Univar CEO Jukes to advance growth strategy with digitisation

Source: ECN


US-based chemical distributor Univar will continue to advance its global growth strategy, including through greater use of digitisation.

“We continue on our cultural transformation to becoming a high performing growth company that expands with our key partners. We’ve delivered six straight quarters of earnings growth – something we haven’t done for years,” said David Jukes, president and CEO of Univar.


For the first quarter of 2018, Univar’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 19% year on year to $166m on 8% higher sales of $2.16bn. Sales in the US accounted for 56% of the total. For all of 2018, the company said it remains on track to generate low double-digit growth in adjusted EBITDA.

Jukes took over as CEO of Univar on 9 May, replacing Stephen Newlin, who has become executive chairman of the board.

Since Univar’s initial public offering (IPO) in June 2015, the company has become more customer focused, and more closely aligned with the needs of its suppliers, he noted.

“We are excited about the opportunities as our execution gets better and better. Great supplier partnerships are crucial and we expect to grow these,” said Jukes.


A key aspect of Univar’s growth plan is digitisation, where it will continue to make investments. The company has been a leader in 
e-commerce with investments in Elemica and ChemPoint many years ago, he pointed out.

“We want to disrupt our own markets and business by expanding our digital capabilities to help customers and suppliers – not just ship chemicals,” said Jukes.

“Our ambition is to be the No 1 digital destination for commerce in our space. It’s not just about making it easier for customers to buy, but using the data to help drive better processes for customers and suppliers,” he added.

Univar aims to reshape the traditional chemical distribution business by using data to take costs and “noise” out of the supply chain, whether related to working capital, process control, safety, shelf life or product resonance.

“We’re just scratching the surface of uses and applications of data to support growth,” said Jukes.


The escalation of US trade disputes with China and uncertainty around the North American Free Trade Agreement (NAFTA) are “unhelpful on a macro level” as this is fostering uncertainty in the market, he noted.

Univar sources most of the products it distributes from local markets, so the implementation of tariffs would not have a “huge or material impact”, the CEO said.

However, positive resolution of trade issues is important, as it relates to business confidence. “The NAFTA uncertainty needs to be resolved. Mexico is a small but important part of our business, and has shown good signs of recovery after the US election,” said Jukes.

While trade disputes can influence demand patterns, “we’ll watch it closely, 
deal with it, and manage our way through”, he added.


Amid the trade uncertainty, global markets are largely constructive with strength in Europe, the Middle East and Africa (EMEA) and North America, Latin America recovering, and China demand “fairly consistent”.

“We see a broadly supportive market, but always run our business as if a recession is just around the corner. As a distributor, we have to be agile and nimble to adapt to whatever the market conditions are,” said Jukes.

This includes greater autonomy in the field to adapt to changing markets, he added.


US tax reform has allowed Univar to repatriate overseas cash to pay down debt, said Jukes. Univar has reduced leverage to around 4x earnings before interest, tax, depreciation and amortisation (EBITDA) and aims to bring levels down to about 3x, he noted.

“Our blended average tax rate is slightly less but not massively different. We’re asset light anyway so it also hasn’t had a major impact on capital spending, but we are investing in digitisation and technology,” said Jukes.


Univar also sees mergers and acquisitions (M&A) as an important part of its growth strategy as it aims to consolidate a fragmented market.

“We have a very clear plan for our business and know the geographies, products, end markets and technologies where we have gaps. We are a little more proactive in looking at these opportunities to expand our footprint,” said Jukes.

Univar plans to allocate “a couple hundred million dollars a year for M&A” and focus on its core markets.

Focus end markets include food, personal care, pharmaceuticals, coatings and adhesives, and household and industrial cleaning, he said. The company will look at both specialty – what Jukes calls differentiated – and commodity or undifferentiated assets.

Specialties would be more pure growth plays, whereas certain commodities could offer greater cost synergies.

Best assets

“We probably have the best assets in NAFTA for petrochemicals and solvents” where acquisitions in these areas would be “more of a [cost] synergy play than pure growth”, said Jukes.

On 8 May, Univar reached an agreement to acquire Earthoil, a subsidiary of UK-based Treatt. Earthoil is a supplier of pure, organic, fair trade essential and cold-pressed vegetable seed oils used in the naturals, organic beauty, and personal care markets.

These vegetable origin and naturally derived ingredients are a frequent consumer demand in the beauty and personal care market, according to Univar. Earthoil had sales of around $11m in 2017.