Update 2 - As the price hike effects related to war fade, Brentag's core profits fall short of expectations

Paragraphs 2, 3, 6, and 7 have been revised to include additional background information and management statements; paragraph 5 concerns share price, and paragraph 8 relates to fourth-quarter performance guidance.

Ozan Ergenay

Reuters, November 11 - German chemical distributor Brenntag BNRGn.DE announced on Wednesday that its core profit for the third quarter jumped 16.5%, mainly because cost-cutting measures helped offset rising procurement and logistics expenses. However, profit still fell short of market expectations as earlier pricing advantages (link) gradually faded.

The German chemical industry, one of the pillars of German manufacturing, has long faced challenges including weak demand, high energy prices, supply chain bottlenecks, and sluggish economic activity. The Iran war has further intensified these pressures, driving up costs in this energy-intensive sector, some of which have been passed on to customers by producers.

“The exceptionally favorable pricing environment seen in the second quarter did not continue into the third quarter,” Brenntag CEO Jens Birgersson said in a statement.

Quarterly EBITDA rose to 385 million euros ($430 million), but was slightly below analysts’ expectations of 388.7 million euros according to a Vara Research survey.

Brenntag shares opened down 2.6%.

Birgersson noted that the market environment remains fragile, with inflation and persistently high energy, transportation, and freight costs continuing to impact the business. However, he added that Brenntag’s underlying business improvement trend is ongoing.

Chief Financial Officer Thomas Reisten said that the company's cost reduction plan saved 47 million euros in the third quarter, bringing the total savings for the year to about 115 million euros, and that the company is on track to achieve the full-year savings target of around 150 million euros.

Brenntag expects that global demand will remain weak in the fourth quarter, while geopolitical uncertainties persist and inflationary pressures, though moderate, continue to be volatile. The company reaffirmed its 2026 operating profit guidance of 1.35 billion to 1.45 billion euros, and said it expects actual earnings to reach the upper end of this range.

Revenue rose 14.7% year-on-year to 4.26 billion euros, exceeding analysts’ average estimate of 4 billion euros.

(1 US dollar = 0.8957 euro)

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