European Chemical Distribution "Pricing power returns? Better growth mix..."

Research evidence excerpt

European Chemical Distribution "Pricing power returns? Better growth mix..."

Global Research

14 July 2026ab

European Chemical Distribution Equities

Europe including UKPricing power returns? Better growth mix ahead

Industrial Services

Nicole Manion

Turning more constructive, but stock selection remains key Analyst

We've been cautious on the Chemical Distribution subsector since late-2022, as nicole.manion@ubs.com

deflationary dynamics and weak end-market demand have pressured GP/unit and +44-20-7568 2094

volumes (following a period of over-earning in 2020-22). However, we believe near-term Rory McKenzie

dynamics could now finally be improving, and so we turn incrementally more positive on Analyst

the subsector. Our refreshed UBS 'Datamap' points to rising inflation and supply chain rory.mckenzie@ubs.com

pressure since the onset of the Middle East conflict, which we believe could present +44-20-7568 1977

upside risk to GP/unit forecasts over the next c12-18mths. Uncertainty remains high and Abi Bell

risks are still present - particularly potential for higher demand elasticity which could Analyst

weigh on any volume recovery - and so we remain selective in our views. We upgrade abi.bell@ubs.com

IMCD to Buy(PT €100 from €85 on +10-15% EPS upgrades), seeing a trough valuation +44-20-7568 1594

as now undervaluing a long-term quality compounder with a strong balance sheet. We Abdihakem Ahmed

stay Neutral on Azelis but with a higher PT (€11.0 from €9.5 on +11-13% EPS Associate Analyst

upgrades); remain Neutral on Brenntag after upgrading from Sell c2mths ago (unchg. abdihakem.ahmed@ubs.com

€60 PT, +18% EPS upgrades in FY'26e but only +4-5% in outer years); and remain Buy- +44-20-7567 1050

rated on DKSH as a portfolio value opportunity (unchg. CHF75 PT, -4-5% EPS cuts