Brenntag with strong start into FY 2011
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Brenntag successfully started into the financial year 2011 and reported growth in all key performance indicators. Drivers were the organic growth of the business, efficient cost structures as well as the contribution of the EAC Industrial Ingredients acquisition. Compared with last year's first quarter Brenntag increased sales by 22.7 % (20.6 % based on constant exchange rates) to EUR 2.13 billion (Q1 2010: EUR 1.73 billion). Gross profit* grew by 15.2 % (13.1 % based on constant exchange rates) reaching EUR 434.4 million (Q1 2010: EUR 377.0 million). Operating EBITDA rose by 17.7 % (15.6 % based on constant exchange rates) to EUR 158.1 million (Q1 2010: EUR 134.3 million). Brenntag's profit after tax of EUR 66.9 million in the first quarter increased exceptionally (Q1 2010: EUR 2.2 million), mainly due to decreased finance costs after last year's redemption of debt and significantly lower amortization.
All segments contributed to the positive development of Brenntag's results, Asia Pacific continued its outstanding performance of the recent quarters. Furthermore Latin America is again clearly on a growth track and generated pleasing results.
Stephen Clark, CEO of Brenntag: "The strong start into financial year 2011 with clear growth in all regions once again proves the success of our long-term aligned strategy which is focused on profitable growth. We are further on well positioned to benefit from the outsourcing activities in the chemical distribution industry and ready to seize the opportunities in selected customer industries such as water treatment, coatings, food or personal care."
Further growth in Europe
In Europe, Brenntag reported positive growth rates in the first quarter of 2011. Operating gross profit increased compared to the reference period of the previous year by 7.7 % from EUR 211.5 million to EUR 227.7 million. Also, operating EBITDA improved by 11.4 % from EUR 70.4 million in the first quarter of 2010 to EUR 78.4 million in the first quarter of this year.
Ongoing positive results in North America
Brenntag North America continued its growth track and again reported double-digit growth in relevant earnings parameters. One of these key performance indicators, operating gross profit*, went up by 15.6 % from EUR 134.7 million in the first quarter of 2010 to EUR 155.7 million. Adjusted for exchange rate effects, the growth rate amounted to 13.6 %. Operating EBITDA also developed strongly and grew by 12.1 % to EUR 63.2 million in the first quarter (EUR 56.4 million in the first quarter of 2010). At constant exchange rates, operating EBITDA increased by 10.3%.
Latin America back on growth track
Latin America is again back on a clear growth track and reported strong positive growth rates in all relevant earnings parameters after Brenntag's results had been negatively influenced by unfavorable political developments and the finance policy in Venezuela last year. Brenntag Latin America improved operating gross profit* by 12.6 % from EUR 31.8 million in the first quarter of 2010 to now EUR 35.8 million. At constant exchange rates, the growth rate was 8.8 %. Operating EBITDA grew even more strongly by 16.8 % to EUR 11.8 million compared to EUR 10.1 million in the first quarter of 2010. Adjusted for exchange rate effects, Brenntag Latin America increased operating EBITDA by 13.5 %.
Continued strong growth in Asia Pacific backed by consolidation of EAC Group and the growth of the established Brenntag companies
Brenntag Asia Pacific continued its success story and reported again excellent results in the first quarter of financial year 2011. Operating gross profit improved considerably from EUR 4.9 million in the first quarter of 2010 to EUR 19.9 million in the first quarter of 2011. This corresponds to a growth rate of more than four times the previous year's result and more than three times if adjusted for exchange rate effects. This excellent development was supported by the contribution of the companies of the EAC Group but also by the already established Brenntag companies which achieved a significant double-digit increase in operating gross profit as well. Similarly, operating EBITDA increased considerably and more than quadrupled from EUR 2.1 million in the first quarter of the previous year to EUR 9.8 million. At constant exchange rates, the growth in operating EBITDA also more than quadrupled. Overall, the positive business development in Asia Pacific was marked by the successful integration of EAC Industrial Ingredients Ltd. A/S which was acquired by Brenntag in July 2010. The development of EAC's results is in line with Brenntag's expectations and strengthens the company's market position in Asia Pacific.
Significant growth of free cash flow more than offsets the increase in working capital
Brenntag significantly increased free cash flow compared to the first quarter of 2010 by 17.7 % to EUR 47.9 million. Main driver was the pleasing EBITDA growth of 22.9 % to EUR 157.9 million in the first quarter of this year. Working capital increased in comparison to year-end 2010 to EUR 904.5 million which was mainly attributable to higher business activity. The annualized working capital turnover rate slightly decreased from 10.7 in the first quarter 2010 to 9.8 in the reference period. This development is inter alia based on the fact that the acquired EAC Group has a turnover rate below the group average. At the same time, the strong growth of free cash flow overcompensated the increase in working capital and capital expenditures.
Prospects: Brenntag expects further growth in all relevant earnings parameters
Brenntag expects to grow in all relevant earnings parameters in local currency excluding exchange rate effects, by successfully pursuing its current strategy of taking over activities from chemical producers seeking outsourcing opportunities and expanding its geographical footprint through acquisitions. The organic growth of Brenntag is expected to be supported by further growth of the global economy. Organic growth and additional acquisitions will be the two drivers to further strengthen Brenntag's market leading position.
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