Brenntag (ISIN DE000A1DAHH0), the global market leader in chemicals and ingredients distribution, reports very strong results in the first quarter 2021 by prudently navigating through fast changing market conditions. The two global divisions Brenntag Essentials and Brenntag Specialties, had a successful start and both contributed strong results.
Christian Kohlpaintner, Chief Executive Officer of Brenntag SE, said: “We are very satisfied with our results. In the first quarter of 2021, our industry had to deal with significant supply chain challenges, but Brenntag, thanks to our people, navigated through them well. Product availability, prompt and reliable delivery were key for our success in the first quarter and were highly valued by our customers. Both our two global divisions, Brenntag Essentials and Brenntag Specialties, contributed to this positive development with strong results.”
In the first quarter 2021, Brenntag generated sales of 3,132.5 million EUR. Operating gross profit rose by 7.4% to 764.5 million EUR compared to 750.7 million EUR in the previous year. Operating EBITDA grew even more and reached 300.3 million EUR, a year-on-year increase of 20.7%. Earnings per share totaled 0.63 EUR compared to 0.74 EUR a year ago. The reduction is driven by a non-recurring, extraordinary increase in provisions related to a tax audit concerning past handling of alcohol taxes.
Georg Müller, Chief Financial Officer of Brenntag SE, said: “Despite continued challenging macro-economic and operational conditions, we managed to show very strong results for all key figures. We continue to focus on servicing our business partners best as well as on our stringent cost management. Moreover, we very well managed setting up the new internal and external reporting of our two global divisions.”
Both divisions contributed to the very strong results
Since go-live on January 1, 2021, the company is steered in the new organizational set-up with two global divisions: Brenntag Essentials and Brenntag Specialties. The new operating model with its distinct market approach enables Brenntag to better service its business partners and address their changing needs.
The Brenntag Essentials division which markets a broad portfolio of process chemicals across a wide range of industries contributed to the Group performance with outstanding results in the first quarter 2021. The division reached an operating gross profit of 472.5 million EUR (+7.1%) and reports a very strong operating EBITDA of 194.1 million EUR, 29.2% above prior-year period. All regions contributed to the positive performance of Brenntag Essentials, 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.
The Brenntag Specialties division builds on the company’s position as the largest specialty chemicals distributor worldwide, 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. With an operating gross profit of 284.3 million EUR (+7.1%) and reported operating EBITDA of 119.8 million EUR (+9.2%), the division showed very positive results in the first quarter 2021. The EMEA and Asia Pacific regions showed a particularly strong performance across all industries.
Implementation of Project Brenntag makes good progress
Since go-live of its new operating model with the global divisions of Brenntag Essentials and Brenntag Specialties on January 1, 2021, the company has made good progress with the implementation of Project Brenntag. The comprehensive transformation program has the objective to expand Brenntag’s position as global market leader and position the company for sustainable organic earnings growth. The first quarter consisted of the substantial work on the step-by-step implementation of the program’s initiatives. In addition, significant progress was made in optimizing the global site network. Of the planned around 100 site closures, more than 50 have been completed to date, already. Furthermore, since the initiation of the program, around 350 jobs have been reduced out of approximately 1.300 planned over two years. Brenntag goes on using natural fluctuation, mutually agreed separations, and regular and early retirement schemes to perform the adjustments in a socially responsible manner and strives to avoid compulsory redundancies.
As the COVID-19 pandemic continues, Brenntag’s actions regarding crisis management remain in place as it has proved effective. The company successfully limited the impacts of the pandemic on its business and protected the health and safety of its employees and business partners.
Against the background of this current environment and the results of the first quarter, Brenntag confirms its operating EBITDA guidance to be in the range of 1.08 to 1.18 bn EUR for the full year. The company expects both divisions to contribute to the growth of operating EBITDA.
|(in EUR m)||Q1/2021||Q1/2020||∆ as reported||∆ fx adjusted|
|Operating gross profit*||764.5||750.7||1.8%||7.4%|
|Operating EBITDA*** /|
profit* (in %)
|Profit before tax||139.3||156.2||-10.8%||-|
|Profit after tax||100.2||115.0||-12.9%||-|
|Earnings per share|
|Free cash flow||75.6||161.5||-85.9%||-|
|Mar. 31, 2021||Dec. 31, 2020|
|Net financial liabilities||1,451.3||1,339.9|
|Q1/2021||Q1/2020||∆ as reported||∆ fx adjusted|
|Operating gross profit*||472.5||465.8||1.4%||7.1%|
|Operating gross profit*||284.3||279.6||1.7%||7.1%|
|All other segments|
|Operating gross profit*||7.7||5.3||45.3%||45.3%|
*Operating gross profit is defined as sales less cost of goods sold.
**Unless indicated otherwise, growth rates are on a constant currency basis.
***Brenntag presents operating EBITDA before holding charges and special items. Holding charges are certain costs charged between holding companies and operating companies. At Group level, these effects net to zero. Brenntag is also adjusting operating EBITDA for income and expenses arising from special items so as to improve comparability in presenting the performance of its business operations over multiple reporting periods and explain it more appropriately. Special items are income and expenses outside ordinary activities that have a special and material effect on the results of operations, such as restructurings.