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Brenntag reports Q2 2024 results in line with market expectations
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Monday, 02 September, 2024, 08 : 00 AM [IST]
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Essen, Germany
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Stabilisation in challenging markets: Brenntag’s sequential volume recovery materialised as predicted. Operating Gross Profit could be kept stable on prior-year level (EUR 1,027.9 million; +0.6%) despite continued pressure on chemical selling prices thanks to various pricing initiatives. As a result, the group’s operating EBITA in Q2 2024 improved sequentially to EUR 297.1 million. On a year-on-year comparison, the company achieved an overall lower result due to higher costs.
Divisions with encouraging improvements but with results below prior-year level: In highly competitive markets, the divisions managed to capture additional volumes and placed a strong focus on price and margin management. Brenntag Specialties’ operating EBITA came in at EUR 112.3 million (-12.8%) while Brenntag Essentials achieved an operating EBITA of EUR 213.8 million (-13.4%).
Strategy execution while prudently managing cost base: In Q2 2024, Brenntag executed further measures to achieve efficiencies, reduce its operating costs and to counteract inflation-driven cost increases. These measures will be accelerated in the second half of 2024 across the group. At the same time and despite market headwinds, the company is continuing to execute its “Strategy to Win” and driving divisional autonomy and independence.
Guidance adjusted: The market trends and chemical industry expectations observed in recent months-make Brenntag more cautious for the remainder of the year. They indicate that markets will remain highly competitive, with sustained pressure on industrial chemicals selling prices. In H2 2024, the company does not expect a positive gross profit per unit development anymore, and, additionally, expects a slightly lower than initially anticipated sequential improvement in volumes. Therefore, Brenntag now expects operating EBITA for the financial year 2024 to be in the range of EUR 1,100 million to EUR 1,200 million
The company is the global market leader in chemicals and ingredients distribution, presented second quarter 2024 financial results in line with market expectations but below its own ambition level, reflecting an overall weaker than anticipated H1 2024. The performance was impacted by the overall challenging business environment, characterized by strong competition and continued pressure on chemical selling prices in various end markets. The sequential quarter-by-quarter performance in both divisions, Brenntag Specialties and Brenntag Essentials, showed encouraging improvements, including sequential volume recovery and stable gross profit per unit thanks to various pricing initiatives. As a result, the Group’s Q2 operating EBITA significantly improved sequentially.
Christian Kohlpaintner, chief executive officer of Brenntag SE, said, “In the challenging markets of the second quarter of 2024, we saw encouraging trends and positive developments. Our sequential volume recovery quarter by quarter materialised as predicted. We were able to keep gross profit per unit stable compared to the first quarter. This is a clear success of our commercial teams to manage margins effectively in an intensive competitive business environment. In addition, our various measures to achieve efficiencies and reduce costs continue to show effect. However, our overall performance in the first half of 2024 is unsatisfactory and below our ambition. In addition, the overall trends and chemical industry expectations observed recently make us more cautious for the remainder of the year. We expect a less supportive volume development and sustained price pressure in industrial chemicals. Thus, we need to and will accelerate our efforts, focus on driving business performance, and will execute a strong and prioritised cost take-out across our organisation to meet our business and financial targets. Looking beyond 2024, we expect that the currently observed sequential improvement in demand will continue in 2025 based on the general recovery of the chemical cycle combined with an improved pricing environment.”
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