Brenntag unveils strategic roadmap and initiatives for growth

Brenntag, the global leader in chemical and ingredients distribution, has detailed its strategic transformation and growth path, including updated mid-term targets until 2027. Announced at a Capital Markets Day in London, UK, the plan focuses on operational and legal disentanglement of Brenntag Essentials and Brenntag Specialties, leading to two distinct, high-performing divisions with full business autonomy, supported by a lean corporate center.

Acquisition and divisional autonomy

Brenntag has completed the acquisition of a 50% stake in EemsEnergyTerminal, an LNG import terminal in Eemshaven, Netherlands. The company, in partnership with Gasunie, plans to expand the terminal’s capacity to 10 billion cubic metre (bcm) per year, from 8 bcm per year, and develop it for green hydrogen import. This acquisition, totaling just more than EUR80 million (USD86.2 million)), is expected to positively contribute to Brenntag’s operating cash return and have a limited impact on the full year 2023 EBITDA outlook.

Sale of Rotterdam Chemical Terminals

The company also completed the sale of three chemical terminals in Rotterdam, The Netherlands, to Infracapital for EUR407 million (USD438.7 million). This sale includes a conditional deferred payment of EUR19.5 million (USD21.0 million), with a net cash receipt of EUR372 million (USD401.0 million). The operational capacity of these terminals is 1.4 million cubic metres (cbm).

Strategic goals and divisional profiles

Brenntag aims to grow its footprint in gas and accelerate towards new energies. The company is executing a Product Portfolio Steering, transferring all Pharma activities to Brenntag Specialties and moving the Water Treatment and Finished Lubricants business to Brenntag Essentials. These shifts will enhance the divisional value propositions and align with specific customer and supplier needs.

As a result of the shifts, Brenntag Essentials will account for 70% of the group’s current gross profits with a conversion ratio of 31 to 33%. Brenntag Specialties will account for 30% of the gross profits but with an increased conversion ratio of 38% to 40%. The changes in the portfolios will be reflected in Brenntag’s reporting structure from the Q1 2024 results onwards. Brenntag Specialties will switch from a regional segment reporting to a reporting in two global industry segments, Life Science and Material Science. Brenntag Essentials will continue to be reported in regional segments.

Financial framework and targets

Brenntag sets ambitious financial targets for both divisions, reflecting their increased focus. The company expects to grow its organic gross profits by 4% to 7% annually, its organic EBITA by 7% to 9% annually, and achieve a conversion ratio of 35% to 37% by 2027. Additional cost take-out measures are planned to realise efficiency gains, with expected annual savings of around EUR300 million (USD323.4 million) by 2027.

Christian Kohlpaintner, CEO of Brenntag SE, emphasised the advanced operating models of the divisions, aligning closely with market developments and customer needs. Kristin Neumann, CFO of Brenntag SE, confirmed the mid-term financial guidance and highlighted the company’s focus on organic growth and margin uplift. Ewout van Jarwaarde, CEO of Brenntag Essentials, and Michael Friede, CEO of Brenntag Specialties, both underscored their divisions’ unique strategies and focus areas to drive performance and profitability.