Earnings Release • May 12, 2016
Earnings Release
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Rotterdam, The Netherlands (12 May 2016) - IMCD N.V. ("IMCD" or "Company"), a leading distributor of speciality chemicals and food ingredients, today announces the first three months 2016 results.
Piet van der Slikke, CEO, commented: "We started the year with strong growth of revenue, gross profit and EBITA. We are particularly satisfied with the organic operating EBITA growth in EMEA (+10% Fx adjusted) and with the contribution of the acquired businesses in the USA (June 2015) and Brazil (December 2015) which both performed in line with expectation. Asia Pacific did not have a strong first quarter (operating EBITA -3% Fx adjusted)."
| Jan. 1 - March 31 | Jan. 1 - March 31 | Fx adj. | |||
|---|---|---|---|---|---|
| EUR million | 2016 | 2015 | Change | Change | change |
| Revenue | 436.0 | 355.6 | 80.4 | 23% | 27% |
| Gross profit | 96.0 | 79.1 | 16.9 | 21% | 26% |
| Gross profit in % of revenue | 22.0% | 22.2% | (0.2%) | ||
| Operating EBITA1 | 39.1 | 30.5 | 8.7 | 28% | 33% |
| Operating EBITA in % of revenue | 9.0% | 8.6% | 0.4% | ||
| Conversion margin2 | 40.8% | 38.5% | 2.2% | ||
| Net result before amortisation / non recurring | |||||
| items | 26.5 | 21.3 | 5.2 | 25% | 27% |
| Free cash flow3 | 32.7 | 25.9 | 6.8 | 26% | |
| Cash conversion margin4 | |||||
| 81.5% | 82.8% | (1.3%) | |||
| Earnings per share (weighted) | 0.37 | 0.32 | 0.05 | 16% | |
| Cash earnings per share (weighted)5 | 0.50 | 0.40 | 0.10 | 25% | |
| Number of full time employees end of period | 1,772 | 1,536 | 236 | 15% |
1 Result from operating activities before amortisation of intangibles and non-recurring items
2 Operating EBITA in percentage of Gross profit
3 Operating EBITDA plus/less changes in working capital less capital expenditures
4 Free cash flow in percentage of Operating EBITDA
5 Result for the year before amortisation (net of tax)
Revenue increased from EUR 355.6 million to EUR 436.0 million, an increase of 23% compared to the first three months of 2015. This increase was a combination of organic growth (+5.0%), first time inclusion of acquired companies (+21.2%) and a negative impact of exchange rate differences (-3.6%).
Gross profit, defined as revenue less cost of materials and inbound logistics, increased from EUR 79.1 million in the first three months of 2015 to EUR 96.0 million in the same period 2016, an increase of 21%. This increase was a combination of organic growth (+6.4%), first time inclusion of acquired companies (+18.3%) and a negative impact of exchange rate differences (-3.5%).
Gross profit in % of revenue decreased from 22.2% in the first three months of 2015 to 22.0% in 2016. This decrease is the result of the first time inclusion of acquired companies, local market circumstances, currency changes and the usual fluctuations in the product mix.
Operating EBITA, increased by 28% to EUR 39.1 million compared to EUR 30.5 million in the first quarter 2015 (+33% on a constant currency basis).
The growth in operating EBITA was a combination of organic growth, the first time inclusion of acquired companies and a negative impact of exchange differences. The operating EBITA in % of revenue increased from 8.6% in the first three months of 2015 to 9.0% in 2016.
Furthermore, the conversion margin, operating EBITA as a percentage of gross profit, improved by 2.2% from 38.5% in the first quarter of 2015 to 40.8% in 2016.
Compared to the first three months of 2015, free cash flow increased by 26%, from EUR 25.9 million to EUR 32.7 million. The cash conversion margin, defined as free cash flow as a percentage of operating EBITDA, was 81.5% compared to 82.8% in 2015. The development of the cash conversion margin is the result of further growth of operating EBITA combined with higher investments in net working capital in the first quarter of 2016 compared to the same period last year.
The investment in working capital (sum of inventories, trade and other receivables minus trade and other payables) in the first three months of 2016 amounted to EUR 7.0 million compared to EUR 4.8 million in the first three months of 2015. Capital expenditure amounted to EUR 0,8 million in 2016 compared to EUR 0.5 million in 2015.
Net debt amounted to EUR 410.3 million at 31 March 2016, compared to EUR 437.5 million at year end 2015. The leverage ratio (Net debt/Operating EBITDA ratio including full year impact of acquisitions) at the end of Q1 2016 was 2.7 (31 December 2015: 2.9).
Following recent organisational and management changes, the composition of the operating segments has been adjusted. A new operating segment 'Americas' has been introduced comprising the operations in the USA and Brazil, formerly part of segment 'Other Emerging Markets'. The operations in Turkey and South-Africa together with the former segment 'Europe' are included in a new operating segment 'EMEA'. Operating segment 'Other Emerging Markets', including Brazil, Turkey and South-Africa, no longer exists.
The developments by operating segments are as follows:
| EMEA | |||||
|---|---|---|---|---|---|
| EUR million | Jan. 1 - March 31 2016 |
Jan. 1 - March 31 2015 |
Change | Change | Fx adj. change |
| Revenue | 273.1 | 264.6 | 8.5 | 3% | 5% |
| Gross profit | 64.8 | 61.7 | 3.1 | 5% | 7% |
| Gross profit in % of revenue | 23.7% | 23.3% | 0.4% | ||
| Operating EBITA | 26.9 | 25.0 | 1.9 | 8% | 10% |
| Operating EBITA in % of revenue | 9.9% | 9.5% | 0.4% |
Revenue growth was 3% in the first three months of 2016 compared to the same period of 2015 (+5% on a constant currency basis). Gross profit increased by 5% (+7% on a constant currency basis). Gross profit margin improved by 0.4% to 23.7% in 2016.
Operating EBITA growth of 8% from EUR 25.0 million in 2015 to EUR 26.9 million in 2016 was the balance of of organic growth of 10% and a negative impact of exchange rate differences of 2%.
| Asia Pacific | |
|---|---|
| EUR million | Jan. 1 - March 31 2016 |
Jan. 1 - March 31 2015 |
Change | Change | Fx adj. change |
|---|---|---|---|---|---|
| Revenue | 77.2 | 76.8 | 0.4 | 0% | 6% |
| Gross profit | 14.3 | 14.4 | (0.1) | (1%) | 4% |
| Gross profit in % of revenue | 18.6% | 18.8% | (0.2%) | ||
| Operating EBITA | 6.8 | 7.4 | (0.6) | (8%) | (3%) |
| Operating EBITA in % of revenue | 8.8% | 9.6% | (0.8%) |
In the first three months of 2016, revenue and gross profit in Asia Pacific remained at the same level as in the first quarter of 2015. On a constant currency basis revenue increased by 6% and gross profit by 4% in 2016. Operating EBITA decreased by 3% on a constant currency basis.
| EUR million | Jan. 1 - March 31 2016 |
Jan. 1 - March 31 2015 |
Change | Change | Fx adj. change |
|---|---|---|---|---|---|
| Revenue | 85.7 | 14.2 | 71.5 | 502% | 714% |
| Gross profit | 16.8 | 2.9 | 13.9 | 477% | 679% |
| Gross profit in % of revenue | 19.6% | 20.5% | (0.9%) | ||
| Operating EBITA | 8.6 | 0.6 | 8.0 | 1,305% | 1,822% |
| Operating EBITA in % of revenue | 10.0% | 4.3% | 5.7% |
Operating segment Americas consists of the operations in Brazil and the United States of America.
The first three months 2016 figures include the impact of acquisitions in the US (MF Cachat) and Brazil (Selectchemie) completed in June and December 2015, respectively. Reported increase in revenue and gross profit was a combination of organic growth (both +11%), and negative impact of exchange rate differences of the Brazilian operations (-26%). The remainder was the first time inclusion of the two acquisitions in this segment.
| EUR million | Jan. 1 - March 31 2016 |
Jan. 1 - March 31 2015 |
Change | Change | Fx adj. change |
|---|---|---|---|---|---|
| Operating EBITA | (3.2) | (2.6) | (0.6) | (25%) | (28%) |
Operating EBITA of Holding Companies represents the head office in Rotterdam and the regional offices in Singapore and the USA.
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 others, the ability to maintain and expand commercial relationships, the ability to introduce new products and start new customer and supplier relations and the timing, scope and impact of acquisitions.
Based on Q1 achievements and the strong fundamentals of the business, IMCD expects continuing EBITA growth in 2016.
| Annual General Meeting Dividend Announcement |
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| Ex-dividend date |
| Record date |
| Payment date |
| First half year 2016 results |
| Q3 2016 Trading Update |
| Investor Relations |
| T: +31 (0)10 290 86 84 |
| [email protected] |
IMCD is a market-leader in the sales, marketing and distribution of speciality chemicals and food ingredients. Its dedicated experts provide market-focused solutions to suppliers and customers across Europe, Africa, Asia-Pacific and Americas, offering a range of comprehensive product portfolios, including innovative formulations that embrace industry trends.
Listed at Euronext, Amsterdam (IMCD.AS), IMCD realised revenues of EUR 1,530 million in 2015. In over 40 countries on 6 continents its dedicated team of more than 1,700 technical and commercial experts work in close partnership to tailor best in class solutions for around 32,000 customers and a diverse range of world class suppliers.
For further information, please visit www.imcdgroup.com
This press release may contain forward looking statements. These statements are based on current expectations, estimates and projections of IMCD's management and information currently available to the company. IMCD cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual performance and position to differ materially from these statements. IMCD disclaims any obligation to update or revise any statements made in this press release to reflect subsequent events or circumstances, except as required by law.
In the annual report of IMCD N.V, the relevant risk categories and risk factors that could adversely affect the company's business and financial performance have been described. They are deemed to be incorporated in this release.
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