Brenntag Se · XETR:BNR
Brenntag — Investor Day (November 2018)
94 slides from Brenntag's investor day presentation, Nov 8, 2018
Slide 1: Capital Markets Day 2018
Capital Markets Day 2018 ▌ 8 November 2018
Slide 2: Schedule
CAPITAL MARKETS DAY 2018 Schedule Time Topic Speaker 10:30 Welcome Steve Holland 10:30 – 12:30 Strategy Update Steve Holland Financial Recap Georg Müller DigiB @ Brenntag Karsten Beckmann/ Maarten Stramrood 12:30 – 13:00 Lunch 13:00 – 14:00 Accelerating the future in Food & Nutrition Steve Holland 1
Slide 3: Strategy Update
Strategy Update ▌ Capital Markets Day, 8 November 2018 Brenntag AG – Management Board Steven Holland, CEO
Slide 4: Agenda
AGENDA ▌Strategy update ▌Regional update ▌Outlook Brenntag AG - Capital Markets Day 8 November 2018 4
Slide 5: Welcome to the House of Elements
INTRODUCTION Welcome to the House of Elements HOUSE OF ELEMENTS ▪ New Brenntag HQ since Nov. 2017 ▪ Built for Brenntag’s needs ▪ Inspiring working environment for currently ~600 Brenntag employees (German operations + HQ) ▪ Attractive location in the city of Essen ▪ Three application centers Brennta
Slide 6: Brenntag is ConnectingChemistry in 73 countries
INTRODUCTION Brenntag is ConnectingChemistry in 73 countries Op. Gross Profit 2017: EUR 2.6bn 8% 1% World market leader in 7% EMEA chemical distribution North America 43% Latin America Network of 530+ sites in four regions 42% Asia Pacific Rest of World ~185,000 customers Full-line product portfolio
Slide 7: Successful track record from IPO in 2010 to 2018
INTRODUCTION Successful track record from IPO in 2010 to 2018 Operating EBITDA Dividend > +44% +134% EUR 870-900m (2018) EUR 1.10 per share Employees Sites +31% +32% ~16,000 FTE’s > 530 sites More than 50 acquisitions Brenntag AG - Capital Markets Day 8 November 2018 7
Slide 8: Continuous execution of proven strategy
STRATEGY UPDATE Continuous execution of proven strategy Various global & ORGANIC regional initiatives GROWTH Platform in Asia Pacific Brenntag Enhanced extended Safety Thinking (BEST) program HSE Proactive sustainability M&A goals and objectives Regular M&A deal-flow and healthy pipeline Harmonised
Slide 9: Continuous improvement program in place to drive organic growth
STRATEGY UPDATE Continuous improvement program in place to drive organic growth ORGANIC GROWTH 2017 M&A 2017 EMEA efficiency Global Sourcing program Initiative (GSI) ▪ Streamlining of regional ▪ Focus: EMEA and North America infrastructure ▪ Goal: more product (groups) under ▪ Leaner processes to dr
Slide 10: Ongoing programs and initiatives for future organic growth
STRATEGY UPDATE Ongoing programs and initiatives for future organic growth Commercial New CRM Excellence Systems ORGANIC GROWTH New New Facilities Services Brenntag AG - Capital Markets Day 8 November 2018 10
Slide 11: M&A is an integral part of our strategy
STRATEGY UPDATE M&A is an integral part of our strategy based on defined objectives and focused areas REGIONS PRODUCTS M&A Asia Pacific & Specialty & North America Industrial Chemicals EUR Building up scale and eur 200-250m efficiencies p.a. Expanding geographic coverage Small & Improving full-line
Slide 12: M&A strategy execution around the globe
STRATEGY UPDATE M&A strategy execution around the globe Kluman & Balter, UK ▪ Strengthen footprint in Food & Nutrition sector ▪ Closed Dec. 2017 Raj Petro Specialties, India ▪ Important step into Indian market ▪ Closed May 2018 Total annual contribution Quimitécnica, Portugal ▪ Excellent addition to
Slide 13: Strategic outlook: Proven and resilient business model with growth opportunities
STRATEGY UPDATE Strategic outlook: Proven and resilient business model with growth opportunities ORGANIC GROWTH FOOD & NUTRITION M&A HSE DIGITILIZATION HUMAN RESOURCES Brenntag AG - Capital Markets Day 8 November 2018 13
Slide 14: Agenda
AGENDA ▌Strategy update ▌Regional update ▌Outlook Brenntag AG - Capital Markets Day 8 November 2018 14
Slide 15: Brenntag EMEA: Positioning for long term growth in a mature market
REGIONAL UPDATE Brenntag EMEA: Positioning for long term growth in a mature market Environment Brenntag approach Strategy & Initiatives ▪ Still positive industrial ▪ Accelerate growth in Life ▪ Leverage buying power on production growth, MEA Science business tail end spend challenging ▪ Complete the
Slide 16: Brenntag North America: Reliable leadership with sustainable and diversified growth
REGIONAL UPDATE Brenntag North America: Reliable leadership with sustainable and diversified growth Environment Brenntag approach Strategy Initiatives ▪ Healthy industrial ▪ Ensure supply chain ▪ Supplier alignment and production growth reliability sourcing excellence ▪ Potential impact of tariffs ▪
Slide 17: Brenntag Latin America: Extending market leadership in a volatile environment
REGIONAL UPDATE Brenntag Latin America: Extending market leadership in a volatile environment Environment Brenntag approach Strategy Initiatives ▪ Volatile markets with high ▪ Focus on profitability and ▪ Focus on sales productivity growth in Brazil, Colombia market share growth ▪ Oil & Gas growth i
Slide 18: Brenntag Asia Pacific: Significant growth opportunities ahead
REGIONAL UPDATE Brenntag Asia Pacific: Significant growth opportunities ahead to extend growth track record Environment Brenntag approach Strategy Initiatives ▪ Above average industrial ▪ Focus on customer ▪ Drive commercial production growth rates industries with attractive excellence ▪ China a gro
Slide 19: Agenda
AGENDA ▌Strategy Update ▌Regional Update ▌Outlook Brenntag AG - Capital Markets Day 8 November 2018 19
Slide 20: Mid- to long-term outlook
OUTLOOK Mid- to long-term outlook Operating EBITDA: Mid- / ▪ 4-6% p.a. organic growth expectation confirmed Long-term ▪ Contribution from M&A Macroeconomic environment is expected to be stable 2019 but to not improve further ▪ Internal initiatives in place to support growth ▪ Further cost inflation
Slide 21: Financial Recap
Financial Recap ▌ Capital Markets Day, 8 November 2018 Brenntag AG – Management Board Georg Müller, CFO
Slide 22: Agenda
AGENDA ▌Financial recap ▌Long-term trend ▌Financial modelling considerations Brenntag AG - Capital Markets Day 2018 8 November 2018 2
Slide 23: Highlights Q3 2018
FINANCIAL RECAP Highlights Q3 2018 Operating Gross Operating Continued Profit EBITDA growth trend in Q3 +7.9% (fx adj.) +5.0% (fx adj.) EUR 678.0m EUR 224.5m Broad based Successful Earnings per contribution to completion of share growth acquisitions +10.8% 3 regions growing Contribution from across
Slide 24: Operating EBITDA bridge: Q3 2017 to Q3 2018
FINANCIAL RECAP Operating EBITDA bridge1): Q3 2017 to Q3 2018 in EUR m +3% +7% +13% -10% 8 1 2 225 6 -2 216 -5 -2 Q3 2017 FX translation Acquisition EMEA North America Latin America Asia Pacific Rest of World Q3 2018 contribution organic organic organic organic 1) Calculations are partly based on as
Slide 25: Operating EBITDA bridge: 9M 2017 to 9M 2018
FINANCIAL RECAP Operating EBITDA bridge1): 9M 2017 to 9M 2018 in EUR m +4% +10% +5% +1% 28 1 1 662 -5 639 12 16 -30 9M 2017 FX translation Acquisition EMEA North America Latin America Asia Pacific Rest of World 9M 2018 contribution organic organic organic organic 1) Calculations are partly based on
Slide 26: Agenda
AGENDA ▌Financial recap ▌Long-term trend ▌Financial modelling considerations Brenntag AG - Capital Markets Day 2018 8 November 2018 6
Slide 27: Positive long-term trend with return to organic growth
LONG-TERM TREND Positive long-term trend with return to organic growth Operating EBITDA Organic operating EBITDA growth1) in EURm 900 8% 6% 850 4% 800 2% 750 0% 700 -2% 650 -4% 600 -6% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 YTD guidance 1) excl. effects from FX translation and acquisition
Slide 28: Brenntag pays a regular and steadily increasing dividend
LONG-TERM TREND Brenntag pays a regular and steadily increasing dividend Historical cash return in EUR ▪ Regular and steadily increasing 1.2 60% dividend payments due to strong free 1.0 50% cash flow generation 0.8 40% ▪ Payout ratio of 35% - 50% of net income 0.6 30% 0.4 20% 0.2 10% 0.0 0% 2010 201
Slide 29: Agenda
AGENDA ▌Financial recap ▌Long-term trend ▌Financial modelling considerations Brenntag AG - Capital Markets Day 2018 8 November 2018 9
Slide 30: EPS in 2018 positively impacted by more than organic growth
FINANCIAL MODELLING CONSIDERATIONS EPS in 2018 positively impacted by more than organic growth M&A contribution lower tax bond rate certain 2017 refinancing expenses fall organic away EBITDA growth 2018 EPS 2017 EPS Brenntag AG - Capital Markets Day 2018 8 November 2018 10
Slide 31: Financial considerations 2019
FINANCIAL MODELLING CONSIDERATIONS Financial considerations 2019 Interest Capex Tax rate cost spending to remain at decreased to EUR ~170m for the group slightly EUR ~75m due to new (plus China sites carry below 30% going financing structure over from 2018) forward Working Dividend FX Capital consis
Slide 32: Change of accounting rules on leases
FINANCIAL MODELLING Change of accounting rules on leases ▪ IFRS 16 implementation will go live beginning of 2019 ▪ ~6,500 contracts reviewed ▪ Lease expenses of EUR 140m in 2017 ▪ Positive EBITDA impact: majority of lease expenses will move into depreciation and financial result ▪ Only limited EPS e
Slide 33: Brenntag Capital Markets Day 2018
BRENNTAG CAPITAL MARKETS DAY Brenntag AG - Capital Markets Day 2018 8 November 2018 13
Slide 34: DIGIB @ Brenntag
DIGIB @ Brenntag Capital Markets Day 2018 Karsten Beckmann, Board Member
Slide 35: Digital disruption and innovation hub
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Slide 36: Digital change
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Slide 37: Outstanding digital customer experience
2 OUTSTANDING DIGITAL CUSTOMER EXPERIENCE
Slide 38: Data the new gold
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Slide 39: Standardized IT & business processes
4 STANDARDIZED IT & BUSINESS PROCESSES
Slide 40: Digital innovation hub
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Slide 41: To become the market leader in digital customer experience
TO BECOME THE MARKET LEADER IN DIGITAL CUSTOMER EXPERIENCE IN OUR INDUSTRY
Slide 42: DIGI
DIGI A Brenntag Group Company
Slide 43: Introduction
INTRODUCTION
Slide 44: Maarten Stramrood
Maarten Stramrood ✓ 44 years old ✓ Live in Amsterdam, the Netherlands ✓ 20 years in digital industry ✓ Corporate entrepreneur ✓ Joined Brenntag July 2017
Slide 45: Slide 45
Slide 46: Video
VIDEO
Slide 47: The digital future of Brenntag
THE DIGITAL FUTURE OF BRENNTAG
Slide 48: Slide 48
Slide 49: NSA
NSA \a\'a\™ \ . RL NAA Sask - ‘ Seat MANN A.
Slide 50: Technology
TECHNOLOGY
Slide 51: Data
DATA
Slide 52: 1.7655 1.7655 0.00000.00% aes
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Slide 53: Brenntag Source
BRENNTAG SOURCE
Slide 54: (eeeemeen mcm |
(eeeemeen mcm |
Slide 55: Brenntag Connect
BRENNTAG CONNECT
Slide 56: Multi channel
MULTI CHANNEL
Slide 57: Slide 57
Slide 58: Brenntag Connect
BRENNTAG CONNECT
Slide 59: Brenntag Connect
GB Brenateg Connect | Brenntay x @ Secure https://develop.connect.digib.io/e NTAG CONNECT
Slide 60: Brenntag Connect Cosmetics
BRENNTAG CONNECT COSMETICS Being a Brenntag Connect Cosmetics customer means always getting a quick, helpful response from people with local expertise in all the key cosmetics segments. OUR PRODUCTS Skin & Hair Care Sun Care Bath & Body Color Cosmetics Oral Care Language Login
Slide 61: My Products
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Slide 62: My Orders
» G | @ Secure | https://develop.connect.digib.iojen/my-orders BRENNTAG CONNECT My Products My Orders Product List Language Filters «1 Type here... oO. Search by PO Reference bo Type here: ° Status Sales # Reference Delivery date Ship to Select Ship Te Address Am Ockenheimer Graben 43 & 3831092 1234
Slide 63: Add to cart
[BB My products | Brenntag Cons x € © f Secure | https://develop.connect.digib.io/en/my-products & ADD TO CART Select an amount that you would like to order. Order quantity KOQZ MARLIPAL 0 13/90,STR 190/DF Material no: 11003291 t Packaging | Asatocon | 190 kg SpundfaS Available baseprices: €437.00 /
Slide 64: Learnings
LEARNINGS
Slide 65: Digital marketing
DIGITAL MARKETING
Slide 66: Non customers
NON CUSTOMERS
Slide 67: Slide 67
Slide 68: Engagement
ENGAGEMENT
Slide 69: Slide 69
Slide 70: Upsell
UPSELL
Slide 71: Slide 71
Slide 72: Loyalty
LOYALTY
Slide 73: Slide 73
Slide 74: Opportunities
OPPORTUNITIES
Slide 75: DIGI
DIGI A Brenntag Group Company
Slide 76: Accelerating the future in Food & Nutrition
Accelerating the future in Food & Nutrition ▌ Capital Markets Day, 8 November 2018 Brenntag AG – Management Board Steven Holland, CEO
Slide 77: Agenda
AGENDA ▌Global market leader in both industrial and specialty chemical distribution ▌Aligning our business to the future ▌Brenntag’s new Food & Nutrition organisation and branding ▌Competitive advantages of the new Food & Nutrition approach Brenntag AG - Capital Markets Day 2018 8 November 2018 2
Slide 78: Integrated business model provides competitive advantages
GLOBAL MARKET LEADER IN BOTH INDUSTRIAL AND SPECIALTY CHEMICAL DISTRIBUTION Integrated business model provides competitive advantages Full-line chemical distributor with integrated approach ▪ Sales of ~12bn EUR in 2017 ▪ EBITDA of 836m EUR in 2017 Single point of contact for ▪ > 16,000 employees glo
Slide 79: Market leader in specialty chemical distribution
GLOBAL MARKET LEADER IN BOTH INDUSTRIAL AND SPECIALTY CHEMICAL DISTRIBUTION Market leader in specialty chemical distribution ~1/3 ~4 bn EUR sales in 2017 While operating an of integrated business model, Brenntag is the is dedicated to largest specialty specialty chemical Truly global footprint with
Slide 80: The market for specialty chemicals is large and growing above average
GLOBAL MARKET LEADER IN BOTH INDUSTRIAL AND SPECIALTY CHEMICAL DISTRIBUTION The market for specialty chemicals is large and growing above average 2017-2022E CAGR (%) Global Europe North America Asia Pacific 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Third-party SC distribution Sales of SC GDP High Room
Slide 81: Agenda
AGENDA ▌Global market leader in both industrial and specialty chemical distribution ▌Aligning our business to the future ▌Brenntag’s new Food & Nutrition organisation and branding ▌Competitive advantages of the new Food & Nutrition approach Brenntag AG - Capital Markets Day 2018 8 November 2018 6
Slide 82: Changing environment and expectations of partners in life science markets
ALIGNING OUR BUSINESS TO THE FUTURE Changing environment and changing expectations of our partners in the life science markets Reduce complexity Increase efficiency Distributors More dynamic product life cycles Exclusivity Increasing specialisation Expectations from suppliers Expectations from custo
Slide 83: Industry specialization and dedication in Life Science
ALIGNING OUR BUSINESS TO THE FUTURE Industry specialization and dedication in Life Science Life Science ▪ Food & Nutrition ▪ Pharma ▪ Personal Care/Cosmetics ▪ Animal Nutrition Brenntag AG - Capital Markets Day 2018 8 November 2018 8
Slide 84: Brenntag has a successful Food & Nutrition business already today
ALIGNING OUR BUSINESS TO THE FUTURE Brenntag has a successful Food & Nutrition business already today Application Centers Above average growth ~1.3bn EUR Sales in 2017 28 Supply chain expertise Food & Nutrition sales force ~750 Brenntag AG - Capital Markets Day 2018 8 November 2018 9
Slide 85: Mega trends in Food & Nutrition provide significant growth potential
ALIGNING OUR BUSINESS TO THE FUTURE Mega trends in Food & Nutrition provide significant growth potential Societal mega trends Nutritional mega trends Growing life expectancy Nutritional functionality Global population growth Personalization Sustainability All natural Responsibility expectations Bren
Slide 86: Accelerating growth opportunities by repositioning Food & Nutrition
ALIGNING OUR BUSINESS TO THE FUTURE Accelerating growth opportunities by repositioning our Food & Nutrition business Customer industry focus Perception Focus clear value proposition uniting forces internally Repositioning Dedication leveraging expertise a living network Brenntag AG - Capital Markets
Slide 87: Clearly defined strategic goals
ALIGNING OUR BUSINESS TO THE FUTURE Clearly defined strategic goals Consistent market approach Gain market share Leading global distributor Increased for the focus + flexibility Food & Nutrition Achieve higher industry growth rates Global coordination of technical capabilities Brenntag AG - Capital
Slide 88: Agenda
AGENDA ▌Global market leader in both industrial and specialty chemical distribution ▌Aligning our business to the future ▌Brenntag’s new Food & Nutrition organisation and branding ▌Competitive advantages of the new Food & Nutrition approach Brenntag AG - Capital Markets Day 2018 8 November 2018 13
Slide 89: Brenntag's new Food & Nutrition organisation and branding
BRENNTAG’S NEW FOOD & NUTRITION ORGANISATION AND BRANDING Brenntag AG - Capital Markets Day 2018 8 November 2018 14
Slide 90: Agenda
AGENDA ▌Global market leader in both industrial and specialty chemicals distribution ▌Aligning our business to the future ▌Brenntag’s new Food & Nutrition organisation and branding ▌Competitive advantages of the new Food & Nutrition approach Brenntag AG - Capital Markets Day 2018 8 November 2018 15
Slide 91: Dedicated organisation with clear responsibilities
COMPETITIVE ADVANTAGES OF THE NEW FOOD & NUTRITION APPROACH Dedicated organisation with clear responsibilities North Latin ▪ Global set-up centrally EMEA Asia Pacific America America managed ▪ 1- Food Food ▪ Implementation of a Food Food – dedicated Industry Industry Industry Industry – more focused
Slide 92: A win-win situation for Brenntag and its partners
COMPETITIVE ADVANTAGES OF THE NEW FOOD & NUTRITION APPROACH A win-win situation for Brenntag and its partners Actions Goals Benefits Global dedicated Delivering even more commercial Accelerating growth consistent value organisation Clearly defined strategy Increasing recognition Market penetration S
Slide 93: Video
Video Brenntag AG - Capital Markets Day 2018 8 November 2018 18
Slide 94: Brenntag Capital Markets Day
BRENNTAG CAPITAL MARKETS DAY Brenntag AG - Capital Markets Day 2018 8 November 2018 19