- Gross profit* increases to EUR 1,945.5 million
Increase in operating EBITDA** of 1.6% to EUR 698.3 million (on a constant currency basis)
- Growth in earnings per share to EUR 6.59, allowing dividend proposal of 2.60 per share (8.3% increase)
- A three-for-one stock split will be proposed to the General Shareholders' Meeting in June 2014
- Positive outlook for 2014: further growth in all relevant earnings parameters is expected
Brenntag (WKN: A1DAHH), the global market leader in chemical distribution, maintained its sound development last year despite the challenging macroeconomic situation, and posted continuously strong profits for the 2013 financial year. The results further demonstrated the resilience of the company’s business model. This is also reflected by the free cash flow, which remains at a high level.
For the 2013 financial year, sales increased to EUR 9,769.5 million, up 3.3% on the previous year on a constant currency basis (0.8% as reported). In the reporting period, gross profit* amounted to EUR 1,945.5 million, an increase of 3.7% year-on-year on a constant currency basis (1.0% as reported).
On a constant currency basis, operating EBITDA** was up 1.6% on the previous year (-1.2% as reported), totalling EUR 698.3 million. Adjusted for non-recurring increases in provisions in the Europe segment the result increased by 2.4% year-on-year on a constant currency basis. Accordingly, the adjusted operating EBITDA amounts to EUR 715.1 million and meets the guidance range of EUR 710 million to EUR 725 million.
Increased dividend proposal
Profit after tax increased by 0.3% year-on-year to EUR 338.9 million. In line with this, earnings per share attributable to Brenntag's shareholders amount to EUR 6.59. On the basis of this result, the Board of Management and the Supervisory Board propose to the General Shareholders' Meeting (GSM) on June 17, 2014 an 8.3% increase in the dividend to EUR 2.60 per share. This represents a payout ratio of 39.5% of the net profit attributable to Brenntag’s shareholders.
Brenntag proposes a three-for-one stock split
Brenntag will propose a three-for-one stock split to its General Shareholders' Meeting on June 17, 2014. Under this proposal, the registered share capital and the number of shares will be tripled. This will be accomplished by issuing new shares through the conversion of capital reserves from company funds. Every shareholder will receive two additional shares for each share held. With the stock split, Brenntag increases the share’s attractiveness for an even broader group of investors and intends to promote the trading activity.
Steven Holland, CEO of Brenntag: "As expected, 2013 proved to be a dynamic business environment with a number of challenges in both developed and emerging markets throughout the world. We were once again able to demonstrate a high degree of resilience in such markets through our highly diversified business model and report strong results for the year. We continued to build on the Group's structural organic and acquisitive growth opportunities. The business has a clear objective of further expansion of our product and service offering with an accelerated conversion of strategic acquisition targets.”
Europe emerges from recession
Business in Europe developed positively in the reporting period, even against a backdrop of falling industrial production. Sound cost management and the continuous optimization of processes led to an improvement in results, particularly in the second half of the year. Operating gross profit* increased by 1.3% year-on-year on a constant currency basis (0.2% as reported) to EUR 930.0 million. Operating EBITDA** stood at EUR 297.4 million, corresponding to a slight reduction of 1.5% on a constant currency basis (2.8% as reported). After adjustment for a non-recurring increase in provisions, adjusted operating EBITDA rose by 0.4% on a constant currency basis.
North America delivers solid results and invests for accelerated growth in 2014
Despite the weaker economic environment in 2013, business performance in North America was positive with acquisitions contributing to this improvement. In the reporting period, Brenntag North America increased its operating gross profit* by 6.7% on a constant currency basis (2.8% as reported) to EUR 763.1 million. Operating EBITDA** was up year-on-year to EUR 325.7 million, corresponding to a 4.9% increase on a constant currency basis (1.2% as reported) and thus meeting expectations.
Latin America provides mixed results
In 2013, the Latin America segment was characterized by a weak general economic environment and restructuring measures in the region. On a constant currency basis, operating gross profit* improved slightly by 2.1% (-3.5% as reported) to EUR 163.6 million. Brenntag Latin America generated operating EBITDA** of EUR 47.0 million, corresponding to a 12.3% decrease on a constant currency basis (17.4% as reported). The region performed below expectations. Measures were therefore taken during the 2013 financial year to reverse this trend on a long-term basis.
Positive development in Asia Pacific
Economic momentum picked up slightly in Asia Pacific in the second half of 2013. In the region, operating gross profit* rose by 11.3% on a constant currency basis (7.2% as reported) to EUR 121.7 million. Brenntag generated operating EBITDA** of EUR 47.5 million in Asia Pacific, corresponding to a 4.2% increase on a constant currency basis (1.5% as reported).
Free cash flow at a high level
The high free cash flow of EUR 543.4 million in the 2013 financial year again underlines the attractiveness of the business model. The slight decrease compared with the previous year is largely due to the change in working capital, which was higher than in 2012. Investments in non-current assets (Capex) increased slightly to EUR 97.2 million as a result of the higher volume.
Brenntag regards itself as extremely well positioned
According to a forecast by the International Monetary Fund, the global economy is likely to grow more strongly in 2014 than in 2013. Based on the significant groundwork Brenntag has performed, the company expects to benefit from this forecasted improvement in 2014. "We have worked diligently to position the group positively to capture accelerated organic growth as global economies emerge from weak underlying demand. Therefore we are optimistic about the future growth and development for the company in both 2014 and the years ahead", said CEO Steven Holland.
The company intends to achieve its aim of being the preferred distributor of industrial and specialty chemicals for customers and suppliers with its clear growth strategy, which is based on steadily expanding a leading market position while continuously improving profitability.
|Consolidated Income Statement||2013||2012||∆ as reported||∆ fx adjusted|
|Gross profit||EUR m||1,945.5||1,925.7||1.0%||3.7%|
|Operating EBITDA**||EUR m||698.3||707.0||-1.2%||1.6%|
|Operating EBITDA**/Gross Profit||%||35.9||36.7|
|Profit before tax||EUR m||495.2||478.3||3.5%|
|Profit after tax||EUR m||338.9||337.8||0.3%|
|Attributable to Brenntag's shareholders||339.2||335.8||1.0%|
|Earnings per share||EUR||6.59||6.52||1.1%|
|Consolidated balance sheet||Dec 31, 2013||Dec 31, 2012|
|Total assets||EUR m||5,627.3||5,708.1|
|Working capital||EUR m||1,044.4||1,018.6|
|Net financial liabilities||EUR m||1,341.7||1,482.9|
|Consolidated cash flow||Dec 31, 2013||Dec 31, 2012|
|Cash provided by operating activities||EUR m||357.8||433.0|
|Investments in non-current assets (Capex)||EUR m||-97.2||-94.7|
|Free cash flow||EUR m||543.4||579.3|
|Europe||2013||2012||∆ as reported||∆ FX adjusted|
|Operating gross profit*||EUR m||930.0||927.9||0.2%||1.3%|
|Operating EBITDA**||EUR m||297.4||305.9||-2.8%||-1.5%|
|North America||2013||2012||∆ as reported||∆ FX adjusted|
|Operating gross profit*||EUR m||763.1||742.3||2.8%||6.7%|
|Operating EBITDA**||EUR m||325.7||321.7||1.2%||4.9%|
|Latin America||2013||2012||∆ as reported||∆ FX adjusted|
|Operating gross profit*||EUR m||163.6||169.6||-3.5%||2.1%|
|Operating EBITDA**||EUR m||47.0||56.9||-17.4%||-12.3%|
|Asia Pacific||2013||2012||∆ as reported||∆ FX adjusted|
|Operating gross profit*||EUR m||121.7||113.5||7.2%||11.3%|
|Operating EBITDA**||EUR m||47.5||46.8||1.5%||4.2%|
* While Brenntag reports operating gross profit on segment level, the company reports gross profit on Group level. Operating gross profit is defined as sales less costs of material for goods purchased and supplies, services purchased, packaging materials, supplier rebates and increase/decrease in finished goods. Gross profit is defined as operating gross profit less production/mixing and blending costs.
**Brenntag’s segments are primarily controlled on the basis of operating EBITDA, which is the operating profit/loss as recorded in the consolidated income statement plus amortization of intangible assets as well as depreciation of property, plant and equipment and investment property, adjusted for the following items:
• Transaction costs: Costs connected with restructuring under com¬pany law and refi-nancing. They are eliminated for purposes of manage¬ment reporting to permit proper presentation of the operating perform¬ance and com¬parability on segment level.
• Holding charges: Certain costs charged between holding companies and operating companies. On Group level they net to zero.
Brenntag, the global market leader in chemical distribution, covers all major markets with its extensive product and service portfolio. Headquartered in Mülheim an der Ruhr, Germany, the company operates a global network with more than 480 locations in more than 70 countries. In 2013, the company, which has a global workforce of more than 13,000, generated sales of EUR 9.8 billion (USD 13.0 billion). Brenntag is the link between chemical manufacturers and chemical users. The company supports its customers and suppliers with tailor-made distribution solutions for industrial and specialty chemicals. With over 10,000 products and a world-class supplier base, Brenntag offers one-stop-shop solutions to around 170,000 customers. This includes specific application technology, an extensive technical support and value-added services such as just-in-time delivery, product mixing, formulation, repackaging, inventory management and drum return handling. Long-standing experience and local excellence in the individual countries characterize the global market leader for chemical distribution.
This press release may contain forward-looking statements based on current assumptions and forecasts made by Brenntag AG and other information currently available to the company. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Brenntag AG does not intend to update these forward-looking statements or to adjust them to reflect future events or developments and does not assume any liability whatsoever for doing so.