Acquisitions again contribute significantly to Growth at IMCD
Specialty Chemicals distributor IMCD N.V. (Rotterdam, The Netherlands) reported earlier this week on the performance for 2019. Sales (or revenues as IMCD calls it) were EUR 2’689.6 mn, up 13% from EUR 2’379.1 mn in 2018 (+12% on a constant currency basis). IMCD say the growth trend is driven by the the effect of the first-time inclusion of acquisitions (+13%) and a small currency effect at +1%. Business in the existing units declined slightly by 1%.
Gross Profit grew by 12% from EUR 536.1 mn in 2018 to EUR 599.3 mn (+11% on a constant currency basis), Operating EBITA 11% from EUR 202.1 mn in 2018 to EUR 224.8 mn in 2019 (+10% on a constant currency basis) . This represents a return on sales of 8.4%, virtually unchanged from the previous 8.5% of the previous year and a conversion margin (= Operating EBITA as percentage of Gross Profit) that was almost flat at a level of 37.5 % (down 20 Bps from the 37.7% achieved in 2018).
The resulting in Cash Earnings per Share (i.e. before amortisation) were EUR 2.85, an increase of 13% when compared with the result for 2018 at EUR 2.53. Free cash flow increased by EUR 55.7 mn, from EUR 166.5 mn in 2018 to EUR 222.2 mn for 2019.
IMCD plans to propose a dividend of EUR 0.90 per share in cash, up 13% from the EUR 0.80 per share paid for 2018. Subject to approval at the AGM in May 2020, this would result in the company paying EUR 47.3 mn or 32% of the Net Result 2019, adjusted for non-cash amortisation charges and net of tax, a similar percentage level as in 2018.
The (geographical) operating segments again showed a mixed picture, mostly driven by strong M&A activities in the Americas. EMEA (defined as Europe, Turkey and Africa) posted revenues of EUR 1’314.6 mn, up 6% from EUR 1’240.8 mn as reported for 2018 (+6% on a constant currency basis). Operating EBITA in the region declined 1% from EUR 127.8 mn to EUR 126.3 mn (-1% when adjusted for currency effects).
Asia-Pacific generated revenues of EUR 392.0 mn (up from EUR 335.7 mn, +17% as reported, +16% in constant currency). Operating EBITA in that region came in at EUR 35.7 mn, which compares with EUR 31.2 mn in 2018, up 14% as reported and 13% when adjusted for currency effects. In March 2019 IMCD divested IMCD Australia’s Muskvale Flavours & Fragrance manufacturung business, which posted sales of EUR 3.6 mn with a Gross Profit margin of ca. 60%. Later in the year, acquisitions were made in Singapore and Malysia (ca. EUR 4 mn sales in 2018), India (ca. EUR 10 mn sales in FY 2019, ending 31.03.2019) and South Korea (ca. EUR 44 mn sales p.a. on a fully consolidated basis).
In the Americas revenues were EUR 983.0 mn, up 22% from the EUR 802.6 mn as reported for 2018 (or +18% adjusted for currency effects). Organic revenue development was -2%. The acquisitions made in 2018 (E.T. Horn) and 2019 (Unired Quimicas SAS and DCS) contributed 20 percentage-points of growth. Favourable currency trends added another 4 percentage-points. Operating EBITA was EUR 77.8 mn, up 30% from the EUR 60.1 mn in the previous year (a growth of 24% at constant currency).
Structural cost decreased by EUR 2.0 mn, resulting in an Operating EBITA for the “holding companies” (i.e. the head office in Rotterdam and regional head offices in Sinagpore and New Jersey, United States of America) of EUR -15.0 mn (compared to EUR -17.0 mn in 2018).
The original press release can be accessed via the link below:
Source: IMCD press release
HGE / DCG – 28.02.2020