By Helena Smolak
Brenntag, the German chemical distributor, has recently revealed its mid-term financial targets and outlined strategic measures to establish divisional independence within the company. The company presented its comprehensive strategy during a Capital Markets Day in London.
According to the plan, Brenntag Essentials and Brenntag Specialties will undergo operational and legal disentanglement, resulting in the creation of two separate divisions with complete autonomy. This shift in the product portfolio is expected to lead to organic gross profit growth of 4% to 7%, an Ebita margin growth of 7% to 9%, and an annual conversion ratio of 35% to 37% by 2027.
Under this new divisional structure, all pharma activities will be transferred from Brenntag Essentials to Brenntag Specialties. Conversely, the water treatment and finished lubricants business, along with certain semi-specialty products, will be moved in the opposite direction. At present, Brenntag Essentials accounts for 70% of the group’s current gross profits, while Brenntag Specialties represents 30%. This new divisional setup is set to take effect in the coming year.
However, it is important to note that this reorganization will incur one-time expenses for cost reduction and legal disentanglement. The estimated expenses for these purposes range between €450 million and €650 million ($487.6 million-$704.3 million) by 2027.
