Brenntag off with a bang

A STRONG START

RESULTS • BRENNTAG HAS STARTED 2019 IN THE SAME WAY IT LEFT OFF 2018, WITH GROWTH AROUND THE WORLD – EXCEPT IN EUROPE. IT IS ALSO CONTINUING TO EXPAND THROUGH ACQUISITION

IT HAS BEEN a strong start to 2019 for Brenntag with the acquisition of Marlin Company in the US and widespread growth in the first quarter. Three of Brenntag’s operating regions showed solid growth, contributing to increases in operating gross profit and operating EBITDA at the group level.

The most positive regions for growth have been Asia Pacific, North America and Latin America. The Europe, Middle East and Africa (EMEA) region, however, displayed weaker performance due mainly to lower demand.

“A slowdown in global economic momentum was already evident at the end of 2018 and, as expected, this trend impacted on our results in the first quarter of 2019,” says CEO Steve Holland. “In our EMEA region in particular, we recorded a decrease in demand, which is reflected in earnings. However, even amid these conditions, Brenntag achieved stable results overall due to our global diversification.”

GLOBAL GROWTH In Brenntag’s Asia Pacific operations there have been positive contributions from both existing businesses and acquisitions. Operating gross profit reached €60.4m, a rise of 18.0 per cent on a constant currency basis (+23.5 per cent as reported). Operating EBITDA was up by 18.1 per cent on the prioryear figure on a constant currency basis (+23.6 per cent as reported) to €21.5m.

The North America region has continued to display positive performance, with growth in the two key performance indicators. Compared with the prior-year quarter, operating gross profit rose by 5.5 per cent on a constant currency basis (+13.7 per cent as reported) to €292.8m. Operating EBITDA reached €112.0m, an increase of 17.9 per cent on a constant currency basis (+27.1 per cent as reported).

Latin America has surprised many by continuing the growth shown in the latter half of 2018, despite the challenging economic and political environment. Brenntag generated operating gross profit of €42.6m in the first quarter of 2019, an increase of 8.7 per cent on a constant currency basis (+12.4 per cent as reported). Operating EBITDA grew by 40.2 per cent on a constant currency basis (+42.0 per cent as reported) to €11.5m.

Brenntag’s EMEA division – its largest - generated operating gross profit on a par with the previous year (-0.6 per cent as reported) at €287.7m. Operating EBITDA was up by 1.6 per cent on the prior-year figure on a constant currency basis (+0.4 per cent as reported) to €101.8m. Not only did the company experience weaker demand but costs were also higher, particularly relating to transport.

Brenntag Group has confirmed its outlook for 2019 and is expecting to see growth in operating gross profit and operating EBITDA, particularly in the second half of 2019. This forecast takes into account the very difficult environment presently, especially in Europe, but does not assume a further slowdown.

Meanwhile, in the US, Brenntag has acquired North Carolina-based Marlin Company, which is expected to bolster Brenntag’s value-added service strategy and mixing and blending business Markus Klähn, CEO of Brenntag North America, says: “Marlin’s unique powder and liquid blending services for many different industries and their professional packaging and labelling system are an excellent addition to Brenntag’s value-added services business.” Marlin generated sales of some $7m in its 2018 fiscal year. HCB www.brenntag.com

BRENNTAG HAS NOT BEEN SURPRISED TO ENCOUNTER