ENP Newswire - 11 August 2014
Release date- 08082014 - Brenntag, the global market leader in chemical distribution, reported growth in gross profit and operating EBITDA compared with the second quarter of the previous year.
Particularly relevant is the free cash flow, which exceeded the previous year's level.
In the second quarter of 2014, sales amounted to EUR 2,501.3 million, corresponding to growth of 1.3% on a constant currency basis (-1.7% as reported). The key indicator gross profit rose by 3.2% year-on-year on a constant currency basis (0.0% as reported), amounting to EUR 502.2 million. Against the same period of the previous year, operating EBITDA increased by 8.3% on a constant currency basis (4.5% as reported) to EUR 176.7 million.
In the second quarter of 2014, profit after tax totalled EUR 80.8 million. Accordingly, earnings per share attributable to Brenntag's shareholders amounted to EUR 0.52 (after the stock split), thus exceeding the figure of EUR 0.44 for the same quarter of the previous year.
In the period under review, the free cash flow increased to EUR 110.8 million after EUR 100.0 million in the same period of the previous year.
Steven Holland, CEO of Brenntag AG: 'We continue to see modest signs of recovery in our largest regions of Europe and North America and ongoing challenges in both, Latin America and Asia Pacific which are in part related to macroeconomic conditions. The positive development of gross profit in the second quarter gives us reason to be optimistic. The ratio of EBITDA to gross profit was lower in the second quarter. However, we do not regard this as structural but more of a temporary nature as we clearly invest in future growth initiatives which will enhance earnings in the medium and long term.'
Strong performance in Europe continues
Brenntag Europe continued its positive development in the second quarter of 2014. Operating gross profit was particularly strong, reaching EUR 246.6 million in the period under review. This corresponds to an increase of 4.0% on a constant currency basis (4.0% as reported). Year-on-year, operating EBITDA rose by 26.5% on a constant currency basis (26.7% as reported) to EUR 85.5 million. Adjusted for an extraordinary effect in the second quarter of 2013, growth of 1.3% on a constant currency basis was achieved for the period under review.
North America invests in growth initiatives
In the second quarter of 2014, Brenntag North America increased operating gross profit by 3.4% on a constant currency basis (-2.1% as reported), generating EUR 193.9 million. On a constant currency basis, operating EBITDA fell by -1.6% (-6.6% as reported) to EUR 77.6 million. The reasons for EBITDA development lagging behind gross profit growth are several, although mainly temporary in nature.
Increased expenses for growth initiatives that were initiated in the past months are expected to deliver growth of operating EBITDA in the future. Brenntag increased the number of drivers to mitigate external rate increases in the transportation market which were not fully recovered in the quarter.
Negative impact of the macroeconomic environment in Latin America continues
Brenntag Latin America posted a decline in operating gross profit to EUR 39.5 million in the second quarter of the year. On a constant currency basis, this reflects a change from -2.7% (-9.0% as reported) against the same period of the previous year. Reasons for this include the ongoing difficult and fragile situation in Venezuela and the slowing economy in Brazil. The challenging macroeconomic situation is also the key factor in the development of operating EBITDA.
In the period under review, operating EBITDA fell to EUR 9.0 million, which corresponds to a decrease of 27.6% on a constant currency basis (31.8% as reported).
Improved volumes in Asia Pacific
After a decline in operating gross profit in the first quarter of 2014, Brenntag Asia Pacific achieved a positive growth in the second quarter. The region posted an increase in operating gross profit of 4.9% on a constant currency basis (-3.2% as reported) to EUR 30.1 million. Operating EBITDA in the Asia Pacific segment fell by -8.1% (-16.4% as reported) year-on-year to EUR 10.2 million.
As in the first quarter of the year, operating EBITDA was negatively impacted by measures to strengthen local management. Asia Pacific is a rapidly developing region in which corresponding investment is required in order to achieve expected growth in the medium to long term.
Brenntag expects continued growth
Brenntag continues to expect growth in all relevant performance parameters. This growth is likely to be primarily driven by the Europe and North America segments. For 2014 as a whole, the company expects the Group to generate operating EBITDA in the range of EUR 700 to 720 million, assuming that the average US Dollar/Euro exchange rate does not change significantly compared with the first half of the year.
Brenntag, the global market leader in chemical distribution, is present on all major markets worldwide with its extensive ranges of products and services. Headquartered in Mulheim an der Ruhr, Germany, the company operates a global network with more than 480 locations in more than 70 countries. In 2013, the company generated global sales of EUR 9.8 billion (USD 13.0 billion) with more than 13,000 employees. Brenntag links chemical manufacturers and chemical users.
The company supports its customers and suppliers with tailor-made distribution solutions for industrial and specialty chemicals. With over 10,000 products and a world-class supplier base, Brenntag offers one-stop-shop solutions to some 170,000 customers.
These include specific application technology, extensive technical support and value-added services such as just-in-time delivery, mixing & formulation, repackaging, inventory management and drum return handling. Long-standing experience and local excellence in the individual countries characterize the global market leader for chemical distribution.
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 to update these forward-looking statements or to adjust them to reflect future events or developments and does not assume any liability whatsoever for doing so.
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