Executives: Tobias Erfurth - Head, IR Dr. Heinz-Juergen Bertram - CEO Olaf Klinger -

CFO
Analysts: Heidi Vesterinen - Exane BNP Paribas Michael Flitton - Citigroup Stephanie Bothwell - BAML Thomas Swoboda - Societe Generale Patrick Lambert - Raymond James Daniel Buchta - MainFirst Geoff Hare - UBS

Tobias Erfurth: Good morning, ladies and gentlemen, and welcome to our Conference Call on the Symrise Nine Months Results 2016. With me on the call are our CEO, Dr. Heinz-Juergen Bertram; and our CFO, Olaf Klinger. All documents have been published this morning on our web page at the Events and Presentations in the section Investors.

In the same area, you will find the playback of this conference call in the course of the day. After the presentation, we are open for your questions. I will now hand over to our CEO, Dr. Heinz-Juergen Bertram. You may begin.

Dr. Heinz-

Juergen Bertram: Thank you, Tobias. Good morning, ladies and gentlemen. Thank you for dialing into our earnings call. Our CFO, Olaf Klinger and I would like to welcome to today’s session.

You’ve seen that in addition to the publication of our nine-month results we have also announced a transaction this morning, the sales of the industrial product unit of Pinova to French DRT. We will therefore today not only explain our results, but also give more background to this divestment. Please turn to Chart 3 for an overview on our nine-month results. On the heels of our success in the first half we recorded strong demand in both segments and in all regions during the first nine months of this year. We grew sales in the double-digit by 11% to about €2.2 billion in reporting currency and by even 16% in local currencies.

And we continued to drive our earnings. EBITDA, adjusted for one-off items related to the acquisition and integration of activities from Pinova Group rose by 7% to €480 million. Correspondingly, our normalized EBITDA margin came in at a very good level of 21.9%. Net income for the period, adjusted for one-off items just mentioned, grew to €206 million. Accordingly, the normalized earnings per share increased from €1.54 to €1.59.

From an operational standpoint, we focused our strategic initiatives to strengthen our competencies on the core business and further sharpen our portfolio, particularly in scent and care. We will come back to that a bit later. Please turn to Chart 4 for the sales overview. As illustrated on the left, we grew Group sales by 11% in reporting and by even 16% in local currencies, from about €2 billion to €2.2 billion. On one hand, our top line was driven by contributions from acquisitions, amongst them the Pinova Group portfolio.

On the other hand, we also strongly grew organically. Based on strong demand, we realized organic sales growth of 8%. Scent and care increased sales by 23% to €997 million. In local currency, this translates into growth of 27%. Strongest demand came from applications for cosmetic as well as fragrance ingredients.

Without the activities of Pinova Group, the segment grew organically by 7%. Flavor and nutrition grew sales by 3%, which represents an increase by 9% in local currency. Growth drivers were, amongst others, applications for sweet goods and savory products. But also, the Diana pet food solutions had another strong quarter, with high demand. Excluding portfolio additions, the segment grew organically by almost 10%.

Let us now turn to chart 5 for a closer look at the development by region. The first nine months were characterized by dynamic growth across all regions. The strongest growth region was Latin America, with sales up 34% in local currency. North America ranked second with a plus of 27%. Asia Pacific grew by 12% and EAME recorded a solid sales increase of 7%.

As illustrated on the right, we generated about 43% of our sales in emerging markets. Overall, we grew sales in emerging markets by 17%, which is an excellent result, and which confirms our strategic approach to further expand our business in these regions. Chart 6 illustrates our earnings development. On Group level, we grew EBITDA, adjusted for one-off items related to the acquisition and integration of Pinova Group, by 7% to €480 million. The respective normalized EBITDA margin came in at a very good level of 21.9%, making us very profitable.

Scent and care’s normalized EBITDA rose by 10% to € 204 million. Accordingly, the normalized EBITDA margin amounted to 20.4%. Now to our flavor and nutrition business. This segment increased EBITDA by 5% to €277 million. The EBITDA margin reached an excellent level of 23.2%, significantly driven by benefits from sales growth and a favorable product mix.

As mentioned at the beginning, I do want to take the opportunity and also give some background to the transaction which we announced this morning. Please turn to chart 8. As you have seen from our press release, we have signed an agreement with French DRT Group, a longstanding business partner of Symrise. The agreement consists of two elements. First, we will sell the performance specialties of Pinova for a price of $150 million to DRT.

The business stands for projected sales of about $111 million. Second, we will cooperate in specific and strategic areas of product development and raw material supply, going forward. Let me give more background to this decision. During our annual results conference in March we presented our strategic priorities for 2016. They’re all geared for, towards on one hand expanding our footprint in the traditional flavor and fragrance business, while on the other exploring new areas of growth, namely in nutrition and cosmetic ingredients.

This vision guides us in all our decisions. We add business to our portfolio or we take it out if we regard it as non-strategic. The decision to sell the Pinova industrial unit, therefore, is another logical and consequent step along this route. Please turn to chart 9. As you can see on the right, the industrial unit is specialized in manufacturing performance specialties.

Those include, for example, applications such as adhesives, tires and rubbers, colors and coatings that are used in construction or automotive. These activities represent limited links to our core business. By divesting from them we unlock operational and financial resources, which will be dedicated to our core business instead. At the same time, and through the additional agreements we have intelligently secured access to specific raw materials and product development projects. The activities of the former Renessenz remain of high strategic importance.

As you remember, these activities comprise of ingredients for fragrance, cosmetic and home care products as well as oral care. Most importantly, they are based on renewable resources and support our focus on natural raw material use. Renessenz has already been fully integrated in our aroma molecules division. To conclude, this is the right transaction at the right price at the right time. It represents benefits for all parties involved.

Symrise creates headroom to strengthen its core business and will further advance backward integration with respect to renewable resources. In that particular case, by efficient cooperations that do not require additional CapEx or investments. DRT will be able to expand its footprint in the market and Pinova can become a strong pillar in a group that is specialized on industrial applications. The divestment is fully in line with our strategic goals, as summarized on chart 10. We will continue to grow our fragrances and sensory activities and develop innovations based on natural ingredients.

We thereby further increase our competitiveness and create an even stronger reputation as a front runner in this market segment. In addition, we unlock capacities and will be able to accelerate the delivery of projected synergies. By already 2019, which is one year ahead of the original plan, we expect to generate a synergy run rate in the amount of €15 million from the remaining business of former Pinova Holdings. As explained on chart 11, consequent portfolio management is a key part of our strategy. It is an ongoing process to support our competitiveness and profitable growth.

The examples listed here give you an impression of the steps taken over the past three years. We have successfully advanced our portfolio by systematically adding new competencies, especially in complementary and high value growth areas, beyond the traditional flavor and fragrance business. At the same time, we have consequently exited business, either because it does not fulfill our financial or technological requirements, or it does no longer support our core business. Ladies and gentlemen, after these comments, let us come back to our nine-month results. Olaf Klinger will now present additional details.

Olaf, please go ahead.

Olaf Klinger: Thank you, Heinz-Juergen, and welcome to today’s conference call also from my side. We have seen another very strong quarter of turnover growth. In fact, the organic growth of the third quarter was with 8.8% even stronger than the organic growth during the first six months. We were able to maintain our strong growth momentum and confirmed again that we are consistently growing faster than the market.

All parts of the organization contributed nicely to this impressive achievement. As highlighted already in our Q1 and Q2 earnings calls, our prior-year comparison is impacted by the acquisition of Pinova, Nutra Canada and Scelta, as well the divesture of the Diana CAP business. We continue to normalize the effect of the Pinova transaction and integration costs for easier comparison of the operational development. So, let’s start with slide number 13. With total sales of €2.19 billion for the reporting period, we have been able to grow the top line by 10.9% versus last year.

The organic growth -- and that’s the focus of the Group -- amounts to a strong 8.5%. Changes in our portfolio, which include the acquisitions of Pinova, Scelta Umami and Nutra Canada, as well as the divestiture of the Diana CAP business, had an impact of 7.6%. Currency headwinds, especially from Brazil, Argentina, Venezuela, Mexico and China resulted in a 5.1% negative impact on our top line. For Q3 the FX effect was on a standalone basis at 3.9%. The lower FX headwind is in line with our expectations.

Assuming constant currency environment, we expect a lower FX headwind to continue in the fourth quarter. Also, our profitability developed very positively. The normalized EBITDA of the Group grew by 7% in reporting currency and 13% in local currency. The normalized EBITDA margin reached 21.9%, compared to 22.7% the year before, which is the consequence of the lower margin environment of the Pinova business. The margin dilution caused by Pinova was about 100 basis points from the Symrise Group perspective.

Please turn to Slide 14, which shows the development of our scent and care segment. Scent and care increased revenues by 22.8% to €997 million, with 6.7% stemming from a healthy organic growth. Pinova added 19.8%, or €160.8 million, from a portfolio perspective. Currency headwinds slowed the overall revenue development by 3.7% compared to last year. The normalized EBITDA of the segment increased by 10% to €204 million, representing a margin of 20.4% after 22.8% in the prior year period.

Our scent and care segment was impacted by a few extraordinary items during the third quarter. First, we decided to close our U.S. base Chester site by the end of the year. The Chester site came to Symrise as part of the Belmay acquisition. It’s a fragrance production site.

It is a leased site and has rather high running costs. The closure decision cost around €3 million one-time cost in quarter three of which around €2 million are EBITDA relevant. These are related to an early cancellation of the lease and the write-off of certain assets. Second, the global reorganization of our fragrance business led to certain changes in the management team of the division, causing restructuring expenses in a magnitude of around €1 million. And third, our aroma molecules business, with four production sites in the southeast of the US, which includes the former Pinova and Renessenz sites, was impacted by storm and power outage-related shutdown costs, with an EBITDA impact of €2 million to €3 million during quarter three.

At the end of September, we introduced SAP at our former Renessenz Inc. and merged the activities into our Symrise Inc. legal entity at the same time. This is an important milestone of our planned integration efforts, which are going smoothly, going forward. Despite the just announced sale of the Pinova industrial unit to DRT, we expect the normalized integration and transaction related costs to come in at the announced €60 million for the full year, with €13.6 million being already absorbed during the first nine months.

In addition, as you might remember, we normalized the Pinova-related inventory step up of €4 million, already fully in quarter two. Following the sale of the industrial unit of Pinova, we now expect acquisition-related cost synergies within our aroma molecules division of €50 million to be realized by 2019 and therefore one year earlier than initially expected. The amount shows that the majority of the initial Pinova synergies will be kept and be realized, which confirms the good strategic fit of the remaining Renessenz business. At this point, it’s too early to provide details of the deconsolidation impact related to the divestiture of Pinova Inc, including figures related to depreciation and amortization. Closing of the transaction is expected in December 2016.

However, based on the purchase price of $150 million, in our preliminary assessment we do not expect any material positive or negative impact on our financial statement coming out of this transaction. We will inform you further, as part of our 2016 financial statement release in March next year. In summary, our scent and care segment has been very active during the third quarter in further developing and focusing our activities, which will help to move us faster into further profitable growth. Our segment flavor and nutrition, as shown on slide 15, achieved a turnover of €1.2 billion. With 9.7% organic growth, the segment continues to show an outstanding top line performance.

Portfolio effects were slightly negative, with 0.9% stemming from the divestiture of Diana CAP in quarter two 2015, partly compensated by Scelta Umami and Nutra Canada revenues. Currency headwind of 6.1% led to a reported growth of 2.6% for the segment, compared to last year. Our flavors business saw strong growth, especially in the sweet and savory business units. Our healthy pipeline helps to consistently develop new and innovative products and solutions, making us increasingly attractive to existing as well as new customers. Diana, the other division of our flavors and nutrition segment, saw strong organic growth, within pet food, especially in Latin American and Europe.

Our flavor and nutrition business improved its EBITDA by 5% to €277 million, which results in an improved margin of 23.2% in the first nine months, compared to 22.6% in the prior year period. The margin development confirms the ongoing strong performance of the segment. Overall, and despite the Pinova margin dilution, we’re enjoying healthy margins across the whole business portfolio. Before turning to Slide sixteen, let me make some additional remarks on the main EBITDA drivers. We obviously benefited from sales growth, which was driven by further volume increases in the core business.

Across the portfolio the price impact was about 25%, while about 75% of the growth was driven by volume. Latin America was an exception, with about half of the growth being related to price increases, while the other half was linked to volume increases. On the raw material cost side, we continued to see a slight increase in the first nine months, mainly linked to price increases for certain natural based raw materials. The effect was partly compensated by price decreases for chemical based raw materials. Across the whole raw material portfolio, we saw an impact of 1% to 2% coming from raw material price changes.

Our large raw material portfolio of around 10,000 ingredients is again balancing out nicely here. Manufacturing cost increased as Pinova joined in the Group, as Pinova came with proportionately higher manufacturing cost in comparison to the Symrise legacy world, which leads to a slight decrease in the gross profit margin, compared to last year. Process improvements of the former Renessenz will be a key element for synergies and related margin improvements, over the coming years. When taking out the Pinova impact, the ratio of manufacturing costs based on sales was similar to last year’s. Our normalized operating expenses for sales and marketing, as well as research and development, grew by 10%, and just to complete the cost picture, our normalized general administration expenses increased by 4%, well below the top-line growth.

Currency had an unfavorable EBITDA impact of €28 million, with transaction effects amounted to just minus €2 million and translation effects being at minus €26 million. The translation-related effect of the appreciation of the euro especially versus the Latin currency, was a 3.9% headwind, more moderate in Q3, compared to the first six months. The appreciation of the Brazilian real helped in this regard. Overall, the net FX impact confirms that our revenue and cost structure makes us relatively well immune in this respect. After these additional comments, please turn now to page 16.

Depreciation increased from €54 million to €66.2 million for the nine-months period, due to higher investments in previous years, as well as the inclusion of Pinova. The closure of the Chester site caused an extraordinary depreciation of €1 million in quarter three. Amortization increased mainly as a consequence of the Pinova PPA, from €75 million to €84.6 million. In total, the D&A amounts to now €150.8 million. The normalized EBIT, which excludes the Pinova transaction and integration costs and the inventory step-out, but includes the nine months of PPA-related Pinova D&A, increased by 3% to €329.5 million.

The EBIT margin, however, decreased from 16.2% last year to a normalized margin of 15%. Our normalized financial result is with minus €34.2 million, just €0.3 million, or 1.1% lower than last year. The normalized figure excludes an impairment on a participation of €2.2 million booked already in the first quarter. The normalized earnings before income tax increased by 3.4% to €295.2 million and the normalized tax rate was at 28.3%, which is well below our long-term expectation of less than 30% tax burden. The normalized net income of EUR206.2 million, which also excludes the aforementioned asset impairment, increased by 3.5% with the normalized EPS being up to €1.59.

Our operating cash flow, on Slide 17, of €218.4 million, decreased versus the first nine months of 2015. The line change in working capital is primarily impacted by seasonally driven higher inventories in natural raw materials, as well as certain UV filters. Slide 18 shows the main balance sheet items since December 31, 2015. Changes in the third quarter were caused by another 0.2 percentage point decrease in the German discount rate for pension obligations. The total reduction here since year end amounts now to 1.3 percentage points, causing a pension provision-related increase of liabilities of around €140 million.

Our equity ratio is calculated at 32.9% by the end of September. The leverage ratio of net debt, including pensions to EBITDA is at 3.5 times. Excluding pensions, we report a ratio of 2.6 times EBITDA. This is in line with our projections and for the year end we expect the range of 3.2 times to 3.5 times EBITDA, including pensions, with the mid-term target being unchanged at 2 times to 2.5 times EBITDA, including pensions. This projection includes the additional debt related to the acquisition of Nutraceutix by our majority participation Probi, beginning of October.

It also includes the expected proceeds from the just announced divestiture of the Pinova industrial unit to DRT. This concludes my remarks on our very successful first nine months of 2016 and I would like to hand back to Dr. Bertram for the outlook. Dr. Heinz-

Juergen Bertram: Thank you, Olaf.

Before we open the line for your questions, let us look at the final weeks of this year ahead. Please turn to chart 20. Following a busy and very successful nine-month period, we are optimistic for the remainder of the year. We have had a good start into Q4, with good dynamics in both segments. Regional differences related to economic and political developments in some countries have remained.

However, we are very well diversified with respect to regional presence and business activities. We will, therefore, be able to compensate regional differences and contribute and continue to drive profitable growth. Let us assure you we will make the most out of the final weeks ahead. We confirm our goals for 2016, which, by the way, is year 10 for us as a listed company. We are confident to outperform the global flavor and fragrance market, which is estimated to grow by approximately 3% on an annual basis.

And we remain committed to higher profitability. Our targets for 2020 also remain fully in place. That is it from our side for the moment. Let us now start the Q&A session.

Tobias Erfurth: Thank you very much, gentlemen.

We are now happy to take and answer your questions on the call. We kindly ask you to put only two questions. If we cannot take all of your questions during the conference call, we will answer the remaining questions later today. Many thanks, and first question please?

Operator: [Operator Instructions]. The first question comes from the line of Heidi Vesterinen with Exane BNP Paribas.

Please go ahead.

Heidi Vesterinen: So the first one on the organic growth, which surprised most of us today. I wanted to ask, how much of this is driven by the base business and how much is due to new capacities that you’ve been adding? Then a second question on Pinova. You had talked about difficulties in the first half. Could you update us on how that’s going? Was that mainly in the industrial part that you’re now selling, or was it in all of the business? Thank you.

Dr. Heinz-

Juergen Bertram: Okay, Heidi, thanks for the questions. Let me start with the organic growth. It’s hard to differentiate between the base business and capacity additions, but I would say around two thirds our base business, which did very well, and one-third is about capacity additions which we have done over the year. So healthy development in both segments, and obviously we have invested in the right areas.

Olaf, do you want to say a bit to Heidi’s second question?

Olaf Klinger: Yeah, Heidi. So on the Pinova business in general, we were impacted as I mentioned by some extraordinary influences in the third quarter. There were not only storms like Matthew, beginning of October, but also in the third quarter we had some interruptions. They basically caused an impact as mentioned in the range of €2 million to €3 million. It’s across all sites, so both parts, including the industry unit which we are now selling were impacted.

That is the major factor at the moment. Dr. Heinz-

Juergen Bertram: Let me add to this, maybe. So we had this year an unusual strong hurricane season. Not only Matthew.

Hermione was the other one, and if you go back in the records, unfortunately this year all four sites which we have in the U.S. have been impacted. So that is bad luck, and as Olaf just said, that turns out to show up in the numbers. But it’s not something which we on go for every year. So unusual event this year.

I hope that answers your question.

Heidi Vesterinen: Sorry, just to clarify. Earlier in the year you were talking about competition from synthetic alternatives. Is that now behind us, or is that still continuing? Was that particularly in the industrial part of the business?
Dr. Heinz-

Juergen Bertram: Okay.

Yes, now I understand what you were reflecting to. Of course, the business we have acquired, Renessenz Pinova, is a chemical specialty business based on sustainable raw materials. Yes, and some of these materials can be also produced from mineral based raw materials. But we have to say on the one side you see raw materials prices from the oil side increasing, so the situation will develop more favorable in the future. We saw it actually in both business segments.

Renaissance and Pinova are exposed to this situation. It’s nothing unusual, and we expect favorable development in the future going forward. Okay?

Operator: The next question comes from the line of Michael Flitton with Citigroup. Please go ahead.

Michael Flitton: Good morning, and thanks for taking my two questions.

Firstly, just on raw materials, as you alluded to in your last response, can you just give a sense of the impact on EBITDA this quarter? You did talk about, I think, 10 million headwind in the first half with a view that maybe there’s 1% to 2% cost pressure going forward. I wonder if you could perhaps update on that. Just secondly, on LatAm, are you seeing any erosion of real demand there? Obviously, after the purchasing power parity of their incomes has been dropping, are you seeing less ability to demand your products? So real volumes beginning to come off?
Dr. Heinz-

Juergen Bertram: We start with the last question, Michael, a clear no. So, no change, we’re doing well and I think the numbers show it, and we do not see a downturn.

Yes, you might suspect it, but we don’t see it. So we’re doing well there and we continue to do well. On the raw material end, before I ask Olaf maybe to add some numbers if possible, the raw material prices -- we have been talking in the previous quarterly conferences about it, continue to develop. On the natural material end you see continued increase, slight increase in raw material price development, and so far still more or less stable on mineral oil, but we expect this to slightly go up as well.But so far, no strong impact, no major impact on our sales development, so we do not have a strong headwind on the raw material price end so far. Basically, this message is pretty much the same which we have reported in Q2 and Q1, okay?

Olaf Klinger: So the magnitude, Michael, which you mention of 10 million is still valid in this regard.

On the EPA.

Operator: The next question comes from the line of Stephanie Bothwell of BAML. Please go ahead.

Stephanie Bothwell: Yes, good morning and thanks for the opportunity to ask my questions. The first one on organic growth, and the second one a follow-up on Pinova.

So obviously, as you said the organic growth for the Group was very strong, with flavors and nutrition in particular doing very well despite the already tough comparatives. Can you perhaps walk us through some of the underlying trends in that segment? Were there any business lines in particular which were doing significantly better or worse during the course of Q3, or was everything growing at low double-digit growth rates? And the follow-up on Pinova, I’m not sure if I missed it, but perhaps you can give us a sense of the margin within the industrials business that you announced that you will be selling versus the remainder of the Pinova group. Just in terms of the one-off items which you incurred in the third quarter -- I’m thinking particularly about the impact on aroma molecules and from the hurricane season -- what will be the follow-on impact of that in the fourth quarter, if there is any? Thank you. Dr. Heinz-

Juergen Bertram: Thanks Stephanie.

Just one remark, these were three questions, but we’re happy to answer hopefully all three of them. Let me start with the organic growth. Well, thanks for bringing it up. We believe that is a very strong message, and that is as we believe something which cannot be stressed enough. So we saw strong organic growth, and Heidi already pointed out, it surprised the one or the other amongst you as the one or the other had expected our momentum to slow down, which is not the case.

Coming to details, and you asked for in particular flavors and nutrition, I’m happy to report there’s no weak area at the moment. Obviously it shows that we have continuously and consequently invested in new technologies, new products, and we have a very strong and innovative product pipeline which obviously pays off now. We have seen strong dynamics in both segments, the Diana part as well as the flavor part. In flavors, it is beverages, it is sweet and it is savory so nothing to complain. And, by the way, all regions, so nothing which points out negatively here.

Pinova margins, that question can be answered pretty quick. We have agreed with our partner, DRT, not to disclose it. So it’s a simple answer, unfortunately. Olaf, the third one is for you.

Olaf Klinger: So regarding the one-off in aroma molecules.

Yes, we saw another shutdown because of Hurricane Matthew. That affected us a whole week, so you have to bring the site down and then you have to restart it after the wind comes through. I expect that the magnitude will be similar to what we saw in Q3. It was around €2 million to €3 million EBITDA impact.

Operator: The next question comes from the line of Thomas Swoboda of Societe Generale.

Please go ahead.

Thomas Swoboda: Yes, thank you very much. I also have two questions. Firstly, on your fantastic growth in LatAm, my question regarding this is there certainly must be a base effect from the U.S. dollar indexation in this region kicking in.

Obviously, for us it is very difficult to say when that will be. Maybe you can help us with that, so how long do you expect the U.S. dollar indexation effect driving the USA’s growth in the region? And on the strategic inventories, you commented -- you said it is basically because this is because of the harvesting season. However, this is quite a significant effect. I’m just wondering if you could just give us some more specifics on what inventories you’re building up.

Thank you. Dr. Heinz-

Juergen Bertram: You start with the U.S. thing.

Olaf Klinger: Okay, I start with the question regarding U.S.

dollar base and Latin America. So the picture in Latin America is quite diverse at the moment. You have the appreciation of the Brazilian real seen and that’s also partly true for Colombia. That of course is tough, because then you have to start price negotiations. On the other hand, with the appreciation of the real we would expect a higher demand.

The strong currency should drive volume. In the other countries of this region, we haven’t seen a similar effect as for the real. So there, the depreciation continues, and that of course helps also on the organic growth side. The third element is that you have a couple of countries like Argentina and Venezuela with high inflation. So it’s a mixed picture.

The message that I would like to pass is that we are dealing with this. Our team in Latin America is extremely active and extremely successful in approaching customers, and we are managing well even with these interruptions, I would call it, in these currency environments. Dr. Heinz-

Juergen Bertram: Okay, I hope that answers that question and I’ll take the strategic inventory. As Olaf already pointed out, it’s in two areas.

One is natural products, I’ll come to that a bit later, and the other one is sunscreen products. The sunscreen filters, for those who are with us since a longer time, this is a normal effect and it’s a seasonal effect which occurs each year. But the other one, which is even higher this time, is natural strategic inventories. Just to name some areas, it’s onion, carrot, acerola, vanilla and vegetables, mainly the Diana business. So it clearly shows that obviously, with the Diana acquisition, we did the best acquisition in the market as the strong trend towards natural solutions obviously is a strong supporter of our strong organic growth, and the high inventory shows our confidence in that business.

Okay?

Operator: The next question comes from the line of Patrick Lambert with Raymond James. Please go ahead.

Patrick Lambert: Good morning everybody. Congratulations for Q3 numbers. Just one question for me, regarding DRT transaction.

Just to make sure that I understand, one site is going to DRT, so they will own that site. But I cannot remember that part of the synergies would have been achieved by CapEx investment. Are you changing also the CapEx-related synergies to Pinova with that transaction? Is that the way to see it?
Dr. Heinz-

Juergen Bertram: Okay, Patrick. I’ll try to explain what the background it.

First, as we said, we’re happy to report, we believe it’s the right transaction at the right time, with the right partner, for the right price. That’s why it took us a bit longer. We wanted to do it properly, and the industrial segment never was a clear strategic focus area for us. Some of you have suspected right from day one that we might go this route, which we today now did. So we took our time to carefully investigate and look for the right partner, and with the French DRT we found the right partner.

We’re convinced of. It consists of one site, which goes with the transaction towards DRT. That’s the site in Brunswick. CapEx, we had of course for the whole acquisition also allocated certain CapEx investments to the Brunswick site. Some of it we have done, some other planned CapEx investments we will now relocate towards the Renessenz business.

That’s also why we are happy to report the strong message that the synergies which we projected will be brought in one year earlier, and from the original synergies for the transaction projected to be up to 20 million we now say at least 15 million will be remaining in the business, which will continue on the former Renessenz site. I think all these financial things show the clear rationale for this transaction.

Patrick Lambert: But this means that your CapEx for the Pinova acquisition will actually be lower than expected.

Operator: The next question comes from the line of Daniel Buchta with MainFirst. Please go ahead.

Daniel Buchta: Yes, hello, everybody, thank you very much for taking my question. The first one is on the Latin America pricing impact. Could you clarify that this means now round about 2 percentage points at the Group level? I would be interested in how this splits up by segment. Could you then please elaborate a bit more on how the trends will develop, because obviously, the Brazilian real should have had an adverse effect on that side, while the Argentinean peso, for example, should have helped. The second question, on Pinova again, I would like to know a bit more about how the integration is running and what we can expect on the margin side here, because once, I think, the guidance was more than 200 basis points margin this year and 200 basis points the next two years.

How can we see this now, in the light of the transaction? Thank you very much. Dr. Heinz-

Juergen Bertram: I’ll take the second, you start with the first one.

Olaf Klinger: Daniel, I think I mentioned that in Latin America the picture is pretty mixed. It’s very difficult to really break it down into all the details.

Just to give you an idea, the US-dollar-base pricing in scent and care is in the range of 80%, 90%, while in flavors it’s around 50%. If you want to break that down into countries, you’re really entering to relatively small pieces. The impact there is what we will manage going forward, carefully. Brazil has special attention, and the appreciation which we see at the moment we will manage, as I mention, through expected higher volumes. Of course, it’s with a time delay that we can increase prices in this environment.

But again, from an overall picture perspective it will not be a disrupting factor for us in Latin America. I would really like to leave it there at the moment, otherwise we would enter into very niche areas. Dr. Heinz-

Juergen Bertram: Okay, then I’ll take the Pinova questions. Let’s first maybe break out the synergies, and that helps you in your calculation.

So, to 2016, this year, we will expect synergies in the Pinova Renessenz part about 2 million to 3 million, mainly from purchasing, IT and FICO. In next year, we expect 3 million to 4 million in synergies, again mainly purchasing, IT, FICO and first development in products and process improvement. 2018, about 5.5 million, and that is mainly results from process improvement and first new products, and the rest in 2019. I hope that helps you in your calculation.

Operator: The last question comes from the line of Geoff Hare with UBS.

Please go ahead.

Geoff Hare: Can I just clarify one point with you? You mentioned that the gross margin decline that you saw in the third quarter was down to Pinova coming in. So is that all of the 130 basis points when I compare the Q3 gross margin to where you were in the first half of the year? Is that all Pinova?
Dr. Heinz-

Juergen Bertram: That question is simple. Yes.

Geoff Hare: Okay, thank you. Secondly, clearly you’re very positive about the run-in to the end of the year, which is great news. Obviously this is in contrast to what we’re hearing from some of your larger global customers. I’m just wondering if you can discuss a little bit in helping us understand how you’re so confident on the end of the year compared to what we’re hearing in the broader market.

Olaf Klinger: Okay.

At least, I will take -- so far we report on Q3, and I think the results speak for itself. We are very diversified and have a broader product portfolio than others in nutrition, in flavors, in cosmetic ingredients and in fragrances, and depending on the situation some of these areas continue to do very well. As we said in our call, most of these areas balance out. So far, we do not see a downturn in our business activity. That’s why we remain confident.

How this reflects on the one or the other of our customers it’s hard to say for us. But overall, we do well and we continue to do well.

Geoff Hare: Can I just follow up on that? Is it fair to say, then, that if I look at, say, the more traditional flavors and fragrance businesses, it’s not those businesses that are growing faster? It’s actually the newer, slightly more diverse businesses you’ve got who are seeing the most growth?

Olaf Klinger: Let’s put it this way. The areas which we have been actively investing in do very well. That is true, and that shows the constant effort of our portfolio measures, exiting those businesses very consequently which do not fulfill our financial expectations, and to enter those areas which do so.

I just gave you the outlook on the inventory. That obviously shows a high level of confidence, and a lot of this is natural product from areas which we just entered recently.

Geoff Hare: Okay. Thank you very much.

Olaf Klinger: You’re welcome.

Dr. Heinz-

Juergen Bertram: Having said that, ladies and gentlemen, thank you for your attention and questions. On behalf of Symrise and the Management Board I would like to wish you a successful finish of this year. Happy holidays, and a healthy start to the New Year. I look forward to seeing most of you at our Analyst and Investors Day in Frankfurt on 18 January.

Should you have any questions in the meantime, please feel free to contact our Investor Relations team. Thanks.R