DB cuts Symrise to 'hold' as pet food momentum tapers

Swedencare AB (publ)

12/06/2023 09:42

** Deutsche Bank cuts Symrise  SY1G.DE  to "hold" from "buy"
as it sees slowing organic sales growth over the next twelve
months due to a slowdown in pet food and challenging end-markets
    ** The broker points to normalisation in pet food sales
after the pandemic-driven boom, saying recent growth has been
due to pricing more than volumes
    ** It expects Symrise's pet food growth to slow down in Q2
and soon to flatten as input costs level off
    ** It forecasts 6.3% group-wide organic sales growth in Q2,
slowing to 4.7% in H2
    ** DB expects margins to come under pressure from softening
growth and inflation, along with challenges in the aroma
molecules business that suffers from cheap competition from
China, destocking and extra costs
    ** Relating to Symrise's public offering of SEK 37.5 per
share for Swedencare  SECARE.ST , the broker says it doesn't
expect the shares to be tendered at this level
    ** "We therefore cannot rule out the 30% stake in Swedencare
will be written down, which could lead to another impairment of
up to E226 million," it says
    ** Symrise's shares fall 1.9% to the bottom of Germany's
blue-chip index  .GDAXI 

 (Reporting by Tristan Veyet)
 ((Tristan.chabba@thomsonreuters.com))