May 8 2020

Brenntag reports solid Q1-2020 Results and makes Progress on Holistic Analysis of Business

Operating Gross Profit and Operating EBITDA increase despite flat Sales

Global chemical distributor Brenntag AG (Essen, Germany) has published the Q1-2020 results, showing increases in Operating Gross Profit of 8.3% (7.1% on  a constant currency basis) from EUR 688.2 mn in Q1-2019 to EUR 745.2 mn and Operating EBITDA of 10.1% (8.7% on a constant currency basis) from EUR 238.8 mn in Q1 of the previous year to EUR 263.0 mn. Sales was “flat” at EUR 3’206.1 mn, +0.7% (-0.3% on a constant currency basis), not really different from the EUR 3’182.3 mn realised in Q1-2019. 

Profit before tax was up 8.9% at EUR 156.6 mn, Profit after tax up 9.3% at EUR 115.0 mn This results in earnings per share attributable to Brenntag shareholders of EUR 0.74 per share (up from 8.8% from EUR 0.68 per share). Working capital decreased slightly to EUR 1’752.8 mn (down from EUR 1’767.7 mn at the end of  2019). At a level of EUR 161.5 mn, free cash flow was down slightly from the EUR 166.3 mn realsied in Q1-2019.

In EMEA the company experienced a good quarter with increased demand, as most of the company’s customers were able to maintain business operations, despite COVID-19 related issues. Sales were up 3.3% as reported and on constant currency basis to EUR 1’391.9 mn. On the Operating EBITDA level, the EMEA region increased by 20.9% as reported to EUR 406.3 mn (+21.2% on a constant currency basis).

North America remained difficult territory for the company. The region even reported an decrease of the Operating EBITDA, -1.7% to EUR 110.1 mn (-4.6 % on a constant currency basis). Sales were down -2.5% (-5.2% on a constant currency basis) to 1’146.5 mn. Despite positive trends in some industry segement, Oil & Gas with it’s “clear declines in business” drove earnings down, the company said.

Latin America reached an Operating EBITDA of EUR 13.8 mn, up 20.0% as (+25.1% on a constant currency basis), despite  what Brenntag described as “a continued volatile and difficult market environment” in the region”. Sales in the region were EUR 217.1 mn, up 3.1% or 6.4% on a constant currency basis.

Asia Pacific contributed an Operating EBITDA of EUR 26.3 mn, up 22.3%  (+20.1 % on a constant currency basis) This increase is due in particular to the acquisition of Tee Hai Chem Pte. Ltd., closed during 2019, Brenntag said in the statement. 

As Brenntag said earlier in the year, it is currently examining its internal structures, processes and organisational forms along the value chain, where it sees potential for improvement in harmonisation and standardisation. This initiative, dubbed “Project Brenntag” is making good progress, the CEO later said in the earnings call.

Source: Brenntag press release, earnings call and quarterly report; DistriConsult analysis

HGE – DCG / 08.05.2020

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