Univar starts 2020 brightly

SPRING INTO ACTION

RESULTS • UNIVAR SOLUTIONS HAS REPORTED WHAT IT TERMS ‘SOLID’ FINANCIALS FOR THE FIRST QUARTER, THANKS TO ITS ABILITY TO REACT QUICKLY TO RAPID CHANGES IN DEMAND

UNIVAR SOLUTIONS HAS reported adjusted net income of $52.3m for the first quarter of 2020, up 5.2 per cent on the previous year, with adjusted EBITDA ahead by 0.9 per cent at $161.6m. “I’m pleased with our performance this quarter and our strong liquidity position. We remain positive about the path we are on but will remain agile to adjust to changing demand patterns as the impact of Covid-19 continues to develop,” says David Jukes, president/CEO. “Our number one priority

UNIVAR’S EMPLOYEES HAVE PLAYED A MAJOR PART

IN THE COMPANY’S COVID-19 RESPONSE is always safety and the health and well-being of our employees. I’m extremely proud of how our organisation has been rapidly able to adapt to new ways of working. The strength of our supplier and customer relationships, operating infrastructure, and the ability of the sales force to react quickly and decisively, enabled us to execute well in a challenging market, supporting an increasing number of customers.”

Net sales came in at $2.2bn, a 3.6 per cent increase over first quarter 2019 on a constant currency basis. This growth was driven in part by the acquisition last year of Nexeo Solutions, together with higher demand for products in “essential end markets”, offset partly by lower demand from global industrial end markets.

That Nexeo acquisition certainly boosted sales in the Americas, with external sales in the US growing by 3.8 per cent, in Canada by 4.4 per cent and in Latin America by 21.8 per cent. Elsewhere, though, lower demand in some markets held back sales and EBITDA, though gross profit from the EMEA division rose by 3.0 per cent due to a favourable product mix and management initiatives to boost margins.

THROUGH THE MIST As with many other companies during this current pandemic crisis, Univar is less bullish about the rest of the year, even if it confident that it has the financial stability to see it through. Univar has withdrawn its full-year EBITDA guidance and says it “plans to provide an update as appropriate once it has greater clarity regarding the implications of Covid-19 and the impacts on its business”.

Univar has also been taking active steps to manage its expense base in order to maintain its financial health while also service the needs of its suppliers and customers. These include the elimination of some salaried positions, the elimination of salary increases, the suspension of all hiring, except in critical positions, temporary furloughs for other staff to match demand changes in certain locations, and a reduction in travel and other discretionary spending.

Univar expects these steps to deliver cost savings of more than $40m this year, though it has also reduced its expected synergies from the Nexeo acquisition by $5m to $35m due to timing delays. It has also lowered its planned capital expenditure for the year by $25m and will be monitoring the situation in case further cost reduction measures are warranted.

In the meantime, Univar points out that its liquidity at the end of the second quarter is projected to be in the region of $700m to $800m and that it has no significant debt maturities until 2024. www.univarsolutions.com