Brenntag Expands in North America

07.08.2020 - Brenntag has bought the operating assets of US-based Suffolk Solutions’ caustic soda distribution business, gaining access to a bulk terminal and rail transloading facility in the Virginia port city of the same name. The acquired business had sales of about $15.6 million in the fiscal year ending Apr. 30, 2020.

“The business and the related terminals of Suffolk Solutions fit seamlessly into our ambitions to further link Brenntag’s caustic soda network in the eastern United States,” said Steven Terwindt, member of Brenntag Group’s management board and CEO Brenntag North America. “There is great potential to strengthen our supply chain and expand our customer base in this geography.”

Anthony Gerace, managing director mergers & acquisitions at Brenntag Group, added that the acquisition provides “greater supply flexibility, maneuverability and additional storage capacity on the east coast of the US.”

Last month, the German-headquartered global distributor opened a new distribution center in Toledo, Ohio, USA. Located in the Great Lakes region, the facility will be used for storing and distributing commodity chemicals, solvents, surfactants, specialties and food ingredients.

“Toledo provides a perfect location to improve service levels and grow volumes with the existing customer base in Michigan and Indiana, while increasing growth opportunities in Ohio,” said Dan Arneson, president, Brenntag Great Lakes.

The center has access to a seven-acre tank farm on an adjacent property and will also have rail services to locations both inside and outside of Ohio. Redevelopment is underway in collaboration with the Ohio rail development commission as well as other agencies and is projected to create more than 40 new driver, warehouse and production jobs in Lucas County by 2022.

Q2 earnings dip slightly on virus effect

Brenntag has reported a 1.9% drop in second-quarter net profit to €123 million on sales that were 13.4% lower year on year at €2.8 billion, primarily due to falling demand because of the Covid-19 pandemic. Operating gross profit slipped 1% to €715.9 million, while operating EBITDA rose 3.7% to €276.2 million.

Describing the results as “solid and demonstrating resilience,” Brenntag said it has “still limited impact” from the pandemic during the quarter and uncertainty remains high. “The positive performance in the first six months is a sound foundation for the second half of the year, which we expect to be even more challenging,” said CEO Christian Kohlpaintner.

On a regional basis, the distributor’s business in Europe, Middle East and Asia posted a “very good” quarter, posting gross profit up 8.6% on 2019 at €314.6 million and operating EBITDA up 21.5% at €130.1 million.

Earnings in North America, however, continued to be negatively affected by declines in its oil & gas business as well as by the pandemic. Operating gross profit fell 9% to €289.3 million with operating EBITDA 10.1% lower at €117.1 million.

In early April, Brenntag suspended its forecast for the 2020 financial year because of ongoing uncertainty over the future affects of the Covid-19 health crisis.