Commentary: Univar planned IPO appears timely

04 July 2014 10:13 Source:ICIS Chemical Business

The planned initial public offering (IPO) of Univar appears to come at a favourable time, coinciding with an upswing in US chemical stocks on the back of the shale gas boom.

Univar, which had $10.3bn in 2013 sales, is the leading chemical distributor in North America and holds the #2 position in Europe, according to its S-1 filing. Overall, it is #2 in the world behind Brenntag.

It is touting its exposure to shale gas to highlight growth prospects, with assets “strategically configured around the most prominent natural gas and crude oil producing plays in North America”, including the Bakkem, Eagle Ford and Marcellus shale formations. “We believe we are the only chemical distributor capable of cost-effectively delivering a complete portfolio of specialty and commodity chemicals to all of the major US shale basins as well as the Canadian oil sands,” Univar stated in its filing.

Profitability has been challenging, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $598.2m in 2013, down from $607.2m in 2012 and $646.0m in 2011. Margins are thin, as is typical in distribution, at 5.8% in both 2013 and in Q1 2014. But trends in Q1 turned up, with adjusted EBITDA up 14.3% year on year to $145.6m.

By Joseph Chang