Brenntag Se · XETR:BNR

Brenntag — Investor Day (November 2015)

56 slides from Brenntag's investor day presentation, Nov 16, 2015

  1. Slide 1: Capital Markets Day 2015

    Capital Markets Day 2015 ▌ Duisburg Brenntag Board of Management November 16, 2015

  2. Slide 2: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical Distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regional update ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 2

  3. Slide 3: Brenntag is the world market leader in chemical distribution

    INTRODUCTION Brenntag is the world market leader in chemical distribution North America Europe Market position #2 Market position #1 Gross profit 712.6m EUR Gross profit 775.3m EUR Op. EBITDA 282.0m EUR Op. EBITDA 268.3m EUR Employees > 4,000 Employees > 6,400 Latin America Asia Pacific Market posit

  4. Slide 4: Brenntag with stable and long-term growth

    INTRODUCTION Brenntag with stable and long-term growth in EUR m 2,028 1,926 , 1,946 1,768 1,636 1,492 1,460 CAGR 1 355 1,355 7.8 % 1,169 Gross Profit 1,033 718* 714* 727 659 598 481 477 408 331 254 CAGR 12.4 % EBITDA 2005 2006C 2007 2008 2009 2010 2011 2012 2013 2014 * EBITDA’s in 2012 and 2013 are

  5. Slide 5: Resilience coupled with strong growth opportunities

    INTRODUCTION Resilience coupled with strong growth opportunities  Highly fragmented market  Consolidation through M&A driven by larger players M&A  Differentiation through people, product portfolio, value- Share gains added services,, quality, q y, know- th through h scale l how, infrastructure,

  6. Slide 6: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regional update ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 6

  7. Slide 7: Structural growth in a consolidating market

    CHEMICAL DISTRIBUTION MARKET Structural growth in a consolidating market General  Chemical distribution is linked to industrial output of macro economy market growth  Industrial production as a proxy for base-line growth Outsourcing  Suppliers hand-over less-than-truckload volumes to distributors

  8. Slide 8: Leading market positions in a highly fragmented market

    CHEMICAL DISTRIBUTION MARKET Leading market positions in a highly fragmented market Europe ~EUR EUR 43bn North America ~EUR EUR 30bn Brenntag Global1) ~EUR 165bn 10.6% Univar Univar 4.1% 19.8% IMCD 2 5% 2.5% Brenntag 10.3% Azelis Brenntag 2.4% Nexeo 6.3% Univar 9.0% 5.3% Nexeo Stockmeier other 2.1%

  9. Slide 9: Consolidation of chemical distribution market is ongoing

    CHEMICAL DISTRIBUTION MARKET Consolidation of chemical distribution market is ongoing and driven by various factors M&A & activity driven by larger chemical distributors (multinational) ustomers want to Consolidation of consolidate Suppliers reduce chemical sourcing of number of distribution smaller

  10. Slide 10: Outsourcing trend continues in different economic environments

    CHEMICAL DISTRIBUTION MARKET Outsourcing trend continues in different economic environments Ch i l producers Chemical d M lti ti Multinational/large l/l customers t  Chemical distribution is too granular  Centralisation of purchasing for smaller  Hand-over less-than-truckload quantities volumes E

  11. Slide 11: Service is the key differentiator in chemical distribution

    BRENNTAG Service is the key differentiator in chemical distribution  Chemical distribution is a people’s business  Longstanding personal relationships  Customers order non-strategic products but nonetheless relevant for their production process Service  High service levels – lead to high custome

  12. Slide 12: Managing complexity

    BRENNTAG Managing complexity Extensive  Share dedicated know-how in trainings and seminars for Technical customers and suppliers Support pp  Network of applications laboratories  Mixing of different ingredients exity Mixing & Blending  Improve existing formulations, produce new and innovative bl

  13. Slide 13: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regional update ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 13

  14. Slide 14: Why is Brenntag attractive to customers and suppliers worldwide?

    BRENNTAG Why is Brenntag attractive to customers and suppliers worldwide? competitor tit 1 competitor tit 2 Unique position of Brenntag  Global market leader in chemical distribution limited only SC  Unique global footprint compared to largest footprint competitors p  Best-in-class Key-Performanc

  15. Slide 15: Clear competitive advantage as the only distributor with a truly global footprint

    BRENNTAG Clear competitive advantage as the only chemical distributor with a truly global footprint Benefits for suppliers Number of countries with locations*)  Unique channel to market partner 80  Single point of contact for many countries 70  Easier roll-out of new strategies/products 60 50 40

  16. Slide 16: Scale and global footprint offer clear competitive advantage

    BRENNTAG Scale and global footprint offer clear competitive advantage smaller players Size matters Brenntag AG - Capital Markets Day 2015 16 November 2015 16

  17. Slide 17: Chemical distribution is a local business

    BRENNTAG Chemical distribution is a local business D i b Duisburg site it  We drive the business regionally  Each region and every country has its specific characteristics  Customers come from various industries  Each country has different industries and areas to focus on  Our local operations

  18. Slide 18: Full-line product portfolio as the superior business model

    BRENNTAG Full-line product portfolio as the superior business model for future expansion Full-line product portfolio Customers  One-stop-shop for customers  All customers benefit from broader know-how emicals Industrial Che Suppliers  Reduced complexity in distributor management  Cross-selling g

  19. Slide 19: Successfully passing through price volatility

    BRENNTAG Successfully passing through price volatility Product  Customers are service sensitive price  Raw material price is accepted by the customer Value-add Value add Value-add Value-add Value-add Value-add Value-add Product 1 Chemical Product 1 Price b Product 1 Product 1 prices Price a Price

  20. Slide 20: Cost Management is best-in class

    BRENNTAG Cost Management is best-in class Conversion Rate (EBITDA / GP)*) Costs are under control 45%  Ongoing process of streamlining 40% infrastructure in Europe 35% – Stable conversion rate in recessionary 30% environment 25%  Adaption off headcount and assets in O&G 20% segment in North Americ

  21. Slide 21: Focus on Gross Profit growth is essential

    BRENNTAG Focus on Gross Profit growth is essential Illustration EBITDA impact of GP growth and conversion margin (CM) improvement EBITDA 5% GP +40bps p pp.a. growth p.a. better CM 140 X X Focus on GP 130 growth ensures X EBITDA growth 120 110 Pure focus on X costs is not an 100 option 90 1 2 3 4 5 6

  22. Slide 22: Track record of individual initiatives

    BRENNTAG Track record of individual initiatives North America Europe Oil & Gas industry Globally ONE Europe  Resizing resources M&A  Pan-European approach according to demand and harmonisation g g execution of  Ongoing acquisitions North America Latin America Caustic C ti Soda S d project j t Asi

  23. Slide 23: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regional update ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 23

  24. Slide 24: Global market leader with strong financial profile

    BRENNTAG OVERVIEW Global market leader with strong financial profile  Global leader with 5.9%1) market share and sales of EUR 10.0bn in 2014  More than 13,500 employees, thereof 1/3 dedicated local sales and marketing employees  Full Full-line line portfolio of over 10 10,000 000 products to arou

  25. Slide 25: Shareholders benefit from strong and resilient cash flow generation

    FINANCIALS Shareholders benefit from strong and resilient cash flow generation in EUR m 3,500  Strong and resilient cash flow 3,000 generation  > EUR 3bn in 6 years = EUR 19 2,500 per share 2,000  Partial investment of cash flow i t value into l accretive ti acquisitions i iti 1,500  ~ EUR 1.3bn

  26. Slide 26: Strategy from IPO remains unchanged and is confirmed by track record

    FINANCIALS Strategy from IPO remains unchanged and is confirmed by track record in execution Resilient business model  EBITDA growth in each year since IPO (FX adjusted)  Strong free cash flow generation in all years Organic growth  Organic growth in the years after the IPO  Macro-economic headw

  27. Slide 27: Strategy is supported by strong financial profile providing flexibility

    FINANCIALS Strategy is supported by strong financial profile providing flexibility Strong financial profile... IInvestment t t grade d rating Leverage g of 1.7x* ... for f allll our stakeholders t k h ld Balanced maturity  High cash generation profile  Resilience in downturn Cash on balance sheet

  28. Slide 28: Financial stability of Brenntag Group

    FINANCIALS Financial stability of Brenntag Group Leverage: Net debt/Operating EBITDA 1) 2) Maturity profile Syndicated in EUR m Facilityy 3 0x 3.0x 2.4x 2.3x 1,200 2.5x 2.16x 2.1x 1,000 1.9x 1.9x 2.0x 1.7x 800 1.5x 600 Bond 1.0x 400 0.5x 200 0.0x 0 2015 2016 2017 2018 2019  Business demonstrated ab

  29. Slide 29: Successful and sustainable acquisition activity

    FINANCIALS Successful and sustainable acquisition activity  Acquisition spend of EUR ~220m 220m per year  Acquisition activities in all regions  Brenntag applies a hurdle rate of 14% (pre-tax, un-levered) for acquisitions  Strategic market entries into South So th East Asia, Asia China, China Au

  30. Slide 30: Overview Q3 2015 earnings

    FINANCIALS Overview Q3 2015 earnings Macro No positive momentum in Europe. Ongoing weakness in O&G business in North Economy America. Latin America remains challenging and positive picture in Asia G Gross profit fit G Gross profit fi off EUR 570.5m 0 growing i at 9 9.6% 6% (1 (1.2% 2% fx f adjusted)

  31. Slide 31: Significant changes in Oil & Gas industry with impact on Brenntag

    FINANCIALS Significant changes in Oil & Gas industry over the last 12 months with impact on Brenntag $ Oil Price (WTI) ca. -55% Impact p Group: p Approx. – 1.3% GP Almost -EUR 30m US Rig Count GP for Brenntag in 2015 over 2014 ca. -62% Impact North America: Approx. – 3.2% GP Brenntag AG - Capital Ma

  32. Slide 32: North America: Reduction in Gross Profit with Oil & Gas customers

    FINANCIALS North America: Reduction in Gross Profit with Oil & Gas customers – other industries growing 2015: O&G Gross Profit 2015: Ex O&G Gross Profit mUSD mUSD 210 204 204 205 200 200 195 189 190 186 185 180 176 175 170 165 160 Q1/14 Q1/15 Q2/14 Q2/15 Q3/14 Q3/15  Full review of the Oil & Gas bu

  33. Slide 33: Loss of momentum in course of 2015 – North America

    DEVELOPMENT OF MACRO INDICATORS Loss of momentum in course of 2015 – North America Manufacturing PMI NA IP Growth NA on prior year 56.0 55.7 3.5% 3.3% 55.5 55.1 3.0% 55.0 2.5% 54.5 54.1 54.0 53.9 53.8 2.0% 1.8% 54.0 53 6 53.6 53.5 1.5% 53.0 53.1 53.0 0.9% 1.0% 52.5 52.0 0.5% 51.5 0.0% JAN FEB MAR AP

  34. Slide 34: Q3 2015 Segments

    FINANCIALS Q3 2015 Segments North Latin Asia All other in EUR m Europe Group America America Pacific segments Operating p g Q3 2015 255 1 255.1 240 9 240.9 50 5 50.5 34 4 34.4 35 3.5 584 4 584.4 gross profit Q3 2014 1) 242.9 211.6 43.9 30.5 3.7 532.6 ∆ 5 0% 5.0% 13 8% 13.8% 15 0% 15.0% 12 8% 12.8% -

  35. Slide 35: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regional update ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 35

  36. Slide 36: Strategic expansion of lubricants business in North America

    M&A UPDATE Strategic expansion of lubricants business in North America – acquisition of J.A.M. and G.H. Berlin Windward J.A.M. Key Facts G.H. Berlin Windward Key Facts  Headquartered q in Houston,, TX,, with 5  Headquartered q in Manchester,, NH,, with ten warehouses throughout Texas warehouses in

  37. Slide 37: Both acquisitions provide significant competitive advantages

    M&A UPDATE Both acquisitions provide significant competitive advantages Rationale for transactions  Both companies p hold leading gppositions in the attractive and highly g y fragmented g lubricant distribution market  Above-market growth opportunities for larger distributors  US Lubricant suppli

  38. Slide 38: Acquisition of TAT Group, a leading industrial chemicals distributor

    M&A UPDATE Acquisition of TAT Group, a leading industrial chemicals distributor based in Singapore Key Facts South Korea China Japan  TAT was incorporated in 1985 and is headquartered in Singapore Pakistan  Strategic step within market for Hong Kong Taiwan distribution of Industrial Chemicals in I

  39. Slide 39: Strategic acquisitions in Turkey and Dubai

    M&A UPDATE Strategic acquisitions in Turkey and Dubai Parkoteks Kimya San., Istanbul, Turkey Trychem FZC, Dubai, Middle East Expansion of product portfolio in the Strategic importance for supplier strategically important Turkish chemical relationships and global customers distribution market  Distr

  40. Slide 40: Strategic acquisition to be integrated into Brenntag Group

    M&A UPDATE Strategic acquisition to be integrated into Brenntag Group Zhong Yung (International) Chemical Ltd. Strategic market entry in China  Zhong Yung is focused on the distribution of Tianjin solvents with established commercial and logistical g infrastructure in the key y economic regions in

  41. Slide 41: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regional update ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 41

  42. Slide 42: Europe just emerges from recession

    BRENNTAG Europe just emerges from recession Macro-economic situation - backward Actions and initiatives - backward  Industrial Production recessionary in 2  Project “ONE Europe” (pan-European outt off the th last l t 3 years approach h off harmonization, h i ti standardi- t d di  Much slower reco

  43. Slide 43: North America in stable environment except O&G

    BRENNTAG North America in stable environment except O&G Macro-economic situation - backward Actions and initiatives - backward  Sharp drop in oil & gas prices since Q4  Miss-timed investment in oil & gas 2014 b by more th than 50% caused d resources significant disruption in the shale gas  First

  44. Slide 44: Latin America remains to be a relatively volatile region

    BRENNTAG Latin America remains to be a relatively volatile region Macro-economic situation - backward Actions and initiatives - backward  Relatively volatile environment with  Successful implementation of new diff different t challenges h ll iin severall countries ti managementt and d leadership l

  45. Slide 45: Asia Pacific with highest growth expectations going forward

    BRENNTAG Asia Pacific with highest growth expectations going forward Macro-economic situation - backward Actions and initiatives - backward  Mixed macro environment  Built and expanded management  Significant challenges in Thailand platform l tf for f future f t growth th  China volatile and tra

  46. Slide 46: Brenntag Group is strategically positioned for future growth

    BRENNTAG Brenntag Group is strategically positioned for future growth Europe  Well positioned business in an environment with low positive momentum North  Short-term challenges due to O&G and overall demand situation but America generally positive long-term outlook Latin  Expectation of above ave

  47. Slide 47: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regional update ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 47

  48. Slide 48: We are happy to answer your questions!

    CAPITAL MARKETS DAY 2015 We are happy to anwer your questions! Steven Holland, CEO Georg Müller, CFO Region R i Latin L ti America, A i C Corp. Corp. A C Accounting, ti C Controlling, t lli Finance Fi & Communications, Development, HR, IR, IT, Legal, Risk Management, Tax, HSE, Internal Audit & Compl

  49. Slide 49: Content

    CONTENT Capital Markets Day 2015 ▌Introduction ▌Chemical distribution – A highly attractive market ▌Brenntag – Managed to strengthen excellent position ▌Financials ▌M&A ▌Regions ▌Q&A ▌Specialty chemicals in Europe Brenntag AG - Capital Markets Day 2015 16 November 2015 49

  50. Slide 50: Characteristics of industrial chemicals and specialty chemicals

    SPECIALTY CHEMICALS Characteristics of industrial chemicals and specialty chemicals Specialty chemicals Industrial chemicals ~ 1/3 of Brenntag’s business ~ 2/3 of Brenntag’s business  Highly functional, sold in low volumes, lower  Larger volumes, higher price volatility price volatility  Focus on

  51. Slide 51: Brenntag Specialties business makes the difference

    SPECIALTY CHEMICALS Brenntag Specialties business makes the difference We provide... ... for suppliers Highly educated and  Application knowledge wellll ttrained i d people l  Distribution excellence Global and dense  Pan-regional/global network network  Broad customer base  Marketing Applicati

  52. Slide 52: Success factors in the specialty chemicals business

    SPECIALTY CHEMICALS Success factors in the specialty chemicals business Must-have requirements are...  Financial strength and stability  Track record in quality and HSE (Health, Safety and Environment)  Strong sales & marketing organisation knowing local characteristics  Efficient infrastructure

  53. Slide 53: Our organization for sustainable growth

    OUR ORGANIZATION FOR SUSTAINABLE GROWTH Life Science Environmental Material Science Animal Nutrition AdBlue Cleaning Coatings & Construction Cosmetics Water Treatment Lubricants Food Oil & Gas Polymers Pharma Rubber BU Brenntag AG - Capital Markets Day 2015 16 November 2015 53

  54. Slide 54: Application centers in EMEA

    APPLICATION CENTERS IN EMEA Beyond sheer Distribution Animal Nutrition Cleaning Coatings & Construction Cosmetics Food & Nutrition Oil & Gas Polymers Water Treatment Brenntag AG - Capital Markets Day 2015 16 November 2015 54

  55. Slide 55: SensoTainment

    Entertainment for your Senses SensoTainment

  56. Slide 56: Thank you very much for your attention

    BRENNTAG Capital Markets Day 2015 THANK YOU VERY MUCH FOR YOUR ATTENTION Brenntag AG - Capital Markets Day 2015 16 November 2015 56

Brenntag — Investor Day (November 2015) on 6ix