- Gross profit grows by 14.0 % to EUR 419.2 million
- Increase in operating EBITDA by 15.4 % to EUR 153.0 million
- Positive development in all regions – Excellent development in Asia Pacific
- Double-digit growth expected for the full year: Anticipated 2010 operating EBITDA between EUR 570 million and EUR 600 million
Brenntag (WKN A1DAHH), the global market leader in chemical distribution, continues its growth path in the second quarter of 2010. In comparison with last year’s period, Brenntag achieved a significant jump in sales and profits. In the second quarter of this year, sales increased by 23.4 % to EUR 1.95 billion (Q2 2009: EUR 1.58 billion), while gross profit* (group level) improved considerably by 14.0 % to EUR 419.2 million (Q2 2009: EUR 367.6 million). Operating EBITDA reached EUR 153.0 million (Q2 2009: EUR 132.6 million), corresponding to a substantial growth rate of 15.4 %. Net profit for the quarter was at EUR 38.7 million (Q2 2009: EUR 16.3 million). All regions contributed to the significant development with exceptional growth continuing in the Asia Pacific region. Furthermore, the North American region resumed its healthy growth as business significantly increased compared to the previous quarter.
Stephen Clark, CEO of Brenntag: “The strong results of the second quarter present yet another affirmation of our growth strategy as well as a testament to our entire team for being able to execute upon that strategy. We believe that we have a unique set of services and products that both our customers and suppliers will continue to value well into the future. When combined with internal growth initiatives and our acquisition ambitions, our value to our partners will develop even further.”
When compared to the first half of last year, Brenntag presents excellent results: Group sales increased by 15.1 % from EUR 3.20 billion to EUR 3.69 billion. Gross profit reached EUR 796.2 million, increasing by 8.3 % (1st half-year of 2009: EUR 735.0 million) and operating EBITDA increased by 13 % to EUR 287.3 million from EUR 254.3 million in the first six months of the previous year.
In addition to the underlying strategies of Brenntag, the very good business development in the second quarter of 2010 was aided by a slight improvement of the global economy and a resulting recovery of the business situation for Brenntag’s customers.
Positive development in Europe
In Europe, Brenntag registered a very pleasing development in the second quarter of this financial year, which is primarily attributed to an increase in volumes. In operating gross profit*, Brenntag reported a growth by 8.4 % from EUR 203.0 million in the previous year to EUR 220.0 million in the second quarter of 2010. Operating EBITDA improved in comparison to the reference period of the previous year by 12.3 % from EUR 65.9 million to EUR 74.0 million.
North America clearly on a growth path
After the stable development in the first quarter, Brenntag North America resumed its growth path. Operating gross profit* increased in the second quarter by 20.1 % to EUR 162.2 million in contrast to EUR 135.1 million in the reference period of the previous year. Excluding exchange rate benefits, the growth amounted to 10.8 %. Operating EBITDA developed even more strongly with a significant growth of 24.2 % from EUR 56.1 million to EUR 69.7 million. At constant exchange rates, operating EBITDA increased by 15.2 %. The announced acquisition of the industrial chemicals business of Houghton Chemical Corporation at the end of July will further strengthen Brenntag’s market position in North America.
Latin America continues to grow
Brenntag also achieved positive growth rates in Latin America with an operating gross profit* of EUR 37.2 million compared to EUR 29.7 million in the corresponding quarter of the previous year, a significant increase of 25.3 % (12.9 % at constant exchange rates). Operating EBITDA grew by 15.7 % to EUR 12.5 million after EUR 10.8 million in the corresponding pre-year quarter. Adjusted for exchange rate effects, the growth rate amounted to 3.4 %. The growth of the Latin American economies had a positive effect on the business development.
Another strong quarter in the Asia Pacific growth region
The Asia Pacific region again developed very positively during the reporting period. Here, Brenntag generated an operating gross profit* of EUR 5.6 million, achieving a distinct increase of 60.0 % or, adjusted for exchange rates, of 38.5 % in contrast to EUR 3.5 million in the same period last year. Operating EBITDA more than quadrupled from EUR 0.5 million in the second quarter of 2009 to EUR 2.1 million. At constant exchange rates, the result more than tripled. Through the acquisition of EAC Industrial Ingredients A/S in July, Brenntag further expanded its market position to enable even stronger benefits from the opportunities of this faster growing region. With an established network of 27 locations in nine countries, the acquisition will have a positive influence on the development of profits in the Asia Pacific region. However, the expected integration costs for this year will offset a considerable part of the contribution to the profits. The consolidation of EAC became effective at the beginning of July.
Working capital mirrors sales growth
The company’s free cash flow in the first six months 2010 amounted to EUR 132.3 million in contrast to EUR 428.3 million in the same period last year. The decrease is primarily due to the growth of working capital, which was significantly lower as a consequence of the downward business activity in the previous year. However, working capital increased at a slower pace than sales during the period as improved working capital management was able to mitigate at least part of the increase.
Further strengthening of equity base
As projected, in the second quarter of 2010, the Brenntag Group’s gross debt was further reduced by repaying EUR 227.3 million, mainly consisting of borrowings under the Senior Facility Agreements. In addition, liabilities of EUR 69.0 million under a syndicated loan were repaid early. At June 30, 2010, the company reported equity of EUR 1,545.1 million (December 31, 2009: EUR 172.3 million). Due to the strengthening of the company's equity base as a result of the successful IPO in March and the continuing positive result prospects, Standard & Poor’s raised the Brenntag Group's rating from B+ to BB+ and Moody’s from B2 to Ba2.
Prospects: Growth path confirmed
With the solid results of the first six months in the books, the company now anticipates double-digit operating EBITDA growth translating into operating EBITDA of EUR 570 million to EUR 600 million for the full year 2010. The improved macro-economic climate should further have a positive influence on the relevant key performance indicators.
|Financial figures at a glance (in EUR m)|
|Income statement||Apr. 1 – June 30, 2010||Apr. 1 – June 30, 2009|
|Operating EBITDA/Gross profit (in %)||36.5||36.1|
|Profit after tax||38.7||16.3|
|Profit per share (in EUR)||0.74||0.39|
|Balance sheet||June 30, 2010||Dec. 31, 2009|
|Cash flow||Jan. 1 – June 30, 2010||Jan. 1 – June 30, 2009|
|Cash used for/provided by operating activities||-15.1||340.1|
|Investments in non-current assets (Capex)||25.8||19.5|
|Free cash flow||132.3||428.3|
|Europe (in EUR m)|
|Apr. 1 – June 30, 2010||Apr. 1 – June 30, 009|
|Operating gross profit*||220.0||203.0|
|Growth in operating gross profit (in %)||8.4|
|Growth in operating EBITDA (in %)||12.3|
|North America (in EUR m)|
|Apr. 1 – June 30, 2010||Apr. 1 – June 30, 2009|
|Operating gross profit*||162.2||135.1|
|Growth in operating gross profit (in %)||20.1|
|Growth in operating gross profit (in %, F/X adjusted)||10.8|
|Growth in operating EBITDA (in %)||24.2|
|Growth in operating EBITDA (in %, F/X adjusted)||15.2|
|Latin America (in EUR m)|
|Apr. 1 – June 30, 2010||Apr. 1 – June 30, 2009|
|Operating gross profit*||37.2||29.7|
|Growth in operating gross profit (in %)||25.3|
|Growth in operating gross profit (in %, F/X adjusted)||12.9|
|Growth in operating EBITDA(in %)||15.7|
|Growth in operating EBITDA (in %, F/X adjusted)||3.4|
|Asia Pacific (in EUR m)|
|Apr. 1 â€“ June 30, 2010||Apr. 1 â€“ June 30, 2009|
|Operating gross profit*||5.6||3.5|
|Growth in operating gross profit (in %)||60.0|
|Growth in operating gross profit (in %, F/X adjusted)||38.5|
|Growth in operating EBITDA(in %)||320.0|
|Growth in operating EBITDA (in %, F/X adjusted)||250.0|
* 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 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 vast supplier base, Brenntag offers one-stop shop solutions to more than 150,000 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, Brenntag operates a global network with more than 400 locations in more than 60 countries. In 2009 the company realized global sales of EUR 6.4 billion (USD 8.9 billion) with approximately 11,000 people.