Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brenntag SE (BNTGF, Financial) reported stable sales of EUR4.1 billion for Q1 2025, consistent with the prior year period.
- Operating gross profit increased by 2% to EUR1.0 billion, indicating effective margin management despite pricing pressures.
- Operating EBITDA rose by 2.5% year-over-year to EUR355 million, showcasing positive operating leverage.
- The company generated a free cash flow of EUR163 million, demonstrating strong cash management.
- Cost containment measures are on track, contributing significantly to cost development and supporting targeted savings for 2025.
Negative Points
- The business environment remains challenging with economic uncertainty and geopolitical volatility impacting performance.
- Sequential performance did not meet initial expectations, with Q1 results affected by dampened business sentiment.
- Earnings per share decreased to EUR0.93 from EUR0.97 in the previous year, reflecting pressure on profitability.
- The US economy contracted by 0.3% in Q1 2025, posing a risk to future demand and economic stability.
- The unresolved global tariff discussions and unfavorable euro-US dollar FX rates are expected to impact earnings, with guidance now at the lower range of EUR1.1 billion to EUR1.3 billion.
Q & A Highlights
Q: What are the risks to Brenntag's updated EBITA guidance, and how does the euro-US dollar FX rate factor into this?
A: Christian Kohlpaintner, CEO, stated that risks include worsening geopolitical situations and economic environments, which are beyond their control. The euro-US dollar FX rate is a significant factor, with the guidance assuming a rate of 1.05, but current rates are at 1.12, impacting earnings. The company plans to accelerate its cost containment program to mitigate these risks.
Q: Does the trading in April and early May give confidence that Q2 EBITA can be better than Q1?
A: Christian Kohlpaintner, CEO, noted that typically Q2 is better than Q1 due to seasonality. Despite a mid-March slowdown, demand has not fallen significantly in April, providing some confidence for sequential improvement from Q1 to Q2.
Q: Is the sequential increase in gross profit per tonne due to smaller, more frequent orders, or other pricing strategies?
A: Christian Kohlpaintner, CEO, explained that for Brenntag Specialties, the increase is due to pricing and margin management, not mix effects. For Brenntag Essentials, there is pressure on industrial chemical prices, with some mix effects impacting gross profit per unit.
Q: Can you clarify the guidance regarding the FX rate and its impact on the lower range of the EBITA guidance?
A: Thomas Reisten, CFO, clarified that the guidance range of EUR1.1 billion to EUR1.3 billion was based on an FX rate of 1.05. However, the current rate of 1.12 has been factored into the expectation of earnings being at the lower range of the guidance.
Q: What is the extent of the talc liabilities, and are there other similar risks?
A: Thomas Reisten, CFO, mentioned that a provision for talc liabilities is in the low triple-digit million range. The company has accounted for all related risks on their balance sheet.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
