- Gross profit* rises to EUR 502.2 million
- Operating EBITDA increased by 2.4% to EUR 185.9 million (on a constant currency basis and after adjustment for a non-recurring effect of around EUR 17 million)
- Profit after tax of EUR 68.9 million and earnings per share of EUR 1.33
- Operating EBITDA** of between EUR 710 and 735 million expected for 2013 as a whole, not including non-recurring effects
Brenntag (WKN A1DAHH), the global market leader in chemical distribution, achieved growth in sales and gross profit* in the second quarter of 2013 compared with the same quarter of the previous year. Operating EBITDA adjusted for a non-recurring effect also increased slightly. In view of still limited global economic development, the company continues to prove its resilience.
On a constant currency basis, sales increased by 3.4% (2.2% as reported) and reached EUR 2,544.7 million in the second quarter of 2013. One of Brenntag’s crucial key performance indicators, gross profit*, also posted growth. Year on year, it rose to EUR 502.2 million, which equates to growth of 4.6% on a constant currency basis (3.1% as reported). Operating EBITDA**, which was aligned for an adjustment of provisions, was EUR 185.9 million and increased by 2.4% on a constant currency basis (0.8% as reported). The adjustment of provisions by approximately EUR 17 million is connected to a decision by antitrust authorities in France. Reported operating EBITDA** was EUR 169.1 million, which equates to a decline of 6.9% on a constant currency basis (8.3% as reported).
Profit after tax amounted to EUR 68.9 million in the second quarter of 2013 (Q2 2012: EUR 81.3 million), meaning that earnings per share attributable to Brenntag’s shareholders amounted to EUR 1.33 (Q2 2012: EUR 1.57).
The free cash flow amounted to EUR 170.5 million in the first half of 2013 after EUR 179.3 million in the same period of the previous year.
Steven Holland, CEO of Brenntag AG: “The group continues to develop and grow in still challenging market conditions and slow macro economic development. Our business model remains resilient with its highly diversified product range, industries and geographical spread allowing us to seek out new markets and opportunities. Growth of sales and gross profit continued whilst EBITDA was somewhat effected by the non recurring adjustment for just under EUR 17 million increase in provision. We do not see the promise of any significant improvement in the macroeconomic environment but we remain positive and confident about the underlying market opportunities and resilience of our business leading to further growth of the group overall.”
Europe develops positively despite difficult environment
Year on year, external sales in Europe increased by 1.2% on a constant currency basis (0.6% as reported) to EUR 1,184.0 million. Operating gross profit* also performed positively and increased by 0.9% on a constant currency basis (0.2% as reported) to EUR 237.2 million. Operating EBITDA**, adjusted for the increase in provision, is slightly higher than in the same period of the previous year on a constant currency basis. In view of the overall economic situation, this is a solid performance, which means the European business is headed in the right direction. Without the adjustment for the provision, operating EBITDA** was EUR 67.5 million in the second quarter.
North America continues to grow
The North America region posted pleasing sales growth in the second quarter of 2013. External sales climbed to EUR 817.2 million, which equates to growth of 6.5% on a constant currency basis (4.4% as reported). This result is attributable in particular to the acquisition of the Altivia Corporation at the end of last year. Operating gross profit* also performed positively and increased by 7.9% on a constant currency basis (5.8% as reported) to EUR 198.1 million year on year. Operating EBITDA** followed this positive picture and posted an increase of 6.0% on a constant currency basis (3.9% as reported) to EUR 83.1 million.
Latin America with good operating gross profit but growing cost base
Operating gross profit* for the Latin America region increased as against the same period of the previous year by 4.6% on a constant currency basis (1.2% as reported) to EUR 43.4 million, while external sales posted a decline of 2.2% on a constant currency basis (5.4% as reported) and amounted to EUR 221.4 million. Operating EBITDA** decreased to EUR 13.2 million, which equates to a year-on-year decline of 6.4% on a constant currency basis (9.6% as reported). This is primarily attributable to an increase of the cost base, which is being addressed by the company.
Strong growth again in Asia Pacific
In the second quarter of 2013, Brenntag Asia Pacific once again demonstrated its positive development potential. External sales increased by 9.6% on a constant currency basis (9.6% as reported) to EUR 186.9 million. Operating gross profit* rose to EUR 31.1 million, which equates to a year-on-year growth rate of 21.4% on a constant currency basis (20.5% as reported). This positive development is attributable in particular to the contribution of the acquired ISM/Salkat Group. Operating EBITDA** grew as against the same period of the previous year by 17.3% on a constant currency basis (17.3% as reported) to EUR 12.2 million.
Brenntag expects slower growth
In light of the uncertain macroeconomic situation and assuming that the general economic environment will not see a substantial recovery by the end of the year, the company is anticipating less dynamic development. Given these factors and the earnings performance in the first half of 2013, Brenntag expects the Group’s operating EBITDA** for 2013 as a whole – excluding the extraordinary impact of non-recurring effects, particularly the around EUR 17 million in the Europe segment described above – to amount to between EUR 710 million and EUR 735 million.
Consolidated income statement
∆ as reported
∆ fx adjusted
|Gross profit||EUR m||502.2||487.1||3.1%||4.6%|
|Operating EBITDA**||EUR m||169.1||184.5||-8.3%||-6.9%|
|Operating EBITDA** / Gross profit||%||33.7||37.9|
|Profit before tax||EUR m||109.4||124.2||-11.9%|
|Profit after tax||EUR m||68.9||81.3||-15.3%|
|Attributable to Brenntag shareholders|
|Earnings per share||EUR||1.33||1.57||-15.3|
|Consolidated balance sheet||June 30, 2013||Dec. 31, 2012|
|Total assets||EUR m||5,843.6||5,708.1|
|Working capital||EUR m||1,151.2||1,018.6|
|Net financial liabilities||EUR m||1,578.8||1,482.9|
|Consolidated cash flow||H1 2013||H1 2012|
|Cash provided by operating activities||EUR m||112.7||63.5|
|Investments in non-current assets (Capex)||EUR m||34.5||30.3|
|Free cash flow||EUR m||170.5||179.3|
|Europe||Q2 2013||Q2 2012||∆ as reported|
∆ fx adjusted
|Operating gross profit*||EUR m||237.2||236.7||0.2%||0.9%|
|Operating EBITDA**||EUR m||67.5||84.9||-20.5%||-19.7%|
|North America||Q2 2013||Q2 2012||∆ as reported|
∆ fx adjusted
Operating gross profit*
∆ as reported
∆ fx adjusted
|Operating gross profit*||EUR m||43.4||42.9||1.2%||4.6%|
|Operating EBITDA**||EUR m||13.2||14.6||-9.6%||-6.4%|
|Asia Pacific||Q2 2013||Q2 2012||∆ as reported||∆ fx adjusted|
|Operating gross profit*|
* 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’s segments are primarily controlled on the basis of operating EBITDA, which is 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 under company law and refinancing, particularly the IPO in 2010 and the refinancing in 2011. 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.
*** The conversion ratio at Brenntag is calculated as the quotient of the operating EBITDA and the gross profit. It represents one of the most important efficiency ratios.
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 world-class supplier base, Brenntag offers one-stop-shop solutions to more than 170,000 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, the company operates a global network with more than 450 locations in over 70 countries. In 2012, the company generated global sales of EUR 9.7 billion (USD 12.5 billion) with nearly 13,000 employees.
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, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.