IMCD reports EBITA of EUR 127 million in the first three months of 2024

Highlights at a glance:

• Gross profit of EUR 295 million (on a constant currency basis, equal to the first three months of 2023)
• Operating EBITA decline of 15% to EUR 127 million (-13% on a constant currency basis)
• Free cash flow of EUR 106 million (first three months of 2023: EUR 147 million)
• Cash earnings per share decline of 19% to EUR 1.41 (first three months of 2023: EUR 1.74)
• Successful completion of six acquisitions: Valuetree and CJ Shah in India, Joli Foods in Colombia, RBD in China, Euro Chemo-Pharma/Biofresh in Malaysia and Gova in the Benelux

Valerie Diele-Braun, CEO: “In a volatile first quarter of the year, we faced challenging conditions in some of our market segments, resulting in a lower operating EBITA of EUR 127 million versus a very strong Q1 2023. Whilst our acquisition pipeline and projects with principals and customers remain healthy in all regions, current market dynamics continue to make future customer demand difficult to predict. Our strong commercial teams, digital and logistics infrastructure, combined with further driving operational excellence and cost control, will deliver future growth and efficiencies.”

Key figures

All financial information is presented in millions of euros, unless stated differently.

Key performance indicators

Revenue

In the first three months of 2024, revenue was stable at EUR 1,160.2 million, compared with EUR 1,160.4 million in the same period of 2023. On a constant currency basis, revenue growth was 1%, driven by the impact of the first time inclusion of companies acquired in 2023 and 2024 (+9%) and an organic decline (-8%), compared with a strong first quarter in 2023.

Gross profit

Gross profit, defined as revenue less cost of materials and inbound logistics, declined by 2% from EUR 300.0 million in the first three months of 2023 to EUR 294.8 million in the same period of 2024. The decline in gross profit was the result of organic developments (-8%), the impact of the first-time inclusion of acquisitions (+7%) and foreign currency exchange rate results (-1%). Gross profit as a % of revenue increased by 0.1%-point from 25.3% in 2023 to 25.4% in the first three months of 2024.
Differences between and within the regions are caused by local market circumstances, product mix variances, product availability, foreign currency fluctuations and the impact of newly acquired businesses.

Operating EBITA

Operating EBITA declined by EUR 22.0 million (-15%) from EUR 148.5 million in the first three months of 2023 to EUR 126.5 million in the same period of 2024 (-13% on a constant currency basis). The decline in operating EBITA of 15%, consists of organic developments of -21%, the impact of the first-time inclusion of acquisitions completed in 2023 and 2024 of +8%, and foreign currency exchange rate impacts of -2%. Operating EBITA as a % of revenue declined by 1.9%-point from 12.8% in the first three months of 2023 to 10.9% in 2024. The conversion margin, defined as operating EBITA in percentage of gross profit, declined from 49.5% in the first three months of 2023 to 42.9% in 2024. The decline in conversion margin is the result of less gross profit combined with
inflation-driven organic own cost growth.

Cash flow and capital expenditure

Free cash flow decreased by EUR 40.8 million, from EUR 147.1 million in the first three months of 2023 to EUR 106.3 million in 2024. The cash conversion margin, defined as free cash flow as a percentage of adjusted operating EBITDA (operating EBITDA adjusted for non-cash share-based payments and lease premiums), was 82.0% compared with 97.4% in the first three months of 2023. The decrease of the cash conversion margin in 2024 is mainly the result of lower operating EBITDA combined with higher investments in net working capital. The investment in net working capital (sum of inventories, trade and other receivables minus trade and other payables) in the first three months of 2024 was EUR 19.6 million compared with EUR 2.1 million in the first three months of 2023. As at the end of March 2024, net working capital in days of revenue was 63 days (March 2023: 60 days). In the first three months of 2024, capital expenditure was EUR 3.8 million compared with EUR 1.8 million in the same period of 2023, and mainly relates to investments in the ICT infrastructure, office improvements and technical equipment.

Net debt

As at 31 March 2024, net debt was EUR 1,443.0 million compared with EUR 1,285.6 million as of 31 December 2023. The leverage ratio (net debt/operating EBITDA ratio including full year impact of acquisitions) as at the end of March 2024, was 2.7 times EBITDA (31 December 2023: 2.3). The actual leverage, calculated on the basis of the definitions used in the IMCD loan documents, was 2.5 times EBITDA as at 31 March 2024 (31 December 2023: 1.7).

Equity

In January and March IMCD transferred 20,211 respectively 8,910 own shares to settle its annual obligations under its long-term incentive plan. As at 31 March 2024, the number of own shares held by IMCD was 38,653 (31 December 2023: 67,774).