Price hikes to bolster Symrise growth - Citigroup

08 July 2008 15:23  [Source: ICIS news]

MUMBAI (ICIS news)--Symrise's 10% price hike for its flavours and fragrances will bolster the German chemical company's performance in 2008, with a 6% growth in revenue forecast, analysts Citigroup Global Markets said on Tuesday.

“Fears over the consumer slowdown and rising cost pressures had caused the company’s shares to fall to a point that we consider them substantially undervalued. Our €21 ($33) target price implies more than 50% upside potential from current levels,” Citigroup said.

 

The analysts rated Syrmise stock as "buy/low risk" because it had a robust balance sheet and planned to accelerate growth through acquisitions, it said.

 

“The flavours and fragrance industry should be able to exhibit substantial pricing power, in our view. Its products form only 1-4% of its customers' costs, yet are critical to the success of the end product,” it added.

“The wide variety of raw materials should dampen overall raw material inflation to 3-4% this year and the bulk of this is being felt in the fragrances division, where today's price increases are focused,” Citigroup said.

Symrise shares were trading 4.07% down at €12.49 at 14:08 GMT on Frankfurt's Xetra exchange.

($1 = €0.64)

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By: Aaron Rodrigues
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