Strategy & Business Model

Business model

Brenntag’s growth opportunities along with its resilient business model are based on complete geographic coverage, a wide product and service portfolio and high diversity across suppliers, customers and industries.

Connecting chemical manufacturers (our suppliers) and chemical users (our customers), Brenntag provides complete distribution solutions rather than just chemical products. Brenntag purchases large-scale quantities of specialty and industrial chemicals and ingredients from various suppliers, enabling the company to achieve economies of scale and offer a full-line range of chemical products and value-added services to around 195,000 customers. Brenntag is the strategic partner and service provider for manufacturers at the one end and chemical users at the other end of the value chain. Brenntag's role in the value chain is also expressed in the brand identity "ConnectingChemistry".

Brenntag stores the products it purchases in its distribution facilities, packs them into quantities the customers require and delivers them, typically in less-than-truckloads. Brenntag’s customers are active worldwide in diverse end market industries such as adhesives, paints, oil & gas, food, water treatment, personal care and pharmaceuticals. In order to be able to react quickly to the market and customers’ and suppliers’ requirements, Brenntag manages its business through its geographically structured segments in EMEA (Europe, Middle East, Africa), North America, Latin America and Asia Pacific. Brenntag offers a broad range of over 10,000 products as well as extensive value-added services (such as just-in-time-delivery, product mixing, blending, repackaging, inventory management, drum return handling as well as technical and laboratory services for specialty chemicals).

Brenntag is the global market leader in chemical and ingredients distribution. We define market leader not just by business volume but also associate it with our philosophy of continually improving the safety standards at our sites. As a responsible service provider, we continually strive to achieve further improvements in the supply chain as a whole.

Strategy

At Brenntag will continue to pursue our goal to be the preferred distributor for both specialty and industrial chemicals and ingredients for our customers and suppliers and, at the same time, the industry leader in safety, growth and profitability. We aim to achieve this with a clear growth strategy geared to steadily expanding our leading market position while continually improving profitability.

To achieve our goals we have set clear strategic priorities:

Organic growth and acquisitions

We strive to extend our market leadership by steadily growing our product and service offering capabilities in line with the requirements of our regional markets. In doing so, we benefit from leveraging our extensive global activities and key strengths. Our proactive sales activities focus on providing customers with tailored full-service solutions along the entire value chain rather than just products.

In addition, we continue to seek acquisition opportunities that support our strategy. Our strategic focus is on expanding our presence in emerging markets to capture the expected strong growth in demand for chemicals in these regions. In the established markets of Western Europe and North America, we continue to further develop our product and service portfolio as well as to optimize our national and international distribution networks through acquisitions.

Steadily improving profitability

A further element of our strategy is to continually and systematically increase profitability. On the basis of our entrepreneurial culture, our operational excellence and our resilient business model, we strive to steadily increase our operating gross profits, EBITDA, cash flows and achieve an attractive return on capital. Extending the scope of our operations, both organically and through acquisitions, achieving the resulting economies of scale, and placing emphasis on value-added services are major levers for increasing our profitability and returns.

Strategic initiatives

The systematic implementation of our strategy is based on global and regional initiatives.

The goal of our global safety initiative, for instance, is to establish an outstanding safety culture and to introduce globally harmonized and consistently high standards.

Worldwide we are continually improving our commercial excellence in order to offer our business partners the best service in the industry. We see this as the continued optimization of procurement, sales and marketing effectiveness and efficiency. We are focusing on systematically expanding business with regional, pan-regional and global key accounts, sectors where our broad product offering and extensive geographic network provide unrivalled service capabilities. In addition, we will continue to actively realize the potential offered by the trend for chemical producers to outsource supply chain and commercial activities.

As part of our regional growth strategies, we seek to effectively leverage our capabilities in rapidly growing and therefore particularly attractive industries such as water treatment, personal care, pharmaceuticals, food & beverages as well as adhesives, coatings, elastomers and sealants. In oil & gas, we are counting on the segment’s long-term potential in combination with our excellent capabilities and our supplier and customer network. In order to achieve sustainable growth, we are placing more emphasis on developing our global oil and gas expertise as well as downstream products and services. Further initiatives focus on growing the customer-specific mixing and blending business by providing value-added services.

Besides our growth initiatives, we continue to improve our operational excellence. This means, in particular, that we continue to optimize our network, to adopt best practice solutions throughout the Brenntag Group and to optimize our warehouse and transport logistics on a regional and global level.

In our human resources activities, we seek to recruit, develop and retain highly qualified employees. 2015, we extensively revised our global human resources strategy and launched various new initiatives with the aim of best positioning the Brenntag brand in the employment market. We place particular emphasis on our employees’ continuing development and on targeted succession planning.