Brenntag Se · XETR:BNR

Brenntag — Investor Day (November 2016)

48 slides from Brenntag's investor day presentation, Nov 17, 2016

  1. Slide 1: Capital Markets Day 2016

    Capital Markets Day 2016 ▌ London Brenntag Board of Management – Key Note 17 November 2016

  2. Slide 2: Agenda

    CAPITAL MARKETS DAY 2016 Agenda 1:00 pm Management presentation and Q&A 2:00 pm Brenntag exhibition  Asia Pacific  Commercial Excellence  M&A  Supplier Relationships  Sustainability 4:00 pm Tea time & Get-together with management 5:00 pm Wrap up Brenntag AG - Capital Markets Day 2016 - Key Note

  3. Slide 3: Content

    CONTENT Capital Markets Day 2016 ▌Introduction ▌Resilient business model in an attractive market ▌M&A Update ▌Financials ▌Regional Update ▌Group Outlook ▌Brenntag exhibition – Introduction of experts Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 3

  4. Slide 4: Brenntag at a glance

    INTRODUCTION Brenntag at a glance Gross Profit (EUR m) 2,266 Global 2,028 Market Sales of Average 1,926 1,946 1,768 1,636 Leader with 10.3bn EUR order size 1,492 1,460 1,355 ~6% market in 2015 ~EUR 2.500 1,169 1,033 share 303 866 Full-line ~180.000 portfolio with > 530 sites in customers > 10.000 74

  5. Slide 5: Brenntag is the world market leader in chemical distribution

    INTRODUCTION Brenntag is the world market leader in chemical distribution North America EMEA Market position #2 Market position #1 Op. gross profit 745.2m EUR Op. gross profit 807.7m EUR Op. EBITDA 274.1m EUR Op. EBITDA 277.0m EUR Employees > 4,300 Employees > 6,600 Latin America Asia Pacific Market

  6. Slide 6: Chemical distribution is predominantly a local business but global aspects are becoming increasingly important

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Chemical distribution is predominantly a local business but global aspects are becoming increasingly important Brenntag‘s core business is fulfilling the various requirements Supporting GLOBAL LOCALLY Factors Customers Customers  Global supplier focu

  7. Slide 7: Chemical distribution is a local business

    INTRODUCTION Chemical distribution is a local business Ft. St. John Sofia Bogotà Melbourne  Highly diversified and granular business  Winning local competition leads to  Distributors have to retain local customers business with key account  Business is service sensitive customers  Competition i

  8. Slide 8: Content

    CONTENT Capital Markets Day 2016 ▌Introduction ▌Resilient business model in an attractive market ▌M&A Update ▌Financials ▌Regional Update ▌Group Outlook ▌Brenntag exhibition – Introduction of experts Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 8

  9. Slide 9: Structural growth drivers in chemical distribution remain unchanged

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Structural growth drivers in chemical distribution remain unchanged  Reduction of  Industrial complexity in the  Customers are production as a supply chain service sensitive proxy for base-line and focus on growth quality Growth of Value-added chem

  10. Slide 10: Brenntag focuses on EBITDA generation and the drivers that can be influenced

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Brenntag focuses on EBITDA generation and the drivers that can be influenced  Market Share Gains Gross Profit Active M&A  Market growth (macro / Volume growth growth program industry trends)  Pricing EBITDA Margin  More value-added management resi

  11. Slide 11: Gross Profit development in the regions recently

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Gross Profit development in the regions recently North America incl. O&G EMEA Asia Pacific Latin America Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 11

  12. Slide 12: What growth drivers delivered in the past

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET What growth drivers delivered in the past  Group’s GP growth below long term trends and impacted by macro-economic environment Gross Profit growth  Positive development in EMEA and Asia Pacific; North America particularly affected by oil & gas, Lati

  13. Slide 13: Headwinds we have been facing

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Headwinds we have been facing  Difficult macroeconomic conditions in EMEA and North America Unfavorable  Negative development of Industrial Production in North and Latin macro America environment Major  Unexpected further deterioration in the oil &

  14. Slide 14: What we have executed…

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET What we have executed… Measures Status ONE Brenntag Pan-European approach and Positive impact on GP Europe (project) harmonization of processes generation achieved Caustic Soda (project) Significant expansion of Fully implemented. North America capabi

  15. Slide 15: What we have executed…(2)

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET What we have executed…(2) Measures Status Industrial Chemical Implementation of IC business / Platform implemented / first business in Asia Pacific also through strategic M&A transactions executed Management in Latin Change of regional top Fully imple

  16. Slide 16: We do NOT intend to make significant changes to our infrastructure and major changes to our strategy

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET We do NOT intend to make significant changes to our infrastructure and major changes to our strategy  We won’t cut profitable business and gross profit No significant generation changes to infrastructure  We will remain focused on delivering service

  17. Slide 17: Business development: What we WILL do…

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Business development: What we WILL do… Drive GP  Drive local Commercial Excellence initiatives and monitor local growth markets thoroughly LOCALLY Drive GP  Demonstrate strengths that arise from scale: full-line service growth provider, global footp

  18. Slide 18: Business development: What we WILL do… (2)

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Business development: What we WILL do… (2) Supplier  Capture outsourcing opportunities with key suppliers Relationship  Co-ordinate business development with suppliers Management Strategic  Expansion of specialty chemical distribution business in E

  19. Slide 19: Digitization: Brenntag has already embarked on a journey to benefit from opportunities

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Digitization: Brenntag has already embarked on a journey to benefit from opportunities Current Status Digitization opportunities @Brenntag include…  Chemical distribution market not significantly  Internal process efficiency touched by digitization

  20. Slide 20: Market conditions in chemical distribution allow for clear competitive advantages for Brenntag

    RESILIENT BUSINESS MODEL IN AN ATTRACTIVE MARKET Market conditions in chemical distribution allow for clear competitive advantages for Brenntag Market condition Competitive advantages for Brenntag  Steadily rising demand for chemicals Global footprint  Highly fragmented market with >10,000 Full li

  21. Slide 21: Content

    CONTENT Capital Markets Day 2016 ▌Introduction ▌Resilient business model in an attractive market ▌M&A Update ▌Financials ▌Regional Update ▌Group Outlook ▌Brenntag exhibition – Introduction of experts Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 21

  22. Slide 22: Successful execution of M&A strategy in 2016

    M&A UPDATE Successful execution of M&A strategy in 2016 Asia Pacific North America Whanee South Korea NOCO New England Zhong Yung China MCP Oklahoma EP Chem Singapore EMEA Leis Germany ACU Germany Plastichem South Africa Warren Chem South Africa Total EV of ~EUR 200m (incl. Zhong Yung) for the 9 acq

  23. Slide 23: Strategic step into lubricants business in North America

    M&A UPDATE Strategic step into lubricants business in North America J.A.M., Texas G.H. Berlin Windward, New England  Product portfolio: serving the industrial,  Highly diversified customer and product commercial, automotive, marine and portfolio compound blender end markets  Multi-brand supplier

  24. Slide 24: Strategic step into industrial chemicals business in Asia Pacific with TAT Group

    M&A UPDATE Strategic step into industrial chemicals business in Asia Pacific with TAT Group TAT Group South Korea China Japan  Strategic step within market for distribution of Industrial Chemicals in Pakistan South East Asia Hong Kong Taiwan  Focus on value-added services (e.g. India Thailand drum

  25. Slide 25: Global M&A approach remains unchanged – different focus areas in the regions

    M&A UPDATE Global M&A approach remains unchanged – different focus areas in the regions  Strategic objectives unchanged: building up scale and efficiency, expand geographic coverage, improve full-line portfolio  Focus on bolt-on acquisitions  Discipline regarding valuation and due diligence  Mar

  26. Slide 26: Content

    CONTENT Capital Markets Day 2016 ▌Introduction ▌Resilient business model in an attractive market ▌M&A Update ▌Financials ▌Regional Update ▌Group Outlook ▌Brenntag exhibition – Introduction of experts Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 26

  27. Slide 27: Resilient business profile confirmed over longer timeframe

    FINANCIALS Resilient business profile confirmed over longer timeframe Operating EBITDA growth since IPO in EUR m 850 820 800 807 800 750 700 727 707 698 650 661 600 603 550 500 2010 2011 2012 2013 2014 2015 2016E reported +25.4% +9.6% +7.0% -1.3% +4.2% +11.0% growth Brenntag AG - Capital Markets Day

  28. Slide 28: Shareholders benefit from strong and resilient cash flow generation

    FINANCIALS Shareholders benefit from strong and resilient cash flow generation in EUR m 4,000  Strong and resilient cash flow 3,500 generation 3,000  > EUR 3.7bn in 7 years = EUR 24 per share 2,500 2,000  Partial investment of cash flow into value accretive acquisitions 1,500  ~ EUR 1.5bn = EUR

  29. Slide 29: Financial stability of Brenntag Group

    FINANCIALS Financial stability of Brenntag Group Leverage: Net debt/Operating EBITDA 1) Maturity profile as of September 30, 2016 6.0x 5.6x in EUR m Syndicated 4.8x Facility 5.0x 1,200 4.0x 3.6x 1,000 3.0x 2.4x 2.3x 800 Bond Bond+Warrants 2.1x 2.1x 2.0x 2018 2022 1.9x 1.9x 600 2.0x 400 1.0x 200 0.0x

  30. Slide 30: Overview of 9M 2016 earnings

    FINANCIALS Overview of 9M 2016 earnings Macro Moderately positive macro environment in Europe. North America with continued weak trend in industrial production. Latin America with more challenging conditions. Ongoing Economy growth in Asia Pacific. Gross profit Gross profit of EUR 1,784.1m growing a

  31. Slide 31: Operating EBITDA bridge: Sep YTD 2015 to Sep YTD 2016

    FINANCIALS 9M 2016 Operating EBITDA bridge: Sep YTD 2015 to Sep YTD 2016 in EUR m 700 ~ -100% ~ -25% ~ -6% ~ +3% 39 650 615 613 10 600 -12 -9 -18 -12 550 500 450 400 350 300 1) Sep YTD 2015 FX translation Venezuela Acquisition 1) Oil & Gas North America Organic growth Sep YTD 2016 contribution in No

  32. Slide 32: Segments

    FINANCIALS 9M 2016 Segments North Latin Asia All other in EUR m EMEA Group America America Pacific segments Operating gross profit 9M 2016 807.7 745.2 128.2 133.9 10.5 1,825.5 9M 2015 775.3 712.6 150.7 104.7 11.4 1,754.7 ∆ 4.2% 4.6% -14.9% 27.9% -7.9% 4.0% ∆ FX adjusted 6.6% 5.2% -11.3% 32.7% -7.9%

  33. Slide 33: Update on Oil & Gas in North America

    FINANCIALS Update on Oil & Gas in North America Status update Local success stories  Stabilization on current levels  Trusting and successful relationship with  Currently no further significant deterioration large customers in the industry expected  Knowledge-transfer from Coastal into the  Str

  34. Slide 34: Severe downturn in Oil & Gas industry over the last 2 years with impact on Brenntag

    DEVELOPMENT OF MAJOR US OIL AND GAS MACRO INDICATOR Severe downturn in Oil & Gas industry over the last 2 years with impact on Brenntag $ Oil Price (WTI) Impact Group: ca. -55% Approx. - 3% GP (over two years) Approx. USD -80m US Rig Count GP for Brenntag from 2014 to 2016 ca. -74% Impact North Amer

  35. Slide 35: North America: Reduction in Gross Profit with Oil & Gas customers

    FINANCIALS North America: Reduction in Gross Profit with Oil & Gas customers – other industries suffering from weak demand 2014-2016: O&G Gross Profit IP Growth US on prior year in USD m  Full review of the Oil & Gas business  Headcount reduction At constant FX Rates Brenntag AG - Capital Markets

  36. Slide 36: Brenntag pays a regular and steadily increasing dividend

    FINANCIALS Brenntag pays a regular and steadily increasing dividend Historical Dividends in EUR per share 1.20 Attractive dividend 1.00 1.00  Regular and steadily increasing dividend 0.80 0.87 0.90 payments due to strong free cash flow 0.80 0.60 0.67 generation 0.40 0.47  Pay-out ratio of 30% - 45

  37. Slide 37: Content

    CONTENT Capital Markets Day 2016 ▌Introduction ▌Resilient business model in an attractive market ▌M&A Update ▌Financials ▌Regional Update ▌Group Outlook ▌Brenntag exhibition – Introduction of experts Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 37

  38. Slide 38: EMEA

    REGIONAL UPDATE EMEA Market  Flat macroeconomic environment persisted longer than expected Situation Strategy  Focus on gross profit generation in attractive industries  Harmonization of infrastructure and sales processes Initiatives  ONE Brenntag 2.0 Product Management  Commercial Excellence 

  39. Slide 39: North America

    REGIONAL UPDATE North America Market  Macro economy on a slowly improving trend Situation  Oil & Gas sector shows signs of stabilization Strategy  Grow business of specialty chemicals organically and through acquisitions  Adapt to oil & gas challenges and growth opportunities  Exploit operation

  40. Slide 40: Latin America

    REGIONAL UPDATE Latin America Market  Region is characterized by geopolitical and macroeconomic volatility Situation Strategy  Expansion of business with specialty chemicals  Increase market penetration within focused industries Initiatives  Regrouping of sub-regions to focus on key opportunitie

  41. Slide 41: Asia Pacific

    REGIONAL UPDATE Asia Pacific Market  Region demonstrates the highest growth potential Situation  Increase market sophistication and grow value-added services Strategy  Geographic expansion, especially in China  Further expand position in specialty chemicals in selected countries (e. g. China, So

  42. Slide 42: Content

    CONTENT Capital Markets Day 2016 ▌Introduction ▌Resilient business model in an attractive market ▌M&A Update ▌Financials ▌Regional Update ▌Group Outlook ▌Brenntag exhibition – Introduction of experts Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 42

  43. Slide 43: Currently existing headwinds are expected to diminish going forward

    GROUP OUTLOOK Currently existing headwinds are expected to diminish going forward CMD 2015 midterm outlook ca. 2.5 % p.a. Structural 4-6% p.a. organic (2-3 years IP Growth growth drivers EBITDA growth horizon) Headwinds in 0.0%-1.0% Structural O&G, VZ EUR 800-820m Actual 2016 IP Growth growth driver

  44. Slide 44: Resilient business model in an attractive market

    GROUP OUTLOOK Resilient business model in an attractive market Resilience Growth opportunities  High barriers to entry  Earnings growth track record  High diversification  Structural market growth  Value-added services support customer retention  Opportunity to grow market share and repeat ord

  45. Slide 45: We are happy to answer your questions!

    CAPITAL MARKETS DAY 2016 We are happy to answer your questions! Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 45

  46. Slide 46: Content

    CONTENT Capital Markets Day 2016 ▌Introduction ▌Resilient business model in an attractive market ▌M&A Update ▌Financials ▌Regional Update ▌Group Outlook ▌Brenntag exhibition – Introduction of experts Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 46

  47. Slide 47: Brenntag is always on the move

    INTRODUCTION TO EXPERTS Brenntag is always on the move Asia Pacific Supplier Relationships  Henri Nejade, Member of the Board of  David O’Connell, Commercial Director Management Industrial Chemicals, EMEA Commercial Excellence Sustainability  Uwe Schueltke, COO EMEA  Dr. Dirk Eckert, Corporate D

  48. Slide 48: Thank you very much for your attention

    BRENNTAG Capital Markets Day 2016 THANK YOU VERY MUCH FOR YOUR ATTENTION Brenntag AG - Capital Markets Day 2016 - Key Note 17 November 2016 48

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