Regulatory News:
Azelis (Brussels:AZE):
Q1 2024 Highlights
- Revenue of EUR 1.1bn, representing year-on-year decrease of
3.8% (decrease of 1.2% on a constant currency basis), with volume
recovery offset by ongoing price discovery in some of our end
markets.
- Gross profit of EUR 260.6m reflects a 47 bp gross margin
expansion to 24.8%, supported by positive mix effects across our
business.
- Adjusted EBITA was EUR 124.3m, implying adjusted EBITA margin
of 11.8%, and conversion margin of 47.7%, reflecting the Group's
continuous focus on maintaining margin levels achieved in recent
years.
- Azelis generated free cash flow of EUR 114.5m, representing a
cash conversion ratio of 91%.
- Leverage ratio was 2.7x at the end of March 2024, compared to
2.3x in the prior year, and 2.5x at the end of December 2023.
- Three acquisitions completed during the quarter, reflecting the
Group's commitment to its expansion strategy. Together with the two
additional transactions announced year to date, the combined annual
revenues of these five companies were over EUR 50m in the prior
year.
- The management remains positive that the Group will return to
organic growth during 2024, although the timing of the recovery
remains uncertain.
- Kåre Schultz and Melanie Maas-Brunner appointed as independent,
non-executive directors to the Azelis Board. Kåre and Melanie
succeed Antonio Trius and Alexandra Brand, respectively.
(in millions of €)
Q1 2024
Q1 2023
Reported Change
Constant Currency
Life Sciences
668.8
669.0
0.0%
2.5%
Industrial Chemicals
382.3
423.8
-9.8%
-7.0%
Revenue
1,051.0
1,092.8
-3.8%
-1.2%
Gross Profit
260.6
265.8
-2.0%
0.7%
Gross Profit Margin
24.8%
24.3%
47 bp
48 bp
Adjusted EBITDA1
134.3
141.7
-5.2%
-1.6%
Adjusted EBITDA Margin
12.8%
13.0%
-19 bp
-6 bp
Adjusted EBITA1
124.3
134.0
-7.2%
-3.6%
Adjusted EBITA Margin
11.8%
12.3%
-43 bp
-31 bp
Conversion Margin1
47.7%
50.4%
-270 bp
-222 bp
Free Cash Flow1
114.5
136.1
-15.9%
FCF Conversion ratio1
91.0%
100.7%
-976 bp
Net Working Capital / Revenue normalized
for acquisitions1
13.9%
14.7%
-83 bp
Leverage Ratio1
2.7
2.3
+ 0.4x
1 Refer to the definitions of Alternative Performance Measures
in the 2023 Integrated Report
Comment from Anna Bertona, CEO: "Our performance during
the first quarter demonstrates our commitment to managing our costs
while the industry recalibrates. The results achieved during the
period reflect the current challenges in our industry, and follow a
strong performance in the comparable period last year.
We will continue to control our costs while the markets remain
volatile. We are executing on various commercial programs and our
overall strategy to ensure that Azelis is strongly positioned for
market recovery and remain positive that growth will return during
the year.
I would like to take this opportunity to welcome Kåre Schultz
and Melanie Maas-Brunner, who will be joining the Azelis Board of
Directors. Kåre will succeed Antonio Trius, who is retiring after
our AGM in June after 10 years as Chair of our Board of Directors.
We are immensely grateful to Antonio for his service, mentorship,
and commitment to Azelis over the last decade, helping to guide the
company from revenue of €815m to €4.2bn in 2023. Melanie will
succeed Alexandra Brand, who is also stepping down after five years
on our Board, and to whom we are thankful for her dedication and
service. Kåre and Melanie each bring a wealth of experience in
corporate governance, specialty chemical and food ingredients
sector knowledge, and industrial stewardship, and we are excited to
have them both on board.”
RESULTS PRESENTATION BY MANAGEMENT
The management of Azelis invites you to a webcast at 09:00 CET
to discuss our Q1 2024 results and current operating trends. Please
click here to view the webcast.
OPERATIONAL REVIEW
Headline results
(in millions of €)
Q1 2024
Q1 2023
F/X Translation
M&A Growth
Contribution
Organic Growth
Total Growth
EMEA
460.1
501.0
-4.3%
4.8%
-8.6%
-8.2%
Americas
371.3
358.4
0.9%
11.4%
-8.6%
3.6%
Asia Pacific
219.6
233.5
-4.5%
4.7%
-6.2%
-6.0%
Group Revenue
1,051.0
1,092.8
-2.7%
6.9%
-8.1%
-3.8%
EMEA
121.1
129.7
-4.1%
6.3%
-8.8%
-6.6%
Americas
92.3
90.9
0.0%
11.7%
-10.2%
1.5%
Asia Pacific
47.2
45.1
-4.1%
5.8%
2.9%
4.6%
Group Gross Profit
260.6
265.8
-2.7%
8.1%
-7.3%
-2.0%
EMEA
65.8
72.5
-4.6%
4.7%
-9.4%
-9.3%
Americas
45.2
48.8
-0.4%
10.7%
-17.6%
-7.4%
Asia Pacific
22.2
21.5
-3.9%
4.9%
2.2%
3.3%
Adjusted EBITA1
124.3
134.0
-3.6%
7.2%
-10.8%
-7.2%
1 Total Adjusted EBITA includes Holding companies
EMEA
(in millions of €)
Q1 2024
Q1 2023
Reported Change
Constant Currency
Revenue
460.1
501.0
-8.2%
-3.8%
Gross Profit
121.1
129.7
-6.6%
-2.5%
Gross Profit Margin
26.3%
25.9%
43 bp
37 bp
Adjusted EBITDA
69.7
75.8
-8.0%
-3.3%
Adjusted EBITDA Margin
15.1%
15.1%
2 bp
8 bp
Adjusted EBITA
65.8
72.5
-9.3%
-4.7%
Adjusted EBITA Margin
14.3%
14.5%
-17 bp
-14 bp
Conversion Margin
54.3%
55.9%
-157 bp
-132 bp
EMEA revenue was EUR 460.1m Q1 2024, a decline of 8.2% compared
to the prior year. The Group’s activities in the region reported an
8.6% organic revenue contraction compared to the strong performance
achieved in the comparable period last year, partly due to the
impact of pricing pressure in some of our end markets as well as
shipment delays related to the ongoing Red Sea tensions, which have
pushed business by a few weeks in some countries. In Life Sciences,
we continue to see stable demand overall, while Industrial
Chemicals continue to be driven by slower volume recovery. M&A
revenue growth contribution of 4.8% was offset by the negative
impact of FX translation during the quarter.
In March, we completed the acquisition of Oktrade, strengthening
our lateral value chain to become a leader in the attractive
personal care market in Turkey.
Gross profit for the period was EUR 121.1m, implying gross
profit margin of 26.3%, an expansion of 43 bps compared to the
prior year, supported by positive mix effects across our businesses
in the region. Adjusted EBITA was EUR 65.8m, representing 14.3%
adjusted EBITA margin and driving a 157 bp contraction in
conversion margin to 54.3%.
Americas
(in millions of €)
Q1 2024
Q1 2023
Reported Change
Constant Currency
Revenue
371.3
358.4
3.6%
2.8%
Gross Profit
92.3
90.9
1.5%
1.4%
Gross Profit Margin
24.9%
25.4%
-53 bp
-32 bp
Adjusted EBITDA
49.1
51.3
-4.3%
-4.0%
Adjusted EBITDA Margin
13.2%
14.3%
-110 bp
-93 bp
Adjusted EBITA
45.2
48.8
-7.4%
-6.9%
Adjusted EBITA Margin
12.2%
13.6%
-145 bp
-127 bp
Conversion Margin
49.0%
53.7%
-468 bp
-443 bp
Revenue in the Americas was EUR 371.3m in Q1 2024, representing
3.6% year-on-year growth. Revenue growth contribution from recent
acquisitions of 11.4%, as well as modest growth contribution from
FX tailwinds, offset the 8.6% organic revenue contraction during
the period. The organic revenue reflects continued stabilization in
the US offset by weakness in Canada and Mexico. Overall, Life
Sciences is seeing modest recovery in demand, whilst volume
recovery in Industrial Chemicals is offset by the impact of price
pressure in the segment.
In February, Azelis completed the acquisition of Localpack,
reinforcing our footprint in Colombia.
Gross profit in the region was EUR 92.3m during the quarter,
with a 53 bp contraction in gross profit margin to 24.9% partly due
to negative mix effect and the impact of pricing pressure as
Industrial Chemicals stabilize. During the period, adjusted EBITA
declined by 7.4% to EUR 45.2m, resulting in a 145 bp contraction in
adjusted EBITA margin to 12.2%, due to dilution from our new
businesses in Latin America and lower impact of cost measures
compared to the prior year, given that we started implementing cost
controls in the region in Q4 2022. Consequently, conversion margin
in the region contracted by 468 bps to 49.0%.
Asia Pacific
(in millions of €)
Q1 2024
Q1 2023
Reported Change
Constant Currency
Revenue
219.6
233.5
-6.0%
-1.5%
Gross Profit
47.2
45.1
4.6%
8.7%
Gross Profit Margin
21.5%
19.3%
216 bp
209 bp
Adjusted EBITDA
24.2
23.2
4.0%
8.0%
Adjusted EBITDA Margin
11.0%
9.9%
106 bp
100 bp
Adjusted EBITA
22.2
21.5
3.3%
7.2%
Adjusted EBITA Margin
10.1%
9.2%
90 bp
85 bp
Conversion Margin
47.0%
47.6%
-58 bp
-70 bp
Revenue in APAC was EUR 219.6m in Q1 2024, a decline of 6.0%
compared to the very strong performance in Q1 2023, driven by
organic revenue contraction of 6.2% and a negative impact from FX
translation of 4.5%, partly mitigated by a 4.7% revenue growth
contribution from recent acquisitions. The organic revenue
contraction in the region follows a strong performance in the
comparable period last year, when the region delivered 47.5%
revenue growth, of which 11.0% was organic.
At the end of January, we completed the acquisition of Agspec, a
leading distributor of crop nutrition, crop protection and
specialty agricultural products in Australia.
Gross profit increased 4.6% to EUR 47.2m during the quarter,
representing a 216 bp margin expansion to 21.5% due to positive mix
effects. Adjusted EBITA grew 3.3% to EUR 22.2m, resulting in a 90
bp adjusted EBITA margin step-up and a decrease in conversion
margin of 58 bps to 47.0% during the period.
Holding companies
Q1 2024
Q1 2023
Reported Change
Constant Currency
Adjusted EBITA (in millions of €)
-8.8
-8.8
0.6%
0.6%
As % of Group Revenues
-0.8%
-0.8%
-4 bp
-1 bp
Operating costs at the Group’s holding companies, which relate
to the Group’s non-operating entities as well as the head office in
Belgium, remained stable at EUR 8.8m despite salary cost inflation
in 2023.
OUTLOOK
Azelis' strategy of driving growth is underpinned by a
consistently strengthening lateral value chain, supported by
continuous investments in innovation capabilities and
digitalization, as well as a commitment to sustainability to create
long-term value.
Whilst global political and economic uncertainty persists, we
remain committed to controlling costs, generating cash and driving
growth. Azelis expects to return to organic growth during 2024,
although the timing of the recovery remains uncertain.
The Group has expanded its operational and geographic footprint
over the last three years, strengthening its commercial and
technical network and developing new competencies within the
specialty chemical & food ingredients distribution. Following
investments in our future growth drivers, the management will
provide an update on our strategy at our annual investor laboratory
event in September.
FINANCIAL REVIEW
(in millions of €)
Q1 2024
Q1 2023
Reported Change
Constant Currency
Life Sciences
668.8
669.0
0.0%
2.5%
Industrial Chemicals
382.3
423.8
-9.8%
-7.0%
Revenue
1,051.0
1,092.8
-3.8%
-1.2%
Gross Profit
260.6
265.8
-2.0%
0.7%
Gross Profit Margin
24.8%
24.3%
47 bp
48 bp
Adjusted EBITDA1
134.3
141.7
-5.2%
-1.6%
Adjusted EBITDA Margin
12.8%
13.0%
-19 bp
-6 bp
Adjusted EBITA1
124.3
134.0
-7.2%
-3.6%
Adjusted EBITA Margin
11.8%
12.3%
-43 bp
-31 bp
Conversion Margin1
47.7%
50.4%
-270 bp
-222 bp
Free Cash Flow1
114.5
136.1
-15.9%
FCF Conversion ratio1
91.0%
100.7%
-976 bp
Net Working Capital / Revenue normalized
for acquisitions1
13.9%
14.7%
-83 bp
Leverage Ratio1
2.7
2.3
+ 0.4x
1 Refer to the definitions of Alternative Performance Measures
in the 2023 Integrated Report
Revenue
Revenue declined by 3.8% to EUR 1.05 bn, driven by organic
revenue decline of 8.1% and a negative impact from FX translation
of 2.7%, mitigated by 6.9% revenue growth contribution from
acquisitions. The organic revenue contraction during the period
reflects a slow recovery in the demand environment and pricing
pressures in certain end markets.
Revenue in Life Sciences was flat compared to the prior year at
EUR 668.8m, with revenue contribution from recent acquisitions
offsetting the organic decline compared to a strong performance in
the prior year. Revenue in Industrial Chemicals declined by 9.8% to
EUR 382.3m, driven by pricing pressure and continuing low
volumes.
Profitability
Gross profit declined by 2.0% to EUR 260.2m, with a gross profit
margin of 24.8%, representing a 47 bp expansion over the prior
year, supported by positive mix effect across our business.
Adjusted EBITA was EUR 124.3m in Q1 2024, driving a 43 bp
contraction in adjusted EBITA margin to 11.8%, largely driven by
lower margin in the Americas during the period.
Cash flow and financing
Net working capital to sales was 13.9% at the end of March 2024
compared to 13.4% at the end of December and 14.7% at the end of
March 2023. The reduction in the Group's working capital
investments compared to the prior year, despite the impact of
acquisitions, reflects the Group's focus on cash generation and
aligning its working capital investments to business activity
levels.
Free cash flow was EUR 114.5m, representing a cash flow
conversion of 91.0% for the period, compared to the cash conversion
ratio of 100.7% in Q1 2023, reflecting lower EBITDA compared to the
prior year and slightly higher investments in working capital
during the quarter, in-line with historical seasonality.
At the end of March 2024, net debt was EUR 1.4bn, and leverage
stood at 2.7x, versus 2.5x at the end of December and 2.3x at the
end of March 2023. At the end of the period, the Group had
liquidity of EUR 771.8m in both cash and unused revolving credit
facility.
FINANCIAL CALENDAR
Date
Event
June 13th, 2024
Annual General Meeting 2024
June 28th, 2024
Ex-dividend date
July 1st, 2024
Dividend record date
July 2nd, 2024
Dividend payment date
August 1st, 2024
Half year 2024 results
October 24th, 2024
Q3 2024 trading update
ALTERNATIVE PERFORMANCE MEASURES
Throughout its financial communication (Annual and Interim
reports, website, press releases, presentations, etc.), Azelis
presents certain financial measures and adjustments that are not in
accordance with IFRS, or any other internationally accepted
accounting principles. Certain of these measures are termed
'alternative performance measure' ("APM's") because they exclude
amounts that are included in, or include amounts that are excluded
from, the most directly comparable measure calculated and presented
in accordance with IFRS, or are calculated using financial measures
that are not calculated in accordance with IFRS. For more
information regarding these APM's, including definitions and
calculation methodology, refer to the section 'Alternative
performance measures' in the Integrated Report 2023.
Notes to the editor
About Azelis:
Azelis is a leading global innovation service provider in the
specialty chemical and food ingredients industry present in 65
countries across the globe with +4,200 employees. Our knowledgeable
teams of industry, market and technical experts are each dedicated
to a specific market within Life Sciences and Industrial Chemicals.
We offer a lateral value chain of complementary products to more
than +63,000 customers, supported by +2,800 principal
relationships, creating a turnover of €4.2 billion (2023). Azelis
Group NV is listed on Euronext Brussels under ticker AZE.
Across our extensive network of more than 70 application
laboratories, our award-winning staff help develop formulations and
provide technical guidance throughout the customers’ product
development process. We combine a global market reach with a local
footprint to offer a reliable, integrated and unique digital
service to local customers and attractive business opportunities to
principals. Top industry-rated by Sustainalytics, Azelis is a
leader in sustainability. We believe in building and nurturing
solid, honest and transparent relationships with our people and
partners.
Impact through ideas. Innovation through formulation.
Important disclaimer:
This announcement may contain statement relevant to Azelis Group
NV (the “Company”) and/or its affiliated companies (collectively
“Azelis” or the “Azelis Group”) which are not historical facts and
are hereby identified as “forward-looking statements”. Such
forward-looking statements, include, without limitation, those
relating to the future business prospects, revenue, working
capital, liquidity, capital needs, interest costs and income, in
each case relating to the Azelis Group.
The forward-looking statements and estimates contained herein
represent the judgement of and are based on the information
available to the Company’s management as of the date of this
announcement. They involve a number of known and unknown risks,
uncertainties and other factors that could cause actual results,
performance or achievements to differ materially from those
expressed or implied by the forward looking statements.
These forward-looking statements should not be considered as
guarantees for future performance of the Azelis Group and should,
therefore, be considered in light of various important factors that
could cause actual results to differ materially from estimates or
projections contained in the forward looking statements. These
include without limitation economic and business cycles, the terms
and conditions of the Azelis’ financing arrangements, foreign
currency rate fluctuations, competition in Azelis’ key markets,
acquisitions or disposals of businesses or assets and trends in
Azelis’ principal industries or economies.
The foregoing list of important factors is not exhaustive. When
considering forward-looking statements, careful consideration
should be given to the foregoing factors and other uncertainties
and events, as well as factors described in any other document
published by the Company with the Belgian Financial Services and
Markets Authority (“FSMA”) or on the Azelis website
(www.azelis.com/investor-relations) from time to time, including
the prospectus related to the admission to trading of the
securities of Azelis Group NV on the regulated market of Euronext
Brussels dated 14 September 2021. No undue reliance should be
placed on such forward-looking statements which are relevant only
as of the date of this announcement. Except as required by the
FSMA, Euronext or otherwise in accordance with applicable law, the
Company undertakes no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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CONTACT INFORMATION Azelis Investor Relations T: +32 3 613 01 27
E: investor-relations@azelis.com