IMCD has its own laboratories to help customers use specialty chemicals in their products. Photo: IMCD
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In short:
IMCD made 28% more profit in the first quarter.
The corona pandemic is disrupting the supply chain, but the demand is also high.
Customers accept price increases of 5 to 15%.
There is little to be seen in the official inflation figures. But if the supply of all kinds of
chemicals for major industries is an important indicator, another wave of
price increases is on the way. Chemical distributor IMCD, an AEX fund since March 2019
(IMCD: € 121.65 -0.33%) reported on Thursday that the prices of its products for the industrial
sector rose 'significantly' in the first quarter.
“You have to think of 5% to 15%,” said CEO Piet van der Slikke. “If you add to that the shortages
of chips (which are now bothering many sectors, ed.), it would not be illogical if we see that reflected in consumer prices. It is amazing that this has not happened so far.”
Splits in the markets
The price increases of chemicals on one hand are caused by disruptions in the supply chain. The corona pandemic is largely to blame for this. The production capacity has been reduced as a result. Transport has also been disrupted. “Freight prices have gone up enormously”, Van der Slikke referred to the scarcity in container shipping.
On the other hand, prices are being pushed up by sharply increased demand. This for example concerns chemicals for plastics and reinforced synthetic fibers, products that e.g. are in great demand in the automotive industry. Car manufacturers were particularly hit last year by the outbreak of the corona virus. Now we see recovery.
Delivery delays
Van der Slikke said he had never experienced such a quarter before, with a disruption
of the business and high demand. Employees had to pull out all the stops to guarantee deliveries. Cancellations did not take place, according to the CEO who has led the Rotterdam company for 26 years. But there were some delays.
IMCD says it was able to pass on the price increases to its customers. “They see what the causes are. There is a high degree of acceptance,” says Van der Slikke. Last week, paint multinational AkzoNobel (AKZA € 100.70 + 0.45%), known from the brands Flexa, Sikkens and Dulux, reported that it can
compensate with higher prices. That surprised analysts at the time.
In the end, IMCD came to a quarterly turnover of € 809.9 million. That was 8% more than in the first three months of last year. Excluding currency effects, revenues even increased by 13%. The weak dollar in particular - 30% of IMCD's turnover comes from the Americas - weighed on growth in rock-hard euros.
Profit increases 28%
The profit increase was even stronger. The gross operating profit (EBITDA), which financial
analysts focus on, increased by 28% to € 90.6 million. Considerably lower operating costs
contributed to this. IMCD now spends much less on travel and representation at
trade fairs to draw attention to the products of chemical companies. Those costs
will soon return, Van der Slikke acknowledged, but he doubts whether they will ever return to the
level they were before the corona crisis. “We have learned a lot," he stated about
his company's capabilities to handle sales digitally.
On the stock exchange, IMCD's stock price fell after the figures. But the stock price was
again increased by 20% after the publication of the annual figures at the end of February. IMCD
is now worth € 6.9 billion on the trading floor, compared to just over € 4 billion at the beginning of last year. “I would certainly not advertise ourselves as people who are doing well. We are not wizards. But over the years we have become a growth company.”