Brenntag posts good results for 2018
Brenntag has reported it has had a good financial year 2018. Its two key performance indicators operating gross profit and operating EBITDA both showed a clear increase due primarily to good organic growth. All group regions contributed to the growth, with North America in particular delivering a very strong rise in earnings. The acquisitions also made the sound contribution to earnings that had been anticipated.
Sales amounted to €12,550 million in financial year 2018, a year-on-year increase of 10.2 percent on a constant currency basis (+6.9 percent as reported). Operating gross profit, an especially important metric for Brenntag, rose by 7.5 percent on a constant currency basis (+4.2 percent as reported) to €2,660.9 million. Operating EBITDA also increased, rising by 8.4 percent year on year on a constant currency basis (+4.7 percent as reported) to €875.5 million.
All performance indicators therefore reached all-time highs. The positive contribution to earnings from the sale of the non-core business unit Brenntag Biosector A/S, Denmark, was reported below operating EBITDA together with other non-operating items affecting net income.
The Brenntag Group’s free cash flow amounted to €525.2 million in financial year 2018, an increase of 19.3 percent on the prior-year figure (€440.3 million). Besides the rise in operating EBITDA, this is due to the lower increase in working capital compared with financial year 2017.
Profit after tax came to €462.3 million in the financial year 2018 and was therefore well above the prior-year figure of €362 million.
Steven Holland, Chief Executive Officer of Brenntag AG, said: “2018 was a year of good growth for Brenntag. We grew in all regions and lifted operating EBITDA to an all-time high. Our large region North America, which delivered a very good, broad-based performance, is particularly worthy of note. In the EMEA region, the internal initiatives geared to increasing efficiency delivered results in financial year 2018. We also continued to systematically execute our acquisition strategy and expand our presence and offering in attractive regions and industries during the past year. This, too, resulted in positive contributions to earnings.”
Brenntag EMEA achieved a clear increase in earnings in financial year 2018, supported in part by the internal initiatives and programmes that have been implemented. Brenntag EMEA generated operating gross profit of €1,141.2 million in 2018, a year-on-year increase of 5.5 percent. Operating EBITDA rose by 7.2 percent to €385.5 million. In the first half of 2018 in particular, the business achieved good organic growth, which became more difficult as the year progressed due to an economic slowdown and tougher conditions in the region.
North America posts a very good year
In the North America region, Brenntag posted a very good financial year 2018. The high growth achieved across virtually all customer industries was almost entirely organic. Operating gross profit grew by 8.9 percent on a constant currency basis to €1,118.3 million. Operating EBITDA rose to €409.6 million, an increase of 11.2 percent.
Earnings in Latin America increase slightly as markets remain volatile
In 2018, Brenntag’s business in Latin America continued to be impacted by the generally challenging and volatile economic environment in the region. The situation stabilised in the second half of the year, however. Overall, Brenntag posted a positive development of the business performance at constant currency rates. At €163.1 million, operating gross profit was up by 1.9 percent on the prior-year figure on a constant currency basis. Operating EBITDA came to €39.9 million, an increase of 2.3 percent.
Asia Pacific remains on a growth track
Asia Pacific is still the region that offers the greatest growth potential for Brenntag. The company is therefore optimising its network in the region and continuously expanding its range of products and services, for example by making an acquisition in India in the reporting period. Further earnings growth was posted in 2018. Operating gross profit came to €224.2 million, a year-on-year increase of 17.2 percent. Operating EBITDA rose by 9.4 percent to €77.9 million.
Forecast for 2019: Further growth in a more challenging economic environment
Steven Holland, Chief Executive Officer of Brenntag AG, said: “Current developments and forecasts show that more challenging economic conditions can be expected at both global and regional level in 2019. In this environment, we will demonstrate our resilience and continue to grow, albeit at a slightly slower pace. In doing so, we will benefit from our broad footprint. We also expect impetus from our new approach for customers in the food and nutrition industry, where we repositioned ourselves in the reporting period so as to leverage the potential in this attractive segment.”
In a more challenging economic environment, Brenntag expects to see growth in its key performance indicators operating gross profit and operating EBITDA in financial year 2019.
For more information visit www.brenntag.com
6th March 2019