to break it down into the two pieces. I think you should take away that at the moment, we are very close to the customer situation, especially with these natural raw material situations.

And I think that's the clue to it at the moment that we work very close with our customers on the demand requirement so that we can manage this carefully. And therefore, for Flavors, not a very difficult situation as we are close to the customers.

On the Nutrition side, EBITDA of Nutraceutix, I cannot break it down. As you know, Probi had done this acquisition and Nutraceutix is their, yes, entity at the end of the day.

So we are following the Probi business, but we are not breaking it down into pieces.

Okay. Just to follow up on the first question again.

So given how closely you're working with customers on the raw material size, is the read that I should take from that come is that the margin contraction, as you go into the latter part of the year, should become less significant as you're able to pass more of that [indiscernible] on the pricing side? Is that fair?

That's the ambition. Now we have to monitor, of course, the further raw material price situation, and that's important part that there, you need to be close to your customers and that's what we do.

That's what the sales teams are doing to have this customer proximity. And react to any price developments over the coming months.

The first one actually is surprising, the effects on the Flavor, minus 0.8% versus positive everywhere else. Could you just elaborate a bit on which currency has actually impacted the sales?

That's question #1. And question #2, again, the 9.6% organic growth in Nutrition, would you actually help us splitting that out between the Diana business and the consumer health business, the probiotic having – Probi has shown very good numbers.

So if you could help us just to the growth of Diana versus probiotics?

Yes. So on the Flavors, foreign exchange side, a good part of the FX impact is coming from Egypt.

So we have a substantial business. And if you follow the [indiscernible] development of the country, you can see that there is an impact since you have business there.

That's the majority and that's why you see a different FX development compared to the other two segments. On the Nutrition business, what I can say is that, and you know that we are not breaking this down further by business unit, it's across the board, it's across the business activities of Nutrition that we see this nice growth environment at the moment.

Food is performing extremely well. Pet is very, very good, and Probi, you can see yourself that they have extra organic growth also and organic growth.

So in this order, you would say Probi first, then food, then pet food on [indiscernible]?

No, it's really on an even level somewhat. So that's really a nice situation at the moment than with – again, confirms our portfolio aspect that we have a very nice broad portfolio established in the meantime.

And the cyclicality, which we see in Scent & Care at the moment, we can easily compensate that to the good performance in Flavors and also in Nutrition.

The first one, just in order to clarify the sun protection business, it's at 5% of group revenues or of divisional revenues in Scent & Care? And second question is, my understanding is that the ambition of Symrise is to grow all segments at 5% to 7%.

Do we stick to this aspiration in light of the widening growth gap we've seen in sort of Q1?

Absolutely. To your last point, there is no doubt about our long-term guidance of the 5% to 7% across the board.

We have seen cyclicality in the past in different business, and it was always possible to compensate that through other elements. And this is the nice part of Symrise that we are so well balanced across the different business, region, customers and raw materials at the end of the day.

So no doubt that we will continue with our long-term guidance across the segments. Your first question on the sun protection, group wise, it's substantially below 5%, very substantially below 5% just to confirm that.

Two questions from my side, if I may. Firstly, on the Flavor segment.

I know it's – EAME region delivered a stellar performance. Is there any business wins that you would call out that drove that performance?

And secondly, just on CapEx, is there any change in your guide for the year, around 6% of sales?

Yes. So there's nothing specific in EAME, which I would highlight as a specific win.

It's across the business where we see very good performance, naturally also, especially in suite. But there's no specific customer which I would have to highlight to explain further.

On the CapEx side, no change, so we stick to the 6% guidance for this year and probably also for next year. That's the current situation.

We have a number of larger projects up and running. We are adding capacity very often due to capacity constraints.

And part of that you see, for example, at the moment, in Diana, in the pet food environment, new capacities used and it's helping us to drive the growth.

I just was looking at your guidance for 2017 for 3%, and I was just wondering if you could elaborate on that. And what kind of scenario you envisage that might lead to your sales being down for low?

And secondly, on Scent & Care, I don't – I still don't fully understand where the weakness was. Could you perhaps give us an indication of where organically growth was significantly negative to offset the positives discussed?

So the 3% which you mentioned is the expectation for the overall market growth. Our ambition is to substantially outperform the 3% also this year again.

I think for that, we had a very good start with 5.3% organic growth in the first quarter. So the ambition is there that we will continue with this, that we will substantially outgrow our market environment.

So there's no taking anything back or so. It's in line with what we have communicated before.

On the Scent & Care weakness side, I think we discussed the UV filter situation, and we mentioned also in our announcement that we had a very diverse picture, some weaker elements on the beauty care side. I think that's the things we see at the moment.

It's very much coming down to cyclicality. And keep in mind that we had a very, very high prior year organic growth also in Scent & Care.

So we are comparing ourselves at the moment, this business, against a high last year comparison.

Chetan from JPMorgan. A few questions.

When you say more than 3% growth for full year, can you help us – or could you highlight possibly things that investors and analysts should keep in mind in terms of reaching that 5.3% growth for Q1 to rest of the year? That is #1 point.

And second question is on raw materials, you said 3% to 4% increase. Is that for 2Q or full year?

And can you also give us the number for Q1? What was is the inflation on raw materials you saw in Q1?

So on the 5.3% organic growth, as we said in our guidance, we want to clearly outperform the 3% market growth. I think for that, we had a very good start into the year.

And as we are positive about the rest of the year, I see this guidance confirmed that the good start in Q1 helps us to deliver according to our ambition to substantially outperform the market. I would like to keep it there at the moment.

There's no change in our ambition. And from a long-term guidance perspective, the 5% to 7% is always something which we have in our mind in driving our business.

So from that perspective, absolutely optimistic for the remainder of the year.

Can I follow-up? Is there a reason to believe that, that growth could slow from Q1 into rest of the year?

No indication at the moment that this will slow down. I think we have set a good start into the year, and I think we distinguished ourselves quite a little bit from our competition with this number.

And no indication from my side at the moment that this will go into one direction. On the raw material side, the 3% to 4% increase is in comparison to the situation which we had last year, so that's what we are dealing with and it's coming from very specific situations on the natural raw materials side.

From a broader portfolio perspective, especially with the oil-based raw materials, we still rather see price decreases. So as I said, we are dealing with specific situations and for that, we are very close to our customers to get this into the pricing environment.

But is sequentially raw material headwinds sort of easing or is it still the same as it was in Q1?

No, I think the specific situation that we face at the moment, they'll continue in the markets. You see that in the vanilla, in the citrus, and the garlic situation remains to be seen how the next campaign for these raw materials are going to be.

It's still too early. The harvesting season is still in front of us.

So therefore, again, the clue here is to be close to the customers and interact with them on the demand side.

Just a quick one from my side please, also on raw materials. Could you just please quantify the negative impact you've had in the first quarter on EBITDA from raw materials, please?

I have to say no. Very difficult question.

But if you – sort of maybe [indiscernible] from another way, given the indication for Flavors already. In Scent & Care, if I address the margin for the one-off benefit and the accretive effect of the disposal of Pinova, the margin was down something like, I guess, in the order of magnitude of two percentage points.

Is it fair to assume that this decline is primarily down to raw materials? Are there any mix effects in there as well?

No, I think it's a very mixed picture, which we have here.

Could you talk a little bit around those moving parts, please?

It's very difficult to move this into pieces, which you have in mind. So I hesitate to give that information without having that specifically at hand at the moment.

Well, thanks for the question. Ladies and gentlemen, this brings us to the end of our conference call.

Thank you very much for your time and your interest in Symrise and a special thanks to you for supporting us in our ambition for a lighter format. This was the quickest conference call we ever had, and I hope all questions are more or less answered.

If not, we'll come back to you in the course of the day. Many thanks and goodbye from Holzminden.