Acquisitions contribute  to strong Growth in Revenue, Gross Profit and Operating EBITA

Specialty Chemicals distributor IMCD N.V. (Rotterdam, The Netherlands) reported data for Q1-2019 this morning. Sales (or revenues as IMCD calls it) were EUR 704.8 mn, up 24% from EUR 566.3 mn in the same period of 2018 (+24% on a constant currency basis). IMCD says the growth comes from mainly from the effect of acquisitions  with 20% and 4% from organic growth.

Gross Profit grew by 23% to EUR 157.9 mn (+22% on a constant currency basis), equivalent to 22.4% of sales. Operating EBITA increased by 28% to EUR 63.7 mn (+27% on a constant currency basis) . This represents a return on sales of 9.0%, up slightly from the 8.8% realised in Q1 of the previous year, and a conversion marging (= Operating EBITA as percentage of Gross Profit) of 40.4% (up from 38.9%).

The resulting in Cash Earnings per Share (i.e. before amortisation) were  EUR 0.83 per share, an increase of 25% when compared with the result for Q1-2018 at EUR 0.67 per share. Free cash flow increased by 54%, from EUR 32.4 mn in Q1-2018 to EUR 48.9 mn. This includes a positive effect of EUR 4.9 mn resulting from the adoption of a new lease accounting standard under IFRS 16. This also led to an increase of reported debt by EUR 63 mn to a total of EUR 653 mn (compared to a total of EUR 611 mn at the end of 2018). The Net Debt / Operating EBITDA ratio remained constant at 2.8 when compered with 31. December 2018.

IMCD expects Operating EBITA growth for 2019, based on the performance in the first three month and the “strong fundamentals of the business”.

IMCD expects Operating EBITA growth for 2019, based on the performance in the first three month and the “strong fundamentals of the business”.

Driven by strong M&A activities, mainly in EMEA and the  Americas, the (geographical) operating segments showed a mixed picture.  EMEA (defined as Europe, Turkey and Africa) posted revenues of EUR 358.0 mn (up 13% as reported or 15% on a constant currency basis). Operating EBITA in the region grew from EUR 34.3 mn to EUR 36.5 mn, up 6% as reported and 8 % when adjusted for currency effects, as the acquisition of Velox  in September with lower than IMCD’s average margins is being felt. Asia-Pacific generated revenues of EUR 96.0 mn (up from EUR 80.8 mn, or +19% as reported, +19% in constant currency). Operating EBITA in that region came in at EUR 8.9 mn, which compares with EUR 7.6 mn in Q1-2018, up  18% as reported and 18% when adjusted for currency effects. In the Americas the effect of the  acquisition of E.T. Horn  completed in July 2018 was significant. Revenues were EUR 250.8 mn, up from EUR 169.9 mn or +48% as reported (or +42% adjusted for currency effects) in Q1-2018. Operating EBITA was EUR 21.8 mn, up 76% from the EUR 12.4 mn in the previous year (a growth of 67% at constant currency).

Structural cost decreased, mainly due to the change in lease acoounting policies (see above), resulting in a 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 -3.05 mn (compared to EUR -4.7 mn in Q1-2018).

The original press release can be accessed via the link below: https://www.imcdgroup.com/media/news/imcd-reports-28-ebita-growth-first-three-months-2019

Source: IMCD press release

HGE / DCG – 08.05.2019