Brenntag (ISIN DE000A1DAHH0), the global market leader in the distribution of chemicals and ingredients, continues its growth trajectory and reports very strong results in the second quarter of 2022 in a macroeconomic market environment that has been and remains extremely challenging. Significant geopolitical uncertainties are increasing the ongoing pressure on global supply chains. The two global divisions, Brenntag Specialties and Brenntag Essentials, continued their strong growth trajectory from the beginning of the year, resulting in a very positive first half of 2022.
Dr. Christian Kohlpaintner, CEO of Brenntag SE: "Brenntag continues its growth trajectory and delivered very strong results in the second quarter of 2022 with excellent organic growth in both divisions. We are particularly pleased with the progress of our ambitious transformation program Project Brenntag, where we will achieve our targets by the end of 2022, one year ahead of schedule. We expect the remaining transformation initiatives to have an additional positive operating EBITDA effect in 2023, which will be quantified in the course of the year. We now expect full-year results to be in the upper range of our guidance raised in June."
In the second quarter of 2022, Brenntag generated sales of EUR 5,061.2 million. Gross profit increased by 28.0% to EUR 1,144.8 million compared to
EUR 838.7 million in the prior-year quarter. Operating EBITDA reached EUR 533.8 million, a strong increase of 41.0% compared to Q2 2021. Earnings per share amounted to EUR 1.86, more than double the previous year's result.
"In the extremely challenging environment of the first half of 2022, product availability as well as on-time and reliable delivery were again key to Brenntag's success. We were able to translate the positive growth in operating gross profit into a disproportionately high increase in operating EBITDA, which is reflected in a very strong conversion ratio of 46.6% for the Group," comments Dr. Kristin Neumann, CFO of Brenntag SE.
Both divisions continue to deliver strong performance and results
Both divisions contributed significantly to the results in the second quarter. The business figures of Brenntag Specialties and Brenntag Essentials show that our operational business structure with its differentiated management enables us to achieve strong results. In the second quarter of 2022, the market environment for the divisions as a whole was characterized by an inflationary cost trend as well as supply bottlenecks and increased transport costs. In this environment, Brenntag succeeded in maintaining supplies to customers and exploiting business opportunities.
Brenntag Specialties, which builds on Brenntag's market position as the world's largest distributor of specialty chemicals and ingredients, again delivered a very strong quarterly performance. The division generated gross profit of EUR 461.4 million (+42.2 %). Operating EBITDA amounted to EUR 234.1 million, an increase of 55.5% compared to the prior-year quarter, driven primarily by strong organic growth, which was again supported by all segments. All focus industries recorded double-digit growth rates.
Brenntag Essentials, which supplies a wide range of process chemicals to a variety of industries, recorded significant, almost entirely organically driven growth in the second quarter of 2022. The division generated gross profit of EUR 672.6 million (+19.5%). Operating EBITDA increased by 29.6% to EUR 320.9 million compared to the same period of the previous year. With the exception of APAC, all segments contributed to this strong performance, as the operating EBITDA of the APAC division in the second quarter of 2022 was impacted by far-reaching pandemic-related lockdowns in China.
"Project Brenntag" targets achieved one year ahead of schedule
The Project Brenntag transformation program is making very good progress. The targeted contribution to operating EBITDA will be achieved by the end of 2022 - one year earlier than planned. Since its launch and until the second quarter of 2022, Project Brenntag has generated an additional annual operating EBITDA of EUR 195 million, which corresponds to around 90% of the target of EUR 220 million for financial year 2023. All initiatives of the program are well on track: 85 sites have been closed across all regions and around 1,060 jobs have been structurally reduced in a socially responsible manner. As we continue to work on the full implementation of the various Project Brenntag initiatives, the company expects an additional positive operating EBITDA contribution in financial year 2023, which will be quantified later this year.
Outlook
Brenntag confirms its operating EBITDA guidance in the range of EUR 1,750 million to 1,850 million for financial year 2022, as stated in the announcement in June 2022. Based on the current business momentum, we now expect to reach the upper range of the forecast. Following very strong results in the first half of 2022 and given the current feedback from customers and suppliers, Brenntag is confident to continue to deliver solid results in the third quarter, with some normalization in the fourth quarter. Overall geopolitical, macroeconomic and operational conditions are expected to remain challenging. Supply chains remain under severe pressure, impacting production and delivery. However, Brenntag has managed the various challenges of the past two years very prudently. With its resilient business model and high diversification, the company believes it is well positioned to address particularly difficult conditions proactively and with foresight.
