- Gross profit* rose to 631.8 million EUR (+7.7% as reported)
- Operating EBITDA** up by 4.9% on the previous year to 201.6 million EUR
- Positive business performance marked by strong growth in the EMEA and Asia Pacific regions and a stabilizing trend in North America
- Profit after tax stood at 94.7 million EUR and earnings per share rose to 0.61 EUR
Brenntag (WKN A1DAHH), the global market leader in chemical distribution, continued to grow in the first quarter of 2017, achieving a strong increase in its key performance indicator gross profit* in particular.The successful performance was due to further solid growth in the Europe, Middle East and Africa (EMEA) and Asia Pacific regions, plus the fact that demand in North America stabilized as expected. These positive developments more than offset the declines in earnings in Latin America, where the situation in several countries remained difficult.
Brenntag generated sales of 2,973.3 million EUR in the first quarter of 2017, an increase of 15.2% on the prior-year period (+12.8% on a constant currency basis). The Group’s key performance indicator gross profit showed strong growth, rising by 7.7% year on year (5.5% on a constant currency basis) to 631.8 million EUR. Operating EBITDA reached 201.6 million EUR, a rise of 4.9% compared with the prior-year quarter (+2.5% on a constant currency basis).
Profit after tax was up on the prior-year figure of 66.0 million EUR to 94.7 million EUR in the first quarter of 2017. This translates into earnings per share attributable to Brenntag shareholders of 0.61 EUR.
At 25.7 million EUR in the first quarter of 2017, free cash flow was below prior-year period (131.2 million EUR). This is due mainly to the increase in working capital normally seen as prices increase on the chemical market in particular. Actually, at the same time we were able to improve working capital turnover slightly.
Steven Holland, Chief Executive Officer of Brenntag AG, said, “Brenntag had a good start to 2017. We saw encouraging trends in the first quarter, with further growth in our EMEA and Asia Pacific regions. In addition, demand in North America improved slightly as expected and Brenntag therefore posted a rise in operating gross profit here, too. In our smallest region, Latin America, the situation in several countries remained difficult, but this was only of limited significance for the Group.”
EMEA posts further earnings growth
In a macroeconomic environment still marked by only moderate expansion, Brenntag EMEA continued to grow in the first quarter of 2017. Operating gross profit was up by 4.3% on the prior-year figure (+5.1% on a constant currency basis) to 279.0 million EUR. Operating EBITDA climbed to 95.8 million EUR, a rise of 8.5% (+9.1% on a constant currency basis). This encouraging earnings growth is due in particular to a very positive, broad-based trend in a number of European countries.
Improved macroeconomic environment in North America as expected
The macroeconomic environment in North America was more benign in the first quarter of 2017, with industrial production showing slight growth for the first time in five quarters. As expected, demand from customers in the oil and gas industry also stabilized. These slightly improved conditions were reflected in operating gross profit: this rose by 11.6% (+7.5% on a constant currency basis) to 272.5 million EUR. Operating EBITDA was up by 4.7% on the prior-year quarter (+1.0% on a constant currency basis) to 88.6 million EUR.
Situation in Latin America remains volatile
The smallest Brenntag region faced a persistently difficult economic environment, with demand still weak in several Latin American markets. This had a corresponding impact on the results of Brenntag Latin America: operating gross profit was up by 0.2% on the prior-year figure (-9.0% on a constant currency basis) to 43.7 million EUR. The region posted operating EBITDA of 9.2 million EUR, a decline of 25.8% on the previous year (-34.3% on a constant currency basis).
Asia Pacific makes a good start to the year
Brenntag Asia Pacific sustained its encouraging performance into the first quarter of 2017, posting further earnings growth. Operating gross profit rose by 15.3% (+12.1% on a constant currency basis) to 48.3 million EUR. Operating EBITDA amounted to 17.0 million EUR, a rise of 14.1% (11.1% on a constant currency basis). Both the existing operations and the businesses acquired in 2016 contributed to the growth.
Growth still forecast for 2017 as a whole
In light of the first-quarter results and macroeconomic developments in the regions, Brenntag continues to expect growth in its key performance indicators operating gross profit and operating EBITDA.