Brenntag (ETR:BNR) executives said the company is on track to deliver €150 million in cost savings for 2026, even as higher energy and transportation expenses and volatile product prices complicate its outlook.
On the company’s third-quarter earnings call, Chief Financial Officer Klaus Weisener said Brenntag achieved €47 million in savings during the quarter, leaving €35 million to reach its full-year target. He said it was too early to say whether savings would exceed that goal.
Chief Executive Officer Jens Birgersson said some job reductions require union agreements, creating uncertainty over whether individual actions occur in December or slip into January. Even so, management remains confident in the annual target, he said.
Restructuring costs to continue
Weisener said special items affecting earnings per share include transformation expenses, particularly severance costs associated with headcount reductions. Those expenses are likely to continue while the company reduces staff, although he expects them to decline over time as employment levels stabilize.
The CFO said Brenntag sees further opportunities to lower costs and that greater use of artificial intelligence could help improve its cost base.
Birgersson said reductions of at least 250 positions in headquarters and central functions represented only a fraction of the companywide total. He also said some contractor reductions do not always appear in headcount figures. Brenntag has chosen not to provide the full number each quarter, he said, in part to keep restructuring discussions with works councils focused on competitiveness rather than a headline job-cut figure.
Margins normalize after second-quarter boost
Weisener attributed the decline in earnings before interest, taxes, depreciation and amortization from the second quarter to seasonality and a narrowing gross profit margin. The company benefited in the second quarter from selling lower-cost inventory after prices rose following the onset of the Middle East crisis, he said.
That benefit normalized as higher input costs flowed into inventory. Weisener said cost savings continued to add to earnings in the third quarter, but higher bonus provisions and energy and transportation costs offset part of that contribution.
Birgersson said the company navigated mixed pricing conditions during the quarter, including sharp increases in base oil prices in some markets and downward pressure on solvents. He said he was satisfied with overall volume growth and the earnings leverage from sales, despite a modest decline in gross margin.
Weisener described the gross profit margin reduction as partly temporary and said he expects it to return to levels seen before the Middle East conflict.
Commercial initiatives and demand
Birgersson said Brenntag is still experimenting with commercial initiatives rather than having completed a transformation of its sales organization. The company is tracking measures including reactivated customers, lost customers, new customer wins and sales visits.
Weisener said third-quarter gross profit increased from a year earlier, including on a per-working-day basis. He declined to quantify how much of the improvement came from underlying business performance versus effects associated with the Middle East crisis.
Higher selling prices and margins from the second quarter, some of which continued into the third, represented a larger component of the improvement, Weisener said. He added that Brenntag was also seeing early positive results from its initiatives and underlying performance.
For the fourth quarter, Weisener said management saw no indication that the positive trend was dramatically weakening. The company did not provide guidance for 2027. Birgersson cited volatile oil and European gas markets and the difficulty of forecasting Brenntag’s short-cycle businesses.
Inventory and corporate costs
Weisener said inventory was broadly flat during the third quarter, with both pricing and inventory volumes relatively stable. He noted that sales typically decline in the fourth quarter and said inventory management would reflect that seasonality.
He also explained that unusually low reported corporate costs in the third quarter reflected a catch-up in intercompany charges, particularly for information technology systems going live. The charges shifted costs to the Essentials and Specialties operating businesses but had no impact on group-level earnings, he said.
Senior Vice President of Corporate Investor Relations André Simon said Brenntag would hold its Capital Markets Day the following day and publish full-year 2026 results on March 10, 2027.
About Brenntag (ETR:BNR)
Brenntag SE purchases and supplies various industrial and specialty chemicals, and ingredients in Germany, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates in two segments, Brenntag Essentials and Brenntag Specialties. It provides just-in-time delivery, product mixing, blending, repackaging, inventory management, and drum return handling. The company serves customers in various end-market industries, including nutrition, pharma, personal care, water treatment, and lubricants; and home, industrial, and institutional markets, as well as coatings and constructions, polymers, and rubber industries.
