IMCD NV
AEX:IMCD
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
119
167.6
|
Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
[Audio Gap][Operator Instructions] I would like to hand over the conference to Pieter van Slikke. Please go ahead.
Good morning, everyone. I'm sitting here traditionally with Hans Kooijmans, CFO, and we want to give you an opportunity to give -- to ask questions about our first quarter.Traditionally, also on the first quarter, we do not give an extensive presentation as we have after this call, our general meeting so we don't have a tremendous amount of time. I just want to go through the highlights with you as we also published them in our press release.First of all, I can confirm and repeat again that we're very pleased with the results in the first quarter. We have seen all regions double-digit growth and in particular also our organic growth was strong. So good results.Gross profit growth of 21% and 27% on a constant-currency basis. EBITA increased with 17%, which is 23% on a constant-currency base. And then, of course, also net results, even 25% on a constant-currency base. Cash earnings per share, a 20% growth.If I look at different regions, I won't repeat for every region the results. Maybe a few words about the Americas. As you know, of course, in September, we acquired L.V. Lomas, which was a significant acquisition. It's -- we're very positive about the developments we have taken steps to integrate businesses and we are also working hard to increase our operating margin, which is with L.V. Lomas, a bit lower than our average. But we see a very, very good possibilities to bring them to a level that we find satisfactory. So looking back at the first quarter, very positive.And with that, I would like to give you the opportunity to ask questions, to either Hans or myself.
[Operator Instructions] The first question is from Ms. Sarikonda (sic) [ Mr. Sarikonda ] from HSBC.
This is Srini from HSBC. A couple of questions for me, please. First, on Americas' conversion rate. Could you give us more details on the impact on margins from inclusion of the newly acquired companies and the impact from currencies? And is there any price spot through phasing issue you're facing there? And second, on Asia-Pacific. You've been doing some investments in this region. Are there any further investments planned? Or is it done now? And are you seeing returns on those investments in the region?
Okay. First, about the Americas, in particular, your question about margins and pass-through. We don't have real problems to give increased purchase prices through to our customers. I think we very often do not have that problem, also not elsewhere. L.V. Lomas as we also reported last year, has a significantly lower -- had a significantly low operating margin mainly due to a higher cost base, and we are looking at that step-by-step to bring the productivity of this business on the level that we want. So if you look at our, let's say, legacy U.S. business, that is doing great, very satisfactory margins. Lomas again is a fantastic company with a great supplier portfolio, and we just need to optimize the organization more. So I wouldn't say -- I saw your note this morning, where you said the problem is the margins. I wouldn't characterize it this way. I just want to say it's just a great opportunity for us to increase margins to the level that we are used to. I think on Asia-Pacific, further investments. As a general remark on that, I can say that we are always looking for possibilities to increase our business and also on Asia-Pacific. So if possible, we will also there further invest in possibilities to grow our business. Does that answer your questions?
Yes, I understand. And one follow-up on Americas margins. L.V. Lomas margins you said significantly lower [indiscernible].
Operating margins, operating margin.
Operating margins, yes. So can you give us some numbers on that like what were the margins and when you see that margins to come back to the IMCD average levels?
Come back is the wrong expression because we never had them. But what you need to understand in our business, in the specialty chemical distribution business, is that we have huge differences between companies outside IMCD and sometimes inside IMCD in terms of what margins, operating margins are. If we look at companies that we try to acquire, we see a lot of difference for many reasons. But L.V. Lomas, the operating margin was more or less half of what we, on average, had ourselves. And we are increasing that already. And we have very, very -- there's no real reason for that, I would say. So we will -- because gross margins are more or less on the level that we look for. We could increase that even a bit. But it has to do with efficiency, with the management strength, et cetera. So we see -- but we need time for that. So we see in the future good possibilities to increase that margin.
The next question is from Sylvia Barker from Deutsche Bank.
Firstly, on growth, I would say it was very, very strong quarter in terms of the organic gross profit growth. It looks like that was definitely double-digit in all 3 regions on an organic basis. I don't know if you can give us -- if you're aware that was actually North America, organically. But just to understand what drives it, because we see it quite strong acceleration versus Q4. I know you don't like talking about none of the tonnage or the volume versus [ GP ] per ton. But was that particularly strong development on either of the two? And so volumes versus kind of the value per tonne that you sold during the quarter? Or were there any supplier relationships that perhaps drove that higher as well?
Okay, let's first agree that we would not speak about value per tonne. We never do that because we don't know that. So that's typically something you discuss with...
Or kilo rather?
Our colleague. Yes, even per kilo, which in itself is more relevant maybe but because of the diversity of our business, where we have business of less than a EUR 1 per kilo or EUR 40 a kilo. It's very difficult for us to have a meaningful discussion about that. I think your question is more about, is it price driven, volume driven? I would say, both. I think the benefit, of course, let's not fool around that, also from a very healthy demand and economy. I think everybody sees that in Europe and elsewhere. So both volume and price go up. And on top of that, we have a very strong product portfolio and we try to, of course, increase that portfolio every day. And the benefit during favorable economic circumstances.
And just one, so has the price element I guess been particularly strong given we have seen perhaps prices, obviously, go up on the specialty side, relatively strongly. Would you say that you've been able to pass more of that through maybe sequentially? I know it's difficult to talk about in near term, but is that something you would pick out or not?
Sylvia, what you mathematically see is that our gross profit percentage remained stable compared to the first quarter of last year. And so that means that if that would have been a price impact that we would have been in the position to pass that on to customers. And as Piet said before, it is a combination of the healthy economic environment, strengthening the supplier base and selling more.
Sure. And in terms of the supplier base, did you see any -- where there any supplier agreements kind of ramping up strongly?
Yes, well, we don't speak about individual supplier arrangements unless we really need to. But we see very good possibilities and very positive conversations with suppliers to increase, let's say representation, both here in Europe and in the Americas. So also from that angle, business is doing well. And what we see, of course, also in North America is the benefit that we have of covering a significant part of North America now and L.V. Lomas helps us also to increase our business because our coverage has increased. And the credibility from us as a North American distributor has, of course, also increased. So that helps to benefit from supplier outsourcing.
Okay, great. And would you be able to just confirm the North American organic growth rate? Because it's difficult to just guide exactly what the L.V. Lomas contribution would have been.
Here we indicated double-digit in all regions and that is through organic growth.
Okay, great. And just two very quick ones. One, on L.V. Lomas itself, have you identified any agreements or any areas of the business that you would need to kind of get rid of or deemphasize over time? Or are you happy with everything that you've acquired? And then lastly, just on the interest, you have refinanced again. Would you be able to give us maybe an interest guidance for the year, please?
On the first question, I think we are happy with the business as is in L.V. Lomas. And so that there would be no major changes there. And on the interest?
On the interest, I think what was indicated in the press release is a one-off cost related to the refinancing on the one hand to allow you to make a guess what you could expect in the second quarter. Plus the interest rates of the new facilities, whereby the bond, of course, is fully drawn, so that's 2.5% on top of the EUR 300 million and then there's fixed for the upcoming 7 years. And on the revolver, as you could calculate back from the reported leverage, I am to understand most of it is undrawn, but the combination will result excluding the one-off amortization to more or less similar interest costs as what we saw last year.
The next question is from Quirijn Mulder from ING.
A couple of questions. So we have no clue on exactly what the organic growth is but there is certainly an acceleration in the first quarter against the fourth quarter. Can you give me an indication of what the seasonality effect is in the U.S. and in Canada? Because we have no -- because it seems to me that there's some seasonality there as well and maybe more than before. The second question about the cash conversion. EUR 18 million put into the working capital. Is that a one-off or is that something which you -- is that because of the effect of good business? Or is that something we are going to see in the second quarter as well?
Okay, maybe first question, seasonality. And specifically about the U.S., I don't think that there is a specific seasonality in our U.S. business. I think generally, as in IMCD, I would say the first quarters, 2 quarters are stronger than the second 2, that's I think what we always mentioned. So there's no specific seasonality in the U.S.
Okay, that's not changed because of the acquisition of L.V. Lomas?
No, no, no.
And then coming back on your cash conversion, Quirijn. I think the main driver is -- in the increased working capital has increased debt positions and, of course, when you sell more, your [ debt has ] move up slightly and as a result of that, you invest more in working capital. Suppose that our sales level will stay on this same basis, and then I think you should consider this as more or less a one-off.
Okay. And then my final question about Brazil. Can you give me an idea about the situation in Brazil? Because it was some sort of headache for you in 2017.
Yes, so Brazil, is constituted by 2 different activities: one is mainly Pharma and the other is very much focused on the industrial markets, like coatings and plastics, et cetera. On Pharma, we continue to perform very strong. And so that's a business that is doing very well. On our industrial business, we make very good improvements in optimizing and improving the business. We are not -- still not there where we want to be but it's going into the right direction. So it's let's say moderately positive about Brazil, although circumstances in that country, of course, remain not easy because of the -- not only the political situation but also the currency situation and economic situation. But by and large, better than we, let's say, in our business more improvement than last year.
The next question is from Nathalie de Bruijne from Degroof Petercam.
Most of my questions has been answered. So perhaps I will switch to something else, which is not linked to your results but really more to a general market trend. I read recently that some chemical manufacturers, being [indiscernible] among others, are actually starting to move to online distribution channels, a.k.a. Alibaba in Asia. And I was wondering if you would see that as some kind of a threat to your business, or if to you that is some kind of a nonevent and you don't believe in it?
You have to be very careful to say that you don't believe in it as many, many other businesses have experienced. Of course, we look at these issues, digital solutions also very carefully. We have seen already for a long time even after, let's say, the first Internet, I would say push, let's say in the early 2000s platforms and sales platforms for chemicals. We have seen that for a long time. And they have never gone away and they have never totally took off. We are very well aware that also chemical producers are looking at these possibilities, in particular for standardized volumes and standardized products. We feel that in specialties, that is not the case and is still difficult. Nevertheless, of course, we invest ourselves also quite a lot in digitalization and how can we make lives of customers easier, how can we help them to make decisions and how can we also transactionally improve our offering. So a threat, no. But on the other hand, we're also very much aware of improving our mobile, our service level and we're working hard on that. So I hope -- I can't give you, let's say, a very fixed answer, well, this is going to happen. I think nobody knows, but we as in our role with our formulation expertise and our technical backdrop of -- to help customers formulate products, we don't see that as an immediate threat.
Okay. So meaning that your added value is much more in formulations, which we were already aware of. But then I'm wondering where are you with regard to the additional labs being built, especially in North America. Because I understood this is pretty important and that which a broader presence, actually you are able to gain suppliers or relationships. So how is it evolving in this regard?
Yes, well we have -- so when we invested in the U.S. there were no labs. We have now a coating lab, we have a personal care lab in the U.S. We are opening a Pharma lab in the next few months in the U.S. and with Lomas, we have a very significant food lab in Toronto, which we will expand further. And that will be a very good and sophisticated aid for our food business, which is quite significant in North America. So yes, we have invested quite a lot in that.
Okay. So you keep on investing in that? Could we expect to see more labs coming?
Well, yes, depending on the needs, yes. It could be very well be that regionally, we have to also invest. As I just explained, already a significant investment and if that can help us fulfill that set of needs then we will invest further.
Next question is from Peter Olofsen from Kepler Cheuvreux.
And few questions left. First, on the Americas. Based on what you said about Brazil. Is it fair to say that when it comes to your -- to the organic gross profit growth, that North America grew a bit faster than Brazil?
I don't think so.
No, no.
So generally, very happy also with the growth in Brazil.
Both likely seeing double growth -- double-digit growth, then?
Yes.
Yes.
Okay. Then on supply conditions. I think in the full year earnings call, you talked about some disruptions and forced measures last year. Have you seen that ongoing? Has it normalized a bit? Or is it still from time to time causing some headaches for you?
It does and it is, of course, also -- let's say it signifies also the healthy state of the economies. We still see shortages in certain areas and undercapacity, so to say. So yes, it's a headache. In some product lines, we would have loved to have more products. But that's a bit the nature of the business. It's not something we complain about. It's not, let's say, a big issue but it is for certain of our market segments and product lines, we still face that.
Okay. But it has not been to such an extent, that it has really limited your ability to grow in certain segments?
No, but we could have -- well, in the end, of course, if you don't have product you can't sell and you don't grow. Nut I mean, it's not something that I want to now highlight here as a major problem. But of course, for individual product lines and market segments, it can be very -- it can be a nuisance, but I think it's okay.
Okay, then that's clear. And then on the holding costs. I noticed they were up a bit from Q1 last year. Should we expect holding costs in the coming quarters to remain at the same level as in Q1? Or could we see some further increases there?
That is difficult to predict, Peter, but what you see when the business is growing, we also strengthen support functions that we have centrally. So there is the relation between the size of the business and what we do centrally. And another thing that you see Piet just refereed to, digitalization. We also invest there at capacity and it leads to some additional cost that we have at the moment.
But as you grow the business over time, we might see some increase in the holding costs over time as well, but -- maybe not major increases but at least some.
Yes.
Yes.
Okay. Then my final question relates to EMEA, where we saw pretty good growth. Were there end markets or countries that stood out? Or was that growth pretty broad-based there?
Yes, it's broad-based. It's many different -- let's say not only regions but also market segments that do well. Pharma stands out as doing very well in the first quarter. But generally, that's not a picture that is different from other years. No, I think that most of Europe has performed very well.
The next question is from Philip Richards from Goldman Sachs.
All my questions have been answered.
Then the next question is from Rajesh Kumar from HSBC Bank.
Hearing from some of your competitors that the suppliers are demanding for better payment terms, in the sense of the payment cycles have been shortened by some of the suppliers. Is that something you're seeing in your end of the market, specialty chemicals, that sort of thing? And the second one is a follow-up on the Alibaba question. Have you ever tried to estimate what proportion of your suppliers, products do you distribute versus what they distribute directly? And how much of the Alibaba thing is sort of replacing their own network versus third-party distributors?
Well, first question is about shortening payment terms. As a trend, we don't see that. So of course, we have discussions always, but we don't see a difference from past years. On the Alibaba question, -- and basically I think you started to ask what percentage of, is direct.
Yes.
I think these are relevant questions and also not easy to answer. I can only refer here to reports that have been done in the past by consulting firms like Boston Consulting. And that always centers -- let's say what is through the distribution channel centers between 15% and 20%. So that's 15% or -- between 15% or 25%. I mean it's -- so that means that 80% is more or less done direct.
Okay. So it's clearly an opportunity for them to probably expand a bit more in the new markets through third-party channels, but still we're doing in-house. So is Alibaba competing with the in-house base or is it third-party distributor? Do you have any sense around -- not yet?
No, not yet. It's too early. And in the end you need to see also what is the actual benefit for the customer to buy through Alibaba or direct or through the third-party channel. I mean, it's as much -- we also need to look at -- we should be only blinded by these names because in the end, we talk about chemicals with a lot of additional, let's say, services that need to be done to be able to deliver chemicals and to handle chemicals. So there's a lot of, let's say, knowledge necessary. It's not a book or appliance that you sell. It requires a lot more care, and so I don't think it's so easy to just throw that on our Alibaba platform or an Amazon platform. But time will tell. I don't know, Rajesh.
[Operator Instructions]
All right.
Oh wait, there's one question coming in. Peter Olofsen from Kepler Cheuvreux.
Nobody.
Mr. Olofsen, you can talk now.
I'm sorry. I had a question on APEC. Could you shed some light on what you're seeing in Australia and New Zealand in terms of demand trends?
Positive but not exuberant. So some growth versus last year but not the same, let's say, not in the same league as we see in Europe or the U.S.
Okay, because you, on a constant-currency basis, the gross profit was up 10% in APEC, and I don't think there was any M&A impact so it's all organic. So then it's fair to assume that Australia and New Zealand, which is about half, is growing single digits in the other part of APEC is growing double digits?
Yes.
That's a fair assumption.
Mr. Chairman, there are no further questions.
Okay. Well, thank you very much. I think the word is for me. I thank everybody and wishing everybody a fantastic day, glorious day. Hopefully on the beach. All the best.
Ladies and gentlemen, this concludes the event call. You may now disconnect your line. Thank you. Have a nice day.