Mülheim an der Ruhr, November 07, 2012
Brenntag reports strongearnings for the third quarter 2012 and confirms the resilience of its business model under more difficult market conditions

  • Gross profit* grew to EUR 493.2 million
  • Operating EBITDA** of EUR 167.8 million slightly above Q3 2011
  • Profit after tax advanced by 19.3% to EUR 79.6 million with EPS at EUR 1.53 up 17.7% versus Q3 2011
  • Free cash flow of EUR 168.1 million demonstrates strong cash generative nature of the business
  • Expectation for full year 2012 operating EBITDA**of EUR 705 to 725 million compared to EUR 660.9 million in 2011

Brenntag (WKN A1DAHH), the global market leader in chemical distribution, reports strong earningsfor the third quarter 2012 under more difficult market conditions. Thanks to the resilience of the business model and the acquisitions executed, the Group was able to increase the important key performance indicators gross profit and operating EBITDA** in the year-over-year comparison.

Sales increased in the third quarter to EUR 2,474.1million (Q3 2011: EUR 2,218.0 million) and thereby grew by 5.4% based on constant exchange rates (11.5% as reported) compared to the same period in the previous year. Gross profitreached an increase of 4.0% based on constant currency exchange rates (10.7% as reported) to EUR 493.2 million. Operating EBITDA**in the third quarter increased to EUR 167.8 million (0.7% as reported) whereas this amount was impacted by about EUR 10 million of extraordinary expenses in the segment Europe. When adjusting for this non-recurring effect operating EBITDA**exceeded Q3 2011 by 7.3%.

Steven Holland, CEO of Brenntag AG: “We are very pleased with the development of our gross profit in the third quarter which was achieved under challenging market conditions around the world.The very positive development of our share price which topped the EUR 100 mark for the first time confirms our strategy and motivates us further to implement it with all our energy.”

Nine months results

Brenntag was able to increase all relevant earnings parameters in the first nine months of this year compared to the previous year. Sales increased by 8.5% based on constant currency exchange rates (12.8% as reported) to EUR 7,349.8 million in the first nine months 2012. Gross profit increased by 5.2% based on constant currency exchange rates (9.9% as reported) to EUR 1,455.3million. The Group generated an operating EBITDA** of EUR 523.7 million that grew by 1.2% based on constant currency exchange rates but including the above mentioned extraordinary expenses (6.4% as reported).

Europe with improved gross profit development

In a soft market environment the region developed well in the third quarter with gross profit growth being higher than in the second quarter. Operating gross profit* grew by 3.3% based on constant currency exchange rates (4.7% as reported) to EUR 231.9 million compared to the same period in the previous year.The European organization generated an operating EBITDA** of EUR 68.0 million for the third quarter of 2012 against EUR 75.1 million in Q3 2011.When adjusting for the extraordinary expenses of about EUR 10 million the operating EBITDA** in Europe shows a pleasing increase.

North America shows strong performance in weaker economic situation

The business of Brenntag North America is robust in a more challenging environment. Against a very strong Q3 2011 operating gross profit in the third quarter 2012 increased by 0.6% based on constant currency exchange rates (13.3% as reported) to EUR 193.5 million. Despite theslightly slower economic dynamic in the USA, the North American organization was able to achieve an operating EBITDA**of EUR 83.9 million. This reflects a stable development on constant currency exchange rates (12.2% growth as reported).

Latin America with ongoing positive business development

Once again Brenntag Latin America was able to record positive growth rates. Compared with the prior-year quarter the operating gross profit increased from EUR 37.4 million to EUR 43.0 million, which corresponds to a growth of 7.3% based on constant currency exchange rates (15.0% as reported). The Latin American organization was able to increase the operating EBITDA** to EUR 13.0 million. Compared to the same period of the previous year this means an increase of 1.6% based on constant currency exchange rates (7.4% as reported).

Asia Pacific reports strong growth supported by China

In the emerging Asian economies, growth continued but the pace slowed further in the third quarter of 2012 as a result of a weaker development of the global economy.Brenntag recorded positive growth in the region withoperating gross profit increasing by 36.4% based on constant currency exchange rates (49.0% as reported) to EUR 30.4 million. Most of this growth can be credited to the acquisition of the Zhong Yung Group which had a good quarter. The Asian-Pacific organization gained an operating EBITDA** of EUR 13.2 million and increased this key performance indicator by 35.4% based on constant currency exchange rates (48.3% as reported).

Strong free cash flow

The Group’s free cash flow amounted to EUR 347.2 million in the first nine months of the year 2012 and thus increased by 3.1% compared with the same period in the previous year. This positive development is largely due to the increase in EBITDA.

Outlook

Brenntagcurrently does not expect a positive economic lift in demand over the remainder of the year. Considering the challenging macro-economic climate, the resilient nature of Brenntag’s business model and also the development of results in the first nine months of 2012, Brenntaghas narrowed the range for the expected operating EBITDA** for 2012 toEUR 705-725 millionexcluding the extraordinary effectin the segment Europe mentioned before.

Consolidated income statement / Q3 2012 / Q3 2011 / ∆ as reported / ∆ fx adjusted
Sales / EUR m / 2,474.1 / 2,218.0 / 11.5% / 5.4%
Gross profit / EUR m / 493.2 / 445.5 / 10.7% / 4.0%
Operating EBITDA** / EUR m / 167.8 / 166.6 / 0.7% / -6.2%
Operating EBITDA** / Gross profit / % / 34.0 / 37.4
EBITDA / EUR m / 167.7 / 164.6 / 1.9% / -5.2%
Profit before tax / EUR m / 109.6 / 106.9 / 2.5%
Profit after tax / EUR m / 79.6 / 66.7 / 19.3%
Attributable to Brenntag shareholders / 78.6 / 66.8 / 17.7%
Earnings per share / EUR / 1.53 / 1.30 / 17.7%
Consolidated balancesheet / Sep. 30, 2012 / Dec. 31, 2011
Total assets / EUR m / 5,726.9 / 5,575.6
Equity / EUR m / 1,913.9 / 1,761.3
Working capital / EUR m / 1,112.9 / 961.1
Net financial liabilities / EUR m / 1,536.8 / 1,493.6
Consolidated cash flow / 9M2012 / 9M 2011
Cash provided by operating activities / EUR m / 221.6 / 215.0
Investments in non-current assets (Capex) / EUR m / 52.7 / 48.0
Free cash flow / EUR m / 347.2 / 336.8
Europe / Q32012 / Q3 2011 / ∆ as reported / ∆ fx adjusted
Sales / EUR m / 1,139.7 / 1,066.5 / 6.9% / 5.7%
Operating gross profit* / EUR m / 231.9 / 221.5 / 4.7% / 3.3%
Operating EBITDA** / EUR m / 68.0 / 75.1 / -9.5% / -11.1%
North America / Q32012 / Q3 2011 / ∆ as reported / ∆ fx adjusted
Sales / EUR m / 792.6 / 715.9 / 10.7% / -1.8%
Operating gross profit* / EUR m / 193.5 / 170.8 / 13.3% / 0.6%
Operating EBITDA** / EUR m / 83.9 / 74.8 / 12.2% / -0.2%
Latin America / Q32012 / Q3 2011 / ∆ as reported / ∆ fx adjusted
Sales / EUR m / 233.7 / 210.2 / 11.2% / 3.6%
Operating gross profit* / EUR m / 43.0 / 37.4 / 15.0% / 7.3%
Operating EBITDA** / EUR m / 13.0 / 12.1 / 7.4% / 1.6%
Asia Pacific / Q32012 / Q3 2011 / ∆ as reported / ∆ fx adjusted
Sales / EUR m / 195.3 / 104.3 / 87.2% / 69.8%
Operating gross profit* / EUR m / 30.4 / 20.4 / 49.0% / 36.4%
Operating EBITDA** / EUR m / 13.2 / 8.9 / 48.3% / 35.4%

* While Brenntag reports operating gross profit on segment level, the company reports gross profit on group level. Operating gross profit is defined as sales less costs of material for goods purchased and supplies, services purchased, packaging materials, supplier rebates and increase/decrease in finished goods. Gross profit is defined as operating gross profit less production/mixing and blending costs.

**Brenntag’s segments are primarily controlled on the basis of Operating EBITDA**, which is the operating profit/loss as recorded in the consolidated income statement plus amortization of intangible assets as well as depreciation of property, plant and equipment and investment property, adjusted for the following items:

  • Transaction costs: Costs connected with restructuring under company law and refinancing, particularly the IPO in 2010 and the refinancing in 2011. They are eliminated for purposes of management reporting to permit proper presentation of the operating performance and comparability on segment level.
  • Holding charges: Certain costs charged between holding companies and operating companies. On Group level they net to zero.

*** The conversion ratio at Brenntag is calculated as the quotient of the Operating EBITDA** and the gross profit. It represents one of the most important efficiency ratios.

About Brenntag:

Brenntag is the global market leader in full-line chemical distribution. Linking chemical manufacturers and chemical users, Brenntag provides business-to-business distribution solutions for industrial and specialty chemicals globally. With over 10,000 products and a world-class supplier base, Brenntag offers one-stop-shop solutions to more than 160,000 customers. The value-added services include just-in-time delivery, product mixing, formulation, repackaging, inventory management, drum return handling as well as extensive technical support. Headquartered in Mülheim an der Ruhr, Germany, the company operates a global network with more than 400 locations in 70 countries. In 2011 the company realized global sales of EUR 8.7 billion (USD 12.1 billion) with nearly 13,000 employees.

This press release may contain forward-looking statements based on current assumptions and forecasts made by Brenntag AG and other information currently available to the company. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Brenntag AG does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.

Press contact: Financial media:

Hubertus SpethmannThomas Langer

Brenntag AGBrenntag AG

Corporate CommunicationsCorporate Finance & Investor Relations

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Investor contact:

Thomas Langer, Diana Alester

Brenntag AG

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45472 Mülheim an der Ruhr

Germany

Telephone: +49 (208) 7828-7653

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