As reported in our press release, we had a strong first quarter with an EBITDA growth of 28% and 34% on a constant currency basis. Growth consists both from organic growth and growth from acquisitions in 2020 and are most notably Signet in India. As said in earlier calls, our business model is robust, also under difficult economic circumstances. We saw in the first quarter strong demand from our customers, and we must assume in preparation of economies that will open up after COVID.
Across many markets, we experienced delays in deliveries because of product shortages or supply chain issues. We also saw price increases over a wide range of products. Notwithstanding this, we were able to cope with all these factors successfully, and we look with optimism to the remainder of the year. Hans will take you through the Q1 numbers, and after that, we will answer your questions. Hans?
Thank you, Piet. Good morning, ladies and gentlemen, I will give you a short summary of IMCD's first quarter 2021 results. As usual, I will start on page 10 of the analyst call presentation. We are happy to report a ForEx-adjusted revenue increase of 13% and 17% gross profit increase in the first quarter of this year. The gross profit increase was a combination of 9% organic growth and 8% as a result of the first-time inclusion of companies acquired in 2020 and 2021. Gross profit in percentage of revenue improved by 0.8 percentage point from 23.6% to 24.4%. This increase in % was a combination of the contribution of newly acquired businesses, product mix effects, changes in local market circumstances, and successful internal growth margin improvement initiatives. ForEx-adjusted operating EBITDA increased 34% to EUR 19.6 million.
This increase was a combination of substantial organic growth and first-time inclusion of acquisitions. The operating EBITDA margin increased by 1.7 percentage point from 9.5% in the first quarter of 2020 to 11.2% in the same period this year. The conversion margin, calculated as operating EBITDA in percentage of gross profit, was 45.9%, which is 5.7 percentage point better than the same period of last year. In all regions, we saw an improvement of this ratio. ForEx-adjusted net result before amortization and non-recurring items increased 32% to EUR 64 million. Free cash flow and cash conversion ratio both increased compared to the same period of last year. Substantial operating EBITDA growth in 2021 more than fully compensated for the increase in working capital in the first three months. This working capital investment of about EUR 27 million was mainly the result of increased business activities.
Net working capital translated in days of revenue were 54 days, similar to the first quarter of last year. Year-to-date cash earnings per share were EUR 1.11, an increase of 18% compared to the same period of last year, and a 22% increase when adjusting for ForEx differences. On the last line of this page, you could see a 10% increase in our number of employees. Most of this increase is the result of the first-time inclusion of acquisitions. On the next slide 11, you will find gross profit, EBITDA, and conversion margin per operating segment. EMEA reported 8% ForEx-adjusted gross profit growth and 18% operating EBITDA growth. Operating EBITDA in % of revenue improved from 10.5% to 11.3%.
As most of the acquisitions in this region were relatively small, it's fair to assume that most of the growth is organic growth and the impact of the acquisitions is limited. A bit of a similar story in the second column with Americas Q1 figures. However, weakening of local currencies in this region had quite an impact on reported Euro numbers, as you can see. Forex-adjusted gross profit in the Americas increased 10% and operating EBITDA increased 11%. Most of the EBITDA growth is organic and amongst others driven by an increased gross profit percentage. Asia Pacific in the third column reported 17% gross profit growth and more than doubled operating EBITDA. This was a combination of substantial organic growth and the first-time inclusion of acquisitions. Operating EBITDA in percentage of revenue and the conversion margin further improved.
This increase was a combination of the acquisition of Signet in India in November last year and healthy organic gross profit and EBITDA growth. In the last column, as usual, you will find the cost of holding companies. This includes, as you know, all non-operating companies, including the head office in Rotterdam and the regional support offices in Singapore and in the U.S. On page 12, a summary of IMCD's free cash flow. Free cash flow and cash conversion ratio were both substantially higher than the same period of last year as a result of increased operating EBITDA combined with a lower working capital investment.
Further CapEx was about EUR 2 million lower than in the same period of last year. On page 13, a short update on the net debt and leverage. As you can see, reported leverage ratios and leverage based on the definitions in the loan documentation stayed at 2.3 and 1.6 x LTM EBITDA. The 1.6 x leverage ratio is well below the lowest 3.5x leverage threshold in IMCD's loan documentation. Last but not least, on page 15, you will find our outlook for 2021. So far, the short summary of our year-to-date financials and Piet and myself are happy to answer your questions.
Ladies and gentlemen, if you would like to ask a question, please press star one. For questions, star one. Go ahead, please. First question is from Mr. Mutlu Gundogan from ABN AMRO. Go ahead, please.
Yes. Good morning, Piet and Hans. Three questions, if I may. The first one on EMEA. Your operational costs were rather low this quarter. I think as a % of sales, 13.6. Just wondering, is that a temporary effect? If so, how quickly do you think that it should normalize to the historical average? That's the first one. Secondly, on Asia-Pacific, I'm really surprised to see that OpEx was nearly up EUR 1 million year-on-year to EUR 13.2 million. Is that the new run rate per quarter for this year? If so, does this mean that our conversion margin of 65% is too low for Signet? Thirdly, on the sentence in the press release where you talk about product shortages and disturbances in supply chain, just wondering, was that overall a positive or a negative for IMCD as a whole? Thanks.
Thank you, Mutlu. The first question on operational cost in EMEA. We have, of course, compared to last year, lower operating costs because of COVID, in particular, of course, in travel, exhibitions. As you all remember, last year, COVID started more or less in the course of March. There we have a normal level, of course. We have some benefit of that. The question whether or not it will return in the, let's say, in the usual form is, of course, something that we think about. It will, of course, increase a bit if the situation normalizes again. Whether it will come back to the original level, we doubt, but we will see because we also learned a lot during this period. Yes, there's some positive cost effects because of the situation we are in. OpEx Asia, Hans.
Yeah. I first try to understand, Mutlu, what you are referring to there, to make sure that there is a common understanding about the numbers that you just mentioned. I think basically, if I look at the cost trends in Asia-Pacific, organic cost growth is a bit similar what Piet has indicated. There could be a little bit of a positive impact of lower travel cost. Other than that, we just see in that region normal cost inflation and a bit of growth of our own organization to cope with the healthy organic growth in that market segment. I'm not sure if I've completely followed your conclusion on conversion margin of Signet. Perhaps I missed your question there.
Maybe to add. If I look at the OpEx, operating EBITDA minus gross profit, issue something on depreciation, I see that that number was EUR 13 million, EUR 13.2 versus something like EUR 12 million last year in Q1. I had expected that that would increase more, mainly on the back of the acquisition of Signet. Maybe the operational cost of Signet is significantly lower than what I have or maybe other analysts have.
That could be the case.
Yeah. They're very efficient.
Maybe that is something to address maybe offline at a certain stage. I think with respect to your last question, product shortage, that's a good question, actually. Is that good or bad? Actually, of course, it causes us many headaches, in particular our order processing staff, salespeople, because we have delivery dates, we have commitments. In that sense, it is not good. I think generally, of course, we see also, and part of that will be the product shortages, we see prices increase, generally, and that is, yeah, generally good for us. Of course, our absolute gross margin, gross profit, will increase. It's a mixed picture, Mutlu, I would say, and it causes us a lot of problems also with customers. In the end deliveries will take place, because then, of course, we need to postpone. It's in particular, I would say, an internal additional burden for our staff.
Understood. Can I just follow up? That's the second time that you mentioned higher prices. Just wondering if you assess the situation, where do you think you or your suppliers stand in terms of higher prices or putting in higher prices? Did it just start? Are we halfway through? How long do you expect it to last?
That's a very difficult question, again. What we see with a lot of industrial products, let's say more base products, quite significant increases for our principals, which make their more sophisticated product for that they deliver to us. Yeah, are we through that? It's difficult to say. I think it will depend very much on how demand will develop in the course of this year. The other factor in this is that there were multiple factors that played a role. We had force majeure in many places, for example, because of the Texas harsh winter situation that caused problems. It's partly it was, let's say, climate-related and partly it is the demand in the market, and disturbance of supply chain. How long this will continue, I think I would be a very valuable person if I would be able to predict that. I don't know.
I understand. Thank you.
Next question is from Mr. Matthew Yates from Bank of America. Go ahead, please.
Hey, good morning, everyone. Are you able in any way to quantify how much sales you maybe missed out on in Q1 from those delayed deliveries? Does that spill over into Q2, or has those sales effectively been lost to a competitor? If we just think about the regional dynamics, following up what you were saying about Texas, is it fair to assume that those shortages were more acute in the U.S., and that would be why perhaps organic growth there was less than Europe? The second question, just curious in terms of the significant rise in COVID cases in India, whether that is having any impact operationally on Signet thus far. Thank you.
I think it's very difficult to say how much, let's say, of our turnover was affected by that product shortages. It's certainly not lost. What we see is that it is pushed over to the next month or the next quarter. That is an effect that we see today as well. The turnover, the sales is not lost. That is a positive. I think you're right that the United States, particularly U.S., have more problems because of the Texas situation, which is, I guess, more or less most of the things are now solved. That certainly had an effect on our first quarter results there. India, until in the first quarter, we have not noticed it yet.
Of course, let's say, the wave that we now see is of the last, what is it, two weeks, that it really break through, and we have to see what the effect is, but it certainly is serious. I'm not sure if this will affect the production capacity of the Indian pharmaceutical industry. The effect could be, of course, because of logistic problem, but until now, we haven't seen it yet.
Sorry, if I can just follow up, maybe around the outlook and the guidance to the extent you can give it. Usually, Q1 is a fairly elevated quarter for the company in terms of activity. If I look back historically, sometimes Q2 has been down, sometimes it's been flat, sometimes it's been up. Directionally, is there anything you can indicate in terms of your expectation for Q2 sales versus Q1 at this juncture?
It's of course, very difficult because we don't give a forecast for quarters. I think generally I can say that the trend that we see is still there.
Very good. Thanks, Piet.
Next question is for Mr. Swadesh Kumar , HSBC. Go ahead, please.
Hi, good morning. Thanks for taking the question. The first question is on cross-selling. Prior to the pandemic and even last year, one of the growth drivers for IMCD has been the ability to bring new products to new markets from existing suppliers. How has the pandemic, and especially as we go through 2021 first quarter, how has that changed? Is the product availability slowing that process up a bit? The second question is a follow-up on the product shortages.
Has your service been disrupted to any of the segments, be it customer segment or geographic segment, because of these shortages, or have you managed so far to deliver the service as you would have anticipated, but with difficulty? Finally, basically, if you look at your generic pharma footprint, are you happy with the shape it is in, or do you still see some gaps which you could potentially target with M&A?
Yeah. Okay. Thank you very much for the questions. On the first one, cross-selling. One of the, let's say, elements of our model is, of course, that we want to, what we call cross-fertilize, cross-sell, let's say, our supplier relations across the territories where we work. That is a process that is part of our DNA and that goes on, and that is not interrupted because of COVID. I think that in the context that we have with our suppliers and principals, we always speak about possibilities to further expand cooperation in other territories. That is not really interrupted.
In this particular case, product shortages have not played a role. Service interruption because of product shortages, yes, of course. What does that mean exactly? It means delays, I would say. Sometimes in certain product categories, we even are on allocation. That means that we have to very carefully consider which orders we can confirm and which not. That's not with every product category, of course, the case. We need to be very diligent in ensuring that we can deliver in time, on time, and in the volumes that are required. It's a much more demand of our internal staff to take care of that. The last question now.
The pharma footprint.
Pharma footprint. The pharma footprint, that's a good question. As you know, we have a global strategy in pharma. There's still some gaps, geographical gaps. Don't want to elaborate too much on that, but yes, I think we cover many, many, many major markets, but there's still some wishes that we have. For that, we will continue to look for opportunities in acquisition.
Thank you very much.
Next question is from Quirijn Mulder. Go ahead, please, from ING.
Yeah. Good morning, everyone. My congratulations. You started the results. I've got a couple of questions here. My first question is about, was there anything visible from the Brexit on the 1st of January? I know it's a long time ago, but my second question is, and we have posed it already last time, is there any impact from the vaccine production related to the, let me say, AstraZeneca, relate to your raw materials, excipients, et cetera, which had an influence on your business in the first quarter? On your organic growth, it's correct to assume that your organic growth in the Far East was double digits? Those were my questions.
Quirijn Mulder, on your first, Brexit. My answer would be no, not yet. Of course, internally, we have a lot more work because of the Brexit. In terms of, let's say, the quality of our business and the growth, we have not seen an effect in these first couple of months. On vaccine, let's say, are we able also to contribute to vaccine production? It has not had an effect on our results. We are looking for potential products that could help produce vaccines, but at this moment, our results have not been influenced by that.
Okay.
Finally, the organic
Organic growth. I think, Quirijn Mulder, the question was it double-digit organic growth in Asia Pacific? The answer is a clear yes.
Yeah, my estimate is 15%. Maybe you can confirm that?
It's a bit on the conservative side.
Okay. Thank you.
Ladies and gentlemen, if there are any more questions, please press star one. For additional questions, star one. Go ahead, please. There's a question from Ms. Suhasini Varanasi.
Hi. Good morning. Thank you for taking my questions. Just a few, please. Could you maybe give some color on how the growth has trended across the verticals, especially industrials versus non-industrial verticals? That would be helpful. Thank you. Any trends that you're seeing there. Just a couple of housekeeping questions after that. Any non-recurring charges that you've taken in 1Q that we should be aware of, and the impact of the disposal of Nutri Granulations business, the manufacturing assets for 2021? Thank you.
Do you want to do the last two, Hans?
Yeah. Perhaps the impact of Nutri Granulations. We closed the sales transaction early April. There was no impact in the Q1 figures. It will have limited impact on Q2 as what we disclosed there as revenue was about $11 million of this activity. Your other question, I think refer to one-offs that you should be aware of in Q1. Is that the question? Nothing to report.
Yes.
Nothing to report there.
Okay.
Yeah. Then your first question about, let's say, the dynamics around the different business groups that we have, in particular industrial life science. We saw a strong demand, as I also, I think, reported in the press release in the industrial sectors. Advanced Materials, which is basically covering plastics and composites and all kinds of products around that, saw strong growth. I must also point out, though, that that was, of course, the sector that last year decreased the most. It's also regaining, so to say, strength. Coatings construction did well. I think in life science, we saw a recovery of, at least a partly recovery of our personal care sector, which had suffered also significantly because of COVID. A bit, let's say, life science, of course, very stable business segment. We saw in particular strong dynamics in the industrial segment.
Understood. Thank you very much.
There's an additional question from Mr. Quirijn Mulder from ING. Go ahead, please.
Yeah, two questions. Piet, you made a remark about maybe for suppliers of excipients for vaccines production. Can you maybe elaborate on that, what your plans are there and what the possibilities are there? Probably a new market for you, so maybe you can give me some idea. The other question is about, you spoke about Advanced Materials. The biggest acquisition in Europe was Velox a couple of years ago. How is that going in Velox? Is that now in line with the returns of the rest of the business? The cost savings are, let me say, completely finished et cetera? Those are my two questions.
On your last question on the Velox acquisition a few years ago, that has been fully integrated and, let's say, all the positive cost effects have been absorbed. Of course, that part of the business has done also in this situation quite well. We have a significant medical application part of Velox that is doing also quite well. On your vaccine question, again, I don't want to elaborate too much on it. There are various supporting substances that need to go into vaccine production. Of course, we are looking at possibilities to interest suppliers to work with us. There is nothing to report on that in a concrete way at this moment.
Ladies and gentlemen, if there are any additional questions, please press star one. For any additional questions, star one. Go ahead, please. There's a question from [inaudible]
Yes. Good morning. Maybe you have already answered it, but I missed part of the presentation as I was kicked out. Regarding this industrial demand, in your view, is that a lot of restocking or also recurring business?
Yeah, that is, of course, the million-dollar question always. I think part of that will be, but it's more a guess, because you can't, of course, of 40 or 50,000 customers, exactly understand what the motivation is. I guess it's partly restocking. It's maybe partly also fear of losing out because of the shortages. It is also driven by demand of, let's say, our customers. We see, of course, in end markets, in building construction, we see car industry, automotive also going up. We see in various industries, we see growth. Of course, these are, let's say, customers of our customers. Part will be restocking, but part will also be continuous demand.
Perhaps to add from my side, Hans here. For me, this is always a bit of a funny question because I remember the first quarter call of last year, whereby we had a very strong quarter, and the EUR 100 million question in that call was, is the strong demand in the end of Q1 the result of stocking of customers because of COVID? Basically, the answer at that moment was, we don't know. We see it every time when we have a strong quarter, people think it's related to restocking of customers.
Yes. Probably that will always be the case. I have another question. On the gross profit margin, you stated it's something from acquisitions and rate driven, but also from mix, and mix effects . You also mentioned, okay, on the question of Mutlu, that this was helpful for pricing. Could we conclude from that actually price was the major part of your organic growth, or is it most was volume driven?
I suppose. It's absolutely both. It's volume growth and price growth or price increase.
Okay.
We see certainly volume growth as well.
Okay. Thank you.
Thank you.
Go ahead, please. Mr. van der Slikke, there are no more questions. Please continue.
Well then, thank you very much again for your attendance, for your questions, and look forward to see you all in the next quarter. Enjoy the day. Thank you very much.
Ladies and gentlemen, this concludes today's analyst call from IMCD. You may now disconnect your line, and have a very nice day.