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FY2022 results: Strong momentum drives 70% growth in adjusted EBITA
2022 Highlights
- Revenue of EUR 4.1bn, representing 45.3% year-on-year growth, of which 20.1% was organic. Both life sciences and industrial chemicals delivered strong growth of 40.7% and 53.0% respectively.
- Adjusted EBITA increased 70.5% year-on-year to EUR 456.9m, translating to an adjusted EBITA margin of 11.1%. Conversion margin expanded by 635 bps to 47.6%.
- Free Cash Flow increased 141.2% to EUR 438.0m, representing a cash conversion rate of 94.8%.
- Adjusted net profit increased 122.9% to EUR 218.9m driven by strong topline growth and margin expansion. Reported earnings per share were EUR 0.91, cash earnings per share were EUR 1.18.
- Temporary elevation of effective tax rate mainly due to EUR 25m charges[1] booked in 2022 which are not tax-deductible.
- 12 acquisitions completed, representing total annualized revenue of over EUR 620m. If all these acquisitions were closed at the beginning of 2022, revenue would have been EUR 4.4bn.
- Leverage ratio was reduced to 2.2x at end December 2022, from 2.7x at end December 2021.
- Top Sustainalytics industry rating with a score of 12.4, the lowest risk assessment in the industry.
- Proposal for a dividend of EUR 67.8m, representing 32% of net profit, and implying EUR 0.29 dividend per share[2].
- The management remains confident of delivering 8%-10% of revenue growth and 10-15 bps of adjusted EBITA margin per year over the medium term.
(in millions of €) | 2022 | 2021 | Reported Change | Constant Currency |
Revenue | 4,109.1 | 2,827.3 | 45.3% | 40.4% |
Gross Profit | 960.7 | 650.1 | 47.8% | 43.0% |
Gross Profit Margin | 23.4% | 23.0% | 39 bp | 42 bp |
Adjusted EBITDA1 | 484.7 | 287.8 | 68.4% | 63.4% |
Adjusted EBITDA Margin | 11.8% | 10.2% | 162 bp | 161 bp |
Adjusted EBITA2 | 456.9 | 267.9 | 70.5% | 65.5% |
Adjusted EBITA Margin | 11.1% | 9.5% | 164 bp | 163 bp |
Conversion Margin3 | 47.6% | 41.2% | 635 bp | 623 bp |
Adjusted net profit4 | 218.9 | 98.2 | 122.9% | 116.6% |
Adjusted earnings per share | 0.91 | 0.41 | 122.8% | 113.8% |
Net Profit | 218.9 | 70.2 | 211.7% | 205.4% |
Cash earnings per share5 | 1.18 | 0.47 | 151.5% | 145.2% |
Earnings per share | 0.91 | 0.29 | 214.8% | 204.6% |
Proposed dividend per share | 0.29 | 0.03 | 866.7% |
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Operating Cash Flow | 458.9 | 205.5 | 123.4% |
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Free Cash Flow6 | 438.0 | 181.6 | 141.2% |
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FCF Conversion ratio7 | 94.8% | 67.1% | 2771 bp |
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Net Working Capital / Revenue normalized for acquisitions8 | 13.8% | 15.3% | -152 bp |
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Leverage Ratio | 2.2 | 2.7 | -19.2% |
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- Adjusted EBITA before depreciation of property, plant and equipment
- Operating profit or loss before amortization and impairment of intangible assets and excluding adjustments
- Adjusted EBITA / Gross profit
- Adjusted for one-off cash and non-cash costs related to the IPO
- Result for the year before amortisation and impairment of intangible assets divided by the weighted average number of outstanding shares
- Adjusted EBITDA less lease payments, plus changes in Net Working Capital, plus changes in other assets, liabilities and provisions, less net capital expenditures
- Free Cash Flow divided by Adjusted EBITDA less lease payments
- Net Working Capital/Revenue including those from acquisitions for the full period
Comment from Dr. Hans Joachim Müller, CEO: “I am proud to present another strong set of results for 2022. We achieved revenue of EUR 4.1bn and adjusted EBITA of EUR 457m, representing 45% revenue growth and 164 bp margin expansion.
Our results demonstrate the progress made towards our growth agenda, with market share gains and principal mandate wins reflected in the 20% organic growth achieved during the year. We also continued to participate in the ongoing industry consolidation with the acquisition of 12 companies across different regions, expanding our footprint and strengthening our lateral value chain in many end markets worldwide. Furthermore, in-line with our objective to be the industry reference in digitalization, we successfully rolled out more than 100 customer portals during 2022, as well as 14 e-labs, and continued the development of partner portals for our largest suppliers. Furthermore, we reinforced our technical and laboratory capabilities with the opening of the group’s Regional Innovation Center for Food & Nutrition in Singapore and a Competence Center for Meat & Meat Alternatives in Poland. We are pleased to have been recognized for our commitment to innovation with three different industry awards in 2022[3]. Lastly, we are proud to have received the top industry ranking for 2023 from Sustainalytics, reflecting our ongoing efforts to contribute to a more sustainable world.
These achievements would not have been possible without the commitment and hard work of our Azelis colleagues around the world. I am grateful to work alongside such dedicated professionals, who have consistently demonstrated resilience and ability to deliver regardless of challenges.
We have a solid, resilient business and have demonstrated in 2022 again that we are successful even in a challenging, fast-changing economic environment. Therefore, I remain confident in achieving our objective of delivering 8-10% revenue growth and 10-15bps of margin expansion per year over the medium term.”
Results presentation by management
The management of Azelis invites you to a webcast at 10:00 CET to discuss our full year results, as well as operating trends and outlook for 2023. Please click here to view the webcast.
Contact information
Azelis Investor Relations
T: +32 3 613 01 27
E: investor-relations@azelis.com
Operational Review
(in millions of €) | 2022 | 2021 | F/X Translation | M&A Growth Contribution | Organic Growth | Total Growth |
EMEA | 1,811.6 | 1,232.3 | -1.3% | 21.3% | 27.0% | 47.0% |
Americas | 1,549.9 | 1,164.2 | 11.5% | 10.7% | 11.0% | 33.1% |
Asia Pacific | 747.5 | 430.8 | 5.1% | 43.2% | 25.3% | 73.5% |
Group Revenue | 4,109.1 | 2,827.3 | 4.9% | 20.3% | 20.1% | 45.3% |
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EMEA | 432.9 | 292.8 | -1.4% | 17.5% | 31.7% | 47.8% |
Americas | 385.2 | 270.9 | 11.4% | 14.6% | 16.2% | 42.2% |
Asia Pacific | 142.6 | 86.2 | 4.8% | 32.1% | 28.5% | 65.4% |
Group Gross Profit | 960.7 | 650.1 | 4.8% | 18.2% | 24.8% | 47.8% |
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EMEA | 215.4 | 125.3 | -2.4% | 22.4% | 51.9% | 71.9% |
Americas | 211.9 | 137.6 | 11.2% | 18.8% | 23.8% | 53.9% |
Asia Pacific | 58.1 | 29.6 | 4.2% | 42.0% | 49.9% | 96.1% |
Adjusted EBITA1 | 456.9 | 267.9 | 5.1% | 24.7% | 40.7% | 70.5% |
- Total Adjusted EBITA includes Holding companies
Azelis achieved revenue of EUR 4.1bn, an increase of 45.3% compared to the prior year (+40.4% in constant currency), supported by positive industry trends as well as the benefits from the group’s growing footprint and increased scale. Both Life Sciences and Industrial Chemicals delivered strong results driven by volume growth and positive pricing trends. Revenue from Life Sciences increased by 40.7% to EUR 2.5bn, representing 60% of total group revenue, while Industrial Chemicals delivered revenue of EUR 1.6bn, an increase of 53.0% versus the prior year.
The 20.1% organic growth generated for the year reflects robust demand across most of the business. Revenue growth contribution from acquisitions was 20.3%, while FX represented a 4.9% revenue tailwind.
(in millions of €) | Q4 2022 | Q4 2021 | Reported Change | 2022 | 2021 | Reported Change | Constant Currency |
Revenue | 440.6 | 338.0 | 30.4% | 1,811.6 | 1,232.3 | 47.0% | 48.3% |
Gross Profit | 102.2 | 79.41 | 28.7% | 432.9 | 292.8 | 47.8% | 49.2% |
Gross Profit Margin | 23.2% | 23.5%1 | -29 bp | 23.9% | 23.8% | 13 bp | 15 bp |
Adjusted EBITDA | 48.0 | 32.9 | 45.9% | 226.8 | 134.1 | 69.1% | 71.5% |
Adjusted EBITDA Margin | 10.9% | 9.7% | 116 bp | 12.5% | 10.9% | 163 bp | 176 bp |
Adjusted EBITA | 44.4 | 30.6 | 45.3% | 215.4 | 125.3 | 71.9% | 74.3% |
Adjusted EBITA Margin | 10.1% | 9.0% | 104 bp | 11.9% | 10.2% | 172 bp | 184 bp |
Conversion Margin | 43.5% | 38.5%1 | 496 bp | 49.8% | 42.8% | 696 bp | 742 bp |
- Q4 2021 of EMEA includes reclassification in Azelis’ income statement 2021 since the publication (in March 2022) of Azelis’ Annual Report 2021, with no impact on previously reported Adjusted EBITDA and Adjusted EBITA. Q4 2021 previously reported Gross Profit, Gross Profit Margin and Conversion Margin were EUR 82.3m, 24.3% and 37.2%, respectively. Refer to p. 120 of the 2021 Annual Report and p. 24 of the H1 2022 Interim Financial Report.
Revenue in EMEA rose 30.4% to EUR 440.6m in the fourth quarter, bringing full year 2022 revenue to EUR 1,811.6m, representing a year-on-year increase of 47.0%, of which 27.0% was organic. Revenue growth contribution from acquisitions was EUR 262.9m, representing 21.3% of revenue growth for the full year, while FX headwinds reduced reported revenues by 1.3%. Our Life Sciences business benefitted from positive momentum, notably in Food & Nutrition and in Personal Care. The recovery in the Pharma business, as well as the uplift in Agricultural & Environmental Solutions also supported the business in the second half of the year. The group’s Industrial Chemicals activities in the region benefitted from positive pricing momentum and our increased footprint.
In the first half of 2022, Azelis completed the acquisition of Umongo, a leading specialty distributor active in L&MWF (Lubricants & Metalworking Fluids) in South Africa; Whitchem, a specialty distributor in CASE and AM&A (Advanced Materials & Additives) in the UK; and Tunçkaya, a leading distributor of specialty food ingredients and additives in Turkey. In the second half of the year, Azelis further accelerated its growth strategy in the region with four more acquisitions. In October, we completed the acquisition of Chemical Partners, a specialty chemicals distributor active in the CASE and AM&A markets in Africa and the Middle East. We also closed the acquisition of the specialty lubricant distribution assets of Ak-taş in Turkey, and Eurotrading, a leading distributors of specialty chemicals to the personal care market in Italy. Finally, in November, Azelis completed the acquisition of Dagalti, a specialty chemicals distributor active in the Turkish AM&A market. These companies generated combined annual revenue of over EUR 330m for the full year 2022.
Gross profit grew 28.7% to EUR 102.2m in the fourth quarter, bringing the full year 2022 gross profit to EUR 432.9m, representing a year-on-year increase of 47.8%, of which 31.7% was organic, reflecting continued efficiency improvements in our pricing strategy as we leverage our growing scale. Adjusted EBITA grew 71.9% to EUR 215.4m, driving a 172 bp margin expansion to 11.9%. The margin expansion during the year implies a 696 bp increase in conversion margin, supported by the benefits of continuous efficiency programs.
(in millions of €) | Q4 2022 | Q4 2021 | Reported Change | 2022 | 2021 | Reported Change | Constant Currency |
Revenue | 351.0 | 308.7 | 13.7% | 1,549.9 | 1,164.2 | 33.1% | 21.7% |
Gross Profit | 84.5 | 76.51 | 10.5% | 385.2 | 270.9 | 42.2% | 30.8% |
Gross Profit Margin | 24.1% | 24.8%1 | -70 bp | 24.9% | 23.3% | 158 bp | 159 bp |
Adjusted EBITDA | 46.0 | 38.7 | 18.7% | 221.1 | 143.7 | 53.8% | 42.6% |
Adjusted EBITDA Margin | 13.1% | 12.5% | 55 bp | 14.3% | 12.3% | 192 bp | 247 bp |
Adjusted EBITA | 43.4 | 37.0 | 17.3% | 211.9 | 137.6 | 53.9% | 42.7% |
Adjusted EBITA Margin | 12.4% | 12.0% | 38 bp | 13.7% | 11.8% | 185 bp | 187 bp |
Conversion Margin | 51.3% | 48.4%1 | 298 bp | 55.0% | 50.8% | 420 bp | 428 bp |
- Q4 2021 of Americas includes reclassification in Azelis’ income statement 2021 since the publication (in March 2022) of Azelis’ Annual Report 2021, with no impact on previously reported Adjusted EBITDA and Adjusted EBITA. Q4 2021 previously reported Gross Profit, Gross Profit Margin and Conversion Margin were EUR 79.5m, 25.8% and 46.5%, respectively. Refer to p. 120 of the 2021 Annual Report and p. 24 of the H1 2022 Interim Financial Report.
Revenue in the Americas increased 13.7% to EUR 351.0m in Q4, bringing revenue in FY 2022 to EUR 1,549.9m, representing year-on-year growth of 33.1%. The group’s activities in the Americas generated 11.0% organic growth, as continued pricing strength offset some of the impact of the destocking in the flavors & fragrance business. Revenue growth contribution from acquisitions was EUR 124.2m, contributing 10.7% of revenue growth, and F/X translation represented an 11.5% tailwind in 2022.
During the year, Azelis entered South America with the acquisition of Rocsa, a specialty chemical distributor active in both Life Sciences and Industrial Chemicals markets in Colombia, providing Azelis the platform to accelerate its footprint expansion in the region. Rocsa generated annual revenue of over EUR 120m for the full year 2022.
Gross profit increased by 10.5% in the fourth quarter, driving full year 2022 gross profit to EUR 385.2m, a step-up of 42.2% from the prior year, out of which 16.2% was organic. The gross profit expansion in the region was driven by the positive pricing trends, which offset some of the mix effect from new activities in South America and the temporary impact of destocking in flavors & fragrances in the US. Adjusted EBITA grew 53.9% to EUR 211.9m, resulting in a conversion margin expansion of 420bp to 55.0% largely due to continuing efficiency gains.
(in millions of €) | Q4 2022 | Q4 2021 | Reported Change | 2022 | 2021 | Reported Change | Constant Currency |
Revenue | 209.7 | 144.4 | 45.2% | 747.5 | 430.8 | 73.5% | 68.4% |
Gross Profit | 38.0 | 27.41 | 38.9% | 142.6 | 86.2 | 65.4% | 60.6% |
Gross Profit Margin | 18.1% | 18.9%1 | -83 bp | 19.1% | 20.0% | -94 bp | -88 bp |
Adjusted EBITDA | 16.8 | 9.4 | 79.4% | 64.5 | 33.7 | 91.3% | 87.0% |
Adjusted EBITDA Margin | 8.0% | 6.5% | 153 bp | 8.6% | 7.8% | 80 bp | 86 bp |
Adjusted EBITA | 15.1 | 8.1 | 86.2% | 58.1 | 29.6 | 96.1% | 91.9% |
Adjusted EBITA Margin | 7.2% | 5.6% | 159 bp | 7.8% | 6.9% | 90 bp | 96 bp |
Conversion Margin | 39.8% | 29.7%1 | 1012 bp | 40.8% | 34.4% | 638 bp | 658 bp |
- Q4 2021 of Asia Pacific includes reclassification in Azelis’ income statement 2021 since the publication (in March 2022) of Azelis’ Annual Report 2021, with no impact on previously reported Adjusted EBITDA and Adjusted EBITA. Q4 2021 previously reported Gross Profit, Gross Profit Margin and Conversion Margin were EUR 29.9m, 20.7% and 27.1%, respectively. Refer to p. 120 of the 2021 Annual Report and p. 24 of the H1 2022 Interim Financial Report.
In APAC, revenue grew 45.2% to EUR 209.7m in the fourth quarter, resulting in full year 2022 revenue of EUR 747.5m, representing year-on-year growth of 73.5%, of which 25.3% was organic. Demand held strong across most of the region, mitigating the slower growth in China during the year. In 2022, revenue growth contribution from acquisitions was EUR 185.9m, representing 43.2% of growth, while F/X provided a 5.1% growth uplift.
During the year, the group completed four acquisitions in Asia Pacific. In February, Azelis closed the acquisition of Catalite in Thailand, and in May, Azelis completed the acquisition of Chemo India. The acquisition of ChemSol in Malaysia was closed in September, and Azelis created a global platform for flavors and fragrances with the acquisition of Ashapura Aromas in India. These companies generated total combined annual revenue of EUR 170m in 2022.
Gross profit in Asia-Pacific increased 38.9% to EUR 38.0m in the fourth quarter, and full year gross profit to EUR 142.6m, representing year-on-year growth of 65.4%, of which 28.5% was organic. The 94 bp gross profit margin contraction was due to the mix effect from the first-time-time inclusion of acquisitions, as well as the slower activities in China during the year. Despite this, adjusted EBITA grew 96.1% year-on-year to EUR 58.1m, representing a 90 bp EBITA margin expansion, and conversion margin of 40.8%, translating to a 638 bp conversion margin step-up in 2022.
| Q4 2022 | Q4 2021 | Reported Change | 2022 | 2021 | Reported Change | Constant Currency |
Adjusted EBITA (in millions of €) | -6.1 | -8.3 | -26.3% | -28.5 | -24.7 | 15.5% | 15.5% |
As % of Group Revenues | -0.6% | -1.1% | 47 bp | -0.7% | -0.9% | 18 bp | 14 bp |
Operating costs at the group’s holding companies, which relate to the Group’s non-operating entities as well as the headquarters in Belgium, were EUR 28.5m in 2022, compared to EUR 24.7m in the previous year. Relative to total group revenue, operating costs at the Group’s holding companies were reduced from 0.9% to 0.7%.
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. In line with this, the management is positive that it should be able to deliver 8-10% of revenue growth and 10-15 bps adjusted EBITA margin expansion per year over the medium-term.
Financial review
Revenue
(in millions of €) | 2022 | 2021 | F/X Translation | M&A Growth Contribution | Organic Growth | Total Growth |
Revenue | 4,109.1 | 2,827.3 | 4.9% | 20.3% | 20.1% | 45.3% |
Gross Profit | 960.7 | 650.1 | 4.8% | 18.2% | 24.8% | 47.8% |
Adjusted EBITA | 456.9 | 267.9 | 5.1% | 24.7% | 40.7% | 70.5% |
(in millions of €) | Q4 2022 | Q4 2021 | Reported Change | 2022 | 2021 | Reported Change | Constant Currency |
Life Sciences | 613.8 | 498.6 | 23.1% | 2,474.6 | 1,758.9 | 40.7% | 36.3% |
Industrial Chemicals | 387.5 | 291.0 | 33.2% | 1,634.5 | 1,068.4 | 53.0% | 47.2% |
Revenue | 1,001.4 | 789.6 | 26.8% | 4,109.1 | 2,827.3 | 45.3% | 40.4% |
Gross Profit | 224.7 | 183.2 | 22.7% | 960.7 | 650.1 | 47.8% | 43.0% |
Gross Profit Margin | 22.4% | 23.2% | -76 bp | 23.4% | 23.0% | 39 bp | 42 bp |
Adjusted EBITDA | 105.0 | 73.0 | 43.8% | 484.7 | 287.8 | 68.4% | 63.4% |
Adjusted EBITDA Margin | 10.5% | 9.2% | 124 bp | 11.8% | 10.2% | 162 bp | 161 bp |
Adjusted EBITA | 96.8 | 67.4 | 43.7% | 456.9 | 267.9 | 70.5% | 65.5% |
Adjusted EBITA Margin | 9.7% | 8.5% | 113 bp | 11.1% | 9.5% | 164 bp | 163 bp |
Conversion Margin | 43.1% | 36.8% | 630 bp | 47.6% | 41.2% | 635 bp | 623 bp |
Net Profit | 8.2 | 20.3 | -59.3% | 218.9 | 70.2 | 211.7% | 205.4% |
Adjusted Net Profit |
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| 218.9 | 98.2 | 122.9% | 116.6% |
Revenue increased 26.8% in the fourth quarter to EUR 1.0bn, driving full year 2022 revenue to EUR 4.1bn, a year-on-year increase of 45.3%, of which 20.1% was organic. The organic growth deceleration in the final quarter was in-line with the historical trend in the business as economic activities generally unwind for the holiday season. Revenue growth contribution from acquisitions was EUR 573m, representing a topline growth contribution of 20.3%, while FX resulted in a 4.9% currency tailwind for the full year.
Revenue in Life Sciences increased by 40.7% to EUR 2.5bn for the full year, supported by positive trends and market share gains in most end markets, as well as revenue growth contribution from acquisitions. Demand in Food & Nutrition and Personal Care remained solid throughout the year, especially in EMEA and Asia Pacific. In North America, revenue growth deceleration in the second half of the year was driven by destocking in flavors & fragrance. In Industrial Chemicals, revenue increased 53.0% to EUR 1.6bn for the full year, driven by the group’s expanding footprint in the segment through recent acquisitions and a positive pricing environment.
Across our geographic markets, organic growth remained strong, with EMEA, Americas and APAC delivering 27.0%, 11.0% and 25.3% organic growth respectively.
Profitability
In the fourth quarter, gross profit increased by 22.7%, bringing the full year 2022 gross profit to EUR 960.7m, representing a year-on-year increase of 47.8%, of which 24.8% was organic. Gross profit margin expanded by 39 bp to 23.4% driven largely by the mix effect from the group’s growing footprint and from continued price optimization initiatives.
Adjusted EBITA increased by 70.5% to EUR 456.9m, implying a 164 bp margin expansion. Strong topline growth and increasing scale efficiencies offset the impact of supply chain pressures and the mix effect from recent acquisitions. The group’s ability to leverage its scale is reflected in the 635 bp expansion in conversion margin during the year.
Net financial expense for the year was EUR 73.8m, a 15.7% reduction from the prior year. The EUR 6.0m financial income relates to the adjusted fair value of certain financial instruments. Financial expense was reduced by 9.6% to EUR 79.8m, as the 25.9% reduction in interest expense was partially offset by higher financial costs driven by an increase in the fair value of put options from previous acquisitions, as well as the impact of hyperinflation notably in Turkey.
Tax expense in 2022 was EUR 95.8m, implying an effective tax rate (ETR) of 30.4%, versus 41.6% in the previous year. The high ETR was largely due to the costs related to the fair value adjustment of acquisition-related instruments and hyperinflation accounting, which are not tax-deductible.
Net profit for 2022 was EUR 218.9m, an increase of 122.9% compared to the adjusted net profit for 2021. Reported earnings per share for the period is EUR 0.91, while cash earnings per share was EUR 1.18, representing a year-on-year increase of 151.5% compared to 2021.
(in millions of €) | 2022 | 2021 |
Operating Profit | 388.4 | 207.8 |
Net Financial Expense | -73.8 | -87.5 |
Financial Income | 6.0 | 0.7 |
Financial Expense | -79.8 | -88.3 |
Interest Expense on Bank Loans and Overdrafts | -34.8 | -46.9 |
Interest Lease Commitments | -3.4 | -3.0 |
Accelerated Amortization of Transaction Costs due to IPO | 0.0 | -19.6 |
Other Financial Cost | -41.6 | -18.8 |
Share of associates' result | 0.1 | -0.1 |
Profit Before Tax | 314.7 | 120.2 |
Tax Expense | -95.8 | -50.0 |
Net Profit | 218.9 | 70.2 |
One-off Cash and Non-cash Charges due to IPO: |
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IPO Cost | 0.0 | 8.4 |
Accelerated Amortization of Transaction Costs due to IPO | 0.0 | 19.6 |
Adjusted Net Profit | 218.9 | 98.2 |
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Earnings per share | 0.91 | 0.29 |
Adjusted earnings per share | 0.91 | 0.41 |
Cash earnings per share | 1.18 | 0.47 |
Cash flow and financing
(in millions of €) | 2022 | 2021 |
Operating Cash Flow | 458.9 | 205.5 |
Free Cash Flow | 438.0 | 181.6 |
FCF Conversion | 94.8% | 67.1% |
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Net Working Capital / Revenue normalized for acquisitions | 13.8% | 15.3% |
Net Indebtedness | 1,161.9 | 870.7 |
Net Leverage | 2.2 | 2.7 |
Net working capital to revenue normalized for acquisitions was 13.8% at the end of 2022, compared to 15.3% at the end of December 2021, driven by significant improvements in working capital management, as reflected in the reduction in working capital from 56 days to 50 days of revenue. The improvement in working capital also reflects the progress Azelis is making in integrating acquired companies, as financial policies align with the group. The working capital intensity of recent acquisitions also show modest improvement, although still well above group level.
Operating cash flow more than doubled to EUR 458.9m in 2022, supported by the significant improvement in working capital efficiency. Capital expenditure was EUR 18.4m, broadly stable compared to the prior year, as Azelis continues to invest in digital and IT infrastructure, and laboratory network to support long-term growth.
Free cash flow in 2022 was EUR 438.0m, representing a free cash flow conversion ratio of 94.8%, versus 67.1% in the 2021, which was impacted by higher investment in working capital to prepare for the unprecedented growth in the first quarter of 2022. The expansion in free cash flow conversion reflects our profit growth and the significant working capital improvement during the year, bringing the group closed to historical trends.
At the end of December 2022, net debt was EUR 1.2bn and the leverage ratio stood at 2.2x, versus 2.3x at the end of June 2022 and 2.7x at the end of December 2021. At the end of the period, the group had liquidity of EUR 647.2m in cash and unused credit facilities.
Post-closing events
On the 10th of January 2023, Azelis completed the acquisition of Smoky Light, a distributor of smoke ingredients in the Benelux market. On the 31st of January 2023, we completed the acquisition of Chemiplas, one of the leading distributors of specialty chemicals, plastic raw materials and ingredients in Australia, New Zealand and the Pacific Islands.
On the 24th of January 2023, we announced that we have signed an agreement to acquire Lidorr Elements, one of Israel's leading specialty chemical distributors in crop-protection, industrial materials, and care & nutrition. Closing of the transaction is expected in the second quarter of the year.
Financial calendar
Date | Event |
May 12th, 2023 | Q1 2023 trading update |
June 8th, 2023 | Annual General Meeting 2023 |
August 3rd, 2023 | Half year 2023 results |
November 9th, 2023 | Q3 2023 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 in the Annual Report 2022.
Appendix
All figures and tables contained in the appendix have been compiled in accordance with the IFRS accounting and valuation principles, as adopted within the European Union. The applied valuation principles, as published in the latest annual report at 31 December 2022, were applied for the figures included in this press release.
The statutory auditor, PwC Bedrijfsrevisoren BV / Reviseurs d’Entreprises SRL, represented by Peter Van den Eynde, has completed the audit of the Azelis Group NV consolidated financial statements, which comprise the consolidated statement of financial position as at 31 December 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterized by a consolidated statement of financial position total of EUR 4,976,725 thousand and a profit for the year of EUR 218,879 thousand.
The statutory auditor has issued an unqualified report without emphasis of matter paragraph dated 1 March 2023 on the company’s consolidated accounts as of and for the year ended 31 December 2022, and has confirmed that the accounting data reported in the accompanying press release is consistent, in all material respects, with the accounts from which it has been derived.
For the annual report 2022 and the full audit report of the statutory auditor we refer to Azelis' website.
Consolidated income statement for the period ended 31 December
(in thousands of €) | 2022 | 2021 |
Revenue | 4,109,102 | 2,827,295 |
Other operating income | 15,795 | 8,470 |
Total income | 4,124,897 | 2,835,765 |
Costs for goods and consumables | -3,164,155 | -2,185,622 |
Gross profit | 960,742 | 650,143 |
Employee benefits expenses | -284,952 | -232,215 |
External services and other expenses | -202,632 | -150,731 |
Depreciation of property, plant and equipment | -27,845 | -19,901 |
Amortization of intangible assets | -56,887 | -39,483 |
Operating profit / loss (-) | 388,426 | 207,813 |
Financial income | 6,008 | 731 |
Financial expenses | -79,823 | -88,278 |
Net financial expense | -73,815 | -87,547 |
Share of result of associates | 59 | -68 |
Profit / loss (-) before tax | 314,670 | 120,198 |
Income tax income / expense (-) | -95,791 | -49,973 |
Net profit / loss (-) for the period from continuing operations | 218,879 | 70,225 |
|
|
|
Attributable to: |
|
|
Equity holders of the parent | 213,193 | 67,756 |
Non-controlling interests | 5,686 | 2,469 |
Net profit / loss (-) for the period | 218,879 | 70,225 |
|
|
|
| in € | in € |
Basic earnings per share | 0.91 | 0.29 |
Diluted earnings per share | 0.91 | 0.29 |
Consolidated statement of financial position
(in thousands of €) | 2022 | 2021 |
Assets |
|
|
Goodwill | 2,174,256 | 1,803,266 |
Intangible assets | 1,170,486 | 1,004,258 |
Property, plant and equipment | 57,884 | 53,008 |
Right of Use assets | 96,982 | 65,582 |
Investments in associates | 235 | 180 |
Other financial assets | 11,758 | 1,355 |
Deferred tax assets | 20,605 | 10,482 |
Total non-current assets | 3,532,206 | 2,938,131 |
|
|
|
Inventories | 627,735 | 467,473 |
Trade and other receivables | 538,381 | 428,950 |
Income tax receivables | 9,963 | 4,432 |
Other financial assets | 280 | 1,522 |
Cash and cash equivalents | 268,160 | 141,293 |
Total current assets | 1,444,519 | 1,043,670 |
Total assets | 4,976,725 | 3,981,801 |
|
|
|
Equity |
|
|
Share capital | 5,680,000 | 5,680,000 |
Reserves | -3,701,231 | -3,617,020 |
Retained earnings | 192,570 | 96,817 |
Unappropriated result | 213,193 | 67,756 |
Issued capital and reserves attributable to owners of the parent | 2,384,532 | 2,227,553 |
Non-controlling interests | 55,145 | 23,792 |
Total equity | 2,439,677 | 2,251,345 |
|
|
|
Loans and borrowings | 1,178,394 | 840,030 |
Lease obligations | 81,168 | 54,078 |
Employee benefit obligations | 8,525 | 8,822 |
Provisions | 4,597 | 4,127 |
Other non-current liabilities | 98,264 | 9,655 |
Deferred tax liabilities | 190,755 | 135,315 |
Total non-current liabilities | 1,561,703 | 1,052,027 |
|
|
|
Bank overdrafts | 30,412 | 40,524 |
Loans and borrowings | 125,323 | 62,604 |
Lease obligations | 20,390 | 15,200 |
Provisions | 3,544 | 1,981 |
Income tax payables | 23,989 | 17,046 |
Trade and other payables | 771,687 | 541,074 |
Total current liabilities | 975,345 | 678,429 |
Total liabilities | 2,537,048 | 1,730,456 |
Total equity and liabilities | 4,976,725 | 3,981,801 |
Consolidated statement of cash flows
(in thousands of €) | 2022 | 2021 |
Cash flows from operating activities |
|
|
Net profit / loss (-) for the period | 218,879 | 70,225 |
Adjustments for: |
|
|
Depreciation, amortisation and impairment expenses | 84,733 | 59,384 |
Net financial expense | 73,815 | 87,547 |
Cost of share-based payment | 839 | - |
Expenses related to IPO included in Net profit / loss for the period | - | 8,360 |
Income tax income / expense | 95,791 | 49,973 |
Share of result of associates | -59 | 68 |
Change in inventories | -65,751 | -101,373 |
Change in trade and other receivables and other investments | 27,194 | -47,901 |
Change in trade and other payables | 22,340 | 80,395 |
Change in provisions | 1,140 | -1,226 |
Cash flow from operating activities | 458,921 | 205,452 |
|
|
|
Income tax paid | -90,327 | -43,540 |
Net cash flow from operating activities | 368,594 | 161,912 |
|
|
|
Cash flow from investing activities |
|
|
Acquisition of property, plant and equipment and intangible assets | -18,443 | -18,288 |
Acquisition of subsidiaries, net of cash acquired | -553,665 | -633,883 |
Net cash flow from investing activities | -572,108 | -652,171 |
|
|
|
Cash flows from financing activities |
|
|
Payments of lease obligation | -22,795 | -17,263 |
Proceeds from shareholders for issue of equity | - | 930,000 |
Dividend payment to shareholders of the group | -7,012 | - |
Purchase of treasury shares | -2,999 | - |
Expenses related to capital increase (part through equity) | - | -50,525 |
Expenses related to capital increase (part of operating income) | - | -8,360 |
Interest paid | -41,175 | -72,016 |
Proceeds from loans and borrowings | 640,621 | 909,653 |
Repayments of loans and borrowings | -217,377 | -1,231,342 |
Transaction costs related to loans and borrowings | -2,193 | -8,338 |
Other cash flows from financing activities | -6,031 | - |
Net cash flow from financing activities | 341,039 | 451,809 |
|
|
|
Net (decrease) increase in cash and cash equivalents | 137,525 | -38,450 |
|
|
|
Effect of exchange rate fluctuations on cash held | -546 | -477 |
Cash and cash equivalents minus Bank overdraft at beginning of the period | 100,769 | 139,696 |
|
|
|
Cash and cash equivalents minus Bank overdraft at December 31 | 237,748 | 100,769 |
Notes and disclaimer
Azelis is a leading global innovation service provider in the specialty chemical and food ingredients industry present in 63 countries across the globe with +3,800 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 +59,000 customers, supported by +2,700 principal relationships, creating a turnover of €4.1 billion (2022). Azelis Group NV is listed on Euronext Brussels under ticker AZE.
Across our extensive network of more than 60 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. EcoVadis Platinum rated, 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.
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.
[1]Related to the impact of hyperinflation accounting in Turkey (EUR 7m), and the increase in fair value of put options driven by the outperformance of past acquisitions (EUR 18m)
[2]Based on 2022 Net Profit attributable to equity shareholders of EUR 213.2m and 233.8m shares outstanding as of 31/12/2022
[3]Two Ringier Technology Awards for food & nutrition and personal care, and a bronze at the Sensory Bar awards at in-cosmetics Global 2022.