Brenntag SE: reports solid Q3-2023 financial results

Essen (Ruhr) / DE. (bag) Germany’s Brenntag SE, the global market leader in chemicals and ingredients distribution, presented solid financial results for the third quarter 2023 broadly in line with expectations. In a challenging macroeconomic environment characterized by geopolitical uncertainties and inflationary trends, Brenntag Essentials continued to showcase its resilience and delivered overall good results despite a volume decrease, with an especially robust performance in North America. The business of Brenntag Specialties was again affected by negative volume developments and price pressure. Both divisions observed a sequential improvement in demand in course of Q3 that is expected to continue in Q4.

Christian Kohlpaintner, Chief Executive Officer of Brenntag SE: «The macroeconomic environment continued to be challenging in the third quarter with ongoing geopolitical uncertainties and inflationary trends that impacted our performance. We saw a mixed picture across divisions and regions but also observed market conditions continue to normalize with sequential volumes moderately increasing as it has been anticipated for the second half of 2023. This modest volume recovery and our overall solid Q3 performance provides a rather stable basis for the remainder of the year despite slightly softening pricing levels. We expect our operating EbitA for the financial year 2023 to now be around the lower end of our guidance specified in August 2023. We thank our employees who made these results happen against numerous headwinds.»

Financial performance in line with expectations

In the third quarter 2023, Brenntag generated sales of 4,088.3 million EUR which is 15.4 percent below previous year quarter. Operating gross profit reached 1,000.6 million EUR, 4.3 percent below the strong prior year quarter. Operating EbitA came in at 302.7 million EUR, a decline of 15.3 percent compared to the very strong Q3 2022 performance. The free cash flow was again very strong and with 441.6 million EUR exceeded the previous year’s figure (347.6 million EUR) significantly by 27.0 percent as Brenntag continued to show its resilience with very strong cash flow generation. Earnings per share stood at 1.18 EUR (Q3 2022: 1.60 EUR).

Global divisions perform in line with expectations

Market conditions remained challenging but continued to normalize with volumes increasing sequentially as it has been anticipated for the second half of the year. In this still challenging environment, the performance of Brenntag’s global divisions was broadly in line with expectations.

The business of Brenntag Specialties, the global go-to service partner for innovative and sustainable solutions for specialty chemicals and ingredients, was again affected by negative volume developments year-over-year in combination with falling sales prices. The division reported an operating gross profit of 371.0 million EUR (-5.5 percent). Operating EbitA reached 135.0 million EUR, a decrease of 19.6 percent compared to Q3 2022. In Q3 2023, a positive development in volumes was reported in the EMEA region, whereas in North America the volumes were again low.

Brenntag Essentials, the market leader in industrial chemicals distribution across a wide range of industries, continued to demonstrate its resilience in adverse market conditions and delivered good results in Q3 2023 despite volumes below previous year level. The operating gross profit came in at 622.9 million EUR, which is 3.5 percent below prior-year quarter. Operating EbitA reached 198.8 million EUR, this is -13.4 percent compared to very good results of the previous year’s quarter. North America showed a robust performance, while price normalization compared to very high price levels last year affected the EMEA region. In APAC, an increase in volumes compared to last year was achieved both organically and including acquisitions.

Successful execution of value enhancing M+A activities

Kristin Neumann, Chief Financial Officer of Brenntag SE: «Brenntag’s strong financial profile gives us ample room to grow organically and to successfully execute value accretive M+A along our ambitious growth strategy. We have signed or closed seven acquisitions so far this year, with a total enterprise value of more than 370 million EUR. We are well on track of reaching our planned corridor of around 400 to 500 million EUR per year.»

The majority of acquisitions in 2023 are associated to the company’s Specialties business and in particular focusing on attractive end markets like Nutrition, Personal Care and Pharma, in line with Brenntag’s strategic ambition to grow in these areas. This includes the most recent acquisition agreement with Colony Gums, a US-based manufacturer of stabilizer blends and service provider that will expand Brenntag’s services and product portfolio in Nutrition and strengthen its Life Science portfolio in North America. In early November, Brenntag Essentials announced the acquisition of OWI Chlor Alkali in North America, one of the largest distributors of caustic soda. The acquisition significantly expands the division’s local and regional footprint. For additional information please read the Company’s PDF file below (477 KB):