Brenntag adjusts outlook for the year after “unsatisfactory” start despite meeting market expectations

13 Aug 2024 --- Chemicals and ingredients company Brenntag has reported meeting market expectations with an operating gross profit of US$1 billion in its first half-year results for 2024, an increase of 0.6% compared to the same period the previous year. Despite this, the company has adjusted its outlook for the year, with its CEO saying overall performance has fallen “below our own ambitions.”

Amid challenging market conditions, its specialty chemicals and ingredients business recorded an increase of 0.1%, reaching €297.5 million (US$342.4 million), compared to the same period the previous year.

Brenntag hit its overall operating gross profit target “despite continued pressure on chemical selling prices thanks to various pricing initiatives.” However, it expects these high prices to impact the remainder of the year negatively and is taking a cautious approach in the future. 

The group’s operating EBITA in Q2 2024 improved to €297.1 million (US$324 million), but on a year-on-year comparison, this figure was 10.6% lower due to higher costs.

Adjusting expectations

The group no longer expects a positive gross profit per unit development in the second half of the year but anticipates a more stable development on a group level. It estimates its operating EBITA for the financial year to be between €1.1 billion (US$1.2 billion) and €1.2 billion (US$1.3 billion). 

However, operating EBITA decreased by 12.8% to €112.3 million (US$122.6 million). Brenntag says the decline was due to higher costs, partly driven by M&A and volume-related increases in transportation costs. 

“In the challenging markets of the second quarter of 2024, we saw encouraging trends and positive developments. Our sequential volume recovery quarter-by-quarter materialized 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 intensively competitive business environment,” says Christian Kohlpaintner, CEO of Brenntag SE.

“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.”

Beyond 2024, it expects the sequential improvement in demand it has experienced to continue. 

As part of its overall strategy, the company started rolling out its “Strategy to Win” to optimize its operations. This includes improving its customer and supplier-facing front ends.