Tag Archives: Project Brenntag

Brenntag raises Operating EBITDA Forecast for FY 2021

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Continued positive Earnings Trend and good Prospects for the Rest of the Year are encouraging to German Distribution Group

Global chemical distributor Brenntag SE (Essen, Germany) last week decided to raise the forecast for operating EBITDA for the 2021 financial year previously published on 10. March 2021. Against a backdrop of strong results Q1-2021 and “the continuation of the postive earnings trend into the second quarter to date, as well as considering the prospects for the rest of the year, Brenntag said it expects an Operating EBITDA in the range of EUR 1’160 mn to EUR 1’260
mn for the financial year 2021 (previously: EUR 1’080 mn to EUR 1’180 mn).

Taking into account organic growth, the expected efficiency gains from the implementation of the transformation program “Project Brenntag” and the contribution to earnings from acquisitions which have already been closed, the new forecast is also based on the assumption that exchange rates will remain stable on the level of the announcement date. The forecast does not envisage any special items and comes with the usual caveat that it is “dependent on any further impact of the COVID-19 pandemic on both the macroeconomic environment and the Group not deviating significantly from the currently known extent.”

Source: Brenntag press release

HGE – DCG / 21.06.2021

Brenntag reports strong Q1-2021 Results despite challenging Market Conditions

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Good Start for recently established global Divisions of leading Distribution Group

Global chemical distributor Brenntag SE (Essen, Germany) has published the Q1-2021 results yesterday. Despite a marginal decline in sales to EUR 3’132.5 mn (down 2.5% from EUR 3’211.3 mn as reported, or +2.7% on a constant currency basis), the group is showing increases in Operating Gross Profit of 1.8% (7.4% on  a constant currency basis) from EUR 750.7 mn in Q1-2020 to EUR 764.5 mn last quarter and Operating EBITDA of 14.2% (20.7% on a constant currency basis) from EUR 263.0 mn in Q1 of the previous year to EUR 300.3 mn.

 

Profit before tax was down 10.8% at EUR 139.3 mn, Profit after tax down  12.9% at EUR 100.2 mn. This results in earnings per share attributable to Brenntag shareholders of EUR 0.63 per share (down from EUR 0.74 per share in Q1-2020). The reduction was mostly caused a “non-recurring, extraordinary increase in provisions related to a tax audit concerning past handling of alcohol taxes”, Brenntag said in the announcement.

 

Working capital increased by 14.8% to EUR 1’545.8 mn (up from EUR 1’346.6 mn at the end of  2020) mostly driven by an increase in Trade Receivables. At a level of EUR 75.6 mn, free cash flow was down significantly from the EUR 161.5 mn realised in Q1-2020.

 

With this quaterly set of data Brenntag for the first time provided feedback on the performance of the new global divisions, Brenntag Essentials and Brenntag Specialties that represent the the destinct market aproach the company switched to effective 01. January 2021.

 

Brenntag Essentials had what the announcement described as “outstanding results”, with an Operating Gross Profit of EUR 472.5 mn, up 1.4% as reported or +7.1% at a constant currency basis. This resulted in an Operating EBITDA of EUR 194.1 mn (representing 64.4% of the total in Q1-2021), up 22.6% as reported or +29.2% on a constant currency basis. Brenntag said that “all regions contributed to the positive performance … , with North and Latin America as well as Asia Pacific being particularly strong. EMEA showed slightly weaker growth rates compared to the very strong development of the recent quarters.”

 

Brenntag Specialties, which is focusing on six selected customer industries: Nutrition, Pharma, Personal Care / HI&I (Home, Industrial & Institutional), Material Science (Coatings & Constructions, Polymers, Rubber), Water Treatment and Lubricants, had an Operating Gross Profit of EUR 284.3 mn, up 1.7% as reported and +7.1% and a constant currency basis, resulting in a reported Operating EBITDA of 119.8 million EUR (+3.5% or + 9.2% on a constant currency basis. Here the regions EMEA and Asia Pacific showed a particularly strong performance across all industries, Brenntag said.

 

With the split into two global divisons, the implementation of Project Brenntag has made good progress so far, the statement said. Designed to be a comprehensive transformation program, it has the main objectives to “expand Brenntag’s position as global market leader and position the company for sustainable organic earnings growth.” Step-by-step implementation of the program’s initiatives is underway and more than 50 of the around 100 site closures have already been completed to date. Since the initiation of the program, around 350 jobs have been reduced, out of approx. 1’300 planned over two years. Brenntag said it is using natural fluctuation, mutually agreed separations, and regular and early retirement schemes in order to realise the adjustments in a socially responsible manner.

 

Brenntag also said that the actions regarding crisis management remain in place as have proven to be effective. The company has successfully limited the impacts of the pandemic on its business and protected the health and safety of its employees and business partners.

 

Against the backdrop of a continued challenging environment and the results of Q1, Brenntag said it confirms its Operating EBITDA guidance to be in the range of EUR 1’080 to 1’180 mn for the full year, with both global division expected to contribute.

 

Source: Brenntag press release and quarterly report; DistriConsult analysis

 

HGE – DCG / 12.05.2021

Brenntag reports Results for an “extraordinary” Year 2020

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Operating EBITDA for the Group grows, despite Decline in Sales, particularly in North America

Global chemical distributor Brenntag AG (Essen, Germany) has published the annual results for 2020 today. Sales declined, but Operating Gross Profit for the group and in most geographic regions increased, except for North America. Earning per share remained constant at EUR 3.02 per share.  Brenntag is planning for an 8.0% increase of the dividend to EUR 1.35 per share. This is equivalent to a payout ratio of 44.7% of the Profit after Tax attributable to Brenntag’s shareholders. The dividend payment is subject to approval by the AGM in June.

Brenntag’s sales in 2020 were EUR 11’775.8 mn globally , -8.2% as reported and -6.0% on a constant currency basis, when compared with last year. (Operating) Gross Profit was EUR 2’850.4 mn, an increase of 1.0% as reported, and +3.3% on a constant currency basis. Overall, the group reported an Operating EBITDA of EUR 1’057.5 mn,  up 5.6% from the EUR 1’001.5 mn in 2019 as reported (an increase of 8.3 % on a constant currency basis). Both, Profit before Tax at EUR 663.3mn (EUR 633.4% in 2019) and Profit after Tax at EUR 473.8 mn (EUR 469.2 mn in 2019), remained virtually flat. This results in Earnings per Share attributable to Brenntag shareholders of EUR 3.02 per share, the same level as reached in 2019.

Net Working Capital decreased significantly from EUR 1’767.7 mn at the end of 2019 to EUR 1’346.6 mn at the end of last year. Based on this development, working capital turns improved from 7.0x to 7.3x during 2020. At a level of EUR 1’054.6 mn in 2020, free cash flow was up 26.0% from the EUR 837.3 mn realised in 2019, mostly driven by the reduction in Net Working Capital, Brenntag said.

Sales were impacted by a very challenging macro-economic environment and extraordinary economic conditions triggered by the COVID-19 pandemic. Brenntag said it went into “crisis management mode” early on in the pandemic and managed to maintain uninterrupted supply chains throughout 2020.

In EMEA sales declined by 4.0% (-2.7% on a constant currency basis) to EUR 5’027.5 mn. On the Operating EBITDA level, the EMEA region increased significantly by 17.1% as reported to EUR 475.9 mn (+19.0% on a constant currency basis). Well performing sectors were Personal Care, Cleaning, Pharma and Coatings & Construction, Brenntag said. 

North America suffered from soft demand, particularly in Oil & Gas and Lubricants, with sales declining by 12.5% (10.6% on a constant currency basis) to EUR 4’191.0. The region reported also a decrease of Operating EBITDA, -8.5% to EUR 434.4 mn (-6.6 % on a constant currency basis).

Latin America reached an Operating EBITDA of EUR 63.5 mn, up 13.5% as reported from EUR 55.9 mn (+26.9.0% on a constant currency basis), despite  declining sales at EUR 819.4 mn, down 4.1% as reported (+6.0% on a constant currency basis). 

Asia Pacific contributed an increased Operating EBITDA of EUR 123.8 mn, up 22.5% from the EUR 101.1 mn reported for 2019 (+25.9 % on a constant currency basis. Brenntag said that “after being hit by the pandemic early in the year, the Asia Pacific region recovered sequentially, with particularly China seeing a quick and strong recovery. Almost all countries and many industries contributed to the very good results.” 

As part of the comprehensive transformation program dubbed “Project Brenntag”, which was launched by CEO Christain Kohlpaintner in mid-2020, the company has started to follow a new operating model based on two global divisions named Brenntag Essentials and Brenntag Specialties. Amongst other things, the project comprises programs for the site network optimisation (a reduction of the number of sites globally by 100, of which 30 were closed already in 2020) and a workforce reduction initiative (headcount reduction in 2020 was ca. 200 FTEs).  These, as well as other efficiency measures, are expected to generate a total increase of EUR 220 mn in Operating EBITDA by FY2023, ramping up year by year. In 2020 the initial contribution was approx. EUR 15 mn. 

Providing an outlook for 2021, Brenntag said it expects an Operating EBITDA for the current year between EUR 1’080 and 1’180 mn, assuming  that exchange rates remain stable. The group sees itself operating in a macroeconomic environment of considerable uncertainty, particularly in the first half of the year. The outlook also includes expected efficiency gains from the restructuring measures being currently implemented as part of Project Brenntag and full-year contributions from several acquistions closed during 2020, the announcement said. 

Additional details can be obtained via the links below:

https://www.brenntag.com/corporate/en/media/news/brenntag-shows-strong-performance-in-the-extraordinary-year-2020-that-underlines-the-resilience-of-its-business-model.html

https://www.brenntag.com/corporate/documents/investor-relations/2021/gb-ar2021/brenntag_annualreport_2020.pdf

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

HGE – DCG / 10.03.2021

Brenntag appoints Ewout van Jarwaarde as Chief Transformation Officer

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Management Board expanded with newly created CTO Position

Global chemical distributor Brenntag SE (Essen, Germany) announced  that it has appointed Ewout van Jarwaarde as new Member of the Board of Management and Chief Transformation Officer (CTO). He will assume his role in the newly created position as of 01. January 2021 and will be responsible for the execution of the company’s global transformation program “Project Brenntag”,  which is supposed “to further expand the company´s leading market position and drive sustainable organic earnings growth”.

 

Van Jarwaarde, a 37-year-old Dutchman, will also “be responsible for driving functional excellence, realising digital and data-driven business opportunities as well as developing the group-wide IT and indirect procurement functions”,  Brenntag said in the announcement. Most recently he was CEO of CarNext.com, a marketplace for high quality used cars, part of LeasePlan (Amsterda, Te Netherlands) with operations across Europe. At LeasePlan, he was responsible for its used car business for the development, launch and scaling of CarNext.com. Prior to this position van Jarwaarde was a Partner at McKinsey & Company in Amsterdam focusing on strategy development, commercial and operational excellence transformations and building digital and data-driven capabilities across various industries globally.

 

Source: Brenntag press release

 

HGE – DCG / 21.12.2020

Brenntag announces Outline of Transformation Program

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“Project Brenntag” to deliver signifcant Contribution to Operating EBITDA with Site Network Optimisation and Workforce Reduction

Global chemical distributor Brenntag AG (Essen, Germany) announced  that the Board of Management and the Supervisory Board have decided on the key parameters of the group’s transformation program dubbed “Project Brenntag”, which is aiming at a further expansion of Brenntag’s leading market position and also at sustainable organic earnings growth.

 

The announcement follows a recent media release on the future operation model with two distinct global devisions and changes to the Board of Managemnt, effective 01. January 2021.    

 

Key parameters of the program include an optimisation of the site network, with the intention to close ca. 100 sites globally as well as a reduction of the global workforce of approx. 1’300 (i.e. ca. 7.5% of a current total of 17’500 employees) over the next two years.  The company is planning to implement the reduction in a “socially responsible manner”, the statement said.

 

The overall net cash outflow for the project is forecasted to be EUR 370 mn. Brenntag expects an Operating EBITDA contribution from the project that increases year by year to a full level of EUR 220 mn per annum, which should be reached in the beginning of 2023.

 

Source: Brenntag press release

 

HGE – DCG / 27.10.2020

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

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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