MOSCOW (MRC) -- Brenntag, the market leader in chemical and ingredients distribution, has reported a resilient third-quarter performance and says the impact from the COVID-19 pandemic on its business is “still limited", said Chemweek.
Net profit was down in the third quarter to EUR120.6 million (USD141.1 million) from a prior-year figure of EUR128.4 million on sales of EUR2.88 billion, down 7.7% year on year (YOY) on a constant currency basis. The company achieved YOY growth in operating EBITDA, up 4.9% to EUR264.4 million. The EMEA, APAC, and Latin America regions “showed a particularly good development,” but conditions in North America were tougher, Brenntag says. Group operating gross profit slipped 0.2% YOY to EUR690.6 million.
“Brenntag achieved strong results in the third quarter of 2020,” says CEO Christian Kohlpaintner. “The COVID-19 pandemic has been with us—as with many other companies—throughout the year and has significantly impacted the overall economic environment. Nevertheless, we once again show a positive business development and our operations remained with limited effect by the COVID-19 crisis in the reporting period."
Third-quarter operating gross profit in EMEA was EUR294.8 million, up 4.8% YOY. The company says that despite restrictions due to COVID-19, its business in the region achieved operating EBITDA growth of 11.3% YOY, to EUR112.9 million.
The business environment in North America remained “challenging with the oil and gas industry particularly weak,” Brenntag says. Operating gross profit generated by Brenntag in North America was down 9.3% YOY to EUR273.9 million and operating EBITDA was EUR110.0 million, down 11.7%.
Brenntag reports robust third-quarter results for its business in Latin America on slowly recovering volumes, good margin management, and cost control. Regional operating gross profit of EUR44.5 million was up 15.7% YOY and operating EBITDA jumped 39.8% YOY to EUR15.1 million.
The company says its results in APAC reflect the recovery in the regional economy in the third quarter after strict lockdown for several months due to the pandemic. At EUR72.5 million, operating gross profit in the region was 12.0% above the prior-year level of EUR68.1 million. Third-quarter operating EBITDA leapt 35.9% YOY to EUR33.0 million.
Brenntag has confirmed its full-year outlook, which it reinstated in September after suspending guidance in April. The company expects 2020 operating EBITDA of EUR1.000–1.040 billion, compared with EUR1.001 billion in 2019. The forecast assumes “no further significant government measures to contain the pandemic and related negative effects on the economy,” the company says. It also does not envisage any special items or significant changes in current exchange rates by the end of the year. The forecast includes contributions to earnings from acquisitions. “As the COVID-19 pandemic will most likely impact the economy for the rest of this year and also in 2021, the presumed business environment continues to be volatile,” Brenntag says. The company announced details recently of its transformation program, which includes job cuts and site closures.
As MRC informed earlier, Brenntag Essentials and Brenntag Specialties. Each division will have a focus on customer- and supplier needs. The new operating model forms part of the company’s previously announced transformation program, Project Brenntag. Brenntag says that with the two new divisions it will better leverage on its strengths and sharpen its profile toward relevant industry segments.
In August 2020, Brenntag acquired the operating assets of Suffolk Solutions’ (Suffolk, Virginia) caustic soda distribution business. Financial terms of the deal have not been disclose.
We remind, Russia's September production of sodium hydroxide (caustic soda) were 108,000 tonnes (100% of the basic substance) versus 99,200 tonnes a month earlier. Overall output of caustic soda totalled 945,600 tonnes in the first nine months of 2020, down by 1.6% year on year.