Earnings call transcript: IMCD NV Q4 2024 shows strong results amid challenges

IMCD (AS:IMCD) NV reported robust financial performance for the fourth quarter of 2024, with notable increases in gross profit and operating EBITDA. The company, which specializes in distribution of specialty chemicals and food ingredients and commands a market capitalization of $9.2 billion, saw its stock price rise by 3.03% following the announcement. According to InvestingPro analysis, IMCD maintains a "GOOD" overall financial health score, reflecting positive market reaction to its strategic initiatives and financial outcomes.

Key Takeaways

• IMCD NV achieved a gross profit of €1,202 million for the full year 2024.
• Operating EBITDA increased by 5% on a constant currency basis.
• The company completed 12 acquisitions, enhancing its Life Science and Industrial segments.
• Despite a slight decrease in operating EBITDA margin, the gross profit margin improved to 25.4%.
• The stock price increased by 3.03% after the earnings release.

Company Performance

IMCD NV demonstrated resilience in a challenging market environment, achieving significant growth across its core business segments. The company’s balanced portfolio between Life Science and Industrial segments contributed to its strong performance, with Life Science revenue reaching $2.5 billion and Industrial revenue slightly above $2.2 billion. InvestingPro data reveals impressive metrics, including a robust gross profit margin of 25.57% and a return on equity of 16%, underlining the effectiveness of its digital transformation and supply chain efficiency initiatives. For deeper insights into IMCD’s performance metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Full Year 2024 Gross Profit: €1,202 million
• Operating EBITDA: €531 million, a 5% increase on a constant currency basis
• Gross Profit Margin: 25.4%, an increase from the previous year
• Operating EBITDA Margin: 11.2%, slightly decreased from the previous year
• Cash Earnings Per Share: Slightly decreased

Market Reaction

Following the earnings announcement, IMCD NV’s stock price rose by 3.03%, closing at €146.25 from a previous close of €141.95. Trading at a P/E ratio of 29.68, InvestingPro analysis suggests the stock is slightly overvalued compared to its Fair Value estimate. Despite this, the stock’s movement toward its 52-week high of €169.05 reflects investor confidence in the company’s growth strategies and financial health. InvestingPro identifies IMCD as a stock that generally trades with low price volatility, making it potentially attractive for stability-focused investors.

Outlook & Guidance

Looking ahead, IMCD NV remains optimistic about its growth trajectory. The company plans to continue its digital transformation and focus on operational and sustainability excellence. With a healthy M&A pipeline and ongoing investments in AI and digital tools, IMCD is well-positioned to capitalize on market opportunities despite expected volatility.

Executive Commentary

Valerie Dahl Ron, CEO of IMCD NV, remarked, "2024 was a challenging but successful year for IMCD. We are confident that our investments made, our strong commercial teams, digital and logistic infrastructure, combined with us driving operational excellence and cost control, will deliver further growth and efficiencies."

Risks and Challenges

• Geopolitical tensions may affect customer behavior and market stability.
• Volatile markets with limited visibility beyond six weeks could impact planning.
• The company’s conversion margin decreased to 44.2%, indicating potential operational challenges.
• The global economy’s modest growth pace may limit expansion opportunities.
• China’s economic weakness could affect performance in the APAC region.

Q&A

During the earnings call, analysts focused on the company’s working capital increase and deferred consideration accounting. Questions also addressed regional performance variations and the rollout strategy for digital tools, highlighting areas of investor interest and concern.

Full transcript - IMCD NV (IMCD) Q4 2024:

Conference Operator: Ladies and gentlemen, hello and welcome to the IMCDNV Full Year twenty twenty four Results Conference Call. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on the telephone keypad to register your question. I will now hand you over to your host, Valerie Dahl, Ron, CEO to begin today’s conference.

Thank you.

Valerie Dahl Ron, CEO, IMCD N.V.: Good morning, everyone, and welcome to the IMCD twenty twenty four full year results call. As usual, I’m here with my colleague Hans Kooymans, the CEO, FFO of IMCD, who will lead you through the financial results after my preliminary remarks. And then we’re open to answer your questions. 2024 was a challenging but successful year for IMCD. The global economy continued to grow at a modest pace, whilst geopolitical tensions and economic shifts influenced customer behavior.

Nevertheless, we were able to recover from a rather weak first quarter to return to gross profit and EBITDA growth in all following quarters. During 2024, we recorded a gross profit of EUR $12.00 2,000,000 and operating EBITDA of EUR $531,000,000. On a constant currency basis, this is a 5% EBITDA increase versus the previous year. Our net result was million and our free cash flow million, leading to a cash earnings per share of In 2024, we strengthened our presence across all segments and regions by completing 12 acquisitions and signing an additional two. Of these additions to our portfolio, 11 acquisitions were in Life Science and three in Industrials.

Our M and A pipeline is looking healthy and we have the financial means to execute on targets in a diligent way on our strong balance sheet combined with a reasonable leverage level. Having defined our six strategic growth pillars, which we presented during our Investor Day with many of you in Milan in September, We are happy to report on our execution on them in the past few months. People. We continue to ensure an inclusive and highly professional employee base by investing in our people through excellence in recruitment and in training. Portfolio.

We continue to strengthen our presence across all segments and regions through acquisitions, expansion of existing principles and addition of new principles. Commercial excellence. We added new functionalities and tools to our digital commercial infrastructure such as the sales assistant. This enables our sales force to further increase the number and types of products we sell to customers and thereby we can increase the share of wallet at our customers by selling multiple products from different suppliers. Operational excellence, we reviewed our supply chain and drove efficiencies where possible while focusing on growth.

Digital excellence, we continue to review the utilization of AI wherever possible and beneficial and we invested in existing tools and the development of new tools. And last but not least, sustainability, we have improved versus our 2019 baseline and are working hard to further reduce our emissions intensity. Our latest initiative here is our commitment to SPTI. For more information on what we do, I would refer to our integrated report, which we published this morning. You will find great stories on what we do.

In terms of markets, after a poor start of the year, we covered in all subsequent quarters based on continued strong performance of our teams and strong supplier and customer collaborations. In EMEA, we were able thereby to maintain or to grow volumes despite various negative macroeconomic factors affecting European industries. Inflation and related cost increases could not yet be fully compensated. In The Americas, we delivered a very solid second half of the

Hans Kooymans, CFO, IMCD N.V.: year and could grow volumes whilst carefully managing our cost structure.

Valerie Dahl Ron, CEO, IMCD N.V.: In APAC, we had an overall very positive performance, but were impacted by China’s continued weakness. In terms of our Life Science business versus our Industrial businesses, we continue to maintain a balanced portfolio where revenue from Life Science was $2,500,000,000 and revenue in Industrial was slightly above $2,200,000,000 dollars In our Life Science segment, Personal Care continued to perform very nicely and Food and Nutrition had a very good second half of the year. Pharma continued to be weaker due to destocking taking customers longer than expected, but we started to see a recovery at year end. In our Industrial segments, all areas have started to see better performance. We believe that this was not due to preemptive actions because of the potential tariffs as we did not experience substantial moves of volumes or pre ordering in a material way.

In terms of general market development, we continue to see volatile months across all regions of business lines with little visibility beyond six weeks and movement of volumes from month to month. Inventories are probably also in pharma now at a low to normal level, but the impact of tariffs on consumer behavior, inflation and interest rates is leading to cautious behavior in parts of our customers. While geopolitical and macroeconomic conditions continue to often be challenging, we are confident that our investments made, our strong commercial teams, digital and logistic infrastructure, combined with us driving operational excellence and cost control, will deliver further growth and efficiencies. Our order book and M and A pipeline is healthy, and we are excited about our ongoing work with suppliers and customers. Hans will now give you an update on the numbers.

Hans Kooymans, CFO, IMCD N.V.: Valerie, thank you for the introduction, and good morning, ladies and gentlemen. And as Folari already indicated earlier today, we issued a press release summarizing our IMSD’s financial results for 2024. But at the same time, we also released IMSD’s Integrated 2024 Report, a comprehensive about three fifty page document that as a result of all reporting legislation that we have to comply with looks like a real book. This informative and visually engaging report provides insights into IMCD’s business covering both financial and non financial performance in more detail. In this call, I will take you through a summary of only the financial numbers before we move to Q and A.

I’ll start on Page nine of the presentation where you see ForEx adjusted revenue increase of 8% and a gross profit increase of 9%. And this increase in gross profit was a combination of 1% organic growth and 7% as a result of the first time inclusion of acquisition. The year started with a relatively soft first quarter, if you remember, with negative organic growth. And this was followed by 4% organic growth profit growth in the second quarter and about 6% organic growth in the second half of the year. And the acquisition growth that we report is the balance of the full year impact of acquisitions done in 2023 and more recent acquisitions signed and closed in 2024.

And for an overview of the 2024 acquisition, I would like to refer to the Pages five and six of this presentation. Then gross profit in percentage of revenue had slightly increased to 25.4% in 2024. The segments EMEA and Americas both report an increase in gross profit margin. And in Asia Pacific, we report a decrease and this decrease is mainly driven by lower than IMCD’s average gross profit margin of the acquisitions that we completed in 2023 and 2024. Then for your convenience, we included the line on this slide, the operating EBITDA in a people organization like IMCD with an asset light business model with outsourced logistics and a low fixed asset base.

The development of EBITA shown in the next line seems more relevant to us. And when looking at operating EBITA, you can see it increased 5% on a constant currency basis to $531,000,000 This increase was a combination of an organic decline of 3% and a positive 8% impact as a result of the first time inclusion of acquisitions. On EBITDA, we saw a similar trend as mentioned before when talking about gross profit. Negative growth in the first half of the year followed by 5% organic EBITDA growth in the second half. Operating EBITDA in percentage of revenue slightly decreased to 11.2%.

Same for the conversion margin, which decreased to 44.2% in 2024. The full year decrease in conversion margin, this is mainly the result of gross profit growth that could not fully compensate inflation driven on cost growth. At the 2024, on cost growth was just below 5%. Compared to 2023, the number of full time employees, if you would normalize for the impact of acquisitions, decreased by 2%. It’s further worthwhile mentioning that in the second half of twenty twenty four, the conversion margin was a bit better than in the same period of 2023.

On the next slide, that’s Slide 10, a few key figures from the P and Ls per operating segment. And on the slide, the main focus is on gross profit margin and the EBITDA development. And as you can see, it includes a split in organic acquisition growth and currency impacts. In the integrated report, there is much more segment information that you can find in there. Perhaps first of all, the overall currency impact.

We had a bit of headwind in 2024, resulting in a minus one on gross profit and a minus two on EBITDA. And although it sounds like a low percentage, in absolute numbers, we still lost about $10,000,000 of EBITDA

: as

Hans Kooymans, CFO, IMCD N.V.: a result of negative translation differences due to currency fluctuations. Then EMEA column, gross profit of EMEA in the first column increased 5% ForEx adjusted, which is a combination of 2% organic and 3% acquisition growth. The gross profit increase could not fully compensate for inflation driven on cost growth in this segment. And as a consequence, there was a little negative organic EBITDA growth and a lower EBITDA and conversion margin in the EMEA region. In The Americas, as you will remember, we reported a weak start of the year with negative organic growth profit and EBITDA growth in the first six months of twenty twenty four.

The second half of the year was strong in The Americas. Organic EBITDA increased close to 15% in this period compared to the second half of twenty twenty three. Strict cost management combined with high single digit organic growth profit growth were the main drivers of this double digit organic EBITDA growth. We were happy with the strong recovery in the second half of the year. Unfortunately, the second half of the year was too short to fully compensate for the soft first half.

Then Asia Pacific, we report another growth year whereby we realized 16% ForEx adjusted gross profit growth and 14% EBITDA growth. And as you can see, most of this growth was the result of acquisitions done. Operating EBITDA increased to $170,000,000 whereby EBITDA margin and conversion margin both slightly decreased. And then in the last column, you will find in the holding companies all non operating companies, including the ad office in Rotterdam and our regional support offices in Singapore and The U. S.

Holding cost as a percentage of total revenue slightly increased from 0.7% in 2023 percent to 0.8% of revenue in 2024. Then moving to the next page. And on this page, you will find a summary of all the P and L lines from EBITDA to the net results for the period. Some general remarks, whereby I will summarize net finance costs and income tax expenses on separate slides. Amortization of intangible assets are non cash cost items related to the amortization of supplier relations, distribution rights and other intangibles.

The increase that you see is mainly the result of the acquisitions done. Then the $11,000,000 of what I would call non recurring expenses and this cost includes costs related to successful and unsuccessful acquisitions and it further includes severance costs related to one off adjustments of the organization. And if you look at the increase compared to 2023, this increase is mainly the result of a one off income in 2023. As you might remember last year in 2023, we reported a one off income of SEK 5,000,000 on this line as a result of the sale of a warehouse building in The U. S.

Then on Slide 12, a breakdown of the 2024 net finance costs adding up to AUD 45,000,000, which is about AUD 20,000,000 more than previous year. This increase is a combination of million higher interest costs related to our financing structure. Then there is a positive change in deferred considerations of about million, I’ll come back on that later and a million more negative currency exchange results. The higher interest cost on the financing structure is mainly driven by on the one hand on average higher debt levels combined with slightly increased interest rates. When looking at our debt position, it’s fair to say that our future exposure to interest rate fluctuations further reduced during 2024.

The majority of our actual debt position consists of rated corporate bond loans and the total amount of outstanding bonds is EUR 1,600,000,000.0 with an average fixed coupon of about 3.5%. Then changes in deferred considerations. In the call last year, we spent quite some time on explaining the mechanics. And as you might remember, a part of our net debt that we report refers to deferred purchase price considerations of acquisitions done and the related potential earn out obligations. At the end of twenty twenty four, we reported deferred consideration of SEK99 million as a net debt item.

And this reported deferred consideration is based on estimated conditional payments to former owners. Changes in these estimates lead to adjustments and these adjustments could end up either direct in equity or flow through the interest line of the P and L. This year, we had similar to last year a combination of pluses and minuses based on the changes in these estimates with an unbalanced positive impact, the impact that you see here on the P and L. In 2024, this positive impact mainly relates to Sunrise and Macassetia leading to a noncash income. So if I would be honest, when making your financial model, I could imagine to adjust for these noncash IFRS related adjustments.

Then on the next page, a summary of our tax expenses. On the regular income tax expenses, we report a decrease of CHF5 million. And the tax credits related to amortization, that is a non cash tax component increased in line with the amortization that you saw earlier. And then as guidance for our tax cost, we always indicated to expect a blended tax rate in the range of 24% to 28% of result before tax. And then this result before tax, we always calculate that as EBITDA minus finance and non recurring cost.

On the bottom of this page, you could read that the IMCD’s blended regular tax rate in 2024 was 24.2% and this is slightly below the 2023 level and still at the low end of our guidance. In the integrated report, there is a lot more details about the way we calculate tax, our tax position or tax policy, and I would like to refer to this report if you want to do a deep dive on taxes. Then on the next page, the calculation of cash earnings per share and our dividend proposal. And as you can see on this slide, we report cash earnings per share in 2024. And at the AGM in April, we will propose a dividend of EUR 2.15 in cash per share, which means a small 4% decrease compared to last year.

The company has a dividend policy whereby with an annual target dividend in the range of 25% to 35% of adjusted net income. And this dividend proposal leads to a payout ratio of 35%, which is like last year at the top of the range that we set ourselves in this policy. Then a few words on IMCD’s balance sheet on the next slide. Property, plant and equipment slightly increased and is as a result of the asset light business model still relatively low compared to the size of our business. The right of use assets is a result of the application of IFRS 16.

So this $103,000,000 reflects capitalized operational leases and the related lease liabilities of about $109,000,000 is included in our net debt position that you will see later. The increase in intangible assets and related to deferred tax liabilities are mainly the result of the acquisitions down. Then working capital, I will come back on that in a minute. And then you see a solid equity position of close to $2,200,000,000 covering 63% of capital employed. And the increase in 2024 is amongst others the result of the you can imagine the addition of the net profit for year of $278,000,000 Then there is positive other comprehensive income of $43,000,000 minus, of course, for the dividend payment in cash of 128,000,000 and further it includes the net proceeds from the issuance of the new share capital, which contributed close to CHF 300,000,000.

For working capital and net debt, let’s go to the summary on the next page. On page I think it’s page 16, you will find the summary of the absolute amount of the various working capital components and these absolute amounts translated in days of revenue. The absolute amount of working capital increased with $143,000,000 and this increase includes $41,000,000 additional working capital related to twenty twenty four acquisitions. Then the majority of the remaining increase of about SEK 100,000,000 is a result of higher level of business activities in 2024 compared to the last year. And this increase of business activities combined with additional stock to cater for a strong order book for the start of 2024 was one of the main reasons of the increase that you see.

When looking at the days in the bottom of this slide, the stock days increase is the result what I said earlier of these increased business activities combined with that strong order book. And the other factor that we always see and we spoke about it in previous calls is that we often see at quarter end that customers push their orders or part of their open orders into the next month or next quarter and that is also something that happens at year end. And then of course IMC is I’m going to call it this type but still needs to take care of the stock position of these orders. Then the receivables, when we report this, we always report this as a combination of trade and other receivables. If you break it into the trade receivable days end of twenty twenty four were 55 days compared to the fifty four end of last year.

So the increase in receivable days that we report is mainly driven by other receivables. Other receivables include positions like prepaid taxes, prepaid social security charges, where we increased in total a bit more than two days. I think it makes sense in future reporting that we will split our trade receivables to give you a bit of a better insight in the actual development of our debtor days. On page 17, a summary of our net debt position. At the end of twenty twenty four, we report billion of net debt.

And as mentioned before, this net debt position includes the billion of corporate bonds. And one of the bonds in there, a SEK300 million bond is due for repayment in Q1 this year and this due date is one of the reasons of the substantial cash position that you also see on the balance sheet. Further net debt includes SEK109 million of the operational lease liabilities, IFRS 61 and about SEK98 million of deferred consideration. Then on the same page, an overview of the majority profile of our debt structure as per the end of twenty twenty four. With the new bolt and the extended term of the revolver, we created a nice maturity profile in our debt portfolio.

The $600,000,000 revolver facility bar that you see on the right hand side reflects the maximum amount we can use as per today. Then reported leverage at at the end of twenty twenty four was 2.2 times EBITDA and this leverage ratio or the leverage ratio based on the definitions used in the IMC loan documentation was slightly lower with 2.1 times EBITDA and that is well below the required maximum set in the loan documentation. Then I would like to finish the financial summary with the cash flow overview on Page 18. As you can see, the absolute amount of free cash flow was $450,000,000 which results in a cash conversion ratio of 83%. The change in conversion ratio versus last year is a combination of higher operating EBITDA combined with higher working capital investment compared to last year.

And then on the last slide of the presentation, you will find the outlook in which we, amongst others, indicate that we remain confident that we will continue to contribute value to our stakeholders and to sustain our growth trajectory. So far, our summary of the figures and Valerie and myself are happy to answer your questions. So let’s go back to Ben, the operator. Ben, the floor is yours.

Conference Operator: Thank you. The first question comes from the line of Sushasini Paranasi calling from Goldman Sachs. Please go ahead.

Sushasini Paranasi, Analyst, Goldman Sachs: Hi, good morning. Thank you for taking my questions. I have a few please. Maybe can you discuss for a start how Q4 trends have evolved? It looks like organic growth may be slowed in this quarter compared to previous quarters.

Did you see any movement in orders between December and January? And also second question is on the order book. I think in the press release you’ve pointed to a strong order book for the start of 2025. Does that mean maybe the trends in 1Q are looking a little bit better than the 4Q levels? And maybe just the last one.

Now that you’ve seen three consecutive quarters of positive organic GP growth, do you feel like you’ve now reached an inflection point on growth? Or is there still some uncertainty on demand from customers? Thank you.

Valerie Dahl Ron, CEO, IMCD N.V.: I would suggest that Hans takes the first and I take the other two questions.

Hans Kooymans, CFO, IMCD N.V.: Yes. And Sureshini, thanks for the question. The first one related to the strong order book at year end and the trend that we saw. I think when we looked at the second half of the year, we saw basically a continuation, a bit of a further improvement compared to the second quarter. So we saw organic growth in the second quarter and this further improved in the second half of the year in general across all segments.

I think it’s fair to say that The Americas have shown the strongest performance and that EMEA more tougher business environment. And the other thing that we see and that’s something we explained earlier is that we still live in an environment that people have little visibility not only on their orders, but also that also creates lower visibility on our side. And we often see at the end of a month or even more at the end of a quarter that if there is a possibility for customers to push their order into the next month that they do. And that is also something that happened this year that creates that part of creating that strong order book. And I think Valerie you could say something about the more general market dynamics there.

Valerie Dahl Ron, CEO, IMCD N.V.: Yes. And I think you asked about the inflection point there also. I mean, in general, after three quarters continuous growth and strong January and not such a bad looking. February, I think one could say normal under normal circumstances, this is looking like the trend is reversing. However, there is geopolitically at the moment so much happening in terms of tariffs and changes on a daily basis that a lot of customers at the moment are quite confused in terms of the orders.

And we see also at month end still a lot of going into the next month, which makes it very difficult for us to predict and which is why we stay with our six weeks visibility. And even there, something might go from one quarter to another. So I wouldn’t talk about inflection point until we see that things are stabilizing in terms of geopolitics.

Sushasini Paranasi, Analyst, Goldman Sachs: Thank you very much. And just a quick follow-up, given you mentioned tariffs, is that something that’s going to affect the ability to source products for you? Or is it is your sourcing mostly local to local?

Valerie Dahl Ron, CEO, IMCD N.V.: We have a lot of local to local. Clearly, we are reviewing all our the situation where the plans of our principles are. And in a lot of cases, they have plans in multiple geographies, which really helps. We also have seen a view no major movement so far. I mean, I made that statement in the document or in the what I talked about in the call.

So for the moment, history has shown that IMCD has been pretty resilient. Currently no major moves happening and our principals are preparing them as well.

: Thank you

Sushasini Paranasi, Analyst, Goldman Sachs: very much.

Conference Operator: The next question comes from the line of Alex Stewart calling from Barclays (LON:BARC). Please go ahead.

Dominik Edridge, Analyst, Dutch Bank: Hello, good morning. Thank you

Alex Stewart, Analyst, Barclays: for taking my questions and the presentation so far. I wonder for the avoidance of doubt whether you could clarify what the group organic gross profit growth and group organic EBITA growth was in the fourth quarter specifically. And related to that, would you consider on a consistent basis providing the market with quarterly growth figures because you round the full year and nine month numbers. And so it’s very difficult

Hans Kooymans, CFO, IMCD N.V.: question. I think it’s a bit similar as the discussion that we had last year and then we because we prefer always not to talk too much about the quarter because before you know you start discussing what did this quarter include Eastern and last year not and so on and so forth. And therefore, we always try to talk about what is the trend in the year. And at the same time, I understand your request and that is why we started including always the year to date organic growth figures per segment, per region and so on and so forth, allowing people to if they plug it in the spreadsheet that it automatically calculates themselves. If it would be helpful for you to put it in an Onyx or so, we can do.

But we prefer as a company to always talk a bit longer term and also talk because especially when you talk about segments, kind of what I would call minor details could have an impact on a percentage or a rounding difference and before people translate that into trends. But if it would be helpful for you, we can give you a bit of additional information from this year onwards.

Dominik Edridge, Analyst, Dutch Bank: Would you mind giving us

Alex Stewart, Analyst, Barclays: the figures for the fourth quarter of this year?

Hans Kooymans, CFO, IMCD N.V.: On the group level, yes, we had organic top line growth. And I need to do that out of the top of my head, around about 2%, three %. On EBITDA, I think it was similar as in the third quarter, so that’s around about 5% organic. And on margin, I think also close to slightly below perhaps the third quarter, so I think 5%, six %. But again, the fact that I don’t know it out of the top of my head already indicates this is not something that we look at it on a monthly basis.

But for us the underlying trend is more important than to look at exceptions or slight small changes because of rounding differences and number of working days.

Alex Stewart, Analyst, Barclays: Perfect. Thank you very much Hans.

Conference Operator: The next question comes from the line of Annalise Vermelen calling from Morgan Stanley (NYSE:MS). Please go ahead.

Annalise Vermelen, Analyst, Morgan Stanley: Hi, good morning Hans Vermelen Vermelen. Three questions please. So just firstly, could you talk a little bit about pricing and the pricing dynamics, particularly into year end and year to date and whether some of that volatility that we saw through 2024 has started to abate? Secondly, just on China, the data points continue to be quite mixed coming out of China. So I’m curious as to what you’re seeing.

I recall personal care was had been quite weak in China last year. So any improvement there or anything else you’re seeing on the ground? And lastly, just on M and A, there’s

Valerie Dahl Ron, CEO, IMCD N.V.: been

Annalise Vermelen, Analyst, Morgan Stanley: a clearly a focus on food and pharma deals in 2024. Do you expect that to continue in 2025 based on your pipeline pipeline? Or are you seeing interesting opportunities on the industrial side as well? Thank you.

Valerie Dahl Ron, CEO, IMCD N.V.: So I think on this one, I will take all questions, but Hans, please add if I forget something. So pricing, I mean, I think we talked in the calls before that pricing did have an effect on food products. And during the year, we saw several business groups having lower pricing. However, I would say it has stabilized. And at this point in time, we don’t see that there is a major pressure.

Some prices are being increased. Some, but few are decreased depending on some competitiveness in some specific markets. But if you look at product mix and regions and countries across the board, I would say nothing that is material overall in a major way. China mixed data points, I think that’s a good statement. There is not a lot of positivity, I think, in the Chinese market across.

There are, again, segments in which the performance is starting to improve. But the consumer sentiment, I think, is still relatively negative. I think all data also shows that the savings, they are still saving money, clearly that they are not spending it on consumables. So China for the moment, I would still say that we consider it weak. And on M and A, we have always said we are interested in industrials and life science and wherever there are interesting opportunities, we will go for them.

And there are some interesting ones also industrial. So whilst we did much more in life science last year, that was also a question of the right opportunity coming at the right time. And therefore, that is not a change of strategy. We will continue to build both segments. Anything I forgot?

Annalise Vermelen, Analyst, Morgan Stanley: No. You very much, Valerie.

Conference Operator: The next question comes from the line of Chetan Udeshi calling from JPMorgan. Please go ahead.

Chetan Udeshi, Analyst, JPMorgan: Yes. Hi. Thanks for taking my questions. I was just curious, if I look at your working capital and you pointed that out as well in your release, it’s up 19% at the end of twenty twenty four versus end of twenty twenty three. I think if I look at second half versus first half, again, it’s a pretty good jump.

I’m just curious, you’re talking about working capital, which is up double digit at the year end versus prior year. How should we read that into your sort of your confidence in your Q1 numbers? I mean, can we extrapolate that as double digit growth organically for your top line and bottom line? Or is that a bit too far in terms of trends at this point that you see? The second question was, you raised SEK 300,000,000 equity in December and maybe I don’t know if this is a shift in terms of strategy with Valerie on, but historically, Hans, whenever you’ve raised equity, you’ve typically announced a deal at the same time to and you use equity as a way to fund those deals.

And I remember Cygnet acquisition, which has been a fantastic one. I’m just curious, what was the reason to that equity raise? Because you didn’t feel like the balance sheet was anything that you would typically be worried about given your business profile? Thank you.

Hans Kooymans, CFO, IMCD N.V.: Tidjie, I’ll take this one, Fauci. On the working capital, I would love to say that a double digit increase in working capital because of double digit sales growth. And that I would if I could sign somewhere for that as a guarantee for the future, I would certainly do. But what you see there is always the correlation between top line growth you see on working capital numbers if you keep your days more or less equal. And if you look at the drivers of the increase, for sure it’s partly M and A related.

There’s more than 40,000,000 in my working capital position that is M and A. Currencies play a role. If currencies move that has an impact from working capital amounts. My debt per days, so we’re normalizing for the other receivables are pretty stable at around about 50 something number. And stock is the one that where we see most of the fluctuations and that stock position is partly financed with creditors.

As you have seen in the deck that we also ended the year with slightly higher creditor days because of the additional stock that we had to buy. And the stock is the debtors are the big moving parts related to the top line. And I hope to report a healthy increase on the absolute numbers and keep the days more or less similar, because a healthy increase would indicate a healthy top line growth. Then on the capital raise, when looking at the M and A pipeline and that is also what we mentioned after the capital raise, then we knew that based on all the potential transactions in the pipeline that at a certain moment we would hit the what I would call the leverage threshold that we set ourselves. And the reason of issuing the share capital just before year end was mainly related to the fact that we felt in a very uncertain market, there’s a lot of volatility.

It’s better to take make use of the opportunity at that moment in time than to bet on a future opportunity at the moment that you are pushed to go to the market. In hindsight, I’m happy that we did it at the moment that we did it. I can also confirm that we have a pipeline that by this capital call was really needed. And let’s wait for the announcements to come, I would say. And I’m happy then to explain why something took a bit longer than expected.

Chetan Udeshi, Analyst, JPMorgan: That’s well noted. Thank you very much.

Conference Operator: The next question comes from the line of Erik Wilmer calling from Tempen. Please go ahead.

Erik Wilmer, Analyst, Tempen: Hi, good morning.

Valerie Dahl Ron, CEO, IMCD N.V.0: Thanks for taking my questions. First question is on your Personal Care business, which I believe is around 10% of sales. I think over the weekend, the number of European Personal Care brand owners highlighted to expect slower growth this year combined with margin pressure fueled by inflation triggered by U. S. Tariffs and resulting in softer customer confidence.

I was wondering to what extent this is visible in your current Personal Care order book. And I was also wondering whether the cut in dividend, it seems to reflect the payout ratio that’s slightly below 35%. Should we read from this, this is also a way to basically keep your flexibility regarding the balance sheet. I realize it’s only marginal, but it’s still notable. And finally, a question on EMEA.

I think EBITDA was flat year on year despite M and A and arguably easier comps. I was wondering what the main mix effects were the drivers there? Thanks.

Hans Kooymans, CFO, IMCD N.V.: So first of the dividend and then you take the other. Perfect. Eric, if you look at the absolute amount of dividend that we pay out is more or less similar as last year and the decrease is mainly driven by the fact that we issued about 3% of share capital.

: And I think another important

Conference Operator: thing is that at the start of our listing, we

Hans Kooymans, CFO, IMCD N.V.: set ourselves a don’t want to normalize for all kind of one off type of things, don’t want to normalize for all kinds of one off type of things there. And basically, we would like to be predictable in what we do and stick to the dividend policy that we communicated. And in that dividend policy, there is opportunities to invest in growth, either M and A or organic and then we could review the dividend policy that we are far.

Valerie Dahl Ron, CEO, IMCD N.V.: At the same time, one cannot always read into that our results because of course we also have movements in terms of principles, additions, extension, geographic, maybe different products that we launch. So I think we continue to be very confident about our Personal Care segment because we still have way to grow in many regions. And in terms of margin pressure, I don’t think we see really that there are major moves at this point in time, but still to be seen also. I mean, the year is still relatively fresh. In terms of EMEA and the drivers for the growth or not for the flatness, I mean, EMEA is growing at the moment in the chemical market definitely through a lot of change and particularly Germany and France are affected markets.

I think if we look at the overall picture, I think we have shown quite some resilience based on again the product portfolio product mix, compensating in many markets. So it is a very mixed picture in terms of EMEA with some markets having very, very nice growth numbers and some that are down. And investment packages and those kind of things definitely will be welcomed I think for everybody. Does that answer your question?

Valerie Dahl Ron, CEO, IMCD N.V.0: Yes, that’s very clear. Thanks a lot Valerie and

Conference Operator: The next question comes from the line of Karl Rainsford calling from Berenberg. Please go ahead.

: Good morning, both and so on the call and thanks for taking the questions. Just three from me, please. The first is high level around really trends in life science and industrials and on the latter in particular. PMI has started to report above 50, so obviously a bit more confidence there. So I’m just wondering if that’s a likely driver through 2025 if confidence does remain a bit higher Or does that not necessarily translate into sort of sales of the consumer market in your view?

And the second is just a follow-up on Annalise’s pricing question. Would you like to call out I know you kind of alluded to this, but call out big moves by a market and really it’s case I’m thinking about in particular because you were calling that out as a negative, I think in the last quarter. So it should be good to know if that’s stabilizing or not. And the last question on interest costs, I guess sort of double question really, sorry. But on deferred consideration, Hans, are you’re able to guide how we should model that for 2025, please?

Because I know in the past you said to neutralize it, but it’s been pretty consistent over the last couple of years. So just some further clarification going forward would be useful. And the other side is just the bond maturing in 2025. And you may have mentioned this, sorry if we missed it, but would you be able to give us any color on the refinancing of that one, please? Thank you.

Valerie Dahl Ron, CEO, IMCD N.V.: Do you want to take the last two and then ask us,

Hans Kooymans, CFO, IMCD N.V.: do you want to start with you? That’s good. I’ll start with the last one, the bond, the refinancing. We issued a bond last year in September and that is basically part of the proceeds will be used to repay the bond that is due in this quarter. And that is one of the reasons that we have quite some cash on the balance sheet at year end.

Then on the deferred considerations, what you might have seen in my balance sheet is that over the years the amount of deferred considerations came down. We have now what is it about 99,000,000,000 still left, mainly linked to acquisitions where we will buy the minority share in this year. And I doubt for modeling purposes if you should include any major changes as release or additional cost related to deferred consideration for this year. So the two years that we have seen behind us. And perhaps to explain why these two years were so extreme.

On both sides, you might have seen last year that we had about million top up on the signet payouts that was routed through the equity position based on IFRS. You might have seen a couple of releases also last year. But what we need to do with these deferred considerations under IFRS at the moment that we acquire these businesses, then we pay for the profitability at that moment in time. So if we buy 70% of the business, we pay 70% on the basis of that year’s profitability. And then owners present a hockey stick to us how their profit will grow in the future.

And we don’t want to pay for that hockey stick. But we make them an arrangement that if they really make that hockey stick, we will pay for that. But under IFRS then the funny thing happens that I need to accrue for the payout on the basis of that hockey stick. And if then the reality is different than what they predict at the moment they sell the majority share to us, then I need to adjust the deferred consideration and that either flows through the P and L, what you see this year in last year or through equity if it is a last moment adjustment. So it has nothing to do with the performance of the business, maybe by the profitability that was there at that moment in time.

It is more about what is told to us about future growth and how does that reflect in my IFRS reporting. Did that answer your question? It was a bit of a long answer to your question, Carl. Sorry for that.

: It’s a useful reminder, Hans. So thank you.

Valerie Dahl Ron, CEO, IMCD N.V.: Coming back on to the question that you asked on trends and life science and industrials. I mean, I think if you’re looking at industrials, I’m super proud of the team that in a market that was definitely not a market of tailwinds. They have done extremely well in the last year and recovering in the second half of the year particularly in terms of volumes, in terms of ensuring that the pricing was the optimal one to keep the volumes and at the same time also have the within the mix of pretty stable margin. So I would say that gives me great confidence in terms of the team that they will deal with also what is coming. Now I don’t think we are talking about tailwinds right now in the Industrial segment.

If we are looking at the fact that we will see tariffs in The U. S, we will see probably rising interest costs and with that less home moves, which basically lead in The U. S. At least to a lot of investment in people painting their houses and so on. At the same time, we have dealt with that in the past and we’re dealing with it and we have so many different product groups within also our industrial side from lubricants to the coating to construction textiles, lots of different ones that we see that we can compensate with this agile model for a lot of things that in some areas might be affected and might go down.

Versus life science, I would also say in life science, personal care China, for example, we mentioned that in the past, it’s a big business and that wasn’t very good last year. And nevertheless, in the end we recovered. So I would say also there the trend is a positive one in terms of our agility to react to things that are happening in the market. And the markets in parts are positive and in other parts they are there is clouds on the horizon, let’s say.

: Okay. Thanks, Valerie. Maybe one just follow-up, if you don’t mind. Sorry, just really quick one. On Caes in terms of the end market there specifically, sort of non resi versus resi, is that something we should consider?

Is that a split you’re able to give some color on if so?

Valerie Dahl Ron, CEO, IMCD N.V.: Could you explain that to me? I don’t know.

: Sorry, so in terms of sort of people moving houses, painting, etcetera, sort of a residential side, but is there exposure to the non residential side as well?

Valerie Dahl Ron, CEO, IMCD N.V.: Yes, exactly. We have absolutely. We absolutely have also a big exposure. And that’s why I say we are trying to then compensate in another area with what we are what might be affected in one. And it’s still to be seen because we don’t know how long the tariffs will really last.

: Perfect. No, that’s useful, Benoit. Thank you very much. Thanks, Ben.

Conference Operator: The next question comes from the line of Stefano calling from ABN AMRO (AS:ABNd). Please go ahead.

Valerie Dahl Ron, CEO, IMCD N.V.1: Yes. Good morning, everybody. Thank you for taking my questions. So I have three questions left. One is actually based upon the previous answer, maybe a little bit more specifics into The Americas.

Obviously, very strong development over H2, but also Q4 on the operating EBITDA despite slowing organic growth on the top line and gross profit. So perhaps a little bit more detail what is going on there in terms of operation, but also the mix. Then the second on APAC and M and A, can we expect M and A in the region to be strong as we have seen over the past few years? And I’m asking this obviously because I if I’m not mistaken, operating EBITDA on APAC is for the first time last year higher than The Americas. So obviously, if growth continues to be relatively elevated, this will continue to be increasingly a bigger part of the mix in the growth.

So that will be interesting. And the last one for Hans, and this is relating to a question that Alex asked before, and I apologize if this is an annoying question. But just adding one decimal number to the details that you say help us a long way for us poor analysts. Specifically, for example, if you mentioned organic growth minus 1%, if it’s minus 1.4% or minus that helps us a long way? Thank you.

Hans Kooymans, CFO, IMCD N.V.: Stefano, the question is well noted. I’m happy that Posca, our new Head of Investor Relations joined us recently. She also convinced me that it would make sense. So that I will do my best there. Thank you, Saskia.

Then on your M and A question, EMEA sorry, APAC M and A, you’re right, EBITDA is slightly higher than The Americas at the moment. And I think that is good for internal competition more than anything else. So we need to push the Americans that they should overtake again the Asia and Pacific region. If I look at the M and A pipeline, we have active projects in both regions. But for me, it’s important that they also both grow organically.

The competition is on.

Valerie Dahl Ron, CEO, IMCD N.V.: Yes. And we had a very nice acquisition with Plumars in Americas, I would say. I mean, I think that was a really important one in Chile for foods. Americas, I mean in terms of performance of Americas overall we can say that basically in all markets we did better. And in terms of investment in digital, I think it is a market where they have gone a very long way on utilizing the tools in a very beneficial way.

So I think does that answer your question?

Valerie Dahl Ron, CEO, IMCD N.V.1: Yes. Maybe a little bit more into that because I’m surprised just by the discrepancy of the growth in EBITDA being so big compared to what we have seen on the organic part at least on the top line in gross profit. So maybe that’s me, but I’m just wondering about that.

Hans Kooymans, CFO, IMCD N.V.: Perhaps it’s also a bit, I think, more fundamental in that market. If you look back at the situation around COVID also in those years, the swings in The Americas were much more intense than in other parts of the world. I’m not sure if there’s this partly business mix. I think North America is still a bit more industrial oriented first than Life Science. So there we have quite some white spots to fill still.

I think the region did quite a good job. They gained some new supplier relationships that contributed to the growth that is more fundamental.

Valerie Dahl Ron, CEO, IMCD N.V.: Cost efficiency was great. Yes.

Hans Kooymans, CFO, IMCD N.V.: Cost efficiency was great. I think we have a good team in this region. That also helps. Not that we have bad teams in other parts of the world, but the combination of all these things coming together, I think we benefited also from if you add new countries to your structure and you are in a position to then transfer existing suppliers in those new countries. And that also helps to grow organically a bit quicker.

All these type of factors help to grow quicker than perhaps what you would have expected.

Valerie Dahl Ron, CEO, IMCD N.V.: And maybe that’s why they did

Chetan Udeshi, Analyst, JPMorgan: a little bit less M and A.

Hans Kooymans, CFO, IMCD N.V.: Yes. Well, they did quite a bit in the past. Exactly.

Valerie Dahl Ron, CEO, IMCD N.V.: So does this answer you now?

Valerie Dahl Ron, CEO, IMCD N.V.1: Yes. Thank you.

Conference Operator: The next question comes from Luc Van Beek calling from Degroof Petercam. Please go ahead.

Valerie Dahl Ron, CEO, IMCD N.V.2: Yes. Good morning. Thank you for taking my questions. I have one left. Can you comment on customer buying patterns?

In the past, we heard about customers buying small frequent orders. Is it now normalizing or are they still quite nervous? Can you comment on that?

Valerie Dahl Ron, CEO, IMCD N.V.: I wouldn’t say that we are back to the levels that we have seen pre change of order patterns and unclarity in terms of the markets. So whilst we are seeing some bigger orders now in industrials, I would say it is still not at the old levels.

Valerie Dahl Ron, CEO, IMCD N.V.2: Thank you.

Conference Operator: The next question comes from the line of Dominik Edridge calling from Dutch Bank. Please go ahead.

Dominik Edridge, Analyst, Dutch Bank: Yes. Hi there. Just two quick questions for myself. Firstly, on working capital, just to clarify, Hans, in terms of the inventories, that’s very much just down to the level of orders. There’s no changes there.

I suppose the question would be is, has anything changed in terms of customers maybe looking at payment terms or alternatively any of the M and A that you’ve done has been a little bit more stock intensive as it were, just to clarify on that. And then the second question was just on staff. I see the turnover levels have gone up slightly. I think they’re 19% last year versus 18%. Can you just maybe discuss the labor market pressures if you’re still seeing any out there?

And then a more general question of what sort of cost inflation do you see on your own OpEx for 2025? Thank you very much.

Hans Kooymans, CFO, IMCD N.V.: Doreen, on the stock side, For sure, M and A plays a bit of a role, especially in the first one or two years. If we acquire a business, we bring them on our IT platforms. And then if we create more visibility and better process, we can typically bring stock levels down after an acquisition that we did. The increase that you have seen at year end is mainly order related. So orders pushed from December into January combined with a very strong order book already for the January.

Dominik Edridge, Analyst, Dutch Bank: Thank you.

Valerie Dahl Ron, CEO, IMCD N.V.: Yes. I think in terms of staff, I will answer that. I mean, it’s fast. It always depends also a little bit in terms of are we closing warehouses that we get with, for example, an acquisition, because that is a large number of people that then will go to an outsource partner. So I wouldn’t read something into the numbers in terms of higher and lower.

We have been at a relatively high level for various factors. And yes, one of them is synergies and one of them is the warehousing situation often.

Dominik Edridge, Analyst, Dutch Bank: Thanks. And just more generally about sort of OpEx inflation, what sort of categories are you still seeing significant inflation in certain categories at the moment?

Hans Kooymans, CFO, IMCD N.V.: Dominique, that depends a bit per country. You can imagine that we have countries like for instance, Turkey, where 30%, forty %, fifty % is pretty normal these days. But we also have countries that are lower single digit numbers. I think the blended mix that I would expect for this year in the current market conditions will be more or less similar as what we reported last year.

Dominik Edridge, Analyst, Dutch Bank: Okay. That’s my connect. Thank you very much.

Conference Operator: The next question comes from the line of Kiran Morder calling from ING. Please go ahead.

Valerie Dahl Ron, CEO, IMCD N.V.2: Kiran, good morning, everyone. Also welcome, Tosca. Couple of things from my side. First of all, on the deferred considerations, changes in debt, If I remember, Mej Hasidja was taken over in 2021. I think there were already some, let me say, extra benefits on the IFRS taken.

Can you give me an idea about how the developments are there and also with regard to Sunrise? That’s my first question. And then Valerie made in the remark about pharma where you see some bottoming out. As I understand, maybe you can elaborate on that and maybe somewhat more on the Latin America, how the organic growth is developing in that area. Those were my three questions.

Hans Kooymans, CFO, IMCD N.V.: Can I take the deferred consideration? I think MegaSatia and Sunrise both similar transactions acquired in a time when the market was booming and everybody showed fantastic results. In both cases, we bought 70% of the shares of these companies. And in both cases, the owners presented to us fantastic future growth numbers as the basis that they wanted to use for the valuation. And we have both owners we agreed that we will pay for the profitability at that moment in time.

And if the growth would materialize that we will pay an additional purchase price for the remaining 30% on the basis of that higher growth number. I think in both cases, we saw that extraordinary growth did not materialize That Sunrise Personal Care China, that is a market that Fari already described. And I’m happy that we structured it the way we structured it because now we paid a reasonable multiple for the transaction. And the same applies for MegaSatria where Baidu (NASDAQ:BIDU) is also a company where we acquired 70%. This year we will buy the remaining 30%.

We were fully integrated in our structure. We will then realize quite some synergies on the cost side, on the balance sheet side. And I think we are happy with both acquisitions and happy the way we structured it because if we would have acquired 100% on the basis of their forecast, then I’m sure that it should pay much more at that moment in time and I’m happy that we didn’t do that. The only thing I’m a bit unhappy about is the IFRS treatment of these releases Because the funny thing that you do is that at the moment that you booked a deferred consideration on the debit side, you need to book goodwill. And if you release the deferred consideration, it ends up in your P and L, which is to my opinion weird, but that is the way, yes, IFRS wants us to report on this.

Valerie Dahl Ron, CEO, IMCD N.V.: And I take the question on pharma and on LatAm growth. I mean pharma last year, as we always said, had an inventory issue, not a market share issue or anything additional. But we see that the inventories are going to normal levels. We therefore have the expectation that things should normalize. We saw that in starting in the Q4.

We also are doing very heavy investment in pharma. It’s a very important pillar for us. So pharma, I think, has been always an important pillar and should continue to do so going forward. LatAm growth, last year, particularly beginning of the year, I think we can say that was a very weak market for us, a weak region. We see now light at the horizon.

And again, I think inflection point is always difficult to say because there are movements also in the latter market. But overall, I think we are very happy with the team there. We are very happy with the performance. And yes, therefore, LatAm is a great region. Does that answer your question?

Hans Kooymans, CFO, IMCD N.V.: Yes. Thank you, Valerie.

Conference Operator: The next question comes from the line of Matthew Yates calling from Bank of America. Please go ahead.

Valerie Dahl Ron, CEO, IMCD N.V.3: Hey, good morning, everyone. Just a couple of questions, please. First one around kind of the conversion margin and driving bottom line growth. When you look into 2025, how much volume growth do you think you need in order to offset OpEx inflation, whether that’s wages or whether that’s investments in digital or anything else? Is that you need volume growth to sort of 5% plus before you can actually drive EBITA growth?

And then the

: second

Valerie Dahl Ron, CEO, IMCD N.V.3: question, going back to the event you did last year in Milan and the digital rollout, can you just remind me sort of how that is staggered through 2025 and how you’re thinking about the incremental revenue contribution you might get as you have more customer engagement across these kind of omni platforms? Thank you.

Hans Kooymans, CFO, IMCD N.V.: Shall I take the first one Valerie? Because that is a difficult question, Matthew, as you might understand, because you talk about volume growth and then it depends on what is the margin that you make on volume and so what is the pricing doing for that additional growth. And on the cost side, there is always a bit of flexibility in your cost structure where you can move. It also depends do you grow in a segment where you have for instance, if you have five food suppliers in Germany and you add number six, seven and eight, I don’t need additional people. And then I have volume growth that automatically goes to the bottom line.

And if I start a venture in food in Mexico where I don’t have a food business yet, then it’s less value accretive. But in general, I need less top line growth to compensate the additional inflation driven cost growth. And so if I would grow both if I would grow my margin with 5% and my costs with 5%, by nature, my bottom line will grow quicker.

Valerie Dahl Ron, CEO, IMCD N.V.: So I would say the second question is also rather difficult because in terms of the revenue contribution through digital tools, I think we have not calculated that, to be honest, Matthew, because for us, the key thing right now is to roll it out and we have rolled it out in three business groups and we’re going to roll it out across all this year. And we’re also going to open it up towards the end of the year in certain markets on certain things for customers to have a look at the sales assistant, which is one of the fundamental tools and which we see super beneficial for the business, no question, because it allows basically for us to sell the full portfolio in a guided way. But to dare put numbers in, I think at this point in time as we’re in the rollout phase would be too early.

Valerie Dahl Ron, CEO, IMCD N.V.3: Okay. Thank you, both.

Conference Operator: And the last question comes from the line of Matthias Mannoud calling from Kepler Cheuvreux. Please go ahead.

Erik Wilmer, Analyst, Tempen: Yes, good morning. Thank you for taking my questions. I keep it short, two small ones. Hans, I understood that the deferred consideration of the 94,000,000 is entirely due in 2025. Could you maybe give us a little bit of flavor of how the phasing is between H1 and H2?

And then the second one is actually on translation impact. Looking at 2025, how should we think about translation based on present spot rates? And would it be possible next to, I would say, the detail on the organic growth also give a little bit of more information on the relevant importance of the countries in the different regions, please?

Hans Kooymans, CFO, IMCD N.V.: First, the phasing of the deferred consideration. The process with owners typically is that you that it’s based on full year numbers that need to be audited, that need to be approved by both bodies and then there is a mechanics how to do the payments. So I would expect that the two payments will be done in the first half of this year, but we finalize that process in the first six months of these years. With respect to translation impacts, that is a very difficult question, because it’s basically asking can we predict a bit the exchange rate developments. What we do in our integrated report, there is in the notes to the financial part of the report, so that means somewhere around Page two eighty or so, there is a table in there that indicates the volatility and the impacts of a 10% change per local currency and what it does to our revenue results.

I think that could give you a bit of a guidance where there is volatility. But other than that, this is what I would call translation differences. But perhaps even more important for us is what happens in the underlying business with respect to currencies. And you can imagine that if I buy a product in The U. S.

In dollars and I sell it in the European market and I’m not talking tariffs, but just talking currencies that a stronger of a weaker dollar could have an impact on the margin percentage that I can make depending on with whom I compete in that market and also in the other way around. So for me, currency, it’s not only what I would call the translation risk, but also what does it do on underlying business transactions. And that is for us at least as equally important as the translation part. Okay. Thank

: you.

Conference Operator: Ladies and gentlemen, there are no further questions. So I will hand you back to your host to conclude today’s conference. Thank you.

Valerie Dahl Ron, CEO, IMCD N.V.: It was a pleasure talking with you, and we are looking forward to a call in the not too distant future for Q1. Thank you.

Conference Operator: Thank you for joining today’s call. You may now disconnect.

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