By: ICN Bureau
Last updated : May 03, 2021 10:33 am
IMCD expects operating EBITA growth in 2021
IMCD, a leading distributor of speciality chemicals and ingredients, reported gross profit growth of 12% to EUR 197.6 million (+17% on a constant currency basis) for first three months 2021. Also, operating EBITA increase of 28% to EUR 90.6 million (+34% on a constant currency basis).
Piet van der Slikke, CEO: "I am pleased to report that IMCD had a strong start of the year. Our team performed excellently despite challenges from Covid, product shortages and disturbances in supply chains. We experienced strong demand in particular in the industrial sector. Acquisitions completed last year performed in accordance with expectations. This resulted in an operating EBITA growth of 28% (+34% on a constant currency base) and in favourable development of other KPI’s as well. Free cash flow grew to EUR 63.6 million (+91%) and cash earnings per share was up 18%.
“All regions contributed to these results. We continue to execute our strategy diligently by working hard on further digitalising our business, providing sustainable product solutions to our customers and strengthening our presence in various markets. With this promising start, I am optimistic that the quality of our staff and the strength of our business model enables IMCD to further grow its business this year."
In the first three months of 2021, revenue increased by 8% to EUR 809.9 million, compared with EUR 748.8 million in the same period in 2020. On a constant currency basis, revenue growth was 13%, consisting of organic growth (6%) and the impact of the first time inclusion of companies acquired in
Meanwhile, operating EBITA increased by 28% from EUR 70.9 million in the first three months of 2020 to EUR 90.6 million in the same period of 2021. On a constant currency basis, operating EBITA increased by 34%. The growth in operating EBITA, on a constant currency basis, is a combination of organic growth and the first time inclusion of companies acquired in 2020 and 2021. Operating EBITA in % of revenue increased by 1.7%-point from 9.5% in the first three months of 2020 to 11.2% in 2021.
The conversion margin, defined as operating EBITA in percentage of gross profit, increased from 40.2% in the first three months of 2020 to 45.9% in 2021. The increase in conversion margin is, amongst other things, the result of improved gross profit margins in combination with a lower level of operational expenses, which is primarily due to the COVID-19 restrictions, the impact of acquisitions and driven by cost optimisation efforts.
As at 31 March 2021, net debt was EUR 752.0 million compared with EUR 739.3 million as of 31 December 2020. The leverage ratio (net debt/operating EBITDA ratio including full year impact of acquisitions) as at the end of March 2021, was 2.3 times EBITDA (31 December 2020: 2.3). Calculated on the basis of the definitions used in the IMCD loan documentation, the leverage ratio as at the end of March 2021 was 1.6 times EBITDA (31 December 2020: 1.6) which is well below the maximum of 3.5 as allowed under the loan documentation.
OUTLOOK
IMCD operates in different, often fragmented market segments in multiple geographic regions, connecting many customers and suppliers across a very diverse product range. In general, results are impacted by macroeconomic conditions and developments in specific industries. Furthermore, results can be influenced from period to period by, amongst other things, the ability to maintain and expand commercial relationships, the ability to introduce new products and start new customer and supplier relationships and the timing, scope and impact of acquisitions.
IMCD's consistent strategy and resilient business model has led to successful expansion over the years and IMCD remains focused on achieving earnings growth by optimising its services and further strengthening its market positions.
IMCD sees interesting opportunities to increase its global footprint and expand its product portfolio both organically and by acquisitions. Based on the performance in the first three months of 2021 and the strong fundamentals of its business, IMCD expects operating EBITA growth in 2021.