By Ozan Ergenay and Tristan Veyet
(Reuters) -German chemicals distributor Brenntag reported a nearly 5% drop in its quarterly core profit on Tuesday, missing market expectations, as it paid more to implement its digital transformation and growing volumes drove up transportation costs.
Its shares, down by a third since the start of 2024, fell 9.7% by 0829 GMT, among worst performers on the European benchmark STOXX 600 index. If the losses hold, they will see their biggest daily decline in over two years.
Brenntag’s operating earnings before interest, taxes and amortisation (EBITA) fell to 281.1 million euros ($298.9 million) in the third quarter, below analysts’ average forecast of 292 million euros in a poll by Vara Research.
Quarterly sales fell slightly to 4.06 billion euros, short of analysts’ consensus of 4.13 billion euros.
“Overall, a material miss in 3Q even vs. consensus which was substantially cut into the print,” J.P.Morgan analysts wrote in a note to clients.
Germany’s chemical industry suffered throughout 2023 from high production costs and weak demand. The sector flagged first signs of recovery early in the year, but that optimism has since faded as the country’s industrial outlook continued to deteriorate.
“Our cost-saving measures are showing positive effects and we made good progress in executing our divisional strategies. However, we cannot be satisfied with the outcomes yet and need to step up our efforts,” CEO Christian Kohlpaintner said in a statement.
The group last year announced measures to cut operating costs and counteract inflation-related cost increases, expecting 300 million euros annual cost-out effect by 2027.
Brenntag said it expected the challenging geopolitical, macroeconomic and operational conditions to persist for the rest of the year, and confirmed its full-year guidance for operating EBITA of 1.1-1.2 billion euros.
It had previously trimmed its operating EBITA outlook in August and in May due to continued pressure on selling prices.
($1 = 0.9404 euros)
(Reporting by Ozan Ergenay and Tristan Veyet in Gdansk; editing by Milla Nissi)
