- Gross profit* increases by 5.4% (on a constant currency basis) to EUR 497.2 million
- Growth in operating EBITDA of 14.6% to EUR 183.2 million (on a constant currency basis)
- Profit after tax of EUR 81.0 million and earnings per share of EUR 1.57
- Expectations for operating EBITDA** for 2013 narrowed to EUR 710 to 725 million (adjusted for non-recurring effects)
Brenntag (WKN A1DAHH), the global market leader for chemical distribution, achieved growth in sales and gross profit* in the third quarter of 2013 compared with the same period of the previous year. Operating EBITDA also saw a year-on-year improvement. Although the global economic situation remains challenging, the company is continuing to grow and press ahead with its positive development.
Sales amounted to EUR 2,489.8 million in the third quarter of 2013, up 4.9% on the previous year on a constant currency basis (0.6% as reported). Gross profit* rose by 5.4% year-on-year to EUR 497.2 million on a constant currency basis (0.8% as reported), while operating EBITDA** increased to EUR 183.2 million, corresponding to growth of 14.6% on a constant currency basis (9.1% as reported). Adjusted for an extraordinary increase in provisions in the same period of the previous year in the Europe segment, the growth rate on a constant currency basis was 7.3% (2.4% as reported).
Profit after tax amounted to EUR 81.0 million in the third quarter of 2013 (Q3 2012: EUR 79.5 million), meaning that the earnings per share attributable to Brenntag’s shareholders was EUR 1.57 (Q3 2012: EUR 1.52).
Free cash flow amounted to EUR 338.5 million in the first nine months of 2013 after EUR 347.5 million in the same period of the previous year.
Steven Holland, CEO of Brenntag AG: “Our overall performance remains robust and continues to build positively on previous quarters. The strength of our quarterly results serves to underline the structural resilience of our highly diversified business model. We are encouraged by the developments of our European segment which is starting to reflect the internal efficiency gains initiated in the previous year and we expect to see continued development for the region as a whole. We look forward with more optimism in light of a more positive consensus for mature markets in total and continue to closely monitor macroeconomic developments for all segments.”
Positive development in Europe
The solid development in the Europe region continued in the third quarter. The segment recorded external sales of EUR 1,141.7 million, corresponding to year-on-year growth of 2.0% on a constant currency basis (0.2% as reported). Operating gross profit* increased by 2.7% on a constant currency basis (0.7% as reported) to EUR 233.5 million. Operating EBITDA** saw a good performance, particularly since the macroeconomic situation is yet to improve. It amounted to EUR 79.1 million, which equates to an increase of 17.3% on a constant currency basis (14.6% as reported). Adjusted for the increase in provisions in the same period of the previous year, operating EBITDA rose by 0.9% on a constant currency basis. The positive development in Europe over the course of the current year means that Brenntag is optimistic with regard to the future.
Continuous growth in North America
Brenntag North America repeated its positive figures in the third quarter of 2013, in part due to the acquisitions made. The region generated external sales of EUR 816.5 million in the period under review, an increase of 9.6% on a constant currency basis (3.0% as reported). Operating gross profit* also saw positive development, rising by 10.4% on a constant currency basis (3.8% as reported) to EUR 200.9 million. Operating EBITDA** increased by 7.2% on a constant currency basis (1.1% as reported) to EUR 84.9 million.
Latin America remains a difficult environment
The overall economy in Latin America slowed further in the third quarter of 2013, and Brenntag Latin America was not unaffected by this development. Operating gross profit* in the Latin America region changed by 3.7% year-on-year on a constant currency basis (-5.1% as reported) to EUR 40.8 million. External sales declined by 1.2% on a constant currency basis (10.1% as reported) to EUR 210.0 million, while operating EBITDA** fell to EUR 11.5 million, corresponding to a year-on-year reduction of 2.5% on a constant currency basis (11.5% as reported). Following the change in senior management and further organizational measures, the region is currently in a transitional phase and improvements will become visible in the near future.
Asia Pacific records growth in several regions
The Asia Pacific region saw mixed performance in the third quarter. This was due to different growth rates within the region as a whole. Operating gross profit* in the Asia Pacific region amounted to EUR 29.8 million in the third quarter of 2013, representing a change of 4.1% on a constant currency basis (-3.9% as reported). External sales changed by 0.1% on a constant currency basis (-6.0% as reported) to EUR 183.9 million. Compared with the same period of the previous year, operating EBITDA** rose by 8.6% on a constant currency basis (2.5% as reported) to EUR 12.1 million. In September 2013 Brenntag has signed an agreement to acquire the chemical distribution division of the Zytex Group, which will strengthen business in the food and preventive healthcare industries in India.
Brenntag narrows guidance range for operating EBITDA
Based on earnings development over the first nine months and the continued uncertainty concerning the development of the overall economic situation, the company has limited its guidance range for operating EBITDA** – adjusted for non-recurring effects – to EUR 710-725 million for 2013 as a whole.
Consolidated income statement
∆ as reported
∆ fx adjusted
Operating EBITDA** / Gross profit
Profit before tax
Profit after tax
Attributable to Brenntag shareholders
Earnings per share
Consolidated balance sheet
Sept. 30, 2013
Dec. 31, 2012
Net financial liabilities
Consolidated cash flow
Cash provided by operating activities
Investments in non-current assets (Capex)
Free cash flow
∆ as reported
∆ fx adjusted
|Operating gross profit*|
|North America||Q3 2013||Q3 2012||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||200.9||193.5||3.8%||10.4%|
|Operating EBITDA**||EUR m||84.9||84.0||1.1%||7.2%|
∆ as reported
∆ fx adjusted
|Operating gross profit*||EUR m||40.8||43.0||-5.1%||3.7%|
|Operating EBITDA**||EUR m||11.5||13.0||-11.5%||-2.5%|
∆ as reported
∆ fx adjusted
Operating gross profit*
|Operating EBITDA**||EUR m|
* 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 company law and refinancing, particularly the IPO in 2010 and the refinancing in 2011. They are eliminated for purposes of management reporting to permit proper presentation of the operating performance and comparability on segment level.
• Holding charges: Certain costs charged between holding companies and operating companies. On Group level they net to zero.
*** The conversion ratio at Brenntag is calculated as the quotient of the operating EBITDA and the gross profit. It represents one of the most important efficiency ratios.
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 over 70 countries. In 2012, the company generated 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 conform them to future events or developments.