FRANKFURT (dpa-AFX Broker) - Shares of major flavor and fragrance companies in Europe came under pressure Wednesday due to antitrust investigations. A U.S. company also came under the scrutiny of competition authorities. In view of this, Symrise 's annual targets issued this morning receded somewhat into the background.

Around midday, Symrise shares lost 2.9 percent to 92.84 euros at the end of the Dax. In the Swiss SMI index, shares in Givaudan fell by 2.8 percent to 2723 francs. DSM shares also suffered, losing 3.2 percent to 115.05 euros.

The EU Commission, as well as the Swiss Weko and other competition authorities from the UK and the US, are investigating suspicions of price fixing in the industry. While the EU Commission did not name any names, the Weko was more specific. It named the largest companies in the industry as being affected: Symrise and Givaudan, as well as the Geneva-based family business Firmenich, which wants to merge with the Dutch DSM, and also the U.S. group International Flavors & Fragrances.

Symrise confirmed it had been contacted by the European Commission in connection with investigations into possible price fixing in the industry. The company's headquarters in Holzminden, Lower Saxony, is also affected by the investigation. However, there are no details yet. Symrise is cooperating fully and is currently being heard as a witness. Company CEO Heinz-Jürgen Bertram said at the annual press conference: "Price fixing: We don't see ourselves affected. Today, we think we have nothing to hide."

"The authorities have apparently found sufficient concerns and credible indications of misconduct to take coordinated action against the sector for cartel violations," commented not only the experts at Basler Kantonalbank. If the indications were confirmed, this would entail "very significant reputational damage" and, apart from expected fines, would also have an impact on ESG ratings, which are becoming increasingly important. They also pointed out that the merger between Firmenich and the Dutch DSM might now be in question, which DSM has denied, however.

Bank Vontobel has a similar view. Apart from possible fines, it also fears considerable damage to the image of the industry and a weaker position in price negotiations in the future.

Analyst Gunther Zechmann of Bernstein Research pointed out that the investigations are not likely to be easy "given the complexity and interconnectedness of the 'Big 4' in the flavors and fragrances industry." Investors interested in buying could therefore hold back in the coming months. Nevertheless, according to him, an expected recovery in industry sales later in the year and falling prices for raw materials should provide a tailwind for the sector.

Baader Bank analyst Konstantin Wiechert commented specifically on Symrise: The investigations by the competition authorities had a negative impact on investor sentiment in the sector. In addition, the figures published this morning and the somewhat subdued, possibly only conservative margin forecast for 2023 were "no price drivers in the short term". For now, Symrise will probably have to restore investor confidence by boosting its earnings momentum with improved profitability in the first half of the year./ck/mis/jha/

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