Symrise AG (OTCPK:SYIEF) Q4 2021 Earnings Conference Call March 1, 2022 6:00 AM ET
Tobias Erfurth - Head, Investor Relations
Dr. Heinz-Jürgen Bertram - Chief Executive Officer
Olaf Klinger - Chief Financial Officer
Conference Call Participants
Lisa De Neve - Morgan Stanley
Matthew Yates - Bank of America
Heidi Vesterinen - BNP Paribas Exane
Thomas Swoboda - Societe Generale
Isha Sharma - Stifel
Charles Bentley - Jefferies
Charles Eden - UBS
Good afternoon or good morning, ladies and gentlemen. Welcome to the presentation of the Symrise 2021 Full Year Results. With me in this conference call are our CEO, Dr. Heinz-Jürgen Bertram; and our CFO, Olaf Klinger. The ongoing corona pandemic has unfortunately kept us again from hosting this event in person in Frankfurt, but we are happy to have you in this virtual format instead.
We will go through our results and provide an outlook on the current year from our headquarters here in Holzminden. You will, of course, also have the opportunity to ask questions during the Q&A session following the presentation. All documents have been published on our web page this morning in the section Investors at Financial Results. You can also find the recording of this session later today.
I will now hand over to our CEO, Dr. Heinz-Jürgen Bertram. Please go ahead.
Dr. Heinz-Jürgen Bertram
Thank you, Tobias. Good morning, ladies and gentlemen, and welcome also from my side. I am delighted that so many of you have taken the time to join our call today. I will begin with the highlights of 2021. Olaf will then provide a deep dive into the financials before I conclude with our key strategic initiatives and an outlook for the road ahead.
Let us have a look at Chart 4. The year 2021 was clearly marked by a strong economic recovery from the effects of the global coronavirus pandemic. The improved situation led to fewer restrictions. The social life gained good momentum again. However, particularly since the second half of the year, the economy has been facing persistent bottlenecks in supply chains. Rising inflationary effects and higher raw material prices intensified the pressure on economies worldwide.
As other players, Symrise was also influenced by these factors, but we successfully capitalized on returning demand and continued our profitable growth course despite some headwinds. Our diversified portfolio and our backward integration have been decisive factors for success. We are, therefore, looking at an all-around very satisfactory year 2021. We grew sales by around 9% to over €3.8 billion. Organic growth was even stronger at almost 10%. EBITDA increased by 9.6% to €814 million, and our profitability remained at a high level of 21.3%. The business free cash flow amounted to €486 million and equals about 13% of sales.
Net income grew by more than 20% to €375 million which corresponds to €2.74 per share. Our dividend proposal amounts to €1.02 per share for fiscal year 2021. This proposal represents, ladies and gentlemen, the 12th consecutive dividend increase.
Let me conclude the snapshot with 1 more highlight, our DAX membership. After 14 years in the German MDAX, we have become a member of the leading German index last September. Our share gains even more visibility and interest amongst shareholders now.
Taking a look at our sales growth on Chart 5. Group sales increased to over €3.8 billion, including €40 million of Sensient Fragrances which we had acquired last year. Organically, the group achieved even stronger growth of 9.6%, driven by both segments and all regions. We not only exceeded our sales forecast, which we had raised twice last year, but also outperformed market growth.
In both segments, we observed a normalization in consumer behavior and increased demand, which Page 6 illustrates. Taste, Nutrition & Health, our renamed segment, which resulted from the combination of our 2 former Flavor & Nutrition segments generated sales of €2.3 billion. Organic growth amounted to an excellent 10.6%. The renewed out-of-home consumption boosted demand, particularly for beverage applications. A strong growth driver was once again our Pet Food business, which grew in the double-digit percentage range.
Our Scent & Care segment also performed extremely well. Sales rose by 8.9% to around €1.5 billion, and organic growth came to 7.9%, driven by all application areas. Fine fragrances and cosmetic ingredients particularly benefited from the resumption of travel.
Coming to our regions, where we also have a very good news to share on Chart 7. We grew across all regions with Latin America being the strongest one and delivering organic growth of 13.5%. Asia Pacific achieved organic growth of 10.3%. EAME and North America generated very good organic growth rates of 8.8% and 8.5%, respectively.
Symrise is sustainable in more than 1 respect. We stand for sustainable operations and sourcing. We also stand for a very sustainable financial performance, as you can see on Chart 8. Since our IPO in 2006, we delivered an annual compounded growth of around 8%. Our EBITDA CAGR amounts to an excellent 8.4%, and our profitability is on a constantly high level. We are creating value every single year. This makes us very proud, and I would like to thank all our employees worldwide for their tireless work, commitment and dedication.
As chart 9 shows, our share price has also performed very well, gaining more than 20% in 2021. We outperformed both MDAX and DAX and consider this a confirmation of our attractiveness, but it also reflects the trust investors have in our strategy and long-term prospects. It is part of our Investor Relations philosophy to have our shareholders participate in Symrise's success. The management and Supervisory Board will, therefore, propose a 2021 dividend of €1.02 per share. This proposal represents the 12th consecutive dividend increase and is another indicator for our commitment to long-term value creation.
Let me pause here and turn to Olaf. He will now provide the details on our financials. Olaf?
Yes. Thank you very much, Heinz-Jurgen and also a warm welcome from my side. Let me start straight away with our sales development on group level on Slide 11. We achieved strong organic growth of 9.6%, which is far above-market growth. But not only that, we also outperformed our guidance of average annual organic sales growth between 5% and 7%. It is particularly important to note that sales growth was driven by volume, not price. This will change in the current year towards substantially more contribution from price.
Going through major events this year, Q1 was still characterized by the cyber-attack that hit us at the end of 2020. We recovered within weeks and caught up the vast majority of the missed turnover quickly. Special thanks go to our clients and partners for their support, and our Symrise colleagues for their extra effort to recover our IT system environment in an accelerated mode.
Throughout the year, global consumer demand caught up immensely. Travel activity and the leisure sector particularly benefited, which drove the need for cosmetic applications and beverage solutions. Also, our Pet Food activities performed extraordinarily well, supported also by ADF/IDF, which we acquired back in 2019 and which continues to perform well ahead of our initial expectations.
The performance of the Sensient Fragrance acquisition was fully in line with our initial expectations. The business contributed sales of €41 million and in addition to acting as internal raw material supplier. In terms of FX, we had negative effects of €73 million for the full year but a positive sales impact of €23 million in Q4. For 2022, we expect FX tailwind that will support our reported top line as well as our group sales target of €4 billion to €4.5 billion, which we gave in 2019 for the year 2022. We are fully on track to deliver on our midterm ambitions.
On to our profitability on Slide 12. Gross margin amounted to 38.7% compared to 39.5% in 2020. The development is linked to higher manufacturing costs and increased raw material expenses with an inflation of about 1.2% last year. Our P&L has been impacted by a few extraordinary items. We experienced M&A-related transaction cost of €8.7 million. Positive one-off items came from the sale of the color business with plus €12.5 million, and from the favorable book value of the Sensient Fragrance acquisition was plus €20.8 million. Please keep in mind that the substantial benefit from the book value is connected to an initially low profitability of the acquired Sensient Fragrance business.
EBITDA grew by 9.6%, also supported by lower travel and R&D costs. Our EBITDA margin increased to 21.3% after an already strong level of 21.1% the year before. While depreciation increased moderately, amortization decreased by around €4 million, mainly due to the end of the amortization period of IT software solutions. As a consequence, our EBIT rose over proportionally by 14.7%, and our EBIT margin reached a solid level of 14.6% compared to 13.8% in 2020.
Let us now look into the segments, starting with Taste, Nutrition & Health on Slide 13. The segment successfully leveraged returning consumer preferences and achieved an organic sales growth of 10.6%. We saw an exceptional upturn in beverage solutions followed by double-digit growth in Pet Food activities. EBITDA grew by 12.9% or €60 million to €531 million. The segment increased its EBITDA margin to 22.7% and operated highly profitable despite higher costs. Our strategy to invest into faster-growing and more profitable businesses starts to pay off. In addition, initial steps to increase prices were successfully taken.
On to Scent & Care on Slide 14. Scent & Care achieved organic sales growth of 7.9%. Main growth drivers were fine fragrances and cosmetic ingredients, which both benefited from the normalization of consumer behavior and experienced an excellent upswing after the sharp decline in 2020. Aroma Molecules was supported by strong demand and further capacities for menthol built during the recent years. Consumer Fragrances and Oral Care achieved single-digit sales growth following exceptional high levels in the prior year.
EBITDA in Scent & Care increased by 4.1% or €11 million to €283 million. The margin totaled 19% compared to 19.8% the year before. The decline was mainly due to a below-average operational margin at Sensient Fragrances, increased raw material costs and higher manufacturing costs. During the second half of the year. Scent & Care experienced higher costs related to increased logistics, energy as well as packaging costs. While price increase initiatives were taken early on in the second half of last year, the effect will mostly come in starting this year due to the nature of customer contracts, especially in Aroma Molecules and Cosmetic Ingredients.
Turning now to the financial result and bottom line on Slide 15. The financial result improved by around €21 million and reflects generally lower financing costs in 2021. In addition, we had a one-off effect payment to tax authorities during the year before. At the Capital Markets Day in January 2019, I gave a tax guidance of 26% to 28%. Since our tax rate developed well and further decreased from 25.6% to 25.4% last year, I would like to update our tax guidance to now 25% to 27% for the coming years.
Our bottom line grew by more than 20% to €375 million. EPS reached a new all-time high at €2.74. It is also to be kept in mind that the number of shares increased because of the conversion of the convertible bond into new shares in September last year. Please take note that the EPS is calculated based on a weighted average number of shares last year. As stated by Heinz-Jurgen, Management and Supervisory Board will propose a dividend increase to €1.02 per share.
Let's continue with our business free cash flow on Slide 16. The level for 2021 remained below the high levels of the previous 2 years despite strong EBITDA growth for 3 reasons. First, 2021 was a year of important investments. We spent €174 million, including some strategic growth initiatives. Second, we increased working capital as a result of the cyber-attack in late 2020 as well as strategic inventories to maneuver risk and the global supply chain. And third, with a higher level of trade receivables due to the strong growth in sales. Despite the strong earnings growth, business free cash flow settled at 12.7% of sales. For 2022, we are optimistic to reach a level of around 14% of sales again.
Moving on to net debt development on Slide 17. With the increase in capital and further reduction of debt, net debt, including pensions and leasing obligations totaled 2.4x EBITDA as of December 31. For 2022, we expect a slightly higher leverage ratio of 2.5 to 2.7x, driven by recent and further expected M&A activities. Our top priority still remains to be an investment-grade profile.
Taking a closer look at the balance sheet on Slide 18. Investments and acquisitions increased property, plant and equipment as well as intangibles. The increase in other assets results from the participation in Swedencare. In August, we decided to redeem our €400 million convertible bond early by conversion into new shares. Our equity increased by €890 million to €3.252 billion. Next to the conversion of the convertible, we benefited from positive FX translation differences of around €170 million as well as an increase in accumulated profit and other reserves of around €276 million.
Our equity ratio, therefore, closed the year at a very healthy level of 49%. All in all, we enjoyed another successful year with profitable growth at Symrise, once again confirming the resistance of our business model in challenging times.
And after this financial deep dive, I now hand back to Heinz-Jurgen.
Dr. Heinz-Jürgen Bertram
Thank you, Olaf. Ladies and gentlemen, let us look at the strategic initiatives. They have supported our performance in 2021 and will -- which will bear further fruit going forward. Chart 20 illustrates our new corporate structure and gives background to establish the Taste, Nutrition & Health segment. We have decided to bundle the Flavor & Nutrition competencies and build a global powerhouse around Taste, Nutrition & Health, 3 assets which are closely tied together.
With an expanded portfolio, we are in an even better position: first, to serve the needs of our customers with sustainable and innovative products and solutions; second, to tackle promising new markets; and third, to further increase our competitiveness through unique capabilities. M&A have traditionally been important elements for differentiation and growth.
Please have, therefore, a look at Page 21. For example, Canadian GiraffeFoods. The company will strengthen our food business via customized taste concepts and make us a leading provider of integrated food solutions in North America. Pet Food is a key driver for our portfolio and our growth, and we even want to expand our position as the leading international supplier for pet food solutions. We acquired a minority stake in Swedencare and aim to strengthen our knowledge of veterinary products, supporting the well-being of pets.
The Dutch company, Schaffelaarbos, is an excellent example for expanding our position in ag-based proteins. As you all know, APAC has traditionally been a highly promising region for us. And with the acquisition of Chinese Wing Pet Food we just announced a few days ago, we intend to further increase our footprint in pet food in the region. At the same time, we stopped activities. The core business no longer includes the food color applications, which we sold to Oterra as well as the Drinkstar Velcorin activities.
In the Scent & Care segment, too, the wheels have not stood still, as you can see on Chart 22. We have reorganized our regional presence and expanded our portfolio through targeted acquisitions and strategic partnerships. I want to highlight 3 here. With Sensient, we have strengthened our fragrance and Aroma Molecules business. As part of this acquisition, we also acquired the Sensient site in Granada. It will become an important European hub for our Scent & Care business. Two more important steps have been realized with a minority interest in U.S.-based Kobo Beauty Inc. and a cooperation agreement with U.S. start-up Infinite Looks. Both demonstrate our efforts to further expand our portfolio in attractive business and product areas, namely UV protection, decorative cosmetics and hair care. These acquisitions and divestments show our clear commitment to continuously improve our portfolio and make Symrise a unique player.
Sustainability is and always has been an integral part of our strategy. For this, please see Chart 23. Our approach is fully aligned with the UN sustainability goals and embedded in all our operations, from sourcing thousands of raw materials from all over the world to the production process to delivery to the customer. We let ourselves be measured by a number of KPIs, and it is our clear goal to become climate positive by 2030. Our commitment to climate protection is already recognized today. For example, by the Carbon Disclosure Project, Symrise was awarded triple A status for the second consecutive year in a row in all 3 categories: water, climate as well as forest. We are the only company in Germany and 1 of only 14 worldwide with that status.
Investments pave the way to growth in the future. Chart 24 highlights some selected projects, which comprise investments into new capacities as well as R&D. We have, for example, built a new site for our Pet Food division in China and set up a new innovation center in Dubai. On the R&D side, we have put a particular focus on innovations, for instance, the launch of SymProBiome, which is a new model for microbiome-based research.
And in the area of advanced technologies, we have invested in a very exciting digital tool to improve traceability of global farming. It allows us to collect structure and coordinate agronomic data from around the world.
I want to conclude today's presentation with the outlook for this year on Page 25. Following the strong recovery in 2021, experts estimate that the global economy will grow more moderately this year. In addition, I am sure this is not a surprise to you. We expect an increase in selective raw material and energy prices. Also, the crisis in the Ukraine and the impact for all of us cannot be foreseen today. However, we are confident that we are very good positioned to continue our profitable growth course. Our robust business model, with its diversified portfolio, our far-reaching international presence and broad customer base give us tailwind. For 2022, we are targeting organic growth of 5% to 7%, in line with our midterm guidance. Despite headwinds from raw material and energy prices, we aim at an EBITDA margin of around 21%.
Ladies and gentlemen, thank you for your attention. I would like -- I would now like to open the call for your questions. Tobias?
Many thanks, Heinz-Jurgen. Many thanks, Olaf. Turning to Q&A, we are now happy to take the questions from the audience. And the first question comes from Lisa De Neve from Morgan Stanley.
Lisa De Neve
I have 2. So the first one is on the EBITDA margin. You're guiding to about 21% margin at this point in time of the year for 2022. So can you please share just sort of building blocks that underpin that guidance, especially as it relates to raw material inflation, degree of pricing, synergies you may expect. And maybe also on the adjusted versus reported line, any sort of integration or start-up costs we should calculate or take into account? That would be super helpful.
Dr. Heinz-Jürgen Bertram
Okay. So Lisa, I start, and I would say, Olaf, you take the mix of price increases and volume and all this stuff. So 1 point which I just stressed is we have consequently improved and managed our portfolio. So assets which were not core business anymore or which were dilutive on our margin, we sold, and we have consequently looked for business areas with a better business perspective. And if possible, even an accretive business bottom-line contribution. Olaf?
Yes. So from our perspective, the EBITDA margin is supported by price increases, which we started last year quite a little bit. We are seeing them coming in. So the 5% to 7% growth guidance for this year will incorporate a substantial amount of price here. That's 1 driver. The second driver I would highlight is, again, the strong development of our portfolio into fast-growing, high-margin businesses. I think we have seen a few acquisitions in the last few months, and all of them will be accretive. And therefore, the mix in this regard will further improve our profile. So the diversification of the group continues in this regard and supports well the margin expectation.
Lisa De Neve
Can I just follow up a little bit on the raw materials and the pricing specifically? Can you just share what you're seeing on the raw material landscape in terms of the degree of raw material inflation you're expecting for this year? And to which extent you've been able to renegotiate that via pricing on the top line? How should we think about pricing versus raw materials this year and sort of the time line that's lapping that if that's what's going to happen?
Dr. Heinz-Jürgen Bertram
So I will start, Olaf, and you hop in if you feel there's something more to be added. As what we said beginning of last year, the -- we expected for last year, 1% to 2% price increases. And for last year, we saw a bit more, say, than 2%. But around the guidance we gave at the beginning of last year was correct, with the caveat that most of the price increases of last year happened in the last quarter. And so happened that this year, we saw a steep price increase in the beginning of this year. We expect about 6% on top of it. So that brings us to, say, in total, 8% and we discussed it last year already. We had started in time to pass on price increases for the products. And as per now, we feel well equipped that we have managed to pass on most of our -- if not all of the price increases to the customers.
As Olaf has said, not all of these price increases which we pass through have been materializing yet because some of the contracts, in particular, in the Aroma Molecules area, but also in Flavors and Fragrance are still valid. And -- but in the next weeks or month, these price increases will come through. So of course, the situation is not always clear and visible to us how it continues to develop. But as per now, we feel confident that we have been able to pass on the price increases or that these price increases will go through within the next weeks. Olaf, you want to add a bit more?
No. I think you said it. And keep in mind, I mean, we have a raw material base of 10,000 raw materials. So across this portfolio, you see, of course, different elements coming through. And some price increases have been extremely substantial, like in Aroma Molecules, very substantial double-digit numbers we needed to take. Similar in Pet Food, we had substantial price increases initiated last year. So across the portfolio, it will come through in different magnitudes. We said in the past 3 to 6 months, it takes us normally to pair the 2. Maybe this year, it might be a little bit longer because the increases continue, and we need to see how we play this out. But no worry at the moment on our end that we will not be successful in protecting our margin environment.
Dr. Heinz-Jürgen Bertram
And 1 key message which I would like to highlight in addition to what Olaf said, we benefit from the best backward integration in our industry. And in times when we have crisis, then we typically benefit from this. And in this time, it again shows the value of our business model, and that's why we are confident for this year as well.
Well, thank you very much, Lisa. Next question comes from Matthew Yates from Bank of America, please.
A couple of questions. First one, maybe for Olaf, just around the CapEx, 4.5% of sales. Is that actually enough to keep up with demand? Conscious you just had a year of almost 10% volume growth. Are you running up against any sort of capacity constraints that need to be alleviated?
And maybe a second question, a bit broader, for Heinz-Jurgen around Pet Food business. Am I right in thinking you're outgrowing the end market? And if so, can you help me better understand who you're taking share from? Is that the big pet multinationals increasingly outsourcing some of the things that they've previously done in-house? Or is your technology really extending your lead over some of the Tier 2 players? And I guess over the midterm, you've done some interesting M&A recently to move deeper into certain geographies and adjacent products like health. Just how big do you think this pet business could be for you in 3 to 5 years' time?
Dr. Heinz-Jürgen Bertram
Okay. Yes, Matthew, thanks for the question. So first, the CapEx at the moment, it was 4.5%, which is industry average. But you may bear in mind, we had already times where we exceeded 7%. So you see from there, we invest whatever is necessary, whatever permits our growth. And going forward, I believe, Olaf, you gave the guidance for this year, 5%, maybe a bit more. But Matthew, we benefit also from the massive investments we've done over the last few years and to improve capacity. It shows that, obviously, this was exactly the right thing to do. And there is no reason to be concerned that 2 point -- 4.5% cuts back on capacity or leads us to capacity increase constraints.
We are very confident that, first, we have a portfolio which is future oriented, where there is a bright future ahead, and we will continue to invest whatever is necessary. And in that respect, we're very positive 4.5%, which we did last year, that is industry standard and benchmark is typically that we tend to have a slightly higher capacity CapEx level. For this year, we expect, as I said, a bit more than 5%, but no reason to be concerned at all in that respect.
Pet food. Market growth, here, we see a strong organic growth momentum. We may take market share from smaller players, which, frankly, we don't know exactly. However, what it shows, we have a unique position in that segment. And the recent report from Barclays, pet food, the best category in food industry. And on Page 6, under point 9, it says Symrise is the only company who made meaningful entrance in this. So that is a unique thing which differentiates us from all the other competitors, and we will continue to drive this unique thing. And our clear goal is by 2025, we will have this €1.5 billion business unit. I think that shows our ambition. And so Matthew, in that respect, the best is yet to come, okay?
Thank you for the question. Next question comes from Heidi Vesterinen from BNP Paribas Exane.
I first have a question on the new segment, your decision to rename Flavor & Nutrition. What actually changes on the ground and for your customers? And are you now a believer in integrated solutions?
Dr. Heinz-Jürgen Bertram
Well, as we discussed quite a few times, on the long run, it made sense to reshuffle the food ingredient and the flavor business to put it together. The synergies from these 2 businesses are so striking that there are top and bottom line synergies. After we did the Diana acquisition, and we knew we did the damn best acquisition in our industry, we took our time to develop trust and to preserve all the assets. One of them we just discussed with Matthew so. But after 6 years, it's time to look for some additional synergies. Putting it together just makes sense and I think does not come by surprise for many of you.
Integrated solutions, if that -- we discussed that as well. If that means one-stop shopping, I'm not a believer in it. If that allows additional product benefits plus some synergies as we need just 1 team for the same accounts, as we said, and that we have a lot of overlap in R&D. For example, in Food Ingredient, it was called Culinary. In Flavors, it was called Savory, 2 names for the same thing. Why not combining these resources and addressing, in particular, even better the challenges of the future, Heidi, which is protein alternatives and sugar replacement. All this is something which is not traditional flavors, but close to flavors, but to the other extent, in Food Ingredients. So for that extent, it makes sense to combine. And if you want to name that integrated solution, I'm absolutely with you. If it says one-stop shopping, you lost me, okay?
And another question. I'm curious about your ambition in Nutrition. Do you think you will stay in pet food or do you see merit in moving outside of pet food in a big way? Say if you found acquisition or merger opportunity with somebody with leadership and other types of nutrition solutions, would that make sense?
Dr. Heinz-Jürgen Bertram
At this point in time, we focus on expanding our pet food capabilities. I just gave the numbers, and I think there, the significant growth. And short and midterm, we want to leverage on these opportunities. Heidi, again, this is something which makes us unique, a strong differentiator and we would be foolish on not leveraging on that potential. In that area, all guns are loaded. We are broadening our protein basis. That's why we did the acquisition of ADF/IDF. That's why we did the next acquisition, Michael Foods. That's why we did the acquisition of Schaffelaarbos, all expanding the protein basis into new areas and with Wing Biotech, broadening our business presence in pet food. So you see we are doing everything to stress that one.
If there is a nutrition opportunity coming, which also has a bright potential and makes us unique in that respect, we are open to it. You heard from Olaf, the financial headroom is there. But at the moment, our focus is short and midterm on Pet Food. Okay?
Thanks, Heidi, very much. Next question comes from Thomas Swoboda from Societe Generale.
I have 3 quick ones, please. On volumes in 2022, so my question is, do you expect any meaningful volume growth in 2022? Or is 2022 just about price?
My second question is about phasing. Some of your competitors were pointing towards profitability recovery in the second half of the year. It doesn't sound like you're seeing the same. So just to confirm, you -- is it what you expect, a rather equal normal distribution of the profit generation in 2022?
And the third question is more follow up. I'm not sure if I heard you correctly. Do you see inflation already flattening? Or do you fear that, that inflation is still on the upper trend and that you might need to go back to your clients and increase prices again?
Dr. Heinz-Jürgen Bertram
Thank you, Thomas. I start and then I hand it over to Olaf to give you more. So the second question is clear, yes, and the second -- the third question is a no. So we have not seen the end of inflation yet. So there's still obviously something going on, not that steep, but it's still going on. And with the latest crisis, we don't know where it ends. But we feel well equipped to handle it.
As we said, thanks to the raw material -- to our backward integration, that helps to navigate. And in profit, we don't see a dip in first half. So we expect it to be on a good level, stable. That's why we did our guidance. Olaf, and you want to do on volume and price and all this?
Yes, Thomas, thanks for your question. Keep in mind, I mean, we will have very high comps in the course of this year compared to last year as everything was volume-driven. So what we said is that volume will play a role, but there will be substantially more price to deliver the 5% to 7% growth ambition. I think that's where we should leave it at the moment given this -- dealing all the un-security we have in our environment. You see us very comfortable, and a good part, especially in Pet Food, will also be volume-driven.
Next question comes from Isha Sharma from Stifel.
I just have 2 left, please. On the EBITDA. I know you've already answered quite a bit on this, but just to clarify, you had around €25 million of adjustment as well in EBITDA, and they were more on the positive side. So the reversal of this going into next year, along with price increases, which usually have a mathematical dilution. I'm unable to understand how I can make a bridge of, let's say, a flattish EBITDA development close to the 21.2% that you have reported for '21.
And the second question is on sustainability. You strive to be climate positive by 2030. What exactly do you mean by this? Because if I look at your progress to find CO2 reduction and also your commitment to science-based targets, you are lagging behind your peers in the same industry. So some light on that, a little bit more quantifiable would be great.
Dr. Heinz-Jürgen Bertram
First, the EBITDA performance, 21%. Olaf, you hop in, if I'm not giving Isha the full picture. It's -- we had some special effects this -- the last year. And we give our guidance out for this year, 21%, because we believe we have, as we said, the raw -- the backward integration will help us even through the turbulent times. We have acquired the Sensient business, which was highly dilutive and we have indicated that to the market strategically. It makes a lot of sense because it's the continuation of our Pinova business. We have shown at the Pinova business that we were able to improve the profitability, and we will be able to do the same thing this year. So that is 1 contributor which will help us very well to improve the EBITDA margin on the Scent & Care end.
And the other side, on the Flavor & Nutrition end, as we said, we have divested dilutive businesses. The natural color business was dilutive on our end, and we have acquired businesses, which are accretive. So all in all, that gives us some confidence, good confidence, that even without special effects and adjustments, we will be able to get to around 21%. And we are confident that we will be able to deliver that.
On the other side, Isha, you confuse me. We are well on track on our business progress to bring us climate positive. And in that respect, we believe we are leading compared to competition. I'm not aware that any one of our competitors has committed to be climate positive by 2030. And in our annual report, which we will publish, we monitor our progress. And so far, we are well on track. In 2025, I think we will have reduced our CO2 emission by 63%. And again, by 2030, we will be climate positive. We have done initiatives which are different to anyone else in our industry.
We have built our own power plant, amongst others. We are changing all our processes. Also again, bear in mind, where you have been with us in Pinova, green chemistry, sustainable sourcing, where we source the material from certified forests, and that was actually a hint from one of our key customers who said, you can be the first and only ones doing this. So all these initiatives show we're doing unique stuff, and we are on the forefront of sustainability. So wherever you got the information from that we lag behind, we believe we have different information, and we are well on track on it, okay? Olaf, you...
Maybe we can take this offline.
Dr. Heinz-Jürgen Bertram
Yes, we -- any time, Isha. So Olaf, you want to add so? Was complete? Okay. Thanks, Olaf.
Nothing to add.
Dr. Heinz-Jürgen Bertram
Thanks a lot, Isha.
Jump in here. Isha, thanks a lot. The rest, we can offline. The next question comes from Charles Bentley from Jefferies.
So sorry to keep on coming back, but just on price into next year. So you're talking around 6% raw material cost inflation, plus the kind of 2% from FY '21 with no pricing. So if I to assume any further increases, that would imply probably 3% pricing to offset. Is that a fair assumption? Do you think you can kind of get there?
And then if I just look at the kind of margin cadence into 2022, I mean, I think that the margins in Scent & Care should obviously be higher than in the second half of '21. If you can kind of help with kind of 20 -- sorry, the first half versus the second half? And then also in Flavor & Nutrition, that would be very helpful.
Dr. Heinz-Jürgen Bertram
So Scent & Care, as I'm responsible, yes, it should be certainly higher second half of last year. As I said, we -- in second half, we had Sensient acquisition and with all dilutive effect. And you will see we are making progress, and we have shown it with Pinova that we know what to do and how to do. We're very confident that we will see some progress there. Nothing to be concerned at all. Olaf, you want to add to the other point?
No. I mean, Heinz, you mentioned the Scent & Care situation last year, I mentioned in my speech that we had, of course, in the second half, higher packaging, higher energy, higher logistic costs, and we took price increases in the second half of last year, which will kick in only this year to the majority. So let us work on this as described, and I think that's where we should leave it at the moment to protect our margin environment.
Okay. Great. Can I just follow up, 1 question? So just on Q1 -- sorry, on H1 margins, would you -- you'd expect them for the group to be higher than in the second half?
Dr. Heinz-Jürgen Bertram
The margins, as the previous question, I think, from Lisa, was we expect not a dip in margin for the first half, and we do not expect a slight dip in margin in the second half. As per now, we believe we will show a stable and healthy margin throughout the year, okay?
Charlie, many thanks. We're getting closer to the end of our today's conference call. Last question comes from Charles Eden from UBS.
Just 2 quick ones for me. Firstly, can you remind us with respect to the cyber-attack, have you received your insurance payment for that? If so, is it booked in FY '21? Or is that something to come in '22?
And then my second question, just in Flavors. Can you just talk a bit about the growth expectation by the categories, say, beverages, savory, sweet, dairy? Is there any significant variance in growth you're expecting in '22 across that division?
Dr. Heinz-Jürgen Bertram
Okay. Olaf, you may want to handle the cyber thing, and I handle this growth expectation by flavors. You start?
So on cyber, the reimbursement is expected this year, and there's nothing in the books yet.
Dr. Heinz-Jürgen Bertram
Okay. That was precise, crisp and short. So I'm talking flavors. So from what we see now, we expect a continuous healthy momentum in beverages. And we think with the acquisitions we have done recently, we will also continue to benefit in culinary/savory. Having said that, that is by categories and categories to highlight the areas of growth. We see a strong momentum in Asia going in the past, and this, we expect to go on. So by regions, I would stress Asia, we expect most dynamics and in particular, in the categories, beverages and culinary. Okay?
That's great. And Olaf, are you able to give any sort of size guidance on that insurance pay out? And will it go into your core numbers or adjusted it for your GAAP numbers?
Again, it's not in the guidance, and therefore, I think let's wait for the outcome, and I will inform you, of course, once we have clarity on this.
Dr. Heinz-Jürgen Bertram
Thank you. Dear participants, this brings us to the end of our today's conference call. I know that you are all very busy today with so many companies presenting results. So we are thankful for your time today and your ongoing interest in Symrise. We're looking forward to seeing you in the upcoming virtual conferences and virtual roadshows. And above all, we hope to see you in person soon. We will publish our trading update for the first quarter on April 27. That's it for today. So thank you very much. Goodbye, and have a nice day.