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Brenntag Launches Second Phase of Growth Strategy

14.11.2022 - Leading chemicals and ingredients distributor Brenntag has announced the second phase of its strategic growth plan, which sets new goals until 2026.

The program lays out key priorities for its two business divisions Brenntag Specialties and Brenntag Essentials, doubles annual M&A spend and sets growth targets for annual operating EBITA.

“We aim to foster growth in our global divisions with clear differentiated strategies,” said CEO Christian Kohlpaintner. “Moreover, we build a comprehensive digital and data framework and architecture to better serve our global customer base and achieve the next level of operational efficiency, growth, and excellence. With our comprehensive and ambitious Strategy to Win we aim to outpace the underlying market growth.”

The strategy builds on Project Brenntag, a first phase which started more than two years ago to implement a new operating model, optimize its site network and improve productivity by 2023.

The German-headquartered group sees M&A as an enabler of future growth and will increase its annual spend to between €400-500 million, focusing on five key pillars. These include accelerating growth in the global life sciences segment, enhancing strategic capabilities and market positions, expanding in emerging markets and filling gaps in its existing portfolio.

Brenntag also plans to spend about €350 million by 2026 to develop its Digital.Data.Excellence (DiDex) capabilities, modernizing its digital business architecture and transforming the company into a data and tech-driven enterprise that will attract and retain talent and unlock value across the organization.

With regard to EBITA, the group wants to achieve an annual average growth rate of 6-8%, with the Specialties division achieving 7-9% and Essentials between 4-5%.

The company said it also intends to sharpen the profiles of its two divisions, accelerating their growth above the market average. Brenntag Specialities has five key strategic priorities that include expanding its global footprint, focusing on high-growth customers and industries and accelerating acquisitions.

Brenntag Essentials has three strategic priorities, which are to strengthen its local and regional distribution networks and optimize its last-mile deliveries, reinforce its global sourcing market intelligence capabilities and expand terminal capabilities at strategic ports worldwide, as well as focusing on capturing new market potential through mergers and acquisitions and increasing its portfolio of sustainable products and supply chain services.

According to Brenntag, all targets set under the first phase of its transformation will be reached one year ahead of plan. Project Brenntag included an additional annualized operating EBITA contribution of €220 million.

As part of its Strategy to Win, the group has also launched new branding, which it said reflects Brenntag’s development beyond mere chemicals and ingredients distribution. The branding will be rolled out gradually across 700 sites worldwide in a staged approach over the next few months.

Author: Elaine Burridge, Freelance Journalist