IMCD confident for 2019

LOOKING GOOD

RESULTS • IMCD’S FIRST HALF REAPED THE BENEFIT OF ACQUISITIONS MADE DURING 2018 AND, DESPITE SOME ECONOMIC CLOUDS, IT BELIEVES ITS STRONG FUNDAMENTALS BODE WELL FOR THE YEAR AS A WHOLE

IMCD’S HALF-YEAR results for 2019 show steady growth and development, but progress was slowed by concerns over the wider global economic environment. The results demonstrate first-half gains in both EBITA and gross profit, but stronger results were hindered by wider implications that have affected businesses globally.

Commenting on results and summarising the period, Piet van der Slikke, IMCD’s CEO (right), says: “The results of the first six months were satisfactory with good growth of EBITA and cash earnings per share. Notwithstanding these good results, IMCD also experienced a much more challenging macro-economic environment in the second quarter which impacted growth, in particular in EMEA but the Americas saw slower growth as well. Current market conditions are volatile and uncertain. Despite this we expect operating EBITA growth for 2019.”

A CLOSER LOOK First-half revenue rose from €1.15bn to €1.40bn, an increase of 21 per cent compared to the first half of 2018. EBITA was up 17 per cent year-on-year at €123.1m, while net profit excluding amortisation and non-recurring items rose 14 per cent to €84.8m.

The increase in revenues was largely due to the impact of contributions from businesses acquired by IMCD during 2018. These also provided 17 per cent of the overall increase in gross profit over the period.

The figures for 2019 are not directly comparable with those for 2018 as IMCD has, like most other major organisations, applied the new lease accounting standard IFRS 16, which had a positive impact on the reported EBITA.

First-half results from the Europe, Middle East and Africa (EMEA) division showed 10 per cent growth in both revenue and gross profit; adjusted for currency movements those increases were 11 per cent in both cases. There was a slight drop in operating EBITA margin, primarily as a result of the lower margins achieved by the Germany-based Velox, which was acquired in September 2018.

The Americas division posted a 44 per cent increase in revenue and a 49 per cent increase in operating EBITA, which largely reflect the positive impact of the acquisition of ET Horn in July 2018. The smaller Asia-Pacific division recorded a 17 per cent increase in revenues and an 11 per cent increase in operating EBITA. Once again, these figures reflect recent acquisitions, notably those of Aroma Chemical Agencies and Alchemie Agencies in India in November 2018. On the other hand, the division lost the non-core flavourings and fragrances business in Australia, which posted revenues of €3.6m in 2018.

Looking forward to the rest of the year, IMCD notes that it operates in what are “often fragmented market segments” across multiple geographic regions and provides a “very diverse product range”. While that spread of activity protects it to a great extent to the impact of specific market or political changes, it is like other companies active in this sector subject to the vagaries of broader macro-economic factors.

On the whole, though, the company remains upbeat, noting that it “sees interesting opportunities to increase its global footprint and expand its product portfolio both organically and by acquisitions”. As such, and with the first half behind it and strong fundamentals in the market, IMCD expects to see overall growth in operating EBITA for the full year. HCB www.imcdgroup.com