- Gross profit* up by 4.5% (on a constant currency basis) amounting to EUR 520.3 million
- Operating EBITDA** increases by 3.1% (on a constant currency basis) to EUR 189.1 million
- Profit after tax reaches EUR 86.3 million and earnings per share amount to EUR 0.56
- Expected operating EBITDA** for 2014 as a whole confirmed between EUR 700 to 720 million
Brenntag (WKN A1DAHH), the global market leader in chemical distribution, reports solid growth in gross profit and operating EBITDA in the third quarter of 2014. This results in an increase of profit after tax by 6.5% to EUR 86.3 million.
In the third quarter of 2014, sales increased by 3.9% to EUR 2,587.2 million on a constant currency basis (3.9% as reported). Gross profit*, a key performance indicator for Brenntag, increased by 4.5% year-on-year to EUR 520.3 million on a constant currency basis (4.6% as reported). Operating EBITDA** increased by 3.1% year-on-year to EUR 189.1 million on a constant currency basis (3.2% as reported).
Brenntag’s profit after tax amounted to EUR 86.3 million in the third quarter. Accordingly, the Brenntag shareholders’ earnings per share amounted to EUR 0.56 and were thus higher compared to the same quarter of the previous year (Q3 2013: EUR 0.52).
Brenntag’s free cash flow totalled EUR 324.2 million in the first nine months of the year, compared to EUR 338.5 million in the prior-year period.
Steven Holland, CEO of Brenntag AG, comments: “Despite the global economic situation softening somewhat, Brenntag reports satisfying earnings’ growth in the third quarter of 2014. The growth initiatives which we have consistently implemented in Europe and North America are paying off, as reflected by our higher operating EBITDA. We were also pleased to announce two acquisitions during the third quarter. As a result, Brenntag remains well positioned for future growth.”
Europe maintains positive performance trend
Brenntag Europe maintained its positive performance trend in the third quarter of 2014 and reported further growth, despite a slightly weaker overall economic environment. On a constant currency basis, operating gross profit* increased by 3.2% to EUR 242.9 million (4.0% as reported). Operating EBITDA** amounted to EUR 83.4 million, which represents an increase of 4.4% on a constant currency basis (5.4% as reported).
North America increases operating gross profit and EBITDA
In the reporting period, North America increased its operating gross profit* by 6.0% on a constant currency basis to EUR 211.6 million (5.3% as reported). The various initiatives implemented by the company played a significant part in this development. Brenntag North America succeeded in translating its operating gross profit growth into EBITDA growth in the third quarter. Adjusted for exchange rate effects, operating EBITDA** increased by 5.2% to EUR 88.7 million (4.5% as reported).
Latin America delivers growth in a difficult environment
Despite the continuing difficult business situations in Venezuela and Brazil, Brenntag Latin America realised an operating gross profit* of EUR 43.9 million in the third quarter of the year thanks to increased sales volumes. On a constant currency basis, this represents an increase of 7.5% (7.6% as reported). Operating EBITDA** increased by 8.0% to EUR 12.3 million on a constant currency basis (7.0% as reported).
Asia Pacific with gross profit growth in challenging markets
Operating gross profit in the Asia Pacific region amounted to EUR 30.5 million in the third quarter, which represents an increase of 2.1% on a constant currency basis (2.3% as reported). Overall, business development in the region is being hampered by the political situation in Thailand and by the weak economic environment in Australia. In addition, the measures taken to reinforce the local capabilities impacted operating EBITDA** in the third quarter of 2014. In the Asia Pacific segment, this figure declined by 16.8% on a constant currency basis and amounted to EUR 10.1 million (-16.5% as reported).
Brenntag confirms EBITDA expectations for 2014
Brenntag continues to see an increase in all relevant performance parameters in 2014. The Group confirms its assessment for its operating EBITDA for 2014 as a whole, which it continues to expect to come in at between EUR 700 and 720 million. This is subject to the assumption that there will be no major change in the average US Dollar/Euro exchange rate compared to the first nine months of the year.
|Consolidated income statement||Q3 2014||Q3 2013||∆ as reported||∆ fx adjusted|
|Gross profit||EUR m||520.3||497.2||4.6%||4.5%|
|Operating EBITDA**||EUR m||189.1||183.2||3.2%||3.1%|
|Operating EBITDA** / Gross profit||EUR m||36.3||36.8|
|Profit before tax||EUR m||132.7||124.6||6.5%|
|Profit after tax||EUR m||86.3||81.0||6.5%|
|Attributable to Brenntag shareholders||EUR m||86.1||80.9||6.4%|
|Earnings per share||EUR m||0.56||0.52||7.7%|
|Consolidated balance sheet||Sep. 30, 2014||Dec. 31, 2013|
|Total assets||EUR m||6,133.1||5,627.3|
|Working captial||EUR m||1,248.9||1,044.4|
|Net financial liabilities||EUR m||1,466.1||1,341.7|
|Consolidated cash flow||9M 2014||9M 2013|
|Cash provided by operating activities||EUR m||202.3||197.6|
|Investments in non-current assets (Capex)||EUR m||64.4||57.6|
|Free cash flow||EUR m||324.2||338.5|
|Europe||Q3 2014||Q3 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||242.9||233.5||4.0%||3.2%|
|Operating EBITDA**||EUR m||83.4||79.1||5.4%||4.4%|
|North America||Q3 2014||Q3 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||211.6||200.9||5.3%||6.0%|
|Operating EBITDA**||EUR m||88.7||84.9||4.5%||5.2%|
|Latin America||Q3 2014||Q3 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||211.6||40.8||7.6%||7.5%|
|Operating EBITDA**||EUR m||88.7||11.5||7.0%||8.0%|
|Asia Pacific||Q3 2014||Q3 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||30.5||29.8||2.3%||2.1%|
*Brenntag reports operating gross profit at segment level, but gross profit at Group level. Operating gross profit is defined as sales less the cost of sales. Gross profit is defined as operating gross profit less production, mixing and blending costs.
**The segments are primarily controlled on the basis of operating EBITDA, which represents 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 and refinancing under company law. These items are eliminated for purposes of management reporting to enable the proper presentation of operating performance and to ensure comparability on segment level.
• Holding charges: Certain costs charged between holding companies and operating companies. These are eliminated at Group level.
Brenntag, the global market leader in chemical distribution, is present on all major markets worldwide with its extensive ranges of products and services. 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 generated global sales of EUR 9.8 billion (USD 13.0 billion) with more than 13,000 employees. Brenntag links 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 some 170,000 customers. These include specific application technology, extensive technical support and value-added services such as just-in-time delivery, 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.