Brenntag Q1 operating EBITA drops 24% to €259.7 million

Brenntag Q1 operating EBITA drops 24% to €259.7 million

Brenntag’s performance was impacted by a challenging market environment as well as pricing pressures in various markets and industries

  • By ICN Bureau | May 14, 2024

Brenntag, the global market leader in chemicals and ingredients distribution, today presented financial results for the first quarter 2024 below the Group’s ambitions.

Brenntag’s performance in both divisions was impacted by a challenging market environment as well as pricing pressures in various markets and industries. The encouraging sequential recovery of volumes, especially in the Essentials division, could not fully offset the lower sales prices, as expected.

In the first quarter 2024, Brenntag generated sales of € 4,002.6 million which is -10.9% compared to the previous year’s quarter. The decrease in sales is mainly attributable to lower sales prices, which could not be fully offset by increased volumes.

Operating gross profit declined by 5.1% to € 984.4 million. Operating EBITA came in at € 259.7 million, a year-on-year decline of 24%. Earnings per share stood at € 0.97 EUR (Q1 2023: 1.40 EUR). Due to the earnings’ development and additional funds tied up in working capital, Brenntag’s free cash flow decreased to € 175.3 million in Q1 2024. Working capital increased to € 2,083.0 million with a working capital turn of 7.9 times (Q1 2023: 7.2, FY 2023: 7.3).

Christian Kohlpaintner, Chief Executive Officer of Brenntag SE: “Although our resilient business model with its global reach and broad portfolio enabled us to capture business opportunities, we are not satisfied with our performance in the first quarter of 2024. The difficult market conditions with geopolitical tensions and continuing inflationary trends led to pricing pressures and lower than expected demand in certain markets which adversely impacted Brenntag’s results in both divisions. However, we are cautiously optimistic on the further course of 2024 with volumes showing an encouraging sequential recovery across most regions and industries. Despite the headwinds and the challenging environment, we remain fully committed to implementing our ‘Strategy to Win’ while prudently managing our cost base and driving efficiency in our organization.”

The decline in Brenntag’s earnings in the first quarter 2024 originated in both divisions, Brenntag Specialties and Brenntag Essentials. Their performance was impacted by a decrease of operating gross profit per unit and cost increases.

Kristin Neumann, Chief Financial Officer of Brenntag SE: “In the first quarter, we were not able to capitalize on the sequential recovery of volumes and to fully offset the lower sales prices. We have a clear set of measures and a high level of discipline across all levels in our organization to return to our outlined growth and profitability trajectory. To reduce costs, increase efficiency and counteract inflation-driven cost increases we are taking various initiatives that have already shown effects in the first quarter.”

Brenntag expects the overall geopolitical, macroeconomic, and operational conditions to remain challenging in 2024. However, Brenntag is cautiously optimistic that market conditions will improve throughout 2024, with the first half of the year being more challenging than the second. Brenntag assumes that the sequential recovery of volumes experienced throughout 2023 and which was also observed in Q1 2024 will continue in the following quarters and that the company will benefit from this with higher volumes. In light of these expectations, Brenntag specifies its guidance given in March and expects Brenntag Group's operating EBITA for the financial year 2024 to be at the lower end of the communicated range between € 1,230 million and € 1,430 million.

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