Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brenntag SE (BNTGF, Financial) reported a 3% increase in operating gross profit, reaching EUR1.02 billion for the third quarter of 2024.
- The company confirmed its full-year EBITA guidance of EUR1.1 billion to EUR1.2 billion, indicating confidence in its cost takeout measures and strategic initiatives.
- Brenntag SE (BNTGF) has made significant progress in its Horizon 2 strategy, focusing on optimizing its business portfolio and improving gross profit per unit.
- The company successfully executed several acquisitions, including PIC and PharmaSpecial in Brazil, expanding its Life Science business in key markets.
- Brenntag SE (BNTGF) launched CO2Xplorer, an innovative carbon emissions calculation tool, enhancing its sustainability leadership in the industry.
Negative Points
- Operating EBITDA declined by 5% year-over-year to EUR281 million, reflecting ongoing challenges in the competitive market environment.
- Earnings per share decreased to EUR0.82 from EUR1.18 in the third quarter of 2023, impacted by the sale of Raj Petro Specialties.
- The company experienced a lower overall bottom line result due to higher volume-driven costs and inflationary impacts.
- Brenntag SE (BNTGF) acknowledged that its Specialties division is not likely to close the performance gap with pure-play peers before 2027.
- The company faced intense competition and pressure on industrial chemical selling prices, affecting its gross profit per unit.
Q & A Highlights
Q: You've confirmed the guidance for the year, which is EUR1.1 billion to EUR1.2 billion. Given the year-to-date profit, should the market expect the lower end of the range? Also, what has changed regarding the legal separation of Essentials and Specialties?
A: We are confident in our guidance range due to our performance and cost measures. Regarding the separation, the focus is on performance improvement and cost management. The gap to pure-play peers is due to our current portfolio, which we are working to improve by 2027.
Q: Could you clarify the cost containment and DiDEX program impacts? How should we think about the cost bridge from 2024 to the next two years?
A: The EUR300 million cost-out target by 2027 includes separation costs. DiDEX benefits will be more significant towards the end of the project phase. The cost containment program is already contributing positively, with a targeted impact of EUR50-60 million in 2024.
Q: Are there any other items or potential disposals that might impact EPS in 2025 beyond the announced restructuring costs?
A: The major impact on EPS in Q3 was the loss from the sale of Raj. We will continue portfolio optimization, but currently, we are not aware of any further EPS impacts.
Q: Can you explain the benefits of the partial disentanglement of divisions? Is a complete separation off the table until after 2027?
A: The partial disentanglement focuses on market differentiation and performance improvement. Complete separation is not off the table but requires addressing current performance gaps and portfolio quality first.
Q: How confident are you that gross profit per unit has stabilized, given past trends? Also, how do bonuses and provisions affect your financials?
A: We are confident in stable gross profit per unit based on current trends. Bonuses were adjusted throughout the year, reflecting performance, so no significant releases are expected in Q4.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
