[ID] => 11356
[post_author] => 6150
[post_date] => 2019-08-08 08:44:08
[post_date_gmt] => 2019-08-08 07:44:08
[post_content] => Brenntag has been busy the past few weeks completing international acquisitions and recalculating 2019 forecasts as its second quarter results were published. Headquartered in Essen, Germany, Brenntag has been working hard to expand its global network and provide global customers and suppliers with distribution solutions for industrial and specialty chemicals. The most recent acquisitions will serve to bolster its portfolio of more than 10,000 products, worldwide supplier base, specific application technologies, extensive technical support and value-added services.
Brenntag’s most recent purchases have focused on markets in the Middle East, Africa and Asia. In Africa, Brenntag has acquired the remaining 50 per cent of Crest Chemicals from AECI Group. South Africa-based Crest, which has been a 50:50 joint venture between Brenntag and AECI since 2001, distributes and resells chemicals to a broad range of companies within the industrial, paint and coatings sectors. Crest also offers technical solutions and formulation expertise to clients.
“The full ownership of Crest allows Brenntag to develop the business in the desired direction and to fully leverage its growth potential,” says Karsten Beckmann, member of the board of management and CEO of Brenntag Europe, Middle East and Africa (EMEA). “Combining Crest with Brenntag South Africa will support us in providing a rather complete product and industry sector offering.”
Anthony Gerace, Brenntag’s managing director mergers and acquisitions, adds: “We expect to realise cost synergies and convert cross-selling opportunities by combining Crest and Brenntag South Africa since both companies have complementary product lines. In addition, Brenntag will benefit from Crest’s mixing and blending capabilities, a service that is increasingly requested by customers.”
SOUTH AND EAST
Elsewhere in South Africa, Brenntag has acquired the operating business of Chemgrit Cosmetics, headquartered in Johannesburg. Chemgrit, an independent specialty chemical distributor with a focus on personal care and cleaning markets, operates three warehouses in Johannesburg, Durban and Cape Town, along with an in-house laboratory. These assets provide Chemgrit with the ability to offer customers value-added services including mixing, refilling, redistribution and delivery, formulating and testing of materials and products and other technical support.
Beckmann says: “With the acquisition of Chemgrit Cosmetics we expand the industry segment and scope for Brenntag South Africa in specialties. The company’s cosmetics focus perfectly complements our existing national food and pharma business and supports our ambition to achieve a strong position and comprehensive offering in South Africa.”
“Based on a dedicated structure and team, Chemgrit Cosmetics has a strong foothold in Personal Care which is one of the fastest growing market segments in South Africa and sub-Saharan Africa,” adds Gerace. “Brenntag can use its existing structure in East and West Africa as well as Maghreb to roll out the cosmetics business line in the region.”
Further across Africa and extending into the Middle East, Brenntag has completed its acquisition of Desbro Group in Kenya and the UAE. Desbro, headquartered in Nairobi, provides a portfolio of commodities and specialty chemicals to industries in East Africa and the Middle East covering plastics, coatings and construction, textiles, water treatment and, increasingly, life sciences.
“With Desbro, we have acquired a leading and well-respected market player,” says Beckmann. “The company provides us the needed market expertise, organisation and infrastructure to build on our strategy to claim outstanding Africa coverage.” Brenntag expects to add Desbro Group facilities in Tanzania and Uganda within weeks.
Moving East into Asia, Brenntag has also agreed to acquire specialty and industrial chemical distributor Neuto Chemical Corp. Headquartered in Taipei, Taiwan, Neuto distributes to industries such as electronics, coatings, textile and metal working.
Henri Nejade, member of the management board and CEO of Brenntag Asia Pacific, says: “The acquisition strengthens our position in Taiwan. With the electronics, coatings and textile industry being served, Neuto is a complementary fit to our Brenntag Taiwan business focusing on health and nutrition.” Completion of the transaction is due in early 2020.
In the 2018 financial year, Crest reported sales of approximately €95m, Chemgrit generated sales of approximately €5m, while Neuto reported €26.2m in the same period. Desbro’s figures have not been released. In 2018, Brenntag generated sales of €12.6bn.
TWEAKING THE NUMBERS
Behind the scenes of the recent acquisitions, Brenntag has had a positive beginning of the year financially, but it has lacked the scale of growth predicted. Focusing on the second quarter results, it is noted that “after a good business development in the first two months of the quarter, there was a noticeable slowdown in demand in June and a corresponding impact on earnings”.
This fall in demand is, Brenntag says, due to a weakening in the macroeconomic environment, particularly in its two main regions – EMEA and North America. This was further complicated by the difficult business environment that has been causing issues for many companies globally. Overall, operating gross profit reached €722.9m, an increase of 4.1 per cent on a constant currency basis (+6.8 per cent as reported) compared to second quarter 2018. Operating EBITDA was up by 12.2 per cent year on year at constant currency rates (+15.1 per cent as reported) at €266.3m.
EMEA and North America markets still produced positive returns despite the challenging environment when compared to 2018. EMEA generated €292.8m operating gross profit (up 0.2 per cent on a constant currency basis) while North America reported €313.0m, an improvement on 2018. North America operating EBITDA reached €127.8m, an increase of 11.6 per cent on a constant currency basis. Latin America and Asia-Pacific both continued improving upon previous results, posting operating gross profit rises of 7.9 per cent (€44.8m) and 15.0 per cent (€67.6m), respectively.
Steven Holland, Brenntag’s CEO, says: “The second quarter confirmed that there has been no significant improvement of the underlying business environment, and overall business sentiment remains weak. Despite this, however, we achieved operating EBITDA on a par with the previous year on a like-for-like basis.”
Due to the recent slowdown and global trading difficulties, Brenntag has adjusted its operating EBITDA forecast for 2019. Previously predicted growth from 3 per cent to 7 per cent has been revised to 0 per cent to 4 per cent. Brenntag still expects the second half of the year to yield higher growth rates than the first half.
“We have revised our forecast for operating EBITDA to reflect the currently difficult trends and macroeconomic outlook,” says Holland. “Although we are now more cautious as regards the further course of the year, our resilience, broad diversification and successful acquisitions will help us to continue to grow.”
[post_title] => Brenntag: Reaching further
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[post_name] => brenntag-reaching-further
[post_modified] => 2019-08-08 08:46:20
[post_modified_gmt] => 2019-08-08 07:46:20
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