- Gross profit increased to EUR 1,925.7 million
- Growth in operating EBITDA to EUR 706.6 million
- Earnings per share up by 21.2% to EUR 6.53, allowing increased dividend of EUR 2.40 per share
- Outlook for 2013: continuous growth in all relevant key performance indicators
Brenntag (German Securities Code Number (WKN): A1DAHH), the global market leader for chemical distribution, is continuing on its growth path and once again reported significant result increases for the 2012 financial year against a demanding macroeconomic environment. This positive earnings performance can be attributed to Brenntag’s resilient business model as well as the flexible adjustment to the more difficult conditions and the successful strategic acquisitions executed most recently. Free cash flow also enjoyed extremely positive development, thereby providing the company with greater financial flexibility.
Sales amounted to EUR 9,689.9 million in the 2012 financial year, an increase of 7.7% on the previous year on a constant currency basis (as reported: 11.6%). Another key development was the year-on-year increase in gross profit of 4.6% to EUR 1,925.7 million on a constant currency basis (as reported: 8.9%).
In the period under review, operating EBITDA rose by 2.2% to EUR 706.6 million on a constant currency basis (as reported: 6.9%). Adjusting for extraordinary expenses of around EUR 10 million in the Europe segment the adjusted operating EBITDA amounted to EUR 717m which is in the upper half of the guidance range of EUR 705-725 million.
Profit after tax increased by 21.1% year-on-year to EUR 338.2 million. In line with this, the net profit attributable to Brenntag’s shareholders amounted to EUR 6.53 per share. The excellent results permit the Board of Management and the Supervisory Board to propose the payment of a dividend of EUR 2.40 per share – 20% higher than in the previous year – to the General Shareholders’ Meeting on 19 June 2013. This represents a payout ratio of 36.8% of the net profit attributable to Brenntag’s shareholders.
Steven Holland, CEO of Brenntag: “Although the global economic situation provided more and more challenges in the past year, we succeeded in improving our results once again. In particular, this success can be attributed to our proven strategy, which we are continuously pursuing and systematically expanding. We are also benefiting from our special combination of local presence and global strength, which is something that sets us apart from our competitors. Our broad diversification, the resistance of our business model and our extensive relationships with suppliers also helped us to achieve our impressive results for 2012.”
Business in Europe demonstrates resilience
Despite the challenging macroeconomic situation, business in Europe proved to be resilient and saw a convincing development. The Multisol Group, which was acquired in the previous year, was successfully integrated and made an excellent contribution to Brenntag’s results. In addition, the efficiency measures implemented in the first half of 2012 started to bear fruit over the course of the year. Their full impact will be visible in 2013. Operating gross profit* increased by 2.4% year-on-year to EUR 927.9 million on a constant currency basis (as reported: 3.3%). Brenntag Europe generated an operating EBITDA of EUR 301.6 million in 2012. After adjustment for extraordinary expenses of around EUR 10 million, the adjusted operating EBITDA of EUR 312 million represented a slight increase compared with 2011.
Development in North America remained extremely strong
In spite of a more difficult market environment, Brenntag reinforced its position in North America and again reported record results. Operating gross profit* increased by 4.0% to EUR 742.3 million on a constant currency basis (as reported: 12.5%), while operating EBITDA rose by 5.5% year-on-year to EUR 321.5 million on a constant currency basis (as reported: 14.0%). Brenntag further expanded its strong position in North America in 2012 with the acquisition of the TER Corporation and the Altivia Corporation.
Significant growth in Latin America
Although growth on the Latin American market was slow, with momentum only starting to pick up again in the second half of the year, Brenntag again recorded impressive growth in the region. Brenntag Latin America increased its operating gross profit* by 7.3% to EUR 169.6 million on a constant currency basis (as reported: 12.7%), while its operating EBITDA rose by 5.6% year-on-year to EUR 56.9 million on a constant currency basis (as reported: 10.7%). At the end of the year, Brenntag acquired the Delanta Group, a distributor of specialty chemicals that will strengthen its business in the southern part of Latin America in particular.
Strong development in Asia Pacific
The Asian economies saw further growth in industrial production in 2012, albeit at a slower rate than in the previous year. However, momentum picked up again in the second half of the year. Brenntag’s operating gross profit* in the Asia Pacific region increased by 26.7% to EUR 111.6 million on a constant currency basis (as reported: 35.9%). The region generated operating EBITDA of EUR 49.4 million, up 25.4% compared with the previous year on a constant currency basis (as reported: 33.9%). The Zhong Yung Group in China, which was acquired in 2011, significantly contributed to these impressive results thanks to its strong performance in the second half of the year. The ISM/Salkat Group, which was acquired in 2012, also made a contribution.
Sharp rise in profit after tax
Profit before tax increased by 14.1% to EUR 478.8 million in the period under review. Profit after tax rose by 21.1% to EUR 338.2 million, of which EUR 336.2 million was attributable to Brenntag’s shareholders. Accordingly, the net profit per share attributable to Brenntag’s shareholders increased by 21.2% to EUR 6.53 (previous year: EUR 5.39).
Significant growth in free cash flow
In the year under review, free cash flow increased significantly by 13.1% year-on-year to EUR 578.9 million. This was primarily due to the positive development of EBITDA. At EUR 33.0 million, the increase in working capital was also lower than in the previous year, while investments in non-current assets (capex) increased only moderately to EUR 94.7 million.
Brenntag looks to the future with confidence
The global economy is expected to continue to grow in 2013, with growth rates remaining around the level seen in 2012. Brenntag believes to be extremely well positioned to overcome the challenging market conditions once again in 2013. The company is looking to the future with confidence and is forecasting growth in all relevant performance indicators. “We believe in our strategy and the robustness of our business model, and will continue on the path we have adopted. In addition to further organic growth, we intend to benefit from suitable acquisitions and offer our customers and suppliers continuously improved service” comments CEO Steven Holland.
Brenntag will continue to pursue its strategy of adjusting its product range to reflect developments on the local markets, particularly in its focus industries, while expanding its business with national and international key accounts. The ongoing optimisation of warehouse and transport logistics, supporting suppliers in improving their distribution activities and expanding service activities in areas such as compounds and formulations will remain key areas. All in all, the company expects the market for chemical distribution to enjoy long-term growth.
Consolidated Income Statement
|∆ as reported||∆ fx adjusted|
|Gross profit||EUR m||1,925.7||1,768.0||8.9%||4.6%|
|Operating EBITDA||EUR m||706.6||660.9||6.9%||2.2%|
|Operating EBITDA / Gross Profit|
|Profit before tax||EUR m||478.8||419.5||14.1%|
|Profit after tax||EUR m||338.2||279.3||21.1%|
|Attributable to Brenntag`s shareholders|
|Earnings per share||EUR||6.53||5.39||21.2%|
|Consolidated balance sheet||31. Dec. 2012||31. Dec. 2011|
|Total assets||EUR m||5,710.5||5,575.6|
|Working capital||EUR m||1,018.6||961.1|
|Net financial liabilities||EUR m||1,482.9||1,493.6|
|Consolidated cash flow||31. Dec. 2012||31. Dec. 2011|
|Cash provided by operating activities||EUR m||433.0||349.6|
|Investments in non-current assets (Capex)||EUR m||-94.7||-86.0|
|Free cash flow||EUR m||578.9||511.8|
|Europe||2012||2011||∆ as reported||∆ FX adjusted|
|Operating gross profit*|
|Operating EBITDA||EUR m||301.6||303.9||-0.8%||-1.8%|
|North America||2012||2011||∆ as reported||∆ FX adjusted|
|Operating gross profit*|
|Operating EBITDA||EUR m||321.5||282.1||14.0%||5.5%|
|Latin America||2012||2011||∆ as reported||∆ FX adjusted|
|Operating gross profit*|
|Operating EBITDA||EUR m||56,9||51,4||10,7%||5,6%|
|Asia Pacific||2012||2011||∆ as reported||∆ FX adjusted|
|Operating gross profit*||EUR m||111.6||82.1||35.9%||26.7%|
|Operating EBITDA||EUR m||49.4||36.9||33.9%||25.4%|
*Brenntag reports operating gross profit at the level of its individual segments and gross profit at Group level. Operating gross profit is defined as sales less the cost of goods sold. Gross profit is defined as operating gross profit less production/mixing and blending costs.
Brenntag is the global market leader in full-line chemical distribution. Linking chemical manufacturers and chemical users, Brenntag provides business-to-business distribution solutions for industrial and specialty chemicals globally. With over 10,000 products and a world-class supplier base, Brenntag offers one-stop-shop solutions to more than 170,000 customers. The value-added services include just-in-time delivery, product mixing, formulation, repackaging, inventory management, drum return handling as well as extensive technical support. Headquartered in Mülheim an der Ruhr, Germany, the company operates a global network with more than 450 locations in more than 70 countries. In 2012 the company realized global sales of EUR 9.7 billion (USD 12.5 billion) with nearly 13,000 employees.
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, and does not assume any liability whatsoever, to update these forward-looking statements or to adjust them to reflect future events or developments.