Fitch Ratings has affirmed Azelis Group NV's Long-Term Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook and Azelis Finance NV's senior unsecured rating at 'BB+'.
The Recovery Rating is 'RR4'.
Azelis's 'BB+' IDR reflects its position as a leading specialty chemical distributor with strong diversification of suppliers, customers and products, balanced against EBITDA net leverage sustained above 3x due to recurring acquisitions. It also captures the company's record of stable profit margins and structurally positive free cash flow (FCF), which supports the funding of bolt-on acquisitions.
Fitch-adjusted EBITDA net leverage rose to 3.7x in 2025, above the negative leverage sensitivity of 3.5x, which if sustained, could lead to negative rating action. Our rating case projects EBITDA net leverage remaining broadly at this level in 2026 before declining to 3.3x in 2027 as we expect Azelis to reduce M&A spending to prioritise deleveraging, supporting the Stable Outlook.
Key Rating Drivers
Higher Leverage on Organic Decline: Azelis's revenue declined organically in 2023-2025, contrasting with the resilient nature of the specialty chemical distribution market, compounded by adverse foreign-currency effects. This diverged from the particularly strong performance in 2021-2022. Consequently, EBITDA fell by 10% in 2025, despite acquisitions, and EBITDA net leverage rose to 3.7x in 2025 from 3.3x in 2024. Trading conditions remained weak in 1Q26, with revenue declining by 9% organically, although the company reported early signs of demand stabilising during the quarter.
Uncertain Impact of Disruptions: We believe that the disruptions to chemical trade flows and feedstock costs caused by the closure of the Strait of Hormuz are unlikely to result in the same profit uplift as that seen in 2021-2022, given much weaker underlying demand. We forecast higher prices will be offset by negative volume and mix effects, also reflecting uncertainty over the supply of certain products. Consequently, we assume a 3% organic sales decline in 2026, including FX effects, and a 4% year-on-year decrease in EBITDA. Over 2027-2030, we forecast revenue will return to low-single-digit organic growth as demand stabilises, but remain below the market's historical growth rates.
FCF Underpins Deleveraging Capacity: Azelis has resilient EBITDA margins of 10%-11%, compared with capex of less than 1% of sales, owing to an asset-light business model. This results in strong FCF of about 5% on average in 2022-2025, which we project at about 4% in 2026-2030. In our view, this provides significant flexibility to deleverage, depending on the company's capital allocation priorities.
Financial Discipline with Caveats: We expect Azelis to reduce M&A spending relative to 2022-2025, when it spent a total EUR1.5 billion, due to its commitment to reduce net debt/EBITDA below 3x. Its reported leverage was 3.4x in 1Q26. Therefore, we assume acquisition spending will remain well below FCF in 2026-2028 as the company focuses on deleveraging. Azelis's stated dividend policy is to distribute 25%-35% of the prior year's net income. However, in 2026, a stable dividend was approved, despite lower earnings, suggesting some flexibility in applying this policy.
Global Specialty Distributor: Azelis is the second-largest pure specialty chemical distributor by revenue, behind IMCD N.V. (BBB-/Stable), and the fourth-largest overall when considering the specialty segments of Brenntag SE and Windsor Holdings III, LLC (Univar Solutions; B+/Stable). Azelis's scale in a fragmented industry allows it to benefit from longstanding exclusivity contracts with suppliers and thousands of customers globally. Its scale, technical and formulation expertise, and geographical breadth provide competitive advantages over smaller peers in securing supply contracts with large chemical producers, and in achieving synergies with acquired businesses.
Different Leverage Definitions: We include off-balance-sheet factoring and deferred payments on acquisitions in the calculation of financial debt, resulting in Fitch-calculated EBITDA net leverage of 3.7x for 2025, above the 3.3x reported by Azelis. These deferred payment liabilities represent postponed M&A-related cash outflows. Acquisitions also often include earnouts and put options, creating the risk of additional cash outflows, although these payments are typically linked to the outperformance of acquired companies.
Peer Analysis
Azelis's closest Fitch-rated peer is IMCD. Both companies are pure specialty chemical distributors with market-leading positions, share a similar growth strategy focused on FCF-funded bolt-on acquisitions and comparable diversification of suppliers and customers. Both maintain asset-light business models with minimal sustaining capex requirements. Azelis's FCF margin is stronger, but IMCD benefits from larger absolute EBITDA, and we forecast it to maintain lower EBITDA net leverage, below 3x.
Univar Solutions is the second-largest global chemical distributor behind Brenntag AG and is the largest North American chemical distributor in a fragmented industry. Univar Solutions' financial structure is weaker than peers and we expect its EBITDA leverage to remain at 5.5x-6.5x through the forecast horizon, while we forecast Azelis' EBITDA leverage to remain below 4.5x.
Fitch's Key Rating-Case Assumptions
Organic revenue growth (including FX impact) of -3% in 2026, 1.5% in 2027, 2% thereafter
EBITDA margin (Fitch-calculated) of 10% in 2026-2030
Capex at 0.4%-0.5% of revenue to 2029
Annual M&A outflows (excluding deferred considerations payments) of EUR30 million in 2026, EUR100 million in 2027, EUR150 million in 2028, EUR200 million a year in 2029 and 2030
Annual dividends of EUR50-70 million
Corporate Rating Tool Inputs and Scores
Fitch scored the issuer as follows, using our Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP):
Business and financial profile factors (assessment, relative importance): management ('bbb-', Moderate), sector characteristics ('bbb', Moderate), market and competitive positioning ('bb+', Moderate), diversification and asset quality ('bbb+', Moderate), company operational characteristics ('bbb', Moderate), profitability ('bbb-', Lower), financial structure ('bb', Higher), and financial flexibility ('bb+', Moderate).
The quantitative financial subfactors are based on custom CRT financial period parameters: 20% weight for the historical year 2025, 20% for the forecast year 2026, 20% for the forecast year 2027, 20% for the forecast year 2028 and 20% for the forecast year 2029.
The Governance assessment of 'good' has no impact.
The Operating Environment assessment of 'a' has no impact.
The SCP is 'bb+'.
To derive the Long-Term IDR:
Fitch made no adjustments to the SCP, resulting in an IDR of 'BB+'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
EBITDA net leverage at or above 3.5x on a sustained basis
FCF margin below 2.5% for an extended period
Capital allocation prioritising acquisitions and growth over prudent leverage management
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
EBITDA net leverage below 2.5x on a sustained basis
FCF margin consistently above 5%
Conservative execution of the company's financial policy
Liquidity and Debt Structure
At end-2025, Azelis's liquidity was EUR713 million, comprising EUR263 million in cash and an undrawn EUR450 million revolving credit facility maturing in 2029. Its short-term debt of EUR230 million is related to factoring facilities and deferred acquisition-related consideration payments due within 12 months, which are recurring in nature and comfortably covered by available liquidity and FCF generation. This liquidity position supplements FCF to support the company's capital allocation through 2028.
In February 2026, Azelis issued EUR400 million of new notes due 2031 with a coupon of 4.125% to refinance the EUR400 million 5.75% notes due March 2028, eliminating near-term refinancing risk. Pro forma for this transaction, outstanding funded debt comprises EUR15 million of assignable loan notes (Schuldschein) due 2027, EUR600 million 4.75% notes due 2029, a EUR600 million term loan due September 2029 and EUR400 million notes due 2031. This creates a concentration of maturities in 2029 totalling EUR1.2 billion, but we expect Azelis to proactively address this.
Issuer Profile
Azelis is a global specialty chemical distributor headquartered in Belgium.
Summary of Financial Adjustments
Lease liabilities are excluded from financial debt; right-of-use asset depreciation and lease-related interest expense are reclassified as cash operating costs, reducing EBITDA accordingly
Off-balance-sheet factoring is added to financial debt. The cash flow statement is adjusted to reflect changes in factoring utilisation within financing activities rather than operating activities
Amortised debt issuance costs are added back to financial debt to reflect amounts payable at maturity
Deferred payment liabilities related to acquisitions are added to financial debt
Financial debt excludes accrued interest
Non-cash and non-recurring items are added back to EBITDA
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
Climate Vulnerability Signals
The results of our Climate.VS screener did not indicate an elevated risk for Azelis.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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