Brenntag achieved second-best performance in 2023

Brenntag achieved second-best performance in 2023

Brenntag, the global market leader in chemicals and ingredients distribution, today presents solid financial results and a record free cash flow for the financial year 2023

  • By ICN Bureau | March 08, 2024

In a challenging market environment, both divisions, Brenntag Specialties and Brenntag Essentials, delivered results below the record year 2022 but in line with expectation. The divisional results were affected by low demand and inflationary impact on costs. Throughout the year, a slight sequential improvement in volumes was seen and during the fourth quarter of 2023, Brenntag returned to its growth path.

In 2023, Brenntag generated sales of € 16,815.1 million. The decline in sales of 11.0% compared to the record year of 2022 is mainly attributable to lower sales prices, but also to declining sales volumes.

Destocking at customers continued in 2023, which on top added to the overall lower demand due to the uncertain macroeconomic environment. However, a slight sequential improvement in volumes was also seen throughout the year and during the second half of 2023 the destocking cycle reached its end.

Despite this environment, Brenntag achieved an operating gross profit of € 4,041.8 million (-3.7%) and an operating EBITA of € 1,265.0 million, which is a year-on-year decline of 13.1% compared to the record year 2022 but nevertheless the second highest result the company has ever achieved.

Christian Kohlpaintner, Chief Executive Officer of Brenntag SE: “2023 was again dominated by a multitude of macroeconomic challenges and geopolitical tensions. Those weighed on the overall economic development and affected business activities across various sectors and markets, and especially the chemical industry.

“Despite this environment, Brenntag has realized the second-best performance in our company’s history. This is due to the inherent strength and resilience of our business model with its global reach and broad portfolio of products and services. In addition, we can count on our outstanding employees across the world. I would like to thank them for their tireless efforts to provide our customers with the best possible service and to be a reliable partner, especially in difficult times. I am also pleased by the consistent implementation of our strategy in 2023, thereby laying the foundation for accelerated growth in the future.”

Earnings per share reached € 4.73 which is below the very high prior year level of € 5.74. Brenntag generated a record free cash flow of € 1,712.0 million through the substantial reduction in working capital driven by significantly reducing inventories. This showcases once again the company’s strengths in generating cash throughout volatile market conditions. In course of the year, Brenntag successfully took various measures to reduce the Group’s operating costs and counteract the inflation-driven increases in cost.

Kristin Neumann, Chief Financial Officer of Brenntag SE: “In 2023, Brenntag implemented cost take-out measures to achieve efficiency gains and reduce the cost base and worked consistently on improving its working capital management. With our first-ever share buyback program in the total amount of up to 750 million EUR that has been completed at the beginning of March, we let our shareholder participate in the success of our company. Including dividends, we have returned more than one billion Euro to our shareholders over the past twelve months. These are strong prove-points for Brenntag’s ability to reliably create significant value for shareholders even in a difficult market environment.”

Full delivery on Mergers & Acquisitions strategy

Brenntag remains in an excellent position to further consolidate the still highly fragmented chemical distribution market. In the past year, the company made again substantial acquisitions, strengthening key focus industries and geographies in both divisions with targets delivering a sizable operating EBITA contribution. The eight acquisitions signed or closed in 2023 have a total enterprise value of € 570 million.

Outlook & Guidance 2024

Brenntag expects that the sequential recovery in volumes experienced throughout 2023 will continue in 2024.

At the same time, it is assumed that the overall geopolitical, macroeconomic, and operational conditions will remain challenging in 2024. The war in Ukraine, the conflict in the Middle East, geopolitical tensions and the only slowly decreasing inflation will continue to create uncertainty about growth expectations of the global economy.

In view of the current economic conditions and the trends described Brenntag Group’s operating EBITA for the financial year 2024 is expected to be between € 1,230 million and € 1,430 million. This forecast takes into account the earnings contributions from acquisitions already completed and assumes that exchange rates will remain stable at the level of the end of February.

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