Acquisitions allow for Compensation of Market Headwinds at IMCD
Specialty Chemicals distributor IMCD N.V. (Rotterdam, The Netherlands) last week reported on the performance for 2020. Sales (or revenues in IMCD terminology) were EUR 2’774.9 mn, up 3% from EUR 2’689.6 mn posted in 2019. IMCD said the reported growth is an amalgmate of effects from the first-time inclusion of acquisitions (+6%) and an adverse currency exchange effect at -3%.
Gross Profit increased by 8% from EUR 599.3 mn in 2019 to EUR 647.5 mn (+11% on a constant currency basis), Operating EBITA 13% from EUR 224.8 mn in 2019 to EUR 253.5 mn in 2020 (+16% on a constant currency basis) . This represents a return on sales of 9.1%, up from the 8.4% of the previous year and a conversion margin (= Operating EBITA as percentage of Gross Profit) that increased to a level of 39.2 % (up 170 Bps from the 37.5% achieved in 2019). This was based on better Gross Margins as well as lower operational expenses due to COVID-19 restrictions and targeted cost optimisation efforts.
The resulting in Cash Earnings per Share (i.e. before amortisation) were EUR 3.22, an increase of 13% when compared with the result for 2019 at EUR 2.85. Free cash flow increased by EUR 59.8 mn, from EUR 222.2 mn in 2019 to EUR 282.0 mn for 2020. IMCD plans to propose a dividend of EUR 1.02 per share in cash (2019: EUR 0.90 per share).
As in previous years, IMCD’s (geographical) operating segments showed a mixed picture, in 2020 mostly driven by strong M&A activities in Asia-Pacific. EMEA (defined as Europe, Turkey and Africa) posted revenues of EUR 1’326.9 mn, up 1% from EUR 1’314.6 mn as reported for 2019 (+3% on a constant currency basis). After a slight decline in 2019, Operating EBITA in the region increased 4% from EUR 126.3 mn to EUR 131.2 mn (+6% when adjusted for currency effects). At 9.9% of sales, the EBITA-Margin was close to double-digit level.
In the Americas revenues were EUR 945.1 mn, down 4% compared to the EUR 983.0 mn as reported for 2019 (unchanged when adjusted for currency effects). Organic revenue development was -1%. The acquisitions made in 2019 (Unired and DCS Mexico) and 2020 (VitaQualy, Millikan and Banner Quimica) contributed 1 percentage-point of growth. Unfavourable currency trends deducted 4 percentage-points. Operating EBITA was EUR 86.0 mn, up 11% from the EUR 77.8 mn in the previous year (a growth of 16% at constant currency).
Asia-Pacific generated revenues of EUR 502.9 mn (significantly up from EUR 392.0 mn, +28% as reported, +33% in constant currency). Organic growth contributed 11 percentage-points, the effect of acquisitions completed in 2019 and 2020 was 21 percentage points. Negative exchange reate effects contributed a minus of 4 percentage points.Operating EBITA in that region came in at EUR 52.9 mn, which compares with EUR 35.7 mn in 2019, up 48% as reported and 53% when adjusted for currency effects.
As support functions were strengthened, structural cost increased by EUR 1.6 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 -16.6 mn (compared to EUR -15.0 mn in 2019).
The original press release can be accessed via the link below:
Source: IMCD press release
HGE / DCG – 01.03.2021