-full year results conference 2019 for analysts and investors. We welcome our guests here in the center in Frankfurt, and we also welcome our guests on the phone. With me are our CEO, Dr. Heinz-Jürgen Bertram, and our CFO, Olaf Klinger. All documents have been published this morning on our website for the attention investors, the financial results. The same area you will find a 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-Jürgen Bertram. You may begin.
Thank you, Tobias. Good morning, ladies and gentlemen, and welcome to the Symrise Investor and Analyst Conference on the occasion of our 2019 results. Great to see so many of you here today in Frankfurt. A warm welcome also to everyone who joined us over the phone. As in the previous years, I am joined by our CFO, Olaf Klinger. Together, we will walk you through today's presentation. I will start by giving you a recap of our highlights in 2019. Olaf will then do a deep dive into the financials. Afterwards, we will look into the months ahead, present some key strategic initiatives, and give an outlook. We will, of course, have the opportunity for questions here in the room or via phone. With this brief introduction, let us dive right in. Chart four for our financial highlights.
2019 has been yet another year of strong and profitable growth. We have achieved all our targets and even more important, continued to build on our foundation for sustainable growth going forward. We benefited from good capacity utilization and strong demands across all segments and regions. Our top line grew for the 14th consecutive years. Overall sales increased by 8% in reported currency, more than EUR 3.4 billion. Organic growth was also strong with a plus of 5.7%. Despite a number of important investments, we kept profitability high and outperformed our prior year figures. Our normalized EBITDA increased by over 12% to more than EUR 707 million. Our EBITDA margin stood at 20.8% at a very healthy level. We also made good progress with regards to our business free cash flow. We increased by 63% to EUR 476 million, which equals 14.1%. Net income for the period increased by 10% year-on-year and came in at EUR 304 million.
Accordingly, normalized earnings per share increased to EUR 2.25 after EUR 2.12 in 2018. We want our shareholders to participate in our success again this year. Management and Supervisory Board will therefore propose a dividend increase to EUR 0.95 to share to the Annual General Meeting in May. Let us move on to chart five and our sales development on group level . We continued to see strong demand and good capacity utilization in 2019, driven by all segments and regions. Adjusted for portfolio and fixed effects, group sales increased by an excellent 8% to more than EUR 3.4 billion. IDF, which was for the first time consolidated in November 2019, contributed EUR 32 million. We also grew strong on an organic basis, 8% up by a solid 5.7%. I'm proud to say Symrise was once again one of the fastest growing companies in this industry. An overview of sales contributions by segment on chart six.
Scent & Care increased sales by more than 7% in reported currency, over EUR 1.4 billion. Organically, the segment grew 5.6%. We saw a pleasing double-digit percentage growth with fine fragrance . Especially the regions EU and Latin America showed very good dynamics. Demand in cosmetic ingredients and aroma molecules was also good. In reported currency, Flavor achieved a plus of 5.6% and increased sales to almost EUR 1.3 billion. On an organic basis, the segment grew by 3.8% year-over-year. We recorded a particular strong demand in the Asia-Pacific region with an organic growth in the high single-digit percentage range. Applications for sweet and beverage products as well as meat alternatives were very popular, especially in Indonesia, Malaysia, and China. Nutrition increased sales by an outstanding 14.5% to over EUR 730 million. ADF had a good start and contributed EUR 32 million to this.
Due to the initial consolidation of the group in November, the fourth quarter was particularly strong. Segment sales in Q4 grew by almost 29%. The Nutrition segment was also very good in growth and on an organic basis, with a growth of more than 9%. Farther growth driver was once again Pet Food. Chart seven for our regional performance. At a regional level, growth engines were Latin America and Asia Pacific. They benefited from very good dynamics and grew sales by 12.8% and by 7.4% in Pet Food. Over the year 2019, the EU region also recorded good demand, growing by 3.6%. In North America, we achieved sales growth of more than 4%. Emerging markets accounted for 44.3% of total sales, which was slightly above the prior year figure. We grew in these particularly dynamic markets by 10.7%.
Ladies and gentlemen, let us move on to a chart you are very familiar with. On chart eight, one of our favorite ones as it illustrates our sales and EBITDA growth over the years. We can clearly conclude Symrise has a strong track record in generating sustainable and reliable sales and earnings growth. We have created significant value since our IPO back in 2006. Not once, not twice, but every single year. Irrelevant. No matter how volatile exchange rates or raw material prices were, and irrespectively of political uncertainties. Since our IPO, we have enjoyed a sales compound annual growth rate of 8.6%. We have equally strong earnings development. We are not only one of the fastest-growing companies within our industry, we are also one of the most profitable ones. Our EBITDA margin in 2019 stood at a very healthy 20.8%. As you know, we will not stand still but have set ourselves ambitious goals for the future. I would like to thank all our employees across the world. The commitment, dedication, entrepreneurial thinking have brought us to where we are today. They are key contributors to our success story.
Let us now look at our share price development on chart nine. In 2019, we have yet again outperformed the DAX index. What I'm even more proud of is that we have simultaneously established a new all-time high. Our share price increased by 42% in 2019, a clear sign of the appreciation of our strategy and performance from the capital markets. At Symrise, we have a straightforward dividend policy. We want our shareholders to participate in our success. Therefore, our management and supervisory board will propose a dividend increase to EUR 0.95 per share at this year's AGM. Our total shareholder return in 2019 stands, therefore, at more than 17%. Let me now hand over to Olaf, who will present to you the financials in more detail. Olaf.
Yeah. Thank you very much, Heinz-Jürgen, and good afternoon also from my side to all of you here in the room, but also on the phone. Following Heinz-Jürgen's initial remarks, I would like to give you the promised deep dive into the financials. Let's start with group sales development on page 11. We had another year of strong organic growth. While the industry grows between 3%-4%, we grew 5.7% with a price-volume split of 50/50. ADF/IDF finally contributed EUR 32 million since November 2019, a portfolio effect of 1%. After negative FX impact in 2018, mainly the strong U.S. dollar supported our growth with $33 million or 1.3%.
Turning to slide 12 to take a closer look at our bottom line. In 2019, our profitability grew stronger than the top line, mainly due to under-proportional raw material price increases and good cost management. The cost of goods sold includes material cost derived FX effects amounting to EUR 1.495 million, which represents a material quota of 33.9%, slightly off from 34.4% in 2018. Overall, raw material prices were up at around 3% in 2019 after 5% in 2018. For 2020, we expect overall stable raw material prices across the portfolio. As you probably noticed during the past two years, we have a huge asset in our backward integration, be it in natural, be it in chemicals, which helps to see us through volatile times, which we are facing again at the moment.
Moving to earnings, normalized group EBITDA amounted to EUR 707 million, an increase of 12.2% or EUR 76 million. The margin of 20.8% meets our 2019 margin target of around 21%. The IFRS 16 impact on EBITDA was EUR 20 million, the normalized integration cost for ADF/IDF amounted to EUR 16.3 million. 2018, we benefited from a positive impact due to VAT tax receivable in Brazil, which some of you might remember. That fell into operating income at that time, amounting to around EUR 10 million and needs to be considered when measuring our group performance in 2019. Group EBIT rose 10.7% to EUR 481 million, resulting in an EBIT margin of 13.1%, which comes after 13.8% in 2018. Depreciation increased in connection with IFRS 16, accounting by EUR 17 million, as well as the finalization of some larger investment projects.
We turn to the next slide 13, for the segment reporting. Scent & Care achieved an organic growth of 5.6% and benefited 1.5% from FX. While AM and CI had huge comparables in 2018, the year of the so-called citral crisis, the growth in 2019 was mainly driven by fragrances, especially fine fragrances. In Scent & Care , 90% was pricing and 10% was volume, with volume starting to pick up again in the fourth quarter. Reported sales were EUR 1.419 million. Looking at earnings, Scent & Care EBITDA amounted to EUR 278 million, which comes after EUR 254 million the year before, and the margin increased from 19.2% - 19.6%.
Looking at slide 14, we saw Flavor with a lower growth versus 2018 due to limited price increase opportunities. At the same time, we also saw an EBITDA margin recovery from 20.5% in 2018 to 21.4% in 2019. Moving to slide 15 for Nutrition, an impressive 9.3% organic growth, mainly achieved from our pet food business. Price volume was one quarter price and three-quarter volume. ADF/IDF added EUR 32 million sales or 5% growth since the closing in November 2019. Nutrition EBITDA margin achieved 22%. Some remarks on ADF/IDF. It was a late but successful start. The integration is fully on track. The cultures fit very well together. Important for me as the CFO, the numbers, sales and profitability-wise, were as expected. Looking forward, we expect for 2020 a slightly positive sales growth and an EBITDA margin definitely above 23%.
We continue with the P&L elements below EBIT on slide 16. The normalized financial result dropped 24% to EUR 56 million when excluding a positive U.S. dollar hedge effect of $10 million for the ADF/IDF acquisition. Including this FX gain, we achieved the financial results on prior year levels. Income tax in 2019 increased by 4.6% to EUR 113 million. The tax rate was 27.1% after 28.1% the year before, mainly due to higher earnings in countries with lower tax rates. This is fully in line with our midterm guidance of a tax rate between 26% and 28% for the years to come until 2025. Net income increased 10.2% to EUR 304 million. Normalized EPS achieved a new record level of EUR 2.25 that is attributable to Symrise shareholders after EUR 2.12 in 2018. Consequently, we will propose a dividend of EUR 0.95 to the Annual General Meeting in May, EUR 0.05 more than last year.
Now turn to page 17. I'm glad to report that our increased focus on cash flow generation paid off in 2019. With a strong EBITDA, moderate working capital growth, and a reduction of CapEx, we achieved a business free cash flow of 14.1% of sales in 2019, which is a huge improvement compared to the 9.9% in 2018, and I also can say much better than we expected. By 2020, we foresee the business free cash flow at around 14%. We turn to slide 18 for the review of our balance sheet. Total assets increased by more than EUR 1 billion or 21.1% to EUR 5,957 million over the previous year, mainly for the ADF/IDF acquisition. On the asset side, this was mainly due to an increase in tangibles and PPE, mostly driven by the inclusion of ADF/IDF again. We expect the final purchase price allocation to be ready by mid of this year, at which point we will provide you with an updated amortization schedule for the group.
Balance went up EUR 307 million for the financing of ADF/IDF, mainly through the EUR 250 million Schuldschein promissory loan issue. As an additional remark, remember that we financed the expired Eurobond of EUR 500 million in early summer last year and enjoyed an improvement in the interest rate of 0.5% comes with 1.25% now. Provisions for pensions and similar obligations increased by EUR 92 million, mainly due to the decrease in the discount rate for pension commitments granted in Germany. That came down from 2% in 2018 to 1.2% at the end of 2019. Other liabilities increased by EUR 96 million for IFRS 16 lease accounting reasons. The final financing element for ADF/IDF was our EUR 400 million capital increase in February 2019, when we sold 5.6 million of new shares at a share price of, at that time, EUR 71.25. With an equity ratio including non-controlling interest of 31.4%, Symrise has a very solid foundation for driving future business development forward in a very sustained manner.
Let's now turn to page 19 to our financing structure. Our net debt amounted to 3.1 x EBITDA, including pensions of 2.3 x excluding these pensions. Despite the acquisition of ADF/IDF, this is only slightly above last year. Our ambitions are unchanged. We want to achieve a net debt, including pensions to EBITDA level of 2 - 3.5 x. Our top priority remains to have an investment-grade profile for Symrise. As a summary, in 2019, we saw good improvement of our financials, all in the right direction. We steered successfully through the raw material crisis, which has supported our strong backward integration strategy. Finally, we closed a highly attractive portfolio addition, ADF/IDF. Together with many of you, we enjoyed inspiring Capital Markets Day in January of last year, where we gave our new guidance and which leads the way into our Symrise future. With this, I would like to hand back to Heinz-Jürgen .
Thank you, Olaf. Ladies and gentlemen, let us now look at the road ahead. Chart 21 reiterates the basis of our success, our proven corporate strategies. You are all familiar with those three strategic pillars: growth, efficiency, and portfolio, based on our values and embedded in our sustainability approach. They are the levers to make our vision come true, to create meaningful and sustainable value for all Symrise stakeholders. Our track record and our 2019 results are clear proof our strategy is spot on. Today, we will specify the individual levers for 2020. In terms of growth, we will put a particular focus on exploiting the full potential of our customer base and target markets by cross-selling, expanding our capacity, or making strategic acquisitions like we did with ADF/IDF.
Our efficiency efforts will focus on further advancing internal processes. Artificial intelligence, for example, will support our efficiency programs, and with the help of green chemistry, we will further advance our production technologies. Our portfolio-related initiatives will focus on the ADF/IDF integration. We will also facilitate innovation through the networking of our competencies, especially in the U.S. Let us look at these initiatives in a bit more detail.
Chart 22 shows an overview of our client and sales distributions. The key points are here. We have a globally balanced presence and a variety in the very diversified product and client portfolio. We have multiple touchpoints with our clients, as the graphic on the left shows. Nine out of our 12 largest customers are clients of more than one Symrise application. Five of them are clients in more than one segment, and two of them are clients in all our segments. In 2020, we want to work specifically on further increasing our customer penetration across all our segments and markets. There is still a lot of potential. As Symrise has proven over the years, a balanced business is a resilient business. This does not only account for our client portfolio. The right-hand side fully demonstrates that this applies to our entire business. From sales distribution by segment and region, up to our customer types and markets. 2020 will therefore be all about further leveraging our position and fully exploiting our potential.
Let us move on to our strategic pillar number two on chart 23. As outlined before, our focus in terms of efficiency will be on improving processes and expanding access to raw materials. When it comes to processes, we will remain committed to our disciplined cost and efficiency management. For instance, we will expand purchasing projects with cross-divisional potential. Our goal is to keep raw materials prices stable. Our R&D efforts on the other hand side will concentrate on simplifying our formulas. The overall aim is to reduce the number of raw materials being used. On the raw material side, we will further invest in our backward integrations in order to secure access to high-quality raw materials at all times and realize cost and planning efficiencies in our supply chain. Our raw material platform for green chemistry plays a crucial role in this. Its focus lies on innovation and continual improvement for safe, eco-friendly processes and products. On top of that, it also increases the positive social and environmental impact of our products.
Last but not least, our portfolio pillar on chart 24. In today's fast-paced world, the degree of innovation and reinvention in a consumer brand product is crucial. Our customers rely on us in their efforts to strengthen their product lines and expand their value propositions. They highly appreciate our innovation drive and the ongoing additions to our own portfolio, be it in the traditional flavor and fragrance business or in new areas such as Scent & Care and Nutrition. Over the years, we have successfully expanded our competencies. We now generate 1/3 of our sales outside the traditional flavors and fragrances business, with leading positions across numerous categories. Our focus going forward will be to further leverage opportunities within our existing application areas and foster innovation by cross-linking our competencies.
Ladies and gentlemen, let us now move to another integral part of our strategy, our sustainability efforts on chart 25. As you well know, climate protection and biodiversity are two focus areas. In terms of climate protection, I am proud to say that we managed to further cut our ecological footprint in 2019. Since 2016, we have been reducing our carbon emissions successfully every year. We are fully committed to continue on this path and become climate positive by 2030. By 2025 already, we will source all our electricity from renewable sources. Our climate protection efforts have yet again been recognized by the Carbon Disclosure Project. We were awarded A rating in all three categories: climate, water, and forest. Symrise therefore remains a global sustainability leader within its industry.
Our second focus area is backward integration. To us, it is a prerequisite for long-term commercial success. We use thousands of raw materials from all over the world. We are therefore dependent on sustainable source procurement. It ensures availability, quality, and price stability. We work very closely with our partners and farmers. The most popular collaboration is probably our vanilla production in Madagascar. As the map on the right side illustrates, there are many more collaborations in very different parts of the world. In Sri Lanka for cloves, in Patchouli for Calabria, in Sicily for sustainable citrus. One thing that is important to us, all our collaborations are two-way streets. We are working closely with communities and farmers to improve living and working conditions in the countries we source from.
Chart 26 provides an overview of our key investment and growth initiatives. We achieved a lot in the past two years alone. An investment-heavy 2018 followed by an intense and busy 2019. In both years, our focus was on capacity expansion to meet the high demand and to lay the basis for growth. Our CapEx spending stood at 7.2% in 2018 alone, exceeding the original target of 5%-6% of sales. We will certainly continue to dedicate significant resources to growth initiatives, but this will be more at a more normal level. We managed to work towards this target already in 2019, where CapEx was set at 5.3%. Among our key investments in 2019 were a brand-new manufacturing site for fragrances and flavors in Nantong in China, the expansion of production capacity for menthol and natural extracts in India, and a additional pet food facility in Colombia and in France, just to name a few.
As you can see, there are more new projects lined up already. One project that I am particularly proud of is our investment into meat alternatives. Around the world, consumers want food and beverages with alternative proteins. This includes primarily meat and dairy products, and the desire keeps growing, both out of conviction and for health reasons. Using our in-depth know-how, Symrise has developed taste solutions of creamy, well-rounded, and protein-rich alternatives. We manage to provide products made of pea, soy, or rice protein, all of them with a taste profile that includes all consumer-preferred aspects. Our mission, getting consumers to discover and develop their love of plant-based food.
Let me show you an excellent example of protein alternatives in the beverage application on chart 27. Our subsidiary, DrinkStar, developed and launched mid-2019 a new and innovative beverage range under the brand Princess and the Pea . Princess offers vegan, sugar-free, protein, and calcium-rich milk alternatives distributed in Germany and Austria. The pea-based milk drink is comparable to classical milk products and comes in five different Flavor varieties: coffee, chocolate, Vanilla, and original, and which you can get unsweetened or with dairy products. In Germany, the concept is very well received and perceived and highly rated for its innovative uniqueness by the trade community.
Ladies and gentlemen, let us conclude today's presentation with the outlook for 2020 and beyond. Chart 28, please. We are not going to outperform the growth of the relevant markets. In fact, we expect all our segments to grow faster than the global market, which is projected to grow around 3% - 4% this year. At the same time, we anticipate an EBITDA margin of more than 20% in all segments, assuming that raw material costs and the EUR-USD exchange rate remains stable. We believe that Symrise is very well-positioned to achieve these growth ambitions. We will continue to build on our global presence, diversified product portfolio, and proven strategy. In this context, we plan to expand into fast-growing, high-margin business areas. We will do so by combining organic investments with targeted acquisitions. Of course, we will also remain committed to our disciplined cost and efficiency management.
Chart 29 gives an overview of our financial and sustainability targets for 2025. At our Capital Markets Day, we have presented our updated mid-term financial goals. We have increased our sales target to around EUR 5.5 billion-EUR 6.8 billion by the end of 2025. We intend to achieve this ambitious goal by means of an organic growth of an annual rate of 5%-7%. Our EBITDA target was also raised long-term . Symrise intends to achieve an EBITDA margin within the target corridor of 20%-23%.
On our final chart, page 30, we would like to introduce to you two new faces. Michael König and Peter Vanacker have been nominated to stand for supervisory board election at this year's AGM. Both managers have extensive international experience in various management positions. Michael König is the CEO of stock-listed Elkem ASA, a leading supplier of silicon-based advanced materials with headquarters in Oslo. Previously, he spent four years as CEO of China Bluestar, a nutrition of chemical materials and animal nutrition. Michael began his career in 1990 at Bayer, where he has held a number of management positions in Germany and China for 25 years. From 2013 to 2015, he served as a member of the board of management, and he was responsible for technology, HR, sustainability, and the Asia-Pacific, Africa, and Middle East regions.
Michael, with his experience in green chemistry and product design, as well as his extensive expertise in the Chinese market, will be a very valuable member of the board. Peter Vanacker is President and CEO of the Finnish Neste Corporation, Neste, the world's leading manufacturer of sustainable product solutions such as renewable fuels, road, and aviation transport. Previously, he gained experience in the flavor, fragrance, and cosmetics industry as CEO of Coperion, a provider in the field of specialty chemicals. Peter began his career in 1990 at Bayer, where he spent over 20 years in Germany, the U.S., Brazil, and Belgium. His last position was chief marketing innovation officer at Bayer MaterialScience. Peter is recognized as an expert in developing sustainable processes and product solutions.
As you all know, we have very high ambitions to further advance our sustainability efforts in Symrise, and therefore he will be an excellent addition to our board. While both candidates will be valuable contributors to our corporate strategy. The Symrise Supervisory as well as the Executive Board are pleased to introduce both managers for election at our Annual General Meeting on May 6th. With these words of news, I would like to conclude today's presentation. Olaf and I are now happy to answer your questions. Let us start with our guests here in the room.
Many thanks, Heinz-Jürgen. Many thanks, Olaf. Turning to Q&A , we are now happy to take the questions. We will start in the room in Frankfurt and switch to the phone afterwards. We kindly ask you to give your name and company first, and we also kindly ask you to put only two questions. Many thanks, and first question, please.
Thomas Swoboda from Société Générale . I have two questions, please. Firstly, on raw materials. You have a number of raw materials you source from China. Sometimes it's a similar sourcing. Do you see any indications for shortages, increasing raw material prices because of the current situation? That was number one. Number two, a little bit more strategic, if I may. By this bold move, IFF could have started a consolidation in the wider specialty ingredient space. My question is, do you see pressure to further consolidate? Is the combination of flavors and fragrances and bigger ingredients play as something you see it as strategic rationale for the sector? Thank you.
Okay. Thomas, thanks for the question. I think I take them both. First, raw materials. Of course, the challenges we see at the moment coming from China are challenges, but we are proud and happy to say we have built the most robust and stable supply chain in our industry. Two years ago, when the raw material crisis hit us, we were proud to say we are pretty much the only ones who can deliver the materials. Rest assured, the same situation is here again. We spend a lot of time building a very stable and robust supply chain. Yes, we have issues, but if someone can deliver products, it is us.
I still recall the times back when I came up in our industry with the idea of backward integration, and I had to explain why we do this, and the questions came from your community, "Is it because of a higher margin?" I had to say, "No, not really." "Why do you do it then?" It's like an insurance. These are the times when we need insurance, and we have one. Yes, challenge at the moment, we have not seen the China challenges in our comments to stay out of any outlook, any guidance, anything. Far, so good. Again, rest assured, you're talking to the most robust supply chain in our industry. That is meant well. Second point, IFF and DuPont. Things change all the time, and the industry is moving, and it would be wrong if things wouldn't change.
Yes, we will see probably new challenges because of that move. We will see challenges because the rest of the competition is now trying to copy our strategy. That is fine. I think we take pride in it. With something like a backward integration, which also means taking on more responsibility for the materials you source and helps to make the world a bit better. I think we can all be proud of it. We are far away from losing our feet from the ground. We have to adapt our strategy. Yes, there will be challenges, but so far we have been able to cope with all challenges, and we will cope with these challenges as well. For me, challenges are opportunities, and that is what I like to talk a lot more.
These mergers also pose opportunities for those who want to see it, and I can tell you, I will be in that camp. If you are merging and doing a big merger, it's a lot of internal distraction. A lot of people are concerned about their jobs, closures, and all these things. It is wise to think what business opportunities could be up for grabs. There will be also opportunities. Look, for me, the glass is always half full. It's always half full. You're right, but that is what makes life interesting and that boring, that things change and move. For us, it will be full of challenges, and I prefer to see the challenges. Okay? There is a long debate that there will be mergers in the industry. For us, what could we get out of it?
We are one of the fastest-growing companies in our industry. It seems that we are doing something not too bad. We're not concerned at all, you see that. That is not something which concerns me. I look here and look at this. It's an interesting move and a way to do something that's fine. Okay?
Hi. Thank you for the presentation and for taking my questions. I have two, please. Your growth and EBITDA guidance is based on the IMF's global economic growth of 3.2% in 2020. On the other hand, also on stable raw material prices. Given the current situation around COVID-19 and also the falling oil prices, how can we better estimate how to look at this guidance from today's perspective, please?
Yes. Difficult. Yes. First, your assumption is correct. Our guidance is based on raw material prices as they are. You're right, this coronavirus, whatever we have seen so far, is in there as well, and if there is nothing which is totally unexpected, we should be able to cope with this thing, and we should see no reason to use this as an excuse to move away from our guidance. We should be able to make it up. We have seen a somewhat slower start of the year. One surprise. Our total turnover in China is 6%, and the visibility of the business in China is somewhat limited, yes. Again, we see us being able, for the rest of the year, to make this up again, if not something totally surprising happens. Talking raw material prices, which is closely linked to this.
We said, the China crisis had so far very limited impact on our supply chain, and we have taken our time to make it pretty robust. Raw material prices change all the time. We use 10,000 raw materials, typically, most of these levels out. Oil, we just learned these days, is plummeting. Vanilla is still high. There's other prices also high. This levels out to some extent. That is what makes big part of the beauty myth of our business. It is, if you do it right, pretty robust because a lot of these effects level themselves out. Having said that, in our guidance, there is quite some comfort level in raw materials, so far it levels out. There's also one thing else, which ties back a bit in Thomas' previous question.
The raw material issue can have also opportunities. If no one else can deliver materials but just us, that can also put a smile on your face. A crisis has winners and losers, and what if we are among the winners? Can also be possible. Isha, back to your question. There is some uncertainty, but for us, there's no reason to be too skeptical, and there is somewhat a level of comfort in this raw material price fluctuation. Okay? I don't have a crystal ball, but at least this is not something where I would change my guidance tomorrow already just because the oil price has changed.
Thank you. The second one, please. Could you talk about the trends that you see at Flavor? We talk about strong growth in Asia, but how do you see Europe and North America developing? We look at the margin progression. In the first half, we have seen a significant improvement in maybe the margin, but we didn't see that in the second half. Are there specific reasons for this, or is it the usual seasonality? That's it from my side. Thank you.
Well, we have seen in the last second half year some slowdown. Yeah, no question. On the other side, we have seen a strong momentum in the first half of the year. There may be some restocking somewhere. Talked with some of our competitors, we're talking it may very well be. At this point in time, which are nothing where I would be concerned of. Let's recall what we were after last year. We were so concerned about our Fragrance division, that it's not moving. I said, "Hey, nothing which I should tell you, which I'm concerned about. It's a bit of a cyclical business." This year, no one's complaining about the size of the fragrance, just happy about the numbers, and the same will come true on flavors. Flavors will be back on track, and some of the stuff, straightforward, I don't know even better. It's a tentative explanation, some de-stocking. If someone is de-stocking, that is the explanation. From a certain point on, we have to start buying again. It's nothing which we are concerned of at the moment. Okay?
Next question, please.
Okay. Two questions from my side. Michael Schäfer for Commerzbank. First one, coming back to Scent & Care, which had a strong finish of the year with the organic growth you've reported. You touched upon that 90% in 2019 was price-driven, 10% volume, with a catch-up in volume size in the fourth quarter. Going into 2020, how should we read the volume ammunition you have already visible in terms of capacity, which is there? How comfortable are you with Scent & Care growing to 5%-7%? What's the volume contribution there already visible in this regard? The second one is on the free cash flow side. Congrats, great achievement in 2019 with a strong contribution from working capital management.
Just getting a bit of a feeling how 2020 may look like on the working capital side, because 2019 looks to me that If I wanted to deliver on this end, is there some catch-up or reversal effect we should think about heading into 2020, primarily also with ADF/IDF coming to the table, basically? Thank you.
Yeah. Thank you, Michael, for the question. On the Scent & Care organic growth, just as an additional explanation, we are coming out of this cycle of strong raw material price increases, and Scent & Care has worked a lot in this regard. I think we are at the end of this cycle, and as you indicated, we see stable raw material situations pretty much across the portfolio. That should lead to a more normal situation, which for us is the 5%-7% growth ambition. Out of that one-third price, two-third volume. This is what we would expect in a more normal world, and that's what we also expect for Scent & Care. As I hinted to, in the first quarter, the volume part in Scent & Care was already at 40%.
We are on track to this more normal situation, which we connect to our 5%-7% growth ambition. As Dr. Bertram said, we are not moving away from our ambition, and that holds true for all three segments. There's no reason to put any question mark behind this. However, we have, and we know that very well, very strong comparables. In 2018, all four quarters were above 8% organic growth. The fourth quarter 2019 was above 8% organic growth. Keep that a little bit in mind since we are missing this price element in the current environment, given the high level of raw materials. That's what I would refer to also specifically to Scent & Care. Yeah.
For cash flow, I'm of course, very happy that this moved finally. I think we did a lot of internal work to change the mindset at Symrise in this direction. I would have mind if we would have seen this nice improvement in two steps. It was huge. I guided for 14% this year in 2020. If you look at the parameters of our business free cash flow, is very understandable where we are coming from with the CapEx guidance and our ambition that the working capital grows slower than the growth itself, the top-line growth. That in combination would give us a 14% level, which we foresee as a very good level for the moment. There are some extraordinary items, like in the menthol area where we have pre-stock material for our new production, that will slowly but surely phase out now.
This will further support our, hopefully, ongoing improvement of better working capital management. However, I also want to say that, we all see it at the moment, the supply chains in the world are pretty much relying on just-in-time . You see interactions here and there. We don't have that. One reason is a reasonable stock level, which we can use at the moment to keep going. That is the other part of the coin, that if you have a certain stock situation, you can steer through crisis situations. Goes in the same direction as the backward integration, which we have discussed.
Okay. More questions from the room, maybe.
Thank you very much. Patrick Schmidt from Warburg Research. Could you maybe elaborate a little bit on your situation in Latin America? We saw some volatility. Q1, you were up 21%, came down to mid-single digit in Q2 and Q3, and it is now back at 20% in Q4. That would be my first question. The second one, it seems like that your gross margin came down in the second half a little bit. Despite that, you were able to keep your EBITDA margin, and I was wondering where you were able to make up this cost savings, and why are you not a bit more, let's say, confident about 2020 on your margin? Thank you.
Okay. First, I will take this Latin thing. Latin, for me, actually, is a miracle. You see and hear about the challenges and the economic crisis going there. Actually, we're doing surprisingly well there. For me, it's like most of you, surprising. We're doing fine, and there's no sign that this will change this year. It's a typical case for what I'm saying. Challenges are opportunities, and it is challenging. It is an environment where you have oil problems in a country, in a continent like that. It is a logistical nightmare. It is a lot of political unrest, and the economic situation changes. What is important as well is great people, great country. It's a great area to be. I was there end of last year again, visiting, and we are committed to that area.
A clear sign is that we're doing something which we haven't even talked about in current conference. We're building the first-ever green factory in Symrise in Colombia. It's a clear sign we have all confidence in the stability of that continent. We have a strong dedication in our company to help young people, young talents grow, and we have what we call Future Generation. One project where the young talents who are working in our company was how to build a green factory. In our company, its culture, if the project work of these young talents is convincing enough, the company has committed, we're doing that. These young talents did such a great job, and they came up with a good concept, and the next plant to be erected was the one in Colombia.
We have no reason to be concerned about the economy in South America. It will be challenging. I cannot even give you a clear example or proof of why this is. We have a good team there. I'm particularly proud of our team, and we chose even challenging environment is not a reason not to deliver good and solid business performance. That is what we use as a highlight in these challenging times, with challenges coming from China. You want to take the next one?
Just to add on this one. Of course, we have some impacts first coming from the pet food business, which is very well established in Brazil as well as in Argentina. Dr. Bertram talked about the new facility in Colombia, so good volume growth there. We have, secondly, the U.S. dollar pricing environment, which is with us. In Scent & Care, 100% of the business is in US dollars. We had some tailwind from this angle. In Flavors, it's around 50%, and pet food-wise, 70%, 80% is an increase in addition to move it to US dollar pricing environment, especially in countries like Argentina. That supported the growth profile. Plus, we worked also in this US dollar pricing environment on price increases in situations where raw material prices go up. That explains a little bit. There is some volatility, but I think gives you a good feeling that the type that he's mentioned. There are different reasons why we see this very good growth. The second question was on the gross margin improvement, I think, which is, of course, connected to raw material difference.
It was on the deterioration in the second half of the gross margin, but despite that, you were able to make it up at the EBITDA level.
At the EBITDA level?
No, group level.
Okay. We had some influencing factors coming on the cost side. As I mentioned, the extraordinary items in 2018 played a role here. That helped. I think we had good cost management overall across the group. There's a little bit of impact coming through the two months of ADF/IDF consolidation, which changes a little bit the profile, the mix overall for the group. I think you will understand this better when we go into 2020 and see the quarters going, including ADF/IDF. Most of it referred to the mix effect we have.
The EBITDA guidance you found very conservative. Hey, friends, you all did ask since a while. The beginning of the year, we are always cautious. We talked with some of you. Typically, we said about 20%, we heard, that is too conservative, we increased it to more than what we typically do, to above 20%. We believe that's the best we can do at the moment. We simply have no visibility of the year. On the other side, you have to give us credit, we are not looking for an excuse for the China thing or whatever. We have not bailed out, we have not found any reason to already shy away from any guidance. Also, it is our good practice not to promise you something which we don't know, I can guarantee you, at this time of the year, no one has a clue what the final end profitability will be. The only point, again, also to Heidi on the phone, I'm sure she's on the phone, at least it's confident, but f or the moment, that is what you get.
Okay, time flies. Ladies and gentlemen, I hope we have some listeners still on the phone. I would love to switch to the phone. Elaine, our operator, please go ahead.
Thank you. If you would like to ask a question, please signal by pressing star one on your touch pad. If you're using a speakerphone, please make sure your mute button is off so that your device is unmuted. Again, press star one on your touch pad. We're still adjusting some of our connections, so please be patient. Thank you again for your patience. We will take our first question from [audio distortion] .
Hi, this is actually the first time I've heard you say that. The first question is around ADF/IDF. When you originally announced it, I think you had some numbers around the cost savings that were anticipated. I was wondering if you could maybe elaborate a little bit on what that timeline really looks like and how much of that guidance is going through that antitrust process. The second is more shorter term in nature, just around the fine fragrance business, which you said grew double-digit last year. I would imagine quite a lot of sales go through airports and travel. I just wondered if you'd seen any impact from that in Q1 so far.
You're still there? You're still there? Or did you fall in and out a bit? Anyway, thanks for the questions. Synergies, ADF/IDF timeline, the second, fine fragrance. Let me start with the second, because it's quick. We have seen a strong momentum in fine fragrance, you see we actually have a good momentum there. What we've seen so far does not reflect anything going on, what you mentioned at the airports and these things. We will not exclude that this will become visible, so far so good. We believe over the year we should be okay in that segment. If we, over the year, see double-digit needs to be seen, so far we are not concerned, we have not seen any major negative impact to put it down there. To that question. Second point is synergies, timelines, ADF/IDF.
Yeah, that was something. You're right. I was really concerned of, because when we announced to you that we are particularly proud of the acquisition, ADF/IDF, we had no clue that it would take more than 10 months to get this thing sorted out. For various reasons, the guidelines in the U.S., that's what we learned over the process, have changed in around April last year, and they are different now. The good news is we got it done. We always told you we are confident we will get it done, but we really won't be easy. After more than 10 months, we got it done. Leaving a company which you have agreed on a price for more than 10 months alone, you're absolutely right.
You go a high risk. I was very pleased to see that what has been agreed, what has been communicated to you came true. To your question, the synergies which we have indicated, the timeline which we have indicated, all this will be still come true and with no delay. The only delay we faced was this 10-month breakout period. Nothing which we have a reason to paddle back or bail out at all. Having said that, we see this as a confirmation of our long-term strategy and belief in sustainability. Sustainability is not just saving the planet and taking care of better climate. What we say is treating you with good labor.
Actually, that is a big value, which we also sometimes are pleased to see some of the value coming back. We are known in our industry to be a good home, a good owner, a good business owner. When we bought Diana, we did not hear anything negative in the press. German company and French company. That is not always easy. We never heard anything negative in the press. We heard our friends from Diana saying, "That's the best which could happen to us." People tend to forget we sold 10% of the whole Diana business in France. We heard never anything negative from the press because we took care of our former employees to find a good new home. Pinova was even more risky. We bought the company and sold on one-third of the company because we were convinced of the green chemistry basis.
When we bought ADF/IDF, it was a family business. It was the work of a lifetime from the owner, Bernard. Of course, he wanted the full price. We paid, including the tax rebate, about 13x EBITDA, which is a good price, but not overpaid. More important, he wanted his work of a lifetime to be in good hands. Michael, in your question was we benefited over these 10 months that he felt responsible to make sure that his work of a lifetime gets safely in good hands. That's the only explanation I can find that a company for some months, more than 10 months, left on its own is in good shape. We, for us, for all of us, we were simply lucky, and we got a payback for something, a lot of trust. The good thing is there's no disclaimer to your question on the synergies. They will come in full extent with this 10-month delay as originally indicated. Nothing to be allowed. Okay.
Next question, please.
[audio distortion] . Tom Wrigglesworth from Citi, please go ahead.
Okay. Thank you very much. Sorry, there's been an echo on the line. Two questions from me. Interested by the subsidiary, the Princess and the Pea idea. Is this part of a bigger ambition for Symrise to move further downstream? Do you have more of these subsidiaries? How do you exit the Princess and the Pea project? Would you look to keep that over the medium term? The second one, a bit more mechanical. Can we just go through the price and volume dynamics by division in the organic sales growth for the fourth quarter? That'd be super helpful. Thank you.
First, I'm going to take this thing across our Princess and the Pea . I have to say, I like the concept. Bernard didn't want to even take it in there. I like this idea. To your question, clearly, we will not expand our approach to the market. DrinkStar is running nice. It is well-run company. The guy who is doing it is, I keep always telling in our company, the emperor of Wyoming, who is far away, and he's doing, as I said, a great job. It shows that we can be a market-ready concept. DrinkStar is in the market penetration limited primary to Northern Bavaria and Austria. We will not go in competition with our major customers in that area. It was just an exercise as everyone is talking about protein.
All competitors are making a big fuss out of proteins, where they're in and what they're doing and what if. We showed something right in the market, which is, I believe, pretty creative. It is a concept, and it is made from the right protein bean basis. It's not soy. The composition of protein and minerals in pea is to a big extent better. It's a very creative concept, but it will not be expanded more than necessary. On the other side, for us, it's a good learning exercise, also kind of a show path for our customers what can be done. Okay? Aroma molecules, you alluded to your question to margin and performance in the last quarter. Yeah, aroma molecules had a tough time, and they keep having a tough time at the moment. It is like all businesses we have, there is a cyclical.
It is cyclical. We had a few questions about Flavor, a bit slower. Last year we had a lot of concerns about Fragrance, which is not an issue as per today. I would guarantee you, Fragrance will be another quarter of concern in the future. Overall, it's doing well. Aroma molecules, the way we have set it up is a long-term successful way. That's why we invited many of you to our Charleston plant, to see how we are doing things, sustainable green chemistry. If aroma molecules suffers, Fragrance benefits as they are their customers. It was simplified just looking at one side of the coin. We're fortunately in the good situation if one business unit suffers, the other one benefits from it. Overall, we see our Scent and Care picture pretty healthy, around 20% growth is nice. There's no reason at the moment to paint a negative picture. You're right, aroma molecules first quarter will be very challenging. Does not change our long-term view on this business and our general business. I hope that is clear.
Tom, I think you also asked about the price volume in Q4, if I got that right.
Yes.
For the group, it was one-third price and two-third volume. Flavor basically had no price in this quarter, 100% volume growth. Nutrition, more normal, one quarter price and three quarter volume. Scent & Care, I already mentioned, it's 60% price and about 40% volume growth. That's a very mixed picture still, but on its way to be more normal.
Thank you both. Very helpful.
You're welcome.
Next question please. .
We will take our next question from Patrick Roquas from Kepler. Please go ahead.
Yes, good afternoon, gentlemen. Thank you for taking my questions. I've got two. The first one is on meat alternatives. How big of a business is that for you today, and how big could that become as part of Flavors? Also, is it only an opportunity for you or is it also causing, let's say, some pressure in other parts of your business? Second question is on Nutrition. Could you give us the growth rate of Nutrition like for like Q4, excluding the impact from Probi? Thank you very much.
Yeah. Okay. Growth rate for Nutrition, excluding Probi, Olaf, I think you have the number.
Yeah.
I will give you a number, but he has the more correct number or accurate number. When you talk first about meat alternatives opportunity. Sure, it's an opportunity. We are very well represented. For example, a big burger of a big Swiss multinational company is made by us. Probably say you guess what this company is, that's with an N, as we are in Switzerland. You see, we're pretty good at this. We are into this, and it is an opportunity. It's like any other things, it will, with the consumer pattern will shift away from other consumption. It is my view with sugar replacement, with meat replacement, I see it as an opportunity. I see it for sure as it works. I see it even in some areas as a good. We can contribute to make food healthier, to make the world a bit better.
I think that is great. Whoever does the job finally and provides the meat alternatives, that's of secondary priority, at least we are part of it. Second, we have a good share in contributing to healthier food and making things and food a bit better. That's how I look at it, and I would say for the moment, that should be enough for the question. Olaf, you do the Nutrition. We got Probi. Olaf will probably have done it, probably publishes the numbers anyway, so it is something we could also calculate at home, but Olaf did some calculation.
Sorry, Patrick, I need to do a follow-up with you. I don't have the number with me here.
No worries.
That's okay. We have disclosed the Nutrition numbers, and Probi has listed, so they publish their stuff as well. It can be calculated.
Thank you.
We get that. Olaf, I'm disappointed. I thought you would be secure enough for this. You got us. Actually, you got us. We will deliver this number and probably provide it to you.
Thank you very much.
We will now move to our next question from Heidi Begley from BNP Paribas.
Hi. There's a bit of an echo, so I hope you can hear me. Thanks for the earlier margin comment and the free cash flow, by the way. First question on the coronavirus. Could you talk a bit about the demand side, please? We're hearing that travel retail is down, so do you have big exposure there? We also see that there's stockpiling going on in certain areas like food and cleaning products. Do you see this at all? Are you exposed? The second question is on aroma molecules. I'm a bit confused here because you're saying Q1 is weak, but at the same time, you seem to be alluding to the fact there might be an opportunity here given your backward integration. Could you clarify your expectations for the year? Related to that, how is Givaudan doing? It was quite interesting to see one of your competitors make a similar move. Thank you.
Okay. Heidi, good to have you in our call, and we will be loud and clear here. First, we answered your question from last year. Does management care about cash? We do. Okay, Heidi. Now, the coronavirus, as we said, in our outlook so far, what we see is included, including some changes in retail behavior. It is too early to say do we benefit or suffer on this or that, but at least we were not in the camp just trying to bail out. It is so terrible, and there is a problem here and there. You're right, in some areas, because of changing consumer habits, we even may benefit because some of our products are then used. It is too early to give a clear picture, honestly. It would mislead you.
Our guidance is, even if there will be a certain impact, and we see that in China, that is clearly the case, we should make it up. Our total business in China is 6%, and the visibility in our Chinese business is simply not good enough to give a detailed answer here today. At least we are confident if that comes to rest within the next time, we should be able to make it up. Having said that, I'm sorry not to give you a more detailed view on it. It is just not clear enough as is. The impact on us so far was manageable. The other point is also interesting aroma molecules is down, but you're absolutely right. This crisis also puts opportunities, and we have built the most robust supply chain in our industry. We're benefiting from it.
In aroma molecules, that may be one of the areas, actually, we already got some customer calls from customers which we haven't seen in a long time, we have to make sure that we are using our resources wisely. Heidi, you're absolutely right. It could be an opportunity, but also still too early to say there will be an opportunity, at least too early to anticipate that this will be significant. There are already some small opportunities, but nothing where I would make a big fuss out at the moment. If it continues to go on, the crisis, there will be bigger opportunities for sure. One area may be, of course, in aroma molecules for sure. You're absolutely right. We observe the market. It is interesting, but obviously, others are trying to do a similar move, but so far, we're proud to say this is the best deal.
Thank you.
Oh, Heidi, you're welcome. Anytime.
Once again, if you would like to ask a question, please press star one. We will take our next question from Geoff Haire from UBS. Please go ahead.
Good afternoon. I was wondering if I could ask about gross margin. In a flat raw material environment, I just wondered what you expect the gross margin benefit to be in 2020 versus 2019. Just secondly, on China, I think you were quoted on Reuters today saying that we can write off the Q1 China business and you can catch up later in the year. Where do you expect that catch-up to come from, given a lot of your business is discretionary consumer spending?
I'll take the second one, you take- okay. As we said, the crisis in China has also opportunities. China as a supplier is in some areas not existing anymore. We have built a very robust supply chain which can cope with this situation as it is at the moment totally. We are not dependent on China as a supplier. We are making some of it up already. In other areas, we see a shift in consumption where we also have opportunities to make it up. Even in China, as I said, the first quarter, I didn't say we have to write it off totally, but at least there will be an impact, no question about it. The good news is, people always have to eat and drink, people always eat and drink. The question is only what do they eat and drink?
That is the big thing, the big point. Consumption patterns will change, and it's opportunities for those who are agile enough to see the new opportunities. For sure, there will be new opportunities, and that is what makes me very optimistic that we will cope with these challenges. We have proven that in the past. 2009, when the big crisis hit. When the big crisis hit and everyone was concerned, first point is we had no idea where this will be a hit and will our industry be hit? It turned out we were hit, but I was surprised at the very end of 2009 at this crisis. We won the prize Best of European Business Awards. Bernard, you recall that when we were in Berlin. I was surprised even after a tough start of the year. Business, we even had to start with a layoff program.
At the end of the year, we had 3.5% growth, and we're far away from that crisis. That's what we are saying. We see an impact at the moment, but we're far away from using that as an excuse to redo our forecast and outlook for the year. We're far away from that at the moment. Okay?
Thank you.
As margin, given that we have the ADF/IDF situation not even for a full quarter, I need to ask for a little bit of time. As I said, mid-year, we will have the purchase price allocation in place, and then the picture will be more clear. In general, ADF/IDF comes with in proportion higher production costs, manufacturing costs, compared to the rest of the group. If I take that out from a legacy perspective, I would expect that the gross margin will slightly improve for the group, legacy-wise.
Thank you.
You're welcome.
Okay. I think there are no more questions on the phone. Ladies and gentlemen, this brings us to the end of our 2019 results conference and conference call. Thank you very much for your patience. This was a 90 minutes call, the longest I think we ever had. Maybe not traveling also has some advantages, but this is just a side comment. Good night and thanks, Geoff, and have a nice day. Bye.
Thank you.