A big year for Brenntag

LOOKING BACK, MOVING FORWARD

RESULTS • STEVE HOLLAND’S LAST YEAR AS BRENNTAG CEO HAS STARTED ON A HIGH, WITH THE COMPANY’S BROAD-BASED STRATEGY PAYING OFF ACROSS ALL OPERATING TERRITORIES

BRENNTAG HAS POSTED firm results for 2018, with global sales up 10.2 per cent on 2017 at €12.55bn and EBITDA ahead by 8.4 per cent at €875.5m, both figures adjusted for currency changes and both marking record highs for the group. Steve Holland, Brenntag’s CEO (below), says: “2018 was a year of good growth for Brenntag. We grew in all regions and lifted operating EBITDA to an all-time high.”

All regional divisions posted improved results but, Holland says, “Our large region North America, which delivered a very good, broad-based performance, is particularly worthy of note.” Sales increased by 11 per cent to €4.64bn, with operating EBITDA ahead by 11.2 per cent at €409.6m. The high growth achieved across virtually all customer industries was almost entirely organic, Brenntag says.

The strong showing in North America is set to be a recurring theme for 2019 as Brenntag has struck some new deals and expanded its portfolio in the region. In March this year Brenntag North America signed an agreement with Hexion that will see it distribute Hexion’s range of epoxy speciality and base epoxy resins and intermediates across the US and Canada. Hexion is a global leader in thermoset resins, serving a wide range of industries and providing a comprehensive selection of high-performing epoxy products, complementing Brenntag’s role as a leading distributor of epoxy merchandise. This arrangement provides both operators with new access to specialist teams, a wider assortment of products, and all-important distribution efficiency.

Markus Klähn, CEO of Brenntag North America, says: “We are enthusiastic to expand our global strategic relationship with Hexion in North America as part of our specialties growth strategy. Hexion’s high-performance epoxy products and technologies will allow us to solidify our position as partner of choice in the coatings, adhesives and construction segment and enable us to offer our customers innovative solutions through a dedicated team of technical experts.”

“We’re excited to connect the unique synergies of Brenntag with our product line on a larger scale,” adds Adam Houseman, distribution manager for Hexion Americas. “By expanding our relationship across North America, our customers will see enhanced value in technical assistance and convenience of supply.”

CLOSING A HOLE Filling a gap in its coverage, Brenntag has acquired New England Resins & Pigments (NERP), a regional distributor of specialty chemicals and packaging solutions with commercial operations. Acquisition of NERP, headquartered in Woburn, Massachusetts, “supports our ongoing growth in specialties and complements our presence in New England as a strong and reliable distribution partner of the industry,” says Klähn.

Anthony Gerace, Brenntag Group’s managing director, mergers & acquisitions, says: “NERP allows us to expand our regional specialty chemical portfolio and bolsters Brenntag’s existing Material Science business and technical sales presence in New England and the border states. It also strengthens our distribution footprint and facilitates new and stronger relationships with our specialty chemical partners.”

Joe O’Connor, NERP president, states: “NERP is thrilled to be joining Brenntag Specialties. The additional resources and expanded product offerings will allow NERP to bring greater value to our customers and will provide exceptional growth opportunities to our employees and principals. Our ability to provide a superior technical and customer service experience will be greatly enhanced.”

MAINTAINING MOMENTUM Outside of North America, Brenntag managed to resist economic and political headwinds and maintain its growth pattern. In the Europe, Middle East and Africa (EMEA) region, for instance, operating EBITDA rose by 7.2 per cent to €385.5m on sales up 7.9 per cent at €5.34bn, supported in part by internal initiatives. There was good organic growth in the first half of the year, although conditions became more difficult as the year progressed due to an economic slowdown and tougher conditions in the region.

Brenntag’s business in Latin America continued to be impacted by the “generally challenging and volatile economic environment” in the region, although the company notes that the situation stabilised somewhat later in the year. Overall, operating EBITDA rose by 2.3 per cent to €39.9m on sales ahead by 6.1 per cent at €807.8m.

The Asia Pacific region once more posted strong growth, with operating EBITDA up 9.4 per cent at €77.9m on sales up 22.7 per cent at €1.38bn. Brenntag sees this as the region that offers the greatest growth potential and is continuing to optimise its network and expand its range of products and services, as evidenced by the joint venture it established with Raj Petro Specialities in July 2018.

Looking ahead to this year, Holland says: “Current developments and forecasts show that more challenging economic conditions can be expected at both global and regional level in 2019. In this environment, we will demonstrate our resilience and continue to grow, albeit at a slightly slower pace. In doing so, we will benefit from our broad footprint. We also expect impetus from our new approach for customers in the food and nutrition industry, where we repositioned ourselves in the reporting period so as to leverage the potential in this attractive segment.”

A NEW CHAPTER This will likely be the last set of annual results that Holland presents. After nearly a decade at the helm, and overseeing record years, he will be ending his time as CEO of Brenntag in February 2020 when his current contract expires. Under Holland, Brenntag has increased sales by more than 60 per cent.

Chairman of the Supervisory Board, Stefan Zuschke, says of the last nine years: “Steven has made a significant contribution in Brenntag’s journey from private to public ownership and its expansion into a truly global chemical distribution company and market leader. He has been a driving force within the Group since he joined the management board in 2007 and the Supervisory Board would like to express its appreciation for his vision, passion and leadership.”

A suitable replacement will be announced by the Supervisory Board in due course after a structured selection process. Undeniably, Holland will be leaving a formidable legacy for his successor.

“It has been my honour and privilege to lead the company and enjoy the challenges and successes of an amazing group of committed colleagues throughout the world,” Holland says. “I remain passionate about the future success and opportunities that lie ahead for Brenntag as we approach transformational changes in digital supply chain, value added services and growth of our speciality chemicals, ingredients and technical expertise. 2020 is the start of a new decade and I believe it’s the right time for new leadership to take Brenntag forward into new areas of growth and success.” HCB www.brenntag.com