- Gross profit* shows a clear increase of 5.3% (as reported) to 586.6 million EUR
- Operating EBITDA** at 192.1 million EUR almost unchanged year on year (-1.5% as reported)
- Profit after tax amounts to 66.0 million EUR and earnings per share reach 0.43 EUR
Brenntag (WKN A1DAHH), the global market leader in chemical distribution, posted strong growth in gross profit* in the first quarter of 2016. Acquired companies, diversification and excellent overall market position offset weaknesses in the oil & gas sector and the North American industrial environment. The quarterly results were over all in line with Brenntag’s own expectations.
In the first quarter of 2016, Brenntag’s sales were on the level of the prior-year quarter at 2,580.1 million EUR (+0.2% as reported). The company posted a strong performance in terms of the key indicator gross profit* which climbed to 586.6 million EUR, a significant increase of 5.3% as reported (+6.2% on a constant currency basis). Operating EBITDA** was almost stable year on year, with -1.5% as reported (-0.7% on a constant currency basis) to 192.1 million EUR. It was negatively impacted primarily by the continued underlying weakness in the North American oil & gas business sector.
Profit after tax reached 66.0 million EUR in the first quarter of 2016 and thus fell short of the prior-year figure of 91.2 million EUR. The decrease is mainly attributable to a one-time effect resulting from the devaluation of the local currency in Venezuela in the first quarter of 2016. This translates into earnings per share attributable to Brenntag shareholders of 0.43 EUR.
At 131.2 million EUR, free cash flow was once again strong and at a high level in the first quarter of 2016. As expected, it was below the very good prior-year figure (161.0 million EUR).
Steven Holland, Chief Executive Officer of Brenntag AG, said, “Overall, the first quarter of 2016 went as we expected. In particular, the strong gross profit performance shows that Brenntag Group as a whole has excellent market access and strategically is very well positioned. In North America, our business was once again strongly impacted by sustained low demand, especially from the oil & gas sector in the face of a persistently low oil price. The significant currency devaluation reduced earnings in Venezuela to zero. Integrating the most recent acquisitions has high priority and we expect them to make steadily increasing contributions to earnings performance.”
EMEA posts strong organic growth in operating gross profit
In a difficult economic environment, Brenntag EMEA (Europe, Middle East & Africa) lifted operating gross profit* to 267.6 million EUR in the first quarter of 2016, a solid increase of 4.4% (+5.9% on a constant currency basis). This gross profit performance was driven mainly by both organic growth and contributions from acquisitions. Operating EBITDA** was on a par with the prior-year quarter at 88.3 million EUR (+0.1% as reported; +1.8% on a constant currency basis).
North America impacted by sustained weak demand from the oil & gas industry
The North America region suffered from low demand from customers in the oil & gas sector once again which had a negative effect on the results in the first quarter of 2016. Industrial production in the USA continues to decline, presenting economic challenges across a number of business sectors. The region benefitted from contributions from the companies acquired in 2015. Operating gross profit* increased by 7.2% year on year (+5.9% on a constant currency basis) to 244.2 million EUR. Operating EBITDA** was down by 3.8% (-5.3% on a constant currency basis) to 84.6 million EUR.
Sound performance in Latin America limited by Venezuela
The currency devaluation in Venezuela had a substantial impact on the quarterly results in the Latin America region. The region’s operating gross profit* declined by 12.3% year on year (-6.0% on a constant currency basis) to 43.6 million EUR. Operating EBITDA** was down by 19.5% (-13.3% on a constant currency basis) to 12.4 million EUR. Adjusted for the business in Venezuela, the region posted a strong increase in operating EBITDA of 8.6% on a constant currency basis.
Asia Pacific achieves high rates of growth
Brenntag Asia Pacific sustained the positive trend of 2015 into the new year. Operating gross profit* climbed by 25.4% (+30.5% on a constant currency basis) to 41.9 million EUR in the first quarter of 2016. Operating EBITDA** also showed a clear increase, rising by 34.2% (+39.3% on a constant currency basis) to 14.9 million EUR. Growth was generated from a combination of organic growth from the existing business and the successful integration of TAT Group acquired in 2015.
Brenntag confirms outlook for 2016
Brenntag expects a continuation of the current macroeconomic environment, especially with view to the challenges resulting from a sequentially weaker industrial production and the oil & gas sector in North America. The Group will benefit from a positive contribution from the acquisitions closed in 2015 and confirms its expectation to grow all relevant earnings metrics for the full year 2016.
|Consolidated Income Statement||Q1 2016||Q1 2015||∆ as reported||∆ adjusted for exchange rate effects|
|Sales||in EUR m||2,580.1||2,573.9||0.2%||1.3%|
|Gross profit*||in EUR m||586.6||557.3||5.3%||6.2%|
|Operating EBITDA**||in EUR m||192.1||195.0||-1.5%||-0.7%|
|Operating EBITDA** / Gross profit*||%||32.7||35.0|
|EBITDA||in EUR m||192.1||195.0||-1.5%||-0.7%|
|Profit before tax||in EUR m||101.4||135.6||-25.2%||-|
|Profit after tax||in EUR m||66.0||91.2||-27.6%||-|
|Attributable to Brenntag shareholders||65.9||90.6||-27.3%||-|
|Earnings per share||EUR||0.43||0.59||-27.1%||-|
|Consolidated Balance Sheet||March 31, 2016||Dec. 31, 2015|
|Total assets||in EUR m||6,963.8||6,976.2|
|Equity||in EUR m||2,698.4||2,690.5|
|Working capital||in EUR m||1,283.5||1,268.1|
|Net financial liabilities||in EUR m||1,630.9||1,676.1|
|Consolidated Cash Flow||Q1 2016||Q1 2015|
|Cash provided by operating activities||in EUR m||99.0||60.1|
|Investments in non-current assets (Capex)||in EUR m||17.6||14.9|
|Free cash flow||in EUR m||131.2||161.0|
|EMEA||Q1 2016||Q1 2015||∆ as reported||∆ adjusted for exchange rate effects|
|Sales||in EUR m||1,154.2||1,162.9||-0.7%||0.7%|
|Operating gross profit*||in EUR m||267.6||256.4||4.4%||5.9%|
|Operating EBITDA**||in EUR m||88.3||88.2||0.1%||1.8%|
|North America||Q1 2016||Q1 2015||∆ as reported||∆ adjusted for exchange rate effects|
|Sales||in EUR m||941.3||902.2||4.3%||3.1%|
|Operating gross profit*||in EUR m||244.2||227.8||7.2%||5.9%|
|Operating EBITDA**||in EUR m||84.6||87.9||-3.8%||-5.3%|
|Latin America||Q1 2016||Q1 2015||∆ as reported||∆ adjusted for exchange rate effects|
|Sales||in EUR m||191.8||235.2||-18.5%||-12.7%|
|Operating gross profit*||in EUR m||43.6||49.7||-12.3%||-6.0%|
|Operating EBITDA**||in EUR m||12.4||15.4||-19.5%||-13.3%|
|Asia Pacific||Q1 2016||Q1 2015||∆ as reported||∆ adjusted for exchange rate effects|
|Sales||in EUR m||234.1||194.8||20.2%||24.9%|
|Operating gross profit*||in EUR m||41.9||33.4||25.4%||30.5%|
|Operating EBITDA**||in EUR m||14.9||11.1||34.2%||39.3%|
*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 & blending costs.
**The segments are primarily controlled on the basis of operating EBITDA. This is the operating profit 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. 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.