- Gross profit* up 4.4% on a constant currency basis to EUR 483.6 million
- Operating EBITDA** up 2.8% on a constant currency basis, totalling EUR 164.0 million
- Profit after tax of EUR 72.1 million and earnings per share of EUR 1.40
Brenntag (WKN A1DAHH), the global market leader in chemical distribution, recorded growth in gross profit compared with the first quarter of the previous year. The two largest regions - Europe and North America - performed particularly well, despite extreme weather conditions in North America.
Sales amounted to EUR 2,416.1 million, corresponding to growth of 2.9% on a constant currency basis (-0.1% as reported). Year-on-year, gross profit*, one of Brenntag's key performance indicators, increased by 4.4% on a constant currency basis (1.2% as reported) to EUR 483.6 million. Operating EBITDA** increased by 2.8% on a constant currency basis (-0.4% as reported) to EUR 164.0 million.
Profit after tax totalled EUR 72.1 million in the first quarter of 2014. Consequently, the earnings per share attributable to Brenntag's shareholders amounted to EUR 1.40 in the first quarter of 2014, thus exceeding the figure of EUR 1.35 for the same quarter of the previous year.
The free cash flow increased to EUR 75.7 million in the period under review after EUR 70.5 million in the same period of the previous year.
Steven Holland, CEO of Brenntag AG: "While the economies in the developed regions North America and Europe are clearly recovering, the markets in the emerging regions hold challenges. This is also reflected in our results in the first quarter 2014. The strong performance of Europe and the positive trends in North America make us optimistic for the future. In addition, the somewhat weaker results in the two much smaller regions of Latin America and Asia-Pacific are likely to be merely temporary. We will keep on investing continuously in developing our business in order to strengthen and enhance our market position in all regions".
Outstanding performance in Europe
A clear change of trends in European business has been achieved, and results are improving continuously. External sales increased by 2.7% year-on-year on a constant currency basis (2.1% as reported) to EUR 1,175.6 million. The efficiency measures and process optimizations carried out in the past are showing a very positive effect. This and the improved overall economical development in Europe are the cornerstones of this development. Year-on-year, operating gross profit* rose by 5.4% on a constant currency basis (5.0% as reported) to EUR 244.1 million. Operating EBITDA** increased significantly by 10.2% on a constant currency basis (9.9% as reported), reaching a healthy figure of EUR 83.2 million.
Hard winter affects strong results in North America
In the first quarter of 2014, Brenntag North America generated external sales of EUR 771.7 million, an increase of 6.9% compared with the same period of the previous year on a constant currency basis (2.1% as reported). Operating gross profit* rose by 6.7% on a constant currency basis (1.8% as reported) to EUR 182.4 million. The operational efficiency was heavily affected by weather impacts and operating EBITDA** to operating gross profit* amounted to 37.3% versus an average of 42.7% in the year 2013 resulting into an operating EBITDA** impact of up to EUR 9 million for the first quarter. Operating EBTIDA** in North America amounted to EUR 68.0 million in the first quarter of 2014 which still equates to an increase of 1.6% on a constant currency basis (-2.4% as reported).
Latin America held back by developments in Venezuela
Brenntag Latin America saw its operating gross profit* fall to EUR 37.6 million in the first quarter of 2014. This equates to a decrease of 4.1% on a constant currency basis (11.3% as reported). The region was affected by the adverse macroeconomic developments in Venezuela in the first quarter of 2014. This particularly affected operating EBITDA**, which fell by 8.5% year-on-year on a constant currency basis (15.7% as reported) to EUR 10.7 million. However, excluding Venezuela, operating EBITDA on a constant currency basis was up 5.9% on the same period of the previous year.
Asia Pacific affected by challenging business conditions in Thailand and increased operating cost
Brenntag Asia-Pacific was unable to match the impressive first-quarter results of the previous year. In addition to the ongoing challenging situation in Thailand, higher costs were also recorded, associated with the acquisitions made as well as the continuous reinforcement of the local management team. Expansion of personnel resources demonstrates an investment into the future, which will help to strengthen volumes and the market position in the region in the medium term. In the first quarter of 2014, operating gross profit* declined by 2.1% on a constant currency basis (10.9% as reported) to EUR 27.8 million. Operating EBITDA** in the Asia-Pacific segment fell by 30.3% on a constant currency basis (36.1% as reported) to EUR 8.5 million.
Brenntag optimistic regarding prospects for the rest of the year
Brenntag expects to see growth in all of the relevant performance indicators for the current year. As a result of the positive trends in Europe and North America, Brenntag can be confident about the rest of the year ahead. Brenntag also considers itself to be well-positioned to benefit as the global economy slowly recovers.
|Consolidated income statement||Q1 2014||Q1 2013||∆ as reported||∆ fx adjusted|
|Gross profit||EUR m||483.6||477.9||1.2%||4.4%|
|Operating EBITDA**||EUR m||164.0||164.7||-0.4%||2.8%|
|Operating EBITDA** / Gross profit||EUR m||33.9||34.5|
|Profit before tax||EUR m||109.0||106.0||2.8%|
|Profit after tax||EUR m||72.1||69.8||3.3%|
|Attributable to Brenntags shareholders||EUR m||72.1||69.7||3.4%|
|Earnings per share||EUR m||1.40||1.35||3.7%|
|Consolidated balance sheet||Mar. 31, 2014||Dec. 31, 2013|
|Total assests||EUR m||5,826.5||5,627.3|
|Working capital||EUR m||1,112.4||1,044.4|
|Net financial liabilities||EUR m||1,322.7||1,341.7|
|Consolidated cash flow||Q1 2014||Q1 2013|
|Cash provided by operating activities||EUR m||46.7||33.7|
|Investments in non-current assets (Capex)||EUR m||18.6||15.6|
|Free cash flow||EUR m||75.7||70.5|
|Europe||Q1 2014||Q1 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||244.1||232.5||5.0%||5.4%|
|Operating EBITDA**||EUR m||83.2||75.7||9.9%||10.2%|
|North America||Q1 2014||Q1 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||182.4||179.2||1.8%||6.7%|
|Operating EBITDA**||EUR m||68.0||69.7||-2.4%||1.6%|
|Latin America||Q1 2014||Q1 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||37.6||42.4||-11.3%||-4.1%|
|Operating EBITDA**||EUR m||10.7||12.7||15.7%||-8.5%|
|Asia Pacific||Q1 2014||Q1 2013||∆ as reported||∆ fx adjusted|
|Operating gross profit*||EUR m||27.8||31.2||-10.9%||-2.1%|
|Operating EBITDA**||EUR m||8.5||13.3||-36.1%||-30.3%|
*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 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.