Symrise posted an 8 percent fall in half-year core profit, hurt by a production shut-down and higher energy and raw material costs, sending shares in the flavour and fragrance maker lower on Wednesday.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to €446 million ($490 million), missing the 479 million expected by analysts, the German company reported.

Strong demand for its pet food additives helped, while demand fell for its aroma molecules used to scent perfumes and soaps.

“The market was underestimating the pressure on aroma molecules business because that was the main source of weakness there due to the destocking effects,” Vontobel analyst Arben Hasanaj said.

Symrise shares fell as much as 3.9 percent to €93.68 to lag a 1.3 percent fall by Germany’s Dax blue-chip-index.

“Results were weak on all key lines,” Baader analysts said in a note to clients. “In comparison to peer Givaudan, Symrise was not able to stabilise their profitability on weaker 2Q growth.”

A shut-down after a fire at a chemical plant in Colonel Island in Georgia in the United States late last year cost €29 million, Symrise said.

Production at the plant is expected to resume soon, chief executive officer Heinz-Juergen Bertram said in a call with journalists.

Also weighing on the results was the reorganisation of its scent & care business unit, which makes ingredients for shampoos, soaps and toothpaste, and costs associated with an antitrust case.

Leading fragrance and flavour manufacturers, including Symrise, have been targeted by competition authorities since March on suspicion they coordinated their pricing policy and prohibited their competitors from supplying certain customers.

Symrise last month contested a fragrance cartel raid by EU antitrust regulators.

“We see ourselves being wrongly attacked. As of today, the EU has not been able to come up with anything that incriminates us in any way,” CEO Bertram said.

The group said it expects a 2023 adjusted EBITDA margin of around 20 percent and confirmed a sales growth target of between 5 percent and 7 percent annually until 2025.

It lowered its 2023 guidance for its business free cash flow, which consists of EBITDA, investments and changes in working capital, to 9-11 percent of sales from previously 12 percent.

By Jagoda Darlak and Matteo Allievi

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