Brenntag Se

Hello and welcome to the Brandtag SE Q1 2024 results call. Throughout the call all participants will be in a listen-only mode and afterwards there will be a question and answer session. Please note this call is being recorded. Today I am pleased to present Thomas Altmann. Please begin your meeting.

Thank you Annika. Good afternoon ladies and gentlemen. On behalf of Brandtag I would like to welcome you to the earnings call for the first quarter of 2024. On the call with me today are our CEO, Dr. Christian Kohlfein, and our CFO, Dr. Christine Neumann. They will walk you through today's presentation, which is followed by a Q&A session. Our relevant documents have been published this morning on our website and can be found at brentak.com in the investor relations section. In that same area, you will also find the recording of this call later today. Before we begin, allow me to point you to our safe harbor statement, which you will find at the end of With that, I will hand over to our CEO, Dr. Christian Kohlfeinach. Christian, over to you.

Yes, thank you, Thomas, and good afternoon, ladies and gentlemen. I will start with the summary of the first quarter 2024, and Christine will then walk you through the details of our financial performance. As usual, we are both happy to answer your questions after the presentation. In the first quarter of 2024, we reported results which were not in line with our own ambitions. Our performance in both divisions was impacted by the challenging environment, as well as pricing pressures in various markets and industries. Although we managed to capture additional volumes in a positive demand environment, particularly in industrial chemicals, pricing remained challenging. Overall, higher volumes were not able to fully compensate for the lower sales prices. Sales amounted to around 4 billion euros, which is 11% lower compared to a relatively strong prior year period. Operating gross profit stood at 984 million euros, which represents a decline of 5%. And operating EBIT A amounted to 260 million euros, a decline of 24% respectively. Earnings per share stood at 97 cents, compared to 1 euro and 40 cents in the first quarter 2023. The combination of slower performance, higher CapEx and higher investments in working capital led to a free cash flow of 175 million euros. This is significantly lower compared to the exceptionally high cash flow in the prior year period, but in the range of a normalized seasonal Q1 pattern. In fact, the free cash flow generated in Q1 2024 marks the second best free cash flow Brandtag ever achieved in the first quarter. Just recently, we placed two Euro bonds with a total amount of 1 billion euros. With this strategic decision, we address upcoming maturities early and secure long-term financing for Brandtag. Now, let me say a few words on the outlook. In light of the performance in the first quarter and the trends we have seen continuing into the second quarter, we expect the brand tax groups operating EBITDA for 2024 to be now at the lower end of the guidance provided with our full year results in March. Let's have a closer look at our strategy execution. Ladies and gentlemen, let me start with the portfolio shifts of our two divisions. As already announced last summer and presented in more detail at our Capital Markets Day in December, we implemented portfolio shifts and the corresponding changes in our reporting with the first quarter 2024. Since January, selected businesses have been reallocated between Brandtag Essentials and Brandtag Specialties to further strengthen the coherence of the business models of the respective divisions. On the one hand, we transferred the water treatment business and the finished lubricants business from Brandtag Specialties to Brandtag Essentials. Furthermore, we shifted semi-specialty products to Brandtag Essentials due to their more commoditized nature, and we also allocated the entire operating activities from all other segments, which is now called group and regional services, to our Essentials division. This includes the operations of Brandtag International Chemicals GmbH, which buys and sells chemicals in bulk on an international scale. On the other hand, we combined all pharma activities under the roof of Brandtag Specialties. These shifts increase the value creation potential by allocating all products which are larger in bulk quantities and which require last mile efficiencies to Brandtag Essentials. All products which are driven by value-added services, formulation, and innovation capabilities are allocated to Brentac's specialties. In addition, the changes also include a partial shift of specific functions, responsibilities, and activities from corporate level to the divisions, such as business and operations-related HR, service, and excellence functions. These changes are all reflected in our external reporting structure this quarter for the first time. Regarding our path towards Horizon 3, we have started the process of our legal and operational disentanglement early this year. However, as indicated at our capital markets day end of last year, the disentanglement of our legal entity structure and our operations will be a longer-term exercise which needs to be carried out diligently. As of today, we have defined and properly staffed the relevant project resources internally and have selected the required external legal and tax advisors. This is important to secure our strategy execution while maintaining focus on our day-to-day operations. We are now in a detailed design phase where we create the necessary transparency on the disentanglement and define what is required to be executed at the lowest local level. In addition, the implementation of our cost containment measures announced at our Capital Markets Day last year is on track and we define further savings potentials as we speak. We are doing this in light of the current economic conditions and against the background of our performance in the first quarter. Lastly, let me provide a quick update on our M&A activities. Since the beginning of the year, we closed or signed three acquisitions, strengthening key focus industries and geographies in both of our divisions. In brand tech specialties, we acquired Lawrence Industries a leading specialties distributor in the UK with top tier supply partners and a high quality portfolio within material science. In Brandtech Essentials, we acquired Rental Service Specialty, a rental equipment supplier based in Louisiana, which focuses on providing specialty equipment for pipeline integrity and maintenance services to the oil and gas midstream and downstream markets. And just recently, we signed the acquisition of Química Delta, a leading chemical distributor in Mexico. The company access to toll gates through marine terminals and last mile infrastructure complements and expands the Brandtac Essentials triple strategy, which we have outlined in detail during our capital market day last December. We will continue our MOA execution and are assessing several promising targets in our pipeline in line with our divisional strategies. Now I would like to hand over to Christine, who will talk about the financial performance in the first quarter in more detail. Please, Christine.