Azelis’ “diverse footprint” brings continued stability amid Forex volatility and hyperinflation

03 Aug 2023 --- Specialty chemical supplier Azelis details a healthy gross profit of €517 million (US$565 million), representing 5.8% year-on-year growth. The company’s revenue now stands at €2.1 billion (US$2.3 billion), demonstrating a steady growth rate of 8% on a constant currency basis.

The completion of the acquisitions of Smoky Light, Lidorr Elements, Sirius International, Chemiplas Agencies, Vogler Ingredients and Gillco Ingredients raked in a combined annual revenue of over €370 million (US$4.5 million), strengthening Azelis’ lateral value chain. The gross profit margin was largely stable at 24.1%, while group revenue remained solid in Q2.

However, it was not all smooth sailing for the company as net profits were driven by higher interest expenses due to increased debt level and higher interest rates demonstrating a 22.9% decline. The group had €17.8 million (US$19.5 million) in non-cash charges related to Forex volatility and hyperinflation accounting.

“Our results reflect the current trends in the industry, which is undergoing a normalization following robust growth in 2021-2022. The group’s diverse footprint allows us to mitigate the weaker demand in some of our markets, notably in the Americas,” says Dr. Hans Joachim Müller, CEO of Azelis.

Financial buoyancy in a volatile environment
The Azelis group is on track to reach its midterm annual revenue growth guidance of 8-10%.

“Our asset-light, defensive business model allows us to generate strong cash flows despite the pressure on our top line,” explains Müller. “While the current volatility in our markets has raised the risk in our outlook, the group remains on track to achieve its midterm annual revenue growth guidance of 8-10%.”Six acquisitions in the Americas and APAC regions boosted the company’s financial standing.

Free cash flow increased by 76.1% year-on-year and stands at €245.2 million (US$268 million). The continued weakness in the Americas was mitigated by robust performance in EMEA and Asia Pacific regions. 

Revenue growth contribution from acquisitions was 12.8% during the period, while Forex translation represented a 1.9% headwind. Demand increased in Life Sciences, with revenue rising 9% year-on-year. This was supported by a strong performance in Pharma across all regions.

There has been stable demand in Food & Nutrition in EMEA and Asia Pacific. Industrial Chemicals increased by 1.7% year-on-year, while the recent acquisitions alleviated the continued weakness of the division.

Regional growth performance
Revenue in the Americas demonstrated a year-on-year decline of 3.7% and stands at €734.9 million (US$804 million). The group saw an organic revenue decline of 13.1%, mainly driven by further deterioration in Industrial Chemicals.

Revenue in APAC increased by 36% to €462 million (US$505 million) in H1, driven by the continued strength in Life Sciences and the group’s expansion in the region. 

APAC generated organic revenue growth of 6.9%, with the slower recovery in China offset by continued growth in South-East Asia and India offsetting the ongoing weakness in China. The acquisitions contributed 33.4% of revenue growth.

Meanwhile, Azelis teamed up with agricultural upcycling and circular economy specialist Alvinesa Natural Ingredients to expand Alvinesa’s footprint to Vietnam, India and South Korea, opening a new market for sustainable plant-based ingredients.

By Inga de Jong