Brenntag opens Ohio location

WHOLLY TOLEDO

EXPANSION • BRENNTAG IS PROGRESSING WITH GROWTH IN THE US AND WITH ‘PROJECT BRENNTAG’, DESPITE THE DIFFICULT BUSINESS ENVIRONMENT

BRENNTAG NORTH AMERICA has been busy recently, completing work on a new facility and continuing its acquisition path to be able to provide a more comprehensive service for its clients. In late July it opened a new full-line distribution centre in Toledo, Ohio (pictured opposite), offering some 230,000 ft² (21,400 m²) of space for the storage and distribution of commodity and specialty chemicals, solvents, surfactants and food ingredients. It sits adjacent to a seven-acre (2.8-ha) tank farm and has both interior and exterior rail links.

“Toledo provides a perfect location to improve service levels and grow volumes with the existing customer base in Michigan and Indiana, while increasing growth opportunities in Ohio,” says Dan Arneson, president of Brenntag Great Lakes. “Brenntag’s global supply and distribution network is now fully available to local customers in the tri-state area. The combination of our dedicated employees, innovative supplier base, and strong customer focus will provide our customers with fast response times, effi cient low-cost logistics, and expert technical and market support.”

Steven Terwindt, COO of Brenntag North America, adds: “This advanced rail-connected distribution centre in Toledo is the beginning of a new growth cycle for Brenntag in the Michigan, Indiana, and Ohio area. Our principal objective has always been, and will continue to be, to serve the needs of our customers and suppliers in the safest and most effi cient manner possible. In addition, our dedicated specialty product storage and logistics capabilities will provide our customers with an extra service dimension.”

SODA AND LUBES Brenntag has also acquired the caustic soda business of Suffolk Solutions, a Virginia-based distributor whose assets include a tank terminal and rail transloading facility in the state. “The business and the related terminals of Suffolk Solutions fi t seamlessly into our ambitions to further link Brenntag’s caustic soda network in the eastern US,” says Terwindt. “There is great potential to strengthen our supply chain and expand our customer base in this geography.”

“Suffolk Solutions will strengthen Brenntag’s footprint in the Virginia market and thus will enable us to improve our logistical infrastructure throughout the region,” adds Anthony Gerace, managing director of mergers and acquisitions at Brenntag Group. “It will provide us with greater supply fl exibility, manoeuvrability, and additional storage capacity on the east coast of the United States.”

The acquired business generated sales of some $15.6m in the twelve months to the end of April 2020.

Somewhat further east, Brenntag has agreed to acquire Thailand-based lubricants distributor Oils ‘R Us, plugging a gap in its regional network for the distribution of lubes for the automotive, commercial, industrial and marine sectors.

“Our acquisition in Thailand, which is the second largest economy in south-east Asia, perfectly drives Brenntag’s lubricants expansion plan in the region forward,” says Henri Nejade, CEO of Brenntag Asia Pacifi c. “Not only regional, but also in terms of service

offering, since Oils ‘R Us offers us extensive possibilities to establish lubricant decanting and re-packaging capabilities in the future.”

FOLLOW THE MONEY Brenntag Group has also released its secondquarter financial results, which show a 13.4 per cent year-on-year decline in sales to €2.82bn but a 3.7 per cent improvement in operating EBITDA at €276.2m and pre-tax profit virtually flat at €167.0m.

“Although we reported solid results in the second quarter with still limited effects of the Covid-19 pandemic on our business performance, we noticed declining demand in various customer industries, and the uncertainty in the markets with regards to the further developments remains high,” says CEO Christian Kohlpaintner. “The positive performance in the first six months is a sound foundation for the second half of the year which we expect to be even more challenging.”

Despite the focus shown on growing its business in North America, this division performed poorly in the second quarter, with sales down 15.0 per cent at €1.04bn and operating EBITDA off by 8.4 per cent at €117.1m. Earnings were impacted by what Brenntag describes as “clear declines in the business with customers of the oil and gas industry as well as by the Covid-19 pandemic”.

Sales also fell in the Europe, Middle East and Africa (EMEA) division, dropping by 9.7 per cent on the year to €1.21bn, although operating EBITDA rose nearly 20 per cent to €130.1m. Brenntag describes this as a “very good quarter”, driven by growth in demand from the cleaning, pharmaceuticals and personal care sectors and “sound business performance” in Germany, Austria, Switzerland, Scandinavia and the UK.

The decline in sales in the Asia Pacific region compared to last year was 10.7 per cent, resulting in a figure of €339.4m, with operating EBITDA down 4.7 per cent at €24.3m. This decline was mainly due to the Covid-19 pandemic, with some countries being in very restrictive lockdown during the quarter, although China had already begun the process of reopening.

The smaller Latin America division experienced a 12.7 per cent fall in sales to €184.7m, though operating EBITDA rose by 14.2 per cent to €15.3m, despite what Brenntag calls “a continued difficult and volatile macroeconomic environment”.

WHAT’S NEXT “The outbreak of the Covid-19 pandemic has made 2020 a year of very special challenges for Brenntag,” Kohlpaintner says. “Back in March, we set up an end-to-end crisis management system with extensive measures to protect the health and safety of our employees and business partners, which has continued to pay off to this day. In the first half of 2020, we managed to minimise the effects of the pandemic on our business performance and the supply chain. We will continue to do all we can to ensure that business runs smoothly.

“Nevertheless, we too find it difficult to make assumptions about the further course of the pandemic,” he continues. “We expect increased levels of uncertainty over the further course of this year and cannot rule out the possibility that the pandemic will have a severe adverse effect on our business performance, especially on the demand side or in the event of growing shortages in supply.”

Since Kohlpaintner assumed the leadership of Brenntag at the start of this year, the company has been working on a holistic analysis of its business, which has now become ‘Project Brenntag’. “The work on this transformation programme addressing our company’s long-term positioning has continued undiminished in recent months despite the unfavourable circumstances,” Kohlpaintner says. “We have drawn initial conclusions, defined measures and developed a comprehensive plan to implement this transformation programme. We have now entered a validation phase so as to maximise the level of coordination on and approval of the planned changes within the Group.

“We will communicate details of ‘Project Brenntag’ at a Capital Markets Update when the results for the third quarter of 2020 are published in early November this year.” www.brenntag.com

CHRISTIAN KOHLPAINTNER, BRENNTAG’S CEO (ABOVE),

IS LEADING A PROCESS OF TRANSFORMATION BUT

IS WARY OF THE EFFECT OF COVID-19 ON BUSINESS

PERFORMANCE IN THE SECOND HALF OF THIS YEAR