Brenntag Targets €450M EBITDA Improvement with New Strategy

Brenntag AG unveiled a five-year strategic plan focused on transforming its global network into a centrally-managed supply chain, a move the company expects will deliver roughly €450 million in EBITDA improvement. The announcement, made during an investor day, triggered an initial rise in the company’s stock price before it ultimately closed down over 2% at €58.22, making it the worst performer in the DAX.

The core of the strategy involves streamlining procurement, optimizing the network, and implementing cost-saving measures. Brenntag also targets a mid-term EBITDA margin of around 10%, exceeding the roughly 9% currently expected by analysts according to Jefferies’ Charles Eden. Alongside margin improvement, the company is aiming for a return on capital employed (ROIC) exceeding 12%.

Brenntag intends to outpace global chemical production growth by 1-3 percentage points, with the higher figure including acquisitions. To that end, the company plans to spend approximately €1.5 billion on acquisitions in the medium term, capitalizing on the fragmented nature of the global chemical distribution market, which it estimates includes over 30,000 distributors. CEO Jens Birgersson emphasized the company’s unique position, stating Brenntag serves more than 160,000 customers with a portfolio of over 20,000 products from over 10,000 suppliers.

The market reacted to the announcement with initial optimism followed by a sell-off, suggesting investor scrutiny of the feasibility of achieving the ambitious targets. The company's ability to execute on these plans — particularly the supply chain optimization and acquisition strategy — will be critical to justifying the planned improvements in profitability and return on capital.