Brenntag Reports Surge in FY10 Profits
Drivers were the organic growth of the operating business combined with increased efficiencies, and an improved capital structure as well as the earnings contribution of acquisitions.
3/24/2011 --- Brenntag, the global market leader in chemical distribution, continues its growth path and concludes the financial year 2010 with record results. Compared with 2009, Brenntag achieved significant growth rates in all key performance indicators. Drivers were the organic growth of the operating business combined with increased efficiencies, and an improved capital structure as well as the earnings contribution of acquisitions.
In 2010, sales increased by 20.2% (15.3% based on constant exchange rates) to EUR 7,649.1 million (FY 2009: EUR 6,364.6 million). Gross profit reached EUR 1,636.4 million (FY 2009: EUR 1,459.5 million), corresponding to a growth rate of 12.1% (7.6% on constant exchange rates). Operating EBITDA improved even stronger by 25.5% (20.2% based on constant exchange rates) to EUR 602.6 million (FY 2009: EUR 480.3 million). Brenntag exceeded its guidance range of EUR 570 – 600 million and marked another record year. Also profit after tax enhanced and amounted to EUR 146.6 million in 2010 (FY 2009: EUR 0.5 million). These figures reflect earnings per share of EUR 2.93. Based on the strong results, Brenntag’s Management and Supervisory Board will propose the General Shareholders’ Meeting on June 22, 2011 to pay a dividend of EUR 1.40 per share.
Stephen Clark, CEO of Brenntag: “We are looking back at a very successful year 2010 when we could further strengthen our global No.1 position in the chemical distribution industry. The excellent results in all key performance indicators in financial year 2010 demonstrate the sustainability of our strategy and the quality of the services our entire team delivers. Both of which will be further pursued under Brenntag’s designated CEO Steven Holland.”
All regions contributed to the positive development of Brenntag’s results in the financial year 2010. Especially Asia Pacific once again showed a very strong development with exceptional growth rates.
Brenntag showed a clearly positive development in Europe in the financial year 2010. Operating gross profit improved by 6.9% from EUR 807.6 million in 2009 to EUR 863.0 million in 2010. Operating EBITDA increased in comparison to the financial year 2009 by 14.3% from EUR 250.6 million to EUR 286.5 million in the previous year. Overall, Europe recorded pleasing double-digit earnings growth compared to the year 2009, which was already a strong year for Brenntag’s business on the continent.
North America reported excellent results in the financial year 2010. Operating gross profit increased substantially in 2010 by 14.0% to EUR 613.0 million compared to EUR 537.7 million in 2009. At constant exchange rates, operating gross profit grew by 6.8%. Operating EBITDA reached EUR 264.4 million in the previous year after EUR 196.8 million in 2009, corresponding to a growth rate of significant 34.3%. Excluding exchange rate benefits, the growth amounted to 26.2%. Overall, Brenntag’s earnings parameters grew substantially in North America in 2010. Brenntag further strengthened its market position in North America in the financial year 2010 through the acquisition of the industrial chemicals business of Houghton Chemical Corporation.
In Latin America Brenntag’s operating gross profit improved from EUR 123.3 million in 2009 by 11.8% to EUR 137.8 million in 2010. Adjusted for exchange rate effects, the growth rate amounted to 2.5%. Operating EBITDA grew by 8.5% to EUR 45.9 million in 2010 after EUR 42.3 million in 2009. At constant exchange rates operating EBITDA remained stable. Main reasons for Brenntag’s lower growth rates in Latin America were political developments in Venezuela and the financial policy, which influenced Brenntag’s business negatively. Excluding Venezuela, the Latin American segment achieved significant growth rates of about 10% in both operating gross profit and operating EBITDA on a constant currency basis in 2010.
The Asia Pacific region developed outstandingly during the financial year 2010. Brenntag’s results were significantly influenced both by the performance of the acquired companies of the EAC Group and the already established Brenntag subsidiaries in this segment. Operating gross profit substantially increased and reached EUR 45.7 million in 2010 after EUR 14.5 million in 2009. This corresponds to a growth of more than three times the result of 2009 as well as more than two times the result of 2009 adjusted for exchange rate effects. Operating EBITDA more than quadrupled from EUR 4.1 million in 2009 to EUR 17.6 million in 2010. Excluding exchange rate benefits the growth in operating EBITDA more than tripled.
Profit before tax in 2010 showed a remarkable development, increasing from EUR 47.1 million in 2009 to EUR 231.8 million in 2010 (+392.1%). In addition to the significant growth in operating EBITDA, profit before tax grew due to noticeably lowered interest costs resulting from the improved capital structure and reduction in debt after the IPO in March 2010. The full-year effect of these improvements will show in the financial result for 2011. In addition to the positive effects from the growth of business and the improved capital structure, a decreased customer base amortization had a positive impact.
Brenntag’s free cash flow amounted to EUR 376.1 million in 2010 compared to EUR 646.8 million in 2009. While the free cash flow benefited from the growth in EBITDA, the overall decrease of the free cash flow is mainly attributable to the change in working capital. Due to an active working capital management the increase in working capital was limited to EUR 136.4 million despite a strong increase in business activity. In 2009, significantly reduced sales resulted in a liquidity inflow from changes in working capital, an effect that has partly been inverted by rising business activity in 2010.
In the financial year 2010 Brenntag further reduced net financial liabilities to EUR 1,420.9 million after EUR 1,833.7 million (excluding the shareholder loan) in 2009. The total leverage ratio of Brenntag measured as net financial liabilities / operating EBITDA, was reduced from 3.6x end of 2009 to now 2.4x. Due to the strengthening of the company’s equity base as a result of the successful IPO and the continuing positive results, the equity of the group increased to EUR 1,617.9 million.
Supported by a further growing global economy in 2011 and benefiting from the favorable trends in chemical distribution, Brenntag plans to grow in all relevant earnings parameters. Brenntag is excellently positioned in the world wide chemical distribution market and will continue to focus on attractive growth segments.
