Executive Summary

IMCD N.V. stands as a premier global distributor and formulator of specialty chemicals and ingredients. The company has successfully carved out a defensible niche in the chemical value chain, distinguished by an asset-light operational model that prioritizes technical expertise and deep-rooted supplier and customer relationships over heavy capital investment in physical assets. This strategy, combined with a disciplined and programmatic approach to mergers and acquisitions (M&A), has fueled a remarkable long-term growth trajectory, establishing IMCD as a key consolidator in a highly fragmented global market.

The company’s resilience is a core attribute of its investment profile. Its diversified exposure across various defensive and cyclical end-markets—such as pharmaceuticals, food, personal care, and coatings—and its broad geographic footprint have enabled it to generate consistent growth through economic cycles. However, the period between 2022 and mid-2025 has presented significant headwinds. The industry-wide phenomenon of inventory destocking following post-pandemic supply chain normalization led to a period of negative organic volume growth. Concurrently, persistent cost inflation has compressed operating margins, creating negative operating leverage despite the stability of gross margins. This has manifested in a notable decline in free cash flow generation and an increase in working capital intensity.

Financially, IMCD maintains a solid balance sheet. Proactive capital raises in late 2024 have provided substantial flexibility to continue its M&A-led growth strategy, which remains the primary driver of value creation and capital deployment. The company’s ability to successfully identify, acquire, and integrate smaller, specialized distributors is fundamental to its long-term growth algorithm.

From a valuation perspective, IMCD’s shares have undergone a significant de-rating from their historical premium multiples, reflecting the market’s concerns over the recent margin pressure and slowing organic growth. The current valuation appears to have priced in these near-term challenges. A potential re-rating is contingent on the company’s ability to restore positive organic EBITA growth, stabilize its conversion margin through efficiency gains, and continue its track record of accretive M&A.

This report provides a comprehensive analysis of IMCD’s business model, competitive positioning, financial performance, and strategic initiatives. It examines the recent challenges that have impacted the sector and the company, assesses the key drivers of its valuation, and outlines the principal risks associated with its operations and strategy.

Company Overview & Business Model

The IMCD Value Proposition: More Than a Distributor

IMCD N.V. operates as a crucial, value-adding intermediary in the specialty chemical supply chain, connecting a global base of large-scale chemical manufacturers (principals) with a highly fragmented and diverse universe of end-users. The company’s core business transcends traditional logistics and distribution. It provides a comprehensive suite of services encompassing sales, marketing, technical support, and formulation development.¹ This “consultative sales approach,” executed by a team of technical experts, is a cornerstone of its value proposition and a primary competitive differentiator.¹

The business is structured through a matrix of eight global Business Groups, ensuring deep market and technical expertise is applied consistently in each country of operation. These groups are aligned with key end-markets, including Pharmaceuticals, Food & Nutrition, Beauty & Personal Care, Coatings & Construction, Advanced Materials, Lubricants & Energy, Home Care and I&I, and Industrial Solutions.² This structure facilitates the sharing of best practices and technical knowledge across the global organization, enabling IMCD to offer both localized market insights and state-of-the-art application knowledge to its partners.

Global Footprint & Market Presence

Founded in the Netherlands in 1995, IMCD has expanded from a European player to a truly global enterprise. As of early 2025, the company maintains a presence in over 60 countries across six continents, employing a workforce of more than 5,000 people.² This extensive network is critical for serving its multinational principals and a diverse customer base.

The company’s operations are geographically diversified across three primary segments: EMEA (Europe, Middle East & Africa), Americas, and Asia-Pacific. For the full fiscal year 2024, the revenue contribution from these segments underscores a well-balanced global portfolio:

• EMEA: €1,990.1 million
• Americas: €1,457.7 million
• Asia-Pacific: €1,279.8 million

EMEA remains the largest segment by revenue, reflecting the company’s origins and long-standing presence in the region. However, the Americas and Asia-Pacific represent substantial and strategically important growth markets, with the latter in particular being a key focus for expansion through both organic initiatives and acquisitions.⁵

The Asset-Light Advantage & Business Model Economics

IMCD’s operational model is frequently described as “asset-light,” a characterization that stems from its avoidance of capital-intensive manufacturing.¹ Unlike its principal suppliers, IMCD does not engage in chemical production. Its primary investments are directed toward intangible assets: the human capital of its technically proficient sales force, deep and long-standing relationships with suppliers and customers, and a sophisticated network of technical facilities.

The company operates over 80 technical centers and laboratories globally.² These facilities are not production plants but are essential to its value-added service model. Here, IMCD’s chemists and formulators work with customers to develop new product applications, test ingredients, and create innovative formulations, such as the recently launched “Glass’Hair Leave-On” formulation for the personal care market.⁴ The recent opening of a new Life Science Laboratory hub in Shanghai in July 2025 is a testament to the ongoing investment in this core capability.⁴

While the operational model is asset-light, it is crucial to recognize that the company’s primary growth strategy—programmatic M&A—is inherently capital-intensive. The business model’s success is predicated on the continuous deployment of capital to acquire smaller competitors. This requires a strong balance sheet and consistent access to capital markets. In the second half of 2024, IMCD demonstrated this by successfully issuing a new €500 million corporate bond and raising an additional €300 million through an equity offering, explicitly to increase its financial flexibility and strengthen its balance sheet for future growth.⁷ The subsequent increase in net debt to €1,543 million by the first half of 2025, following a series of acquisitions, confirms this strategic priority.⁸ Therefore, a complete assessment of the business model must consider this dual nature: an operationally asset-light business that pursues a capital-intensive growth strategy. The ultimate measure of its success is not just operational efficiency but, more importantly, the ability to generate high returns on the substantial capital deployed for acquisitions.

Competitive Differentiators

IMCD has cultivated several key competitive advantages that create a durable moat around its business.

• Technical and Formulation Expertise: The global network of technical centers is a primary differentiator. By providing formulation and application support, IMCD embeds itself within its customers’ product development cycles, creating sticky, long-term relationships that are difficult for competitors to displace. This capability transforms IMCD from a mere supplier into a critical innovation partner.
• Premier Supplier Relationships: The company has established itself as a preferred channel to market for many of the world’s leading specialty chemical producers. Principals like Lubrizol, FrieslandCampina, and BASF rely on IMCD’s extensive market reach, technical sales force, and logistical capabilities to efficiently serve a large and fragmented customer base that they cannot economically reach directly.⁴ These relationships are often exclusive and long-term, creating a significant barrier to entry.
• Global Reach with Local Execution: The company’s matrix organization allows it to offer global principals a coordinated, worldwide distribution platform while empowering local teams to cater to the specific needs of their regional markets. This combination of global scale and local entrepreneurial agility is a powerful competitive advantage.
• Proven M&A Platform: With a long history of successfully acquiring and integrating smaller distributors, IMCD has developed a core competency in inorganic growth. Its reputation as a preferred acquirer and its systematic integration process allow it to consistently add value through consolidation.

Industry Dynamics & Competitive Landscape

Specialty Chemicals Distribution Market: Size and Growth

IMCD operates within the large and expanding global chemical distribution market. Various market research firms estimate the market’s value at approximately $307 billion to $319 billion in 2024.⁹ The industry is supported by strong secular tailwinds, with long-term growth forecasts projecting a compound annual growth rate (CAGR) in the range of 5.1% to 7.3% through 2034.⁹

This growth is propelled by two primary factors. First is the increasing trend among large chemical manufacturers to outsource non-core functions, including sales, marketing, and logistics for smaller-volume products and customers. Distributors provide a more efficient and cost-effective channel to market for these segments. Second is the rising demand for specialty chemicals from a wide array of end-use industries, including pharmaceuticals, electronics, construction, and agriculture, which require specialized handling, technical support, and formulation expertise that distributors are uniquely positioned to provide.¹⁰

Industry Structure & Consolidation

A defining characteristic of the chemical distribution industry is its high degree of fragmentation. The market consists of a few large, global players and a long tail of thousands of smaller, privately-owned regional and local distributors.¹³ Even the largest participants hold only a minority of the total market share, creating a fertile environment for consolidation.

IMCD is one of the industry’s most active and successful consolidators. Its M&A strategy is a core pillar of its growth model, focused on acquiring smaller distributors that either expand its geographic reach, strengthen its position in a particular end-market, or add new, complementary supplier relationships to its portfolio.¹³ This “buy-and-build” approach has been instrumental in the company’s expansion and is expected to remain a key driver of future growth.

Competitive Positioning vs. Peers

The annual ICIS Top 100 Chemical Distributors ranking provides a clear benchmark of the industry’s largest players based on annual sales. The most recent rankings place IMCD firmly among the global leaders.

According to the ICIS ranking based on 2024 sales, the top five global distributors are ¹⁴:

1. Brenntag: $16.8 billion
2. Tricon Energy: $13.1 billion
3. Univar Solutions: $11.5 billion
4. Nagase & Co: $5.7 billion
5. IMCD: $5.0 billion

IMCD’s reported revenue for 2024 was €4.73 billion, which aligns with the $5.0 billion figure reported by ICIS.⁵ While IMCD is smaller in absolute revenue terms than market leaders like Brenntag and Univar Solutions, a crucial distinction is its pure-play focus on higher-margin specialty chemicals and ingredients. In contrast, its larger peers often have significant exposure to the lower-margin, higher-volume commodity chemicals segment. This strategic focus on specialties provides IMCD with a more resilient business model, higher and more stable margins, and a growth profile that is less susceptible to commodity price fluctuations.

Barriers to Entry & Economic Moats

The specialty chemical distribution industry is protected by significant barriers to entry, which underpin the durable competitive advantages of established players like IMCD.

• Regulatory and Compliance Expertise: The industry is governed by a complex and ever-evolving framework of international, national, and local regulations concerning the handling, storage, transport, and documentation of chemicals (e.g., REACH in Europe). Navigating this landscape requires substantial investment in expertise and systems, creating a formidable hurdle for new entrants.¹⁵
• Supplier Relationships and Authorizations: Gaining distribution rights from premier specialty chemical manufacturers is a significant challenge. These principals are highly selective, entrusting their products and brand reputation only to distributors with proven technical capabilities, broad market access, financial stability, and a track record of responsible handling. These relationships are often exclusive and can take years, if not decades, to cultivate.
• Technical Capabilities and Customer Integration: The value-added services offered by IMCD, particularly formulation support in its technical labs, create high switching costs for customers. Once a customer has co-developed a product formulation using ingredients and expertise from IMCD, it is operationally complex and costly to reformulate with a new supplier. This deep integration into customers’ R&D processes forms a powerful economic moat.
• Scale and Network Effects: The scale of IMCD’s global network provides significant advantages. It offers principals a single point of contact for multiple geographic markets and gives customers access to a broad portfolio of products from various suppliers. This creates a network effect where each new supplier makes the platform more attractive to customers, and each new customer makes it more attractive to suppliers.

Financial Performance & Capital Allocation Strategy

IMCD’s financial track record demonstrates a powerful combination of consistent growth, resilient profitability, and a strategic focus on reinvestment. The following analysis examines the key trends in the company’s performance, drawing on data from the past several years and the most recent financial reports for full-year 2024 and the first half of 2025.

Table 1: Key Financial & Operational Metrics (EUR millions, unless stated)
Fiscal Year Ended Dec 31	2018	2019	2020	2021	2022	2023	2024	H1 2024	H1 2025
Revenue	2,379.1	2,689.6	2,774.9	3,435.3	4,601.5	4,442.6	4,727.6	2,384.6	2,474.0
Gross Profit	536.1	599.3	647.5	836.3	1,147.1	1,122.6	1,202.4	607.0	634.0
Gross Profit Margin (%)	22.5%	22.3%	23.3%	24.3%	24.9%	25.3%	25.4%	25.4%	25.6%
Operating EBITA	202.1	224.8	243.2	373.6	554.5	514.5	530.9	270.0	275.0
Operating EBITA Margin (%)	8.5%	8.4%	8.8%	10.9%	12.0%	11.6%	11.2%	11.3%	11.1%
Conversion Margin (%)	37.7%	37.5%	37.6%	44.7%	48.3%	45.8%	44.2%	44.5%	43.4%
Net Result	100.1	108.0	120.1	207.2	313.0	292.2	278.2	141.0	130.0
Free Cash Flow	166.5	222.2	277.4	278.9	434.4	554.2	449.7	221.0	173.0
Cash Conversion Margin (%)	79.3%	97.4%	109.4%	72.6%	76.9%	105.3%	82.7%	79.8%	N/A
EPS (weighted, EUR)	1.91	2.06	2.24	3.64	5.50	5.13	4.86	2.48	N/A
Dividend per Share (EUR)	0.80	0.90	1.02	1.62	2.37	2.24	2.15*	N/A	N/A
Data Sources:.5 Note: H1 2025 Net Result and EPS are not explicitly stated but implied from other figures. Conversion Margin calculated as Operating EBITA / Gross Profit. Cash Conversion Margin sourced from company reports. 2024 Dividend is proposed.*

Revenue Growth Trajectory

IMCD has established a consistent and impressive record of top-line expansion. From 2018 to 2024, revenue grew from €2.38 billion to €4.73 billion, representing a compound annual growth rate of 12.1%.¹⁶ This growth has been achieved through a balanced combination of organic market development and a highly active M&A program.

The composition of this growth is particularly revealing. In fiscal year 2024, for instance, reported revenue growth was 6%. This was the net result of a modest 1% organic decline, a substantial 8% positive contribution from the first-time inclusion of acquired companies, and a 1% negative impact from foreign currency translation.⁵ This breakdown underscores the strategic importance of M&A, which has enabled the company to continue growing its top line even as the broader industry faced headwinds from customer destocking and macroeconomic softness.

Profitability and Returns Analysis

IMCD’s profitability metrics reflect the value-added nature of its business model, though recent trends indicate emerging pressures on operational efficiency.

• Gross Profit Margin: This metric has shown remarkable stability and a gradual upward trend, increasing from 22.5% in 2018 to 25.4% in 2024.¹⁶ This stability, even during periods of high raw material inflation, demonstrates the company’s pricing power and its ability to pass through input costs, a hallmark of a strong value proposition.
• Operating EBITA Margin: The company achieved significant operating margin expansion following the pandemic, with the Operating EBITA margin peaking at 12.0% in 2022. Since then, it has experienced a contraction, falling to 11.6% in 2023 and further to 11.2% in 2024.⁵
• Conversion Margin: The conversion margin, which measures the percentage of gross profit that is converted into Operating EBITA, is a critical indicator of operational leverage. After peaking at 48.3% in 2022, this metric has declined to 45.8% in 2023 and 44.2% in 2024.⁵ The trend continued into the first half of 2025, with the margin contracting to 43.4%.¹⁷ This compression reveals that the company’s internal operating costs have been growing at a faster pace than its gross profit. The company has directly attributed this to “inflation-driven growth in own costs”.⁵ This period of negative operating leverage is a key concern for the market, and the company has begun to address it through “efficiency enhancement measures,” including a 2% reduction in its full-time employee base (excluding acquisitions) during 2024.⁵
• Return on Capital: IMCD has historically generated solid returns. For the trailing twelve months as of early 2025, Return on Equity (ROE) was 14.1% and Return on Invested Capital (ROIC) was 7.3%.¹⁸ Sustaining and improving these returns, particularly ROIC, will be critical given the capital-intensive nature of the M&A strategy.

Cash Flow Generation & Working Capital Management

IMCD has a strong history of cash generation, though performance has been more volatile in the recent period. Free cash flow reached a record €554.2 million in 2023, aided by strong working capital management, before moderating to €449.7 million in 2024.¹⁶ This decline persisted into the first half of 2025, with free cash flow falling by 22% year-over-year to €173 million.⁸

The primary driver of this recent decline has been a higher investment in working capital. Net working capital, measured in days of revenue, increased from 61 days at the end of 2023 to 69 days at the end of 2024.⁵ Management attributed this increase to a combination of higher business activity, a strong order book entering 2025, and the integration of acquired companies that operate with higher-than-average working capital levels.⁵ The cash conversion margin, a measure of the ability to convert EBITDA into free cash flow, consequently fell from an exceptionally high 105.3% in 2023 to a more normalized but still healthy 82.7% in 2024.⁵

Capital Structure & Financial Flexibility

IMCD maintains a prudent capital structure that provides it with the flexibility to pursue its growth ambitions. The company’s leverage and balance sheet metrics have evolved in line with its M&A activity.

Table 2: Capital Structure & Leverage Analysis (EUR millions)
As of Year-End	2018	2019	2020	2021	2022	2023	2024
Total Equity	786.3	866.5	1,252.4	1,461.4	1,673.4	1,726.2	2,215.1
Net Debt	610.7	735.2	727.0	940.0	1,026.9	1,285.6	1,281.6
Net Debt / Op. EBITDA Ratio	2.8x	2.8x	2.3x	2.3x	1.7x	2.3x	2.2x
Data Sources:.5

Leverage, as measured by the Net Debt to Operating EBITDA ratio, stood at a manageable 2.2x at the close of 2024.⁵ Following further acquisition spending, this ratio increased to 2.6x by mid-2025.⁸ This level remains well below the company’s debt covenant limit of 4.25x, affording it significant headroom for further strategic investments.⁸ The proactive capital markets activities in late 2024—raising a combined €800 million in debt and equity—further solidified this financial flexibility, ensuring the company has a sufficient “war chest” to continue executing its M&A pipeline.⁷

Capital Allocation Policy & Shareholder Returns

IMCD’s capital allocation priorities are clear and consistent, prioritizing reinvestment for growth while also providing returns to shareholders.

• M&A as Primary Priority: The foremost use of capital is funding the company’s active acquisition strategy. This is viewed as the highest-return opportunity for deploying capital and the central pillar of the long-term growth story.
• Stable and Growing Dividend: IMCD is committed to returning capital to shareholders through a reliable dividend. The company’s official policy is to pay an annual dividend in the range of 25% to 35% of its adjusted net income.¹⁹ The dividend has grown consistently since the company’s IPO in 2014. For the 2024 fiscal year, a dividend of €2.15 per share has been proposed, representing a payout ratio of 35% of cash earnings per share.⁵ The slight decrease from the prior year’s €2.24 dividend reflects the modest decline in earnings.
• Share Buybacks: The company does not employ a regular share buyback program. Capital is overwhelmingly directed towards M&A and dividends.

Growth Opportunities & Strategic Initiatives

The Dual Growth Engine: Organic & Inorganic

IMCD’s growth strategy is built upon a robust, dual-engine approach that combines steady organic development with strategic, value-accretive acquisitions. This strategy is guided by six key pillars: people, portfolio, commercial excellence, operational excellence, digital excellence, and sustainability.⁷

• Organic Growth Drivers: The company drives organic growth through several avenues. A primary method is expanding relationships with existing principals into new geographic territories or end-markets. It also actively seeks new supplier mandates, such as the 2025 agreement with Lubrizol to distribute its medical solutions in North America.⁴ Cross-selling products from its extensive portfolio to its large customer base is another key lever. Central to this effort is the continuous investment in its technical capabilities. The expansion of its network of technical centers, including the new Shanghai hub, enables IMCD to lead with innovation and develop bespoke formulations, which drives deeper customer integration and higher-margin business.⁴
• Inorganic Growth through M&A: M&A remains the cornerstone of IMCD’s rapid expansion and a core competency of the management team. The company maintains a disciplined yet active approach, targeting companies that enhance its geographic footprint, add new technologies or capabilities, or provide entry into adjacent market segments. The pace of acquisitions remained high through the recent period of market volatility. In 2024, IMCD successfully completed and integrated 12 acquisitions across all its regions.⁵ This momentum carried into 2025 with several strategic transactions announced in the first half of the year, including Apus Química in Chile (strengthening advanced materials), Trichem in India (accelerating pharmaceutical market growth), and Ferrer Alimentación in Spain (bolstering food and beverage).⁴

Digital Transformation as a Differentiator

Recognizing the increasing importance of digitalization in the distribution industry, IMCD has made digital excellence a core strategic pillar. The company is making significant investments in a unified global IT infrastructure, which includes integrated Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems.⁷ A key customer-facing initiative is the “MyIMCD” online portal, which aims to enhance the customer experience through features like online ordering, documentation access, and technical support. These digital tools are designed not only to improve operational efficiency and internal processes but also to provide valuable data and analytics to the commercial teams, enabling them to better serve customers and identify new growth opportunities.

Sustainability as a Value Driver

Sustainability has become an increasingly integral part of IMCD’s strategy and value proposition. The company is actively working to position itself as a leader in this area within the distribution space. Key initiatives include the ‘Sustainable Solutions’ program, which focuses on developing and promoting formulations that help customers address critical environmental challenges such as climate change, resource efficiency, and the circular economy.⁷

The company’s commitment has been recognized externally. In July 2025, IMCD was awarded an EcoVadis Platinum medal, placing it in the top 1% of companies assessed for sustainability performance.⁴ Furthermore, IMCD has formally committed to setting near-term, science-based decarbonization targets in line with the Science Based Targets initiative (SBTi), demonstrating a clear path toward reducing its carbon footprint.² These efforts are not only a matter of corporate responsibility but are also becoming a commercial imperative, as both large principals and customers increasingly scrutinize the sustainability credentials of their supply chain partners.

Recent Challenges & Headwinds (2022-2024)

The period from 2022 through mid-2025 was characterized by significant macroeconomic volatility and unique industry-specific challenges. While IMCD demonstrated resilience, it was not immune to these powerful headwinds.

The “Great Destocking” of 2023-2024

The most significant industry-wide challenge during this period was a dramatic inventory cycle. The acute supply chain disruptions of the post-COVID era in 2021 and early 2022 led many end-users to engage in “panic buying” to secure raw materials and build up safety stocks.¹³ This created an artificial surge in demand. However, beginning in mid-2022, as supply chains began to normalize and economic growth forecasts softened, customers aggressively reversed course. This initiated a prolonged period of inventory reduction, widely termed the “Great Destocking”.¹³

This destocking wave resulted in sharply lower order volumes for chemical distributors across the board. IMCD’s results reflected this trend, with the company reporting an 8% organic revenue decline in the first quarter of 2024, a period that compared against the peak of the prior year’s buying activity.²² By the third quarter of 2024, however, the company reported a return to positive organic revenue growth of 5%, indicating that the destocking cycle was largely complete and demand patterns were beginning to normalize.²³

Margin Pressure from Inflation

While IMCD successfully managed product cost inflation by maintaining its gross profit margins, it faced significant pressure on its operating margins. As detailed in the financial analysis section, high global inflation led to a substantial increase in the company’s own operating costs, including salaries, logistics, energy, and IT expenses. This inflation-driven cost growth outpaced the growth in gross profit dollars, leading to a contraction in the company’s operating (EBITA) margin and, more critically, its conversion margin.⁵ This headwind was a primary factor in the company’s lower-than-expected profitability in 2024 and the first half of 2025.⁸

Macroeconomic and Geopolitical Uncertainty

The broader economic and geopolitical landscape remained a source of uncertainty. Persistently high interest rates in major economies, slowing industrial production in regions like Europe, and ongoing geopolitical conflicts, such as the war in Ukraine, created a challenging operating environment.¹³ These factors contributed to cautious customer behavior and made forecasting difficult. In its public statements, IMCD’s management adopted a more conservative tone, acknowledging that “macroeconomic and political uncertainty make predictions difficult”.⁸

Foreign Exchange (FX) Translation Impacts

As a global company with significant operations outside the Eurozone, IMCD is inherently exposed to currency fluctuations. These fluctuations primarily result in translation effects when results from foreign subsidiaries are converted into Euros for reporting purposes. In fiscal year 2024, for example, currency movements had a negative 1% impact on group revenue.⁵ The impact was more pronounced in the Americas segment, where FX translation reduced reported operating EBITA growth by 2 percentage points.⁵ While these are non-cash accounting impacts, they can affect reported growth rates and create volatility in the financial statements.

Valuation Considerations

Assessing the valuation of IMCD requires a multi-faceted approach, considering its historical trading ranges, its position relative to peers, and the key fundamental drivers that are likely to influence market sentiment going forward. The company has historically commanded a premium valuation, justified by its superior growth profile and specialty focus. The recent market de-rating presents a key question for investors: whether the current, lower multiples reflect a temporary cyclical downturn or a more permanent shift in the company’s growth and profitability outlook.

Table 3: Valuation Multiples – Historical & Peer Comparison
Metric	IMCD (Current TTM)	IMCD (5-Yr Avg.)	Brenntag (Current TTM)	Univar (Pre-Acq. TTM)	Azelis (Current TTM)
P/E Ratio (TTM)	~21x	~35x	~16x	N/A	~25x
EV/EBITDA Ratio (TTM)	~14x	~20x	~9x	N/A	~13x
Note: Current TTM multiples as of early 2025. 5-Yr Avg. is approximate. Peer data is sourced from public filings and financial data providers. Univar Solutions was acquired in 2023 and is no longer public. Azelis data is for FY 2024. Sources:.25

Current & Historical Trading Multiples

As of early 2025, IMCD is trading at a trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio of approximately 21x.²⁵ This represents a significant discount to its historical valuation. In the preceding five years, the stock frequently traded in a P/E range of 30x to 40x, and exceeded 50x at its peak in 2021.²⁷ This de-rating has been driven by the earnings pressure and slowing organic growth experienced during the 2023-2024 destocking cycle. The company’s stock price reflects this sentiment, trading near its 52-week low of approximately €94, a steep decline from its 52-week high of €159.⁸

Relative Valuation & Peer Group Benchmarking

Historically, IMCD has consistently traded at a substantial valuation premium to its largest competitor, Brenntag. This premium has been justified by several factors: IMCD’s pure-play focus on higher-growth, higher-margin specialty chemicals; its more aggressive and historically successful M&A-driven growth model; and its superior track record of margin expansion. Brenntag, which currently trades at a P/E ratio of approximately 16x, has a larger exposure to the more cyclical and lower-margin commodity distribution business.²⁹ While IMCD’s premium has narrowed during the recent downturn, it still trades at a higher multiple, suggesting the market continues to recognize its superior business model. Its valuation is more in line with that of Azelis, another specialty-focused peer.

Key Valuation Drivers & Sensitivity Factors

The future trajectory of IMCD’s stock valuation will be highly sensitive to several key performance indicators:

• Organic Growth: A demonstrated return to sustained, positive mid-single-digit organic gross profit growth would be the most powerful catalyst for a valuation re-rating. This would signal that the underlying demand environment has normalized and that the company is taking market share.
• Conversion Margin Trajectory: The market is intensely focused on the company’s ability to halt and reverse the recent decline in its conversion margin. Evidence of margin stabilization, driven by cost control and operating leverage, would significantly improve investor confidence in the earnings outlook.
• M&A Execution and ROIC: The continued successful execution of the M&A strategy is paramount. The market will closely monitor the financial impact of recent acquisitions and the company’s ability to generate attractive returns on invested capital from its inorganic growth investments.
• Free Cash Flow Conversion: An improvement in free cash flow generation, driven by better working capital management and profitability, would underscore the quality of the company’s earnings and likely command a higher valuation multiple.

Discussion of a Reasonable Valuation Range

While this analysis does not provide a specific price target, it is possible to discuss a reasonable valuation range based on historical precedent and future prospects. The current TTM P/E multiple near 21x appears to have priced in the cyclical headwinds and margin pressures of the past 18 months.

A return to a valuation in the mid-to-high 20s P/E range could be considered reasonable should the company demonstrate a clear inflection back to positive organic EBITA growth and show tangible evidence that its conversion margin has stabilized. Achieving a premium valuation in the 30s P/E range, more consistent with its historical average, would likely require a return to the strong performance characteristics of the 2020-2022 period, namely a combination of robust organic growth, successful M&A integration, and expanding operating margins.

Risk Factors

An investment analysis of IMCD would be incomplete without a thorough consideration of the key risks that could impact its future performance.

• Cyclical Exposure to End Markets: Despite its diversification, IMCD remains exposed to the cyclicality of key industrial end-markets such as construction, automotive, and general industrial manufacturing. A prolonged global economic downturn or recession would lead to reduced demand for chemicals, negatively impacting the company’s sales volumes and profitability.
• M&A Integration and Execution Risk: The company’s growth is heavily reliant on its “buy-and-build” strategy. This strategy carries inherent risks, including the potential to overpay for acquisition targets, difficulties in integrating different corporate cultures and IT systems, and the failure to realize anticipated cost and revenue synergies. As the company grows, the size and complexity of acquisitions may increase, potentially amplifying this risk.
• Supplier and Customer Dependency: IMCD’s business model is built on its relationships with both chemical manufacturers (principals) and customers. The loss of a major supplier relationship, particularly if it is an exclusive arrangement in a key region, could have a material adverse effect on revenue and profit in that segment. Similarly, while the customer base is highly fragmented, the loss of a large customer could impact results.
• Foreign Exchange and Financial Risk: With operations in over 60 countries, IMCD’s reported financial results are subject to volatility from foreign currency translation. Furthermore, while its leverage is currently at a manageable level, the M&A strategy is debt-funded in part. A significant increase in leverage to fund a large acquisition, particularly in a rising interest rate environment, could increase financial risk and interest expense.
• Regulatory and Environmental Compliance Risk: The chemical industry is subject to stringent and continuously evolving health, safety, and environmental regulations globally. New regulations, such as potential restrictions on PFAS (“forever chemicals”) or stricter carbon emissions standards, could increase compliance costs, limit the portfolio of products IMCD can distribute, or require additional investment in infrastructure and processes.¹⁵

Works cited

1. IMCD NV Investor Relations – Alpha Spread, accessed August 4, 2025, https://www.alphaspread.com/security/aex/imcd/investor-relations
2. IMCD – Distributor and formulator of chemicals and ingredients, accessed August 4, 2025, https://www.imcdgroup.com/
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