Brenntag Gets Volume and Gross Profit Boost in Q3 2024

Brenntag, a global market leader in chemicals and ingredients distribution, reached sales of $4.2 billion in Q3 2024, which officials say is on par with the previous year’s quarter, +0.7%.

Despite stable sales, Brenntag’s operating gross profit came in at 1.06 billion, 3.2% above Q3 2023, proving the effectiveness of the pricing measures in both divisions. Operating EBITA decreased by 4.9% year-on-year and stood at $298 million. On a year-on-year comparison, the higher volumes could again over-compensate the lower gross profit per unit margins, but due to higher volume driven costs and inflationary impacts, Brenntag achieved an overall lower result.

According to Christian Kohlpaintner, CEO of Brenntag SE, Brenntag’s chemical markets are experiencing an extended bottoming out of the industry cycle characterized by strong competition and pressure on average chemical selling prices.

“In this challenging environment of the third quarter 2024, our teams in both divisions worked intensively to further grow volumes sequentially and thus succeeded in raising gross profit year-over-year,” he said. “Our cost-saving measures are showing positive effects and we made good progress in executing our divisional strategies. However, we cannot be satisfied with the outcomes yet and need to step up our efforts: Performance improvement is key. While we pursue a targeted disentanglement of our divisions, we put strong emphasis on portfolio optimization, differentiated steering, and cost-takeout. Our priorities are running our business in challenging times and doing our extensive homework. This creates the most value and serves the interest of our stakeholders best.”

In Q3 2024, both Brenntag Specialties and Brenntag Essentials continued executing their divisional strategies. Brenntag Specialties made “good” progress in refining and improving its product and service portfolio quality, official said. Further, Brenntag Essentials continued implementing its “triple” business strategy by strengthening the Last Mile Service Operations setup. Both divisions focus on price and margin management, which remains a top priority for the remainder of the year.

‘Strategy to Win’

Brenntag continues to execute “Strategy to Win” and amends disentanglement path
Despite the market headwinds, Brenntag continued to implement its “Strategy to Win” across all four pillars in the third quarter of 2024, laying the foundation for accelerated growth in the future, officials said. The company is also committed to develop its organizational structure along a clear transformation plan, pursuing a targeted disentanglement, while minimizing dyssynergies and one-off costs.

Brenntag will be leveraging its existing setup as “one Brenntag” with two differentiated divisions, supported by a joint backbone of corporate functions, business services and IT. The stepwise, targeted disentanglement continues with a focus on areas with the highest value creation and differentiation potential, being the customer- and supplier-facing front-end in the divisions. At the same time, Brenntag is prudently managing its cost base, executing cost containment measures, and focusing on running the business.

Guidance for FY 2024

Brenntag says it expects continuously challenging overall geopolitical, macroeconomic and operational conditions for the remainder of 2024. The overall market trends and chemical industry expectations observed indicate that markets are anticipated to remain highly competitive, with sustained pressure on industrial chemicals selling prices, driven by over-supply in certain end markets.

Despite these ongoing challenges and the extended bottoming out of the chemical cycle but based on its effective cost take-out measures and an encouraging start into Q4 2024, Brenntag confirms its guidance for operating EBITA for the full year 2024 to be in the range of $1.16 billion to $1.27 billion.