Brenntag Se

Ladies and gentlemen, thank you for standing by. Welcome to the Brentag SEQ1 2026 results call and live webcast. Please note that this call will be recorded. During today's call, webcast participants are in a listen-only mode until we conduct the question and answer session. If you wish to ask a question, we ask that you please use the raised hand function at the bottom of your Zoom screen. Instructions will also follow at the time of the Q&A. I would now like to turn the call over to Andre Simon, Senior Vice President, Corporate Investor Relations. Please go ahead.

Thank you, Donny. Good afternoon, ladies and gentlemen, and welcome to our earnings call for the first quarter 26 from my end as well. On the call with me are our CEO, James Pilgerson, and our CFO, Thomas Weissman. They will walk you through the presentation, which is followed by the Q&A session. All relevant documents have been published this morning on our website in the inventory relations section, where the replay of today's call will be also available. Allow me also to point out our safe harbor statement, which can be found at the end of the slide deck. With that, I now hand over to our DOEN. Please go ahead.

Hello, everyone. Let's get to go to the first slide. To sum up, I will start by summing up the whole quarter, basically, and then I have a little bit more detail on Iran. Overall, I'm satisfied with this quarter. If we look at November, December, we had quite low market activity. We anticipated that we would step into 2026 against difficult comparables. Last year Q1 was very strong, our strongest quarter. And the year started in that spirit. We had volumes down some 5% January, February. Very slow moving. Some winter effects in the U.S. in construction. A little bit of uptick due to our antifreeze business on airports. generally a slow start. And then, 28 February, crisis in Iran or the war started. We observed that for about a week. Towards the end of the second week, we concluded this will impact the market. And I will come back to all the things going through the Stratum Hormos a little bit later. And with our now new flatter structure, where all the business units and the radios report directly to me without the divisions in between, from the mid-mark of the month, we started actions to say, okay, we need to secure supplies for our customers. We need to price up. We need to pass through surcharges. We need to do a whole lot of things. But top priority, basically, not get caught between a rock and a hard place. And also to keep our customers whole. And it took us about three days to ramp that up. So the results you see reflect maybe one and a half weeks. the wrong crisis in terms of market activity maximum two weeks so we're very very quickly up and running and then also had due to that on the customer side many customers are used to falling prices and that means you go minimum on your inventory as a customer and you saw a certain shift also there of people it wasn't a huge pre-buying, but a little bit of pre-buying to just have a bit of safety stock. And then we entered into growth territory. March landed on a growth and we increased prices immediately and we managed to secure deliveries to everyone. And that was well done. And it's a good proof point to the new Flutter organization and Here we are using really quick communication tools and exchanging between the regions and shipments, and it just works really, really nice. I should say, though, that you can discuss how quickly we will be able to do this. Agility is key in today's world, and here we were extremely quick to get going, but the inherent capability of our business model to deal with this, our site, often you are supply of material, connections everywhere in the industry. We proved again that kind of we thrive in times of volatility. And we knew that already. I think some of that was seen during the COVID happening. It has been shown time after time. But This was the first time I could see it. And I'm very happy how we dealt with it in essentials and specialties and also in the ingredients and additives and what have you. But the big happening was, of course, on the special side. We knew that already. While we were doing that, we also kept reminding ourselves, and we still keep reminding ourselves that this is a good windfall. and we see a good progression of this going forward into 2022. But our real job remains, and that is to get organic growth on the commercial machine going in Brandtag, leveraging the whole portfolio to get structured cost-bound productivity up and demonstrate leverage of scale and generally improve competitiveness, and then in the front end of the company to be able to use all the products we have, now that we are not at all going for a split, but we want to offer the full portfolio with different margin profiles without losing focus on the vertical business, the specialty business that requires the main competence to play both of those roles. So we kept working on that, and Thomas will come to some of the cost reduction progress we made. But, you know, we have more than 200 million gold for next year, and when we look at our internal plan to get to some 150 million savings this year, we are tracking on that plan, and I'm happy with that, because if we look at previous years, there's been plan made, but we haven't executed to him. And here I see that we are actually tracking to the plan we have put in place. We have a good structure to follow it up. And I tell you, in the whole company, we are below three management consultants, two or three consultants in the company. We don't use consultants. We do it ourselves. And it's progressing. And I think that's a very important skill, because if we structurally want to correct some of these cost developments and underutilization developments, we need to know this. It needs to be a core process. I'm happy that we could keep our eyes on that. If I look at the outlook, I think we... I think we can confirm the outlook with a higher degree of certainty. Thomas will talk more about that. But I should also say that what we see now at the beginning of this crisis, or this is the beginning we don't know, into Q2, that is the volatility. We thrive in that type of environment. We still... or we are not able to foresee what happens to end-user demand in H2 of the year. I'm sure there's going to be someone that got the forecast right, but we don't know who that person is. So we have taken some height for that in our forecast and feel comfortable, but we don't know what the impact will be and we don't know how long the crisis in the Middle East will go on. On the negative, Maybe it doesn't belong in an analyst call, but until the end of April, we have sadly had two fatalities in the business. Both of them happened on customer sites. And for me as a CEO, that's a very important one because this is not an Amazon business. This is a business that has inherent dangers. And we need to deal with that. And I think we have made good progress of safety. We have good statistics. But these two incidents that have happened are something we look at really closely and see if there are actions we need to take to improve. We have improved. But here, two independent incidents happened. in the quarter and into April, and I'm not at all happy with that, and I think it's very serious. And our new CEO is going to look into it. At the same time, it's also a reminder to, you know, this is not just any mail-order business we are running. It's serious chemicals, some of it, that we are getting and working with. Okay. We move on to the three priorities. You know, we set three priorities now, and we have now agreed, we have set a date for the Capital Markets Day on the 12th of November, where we will go into more detail, share with you a bit more about how we work, and also demonstrate, you know, by that time have more proof for us that we can move things in the company. But until then, We have put some very simple focus areas and we have had these in the two previous calls. Sales, what are we doing with sales? Are we making some progress? Yes, we are having feeds on the ground a lot more at the moment. We have shifted from internal to external focus. I'm happy with the step up in terms of time spent in front of the customer. And we have a fantastic capture at the front end of the company. We have done now several drives with getting dormant customers back, placing orders, sustained customers that have stopped ordering. And that has been quite successful. And then we are also launching a couple of experiments on cross-selling. And to best illustrate the strength of the one Brentog model is that we have the domain competence business, we say pharma, we count the people in pharma a number of hundreds, but you have customers for pharma that are thousands. And it says itself that if you can't leverage the wider Brentog for account management and maybe the tail end for 5,000 customers, it's very hard. to cover in depth thousands of customers beside three, four hundred people. So, our domain competence businesses, our specialty, they need to be really, really good at spending time in front of the customers of all their big accounts, and then we are now starting to leverage that specialty customers, we are moving it with essential products, specialty customers of one type of specialty, we move in with another specialty business, product portfolio, and helping each other. So we're starting to work on some incentives, pricing. We are starting to work with pricing, and that came at a very good time. We just kicked off a project on how we price and how pricing is done in this company. But, for example, Latin America grew 8% to 9% in Q1. And there we have, compared to last year, we have made quite good progress on how we address the market, and it was very nice to see. Then on the clarity and simplification, we have done an experience with the supply chain. It was split, and to bring it together and serve all the businesses of the world supply chain in APAC, that's going really well. The executive committee is operational now, getting comfortable with each other and tremendously helpful now in the time where we needed to be really agile on price and shipments and working between regions to have the executive committee around the table communicating very fast and working together. So, happy with that. New CEO is on board, starting to look into the whole productivity and the network of our supply chain. And in terms of starting at the top, the CEO functions, relations with the Works Council, also, and this is not only Germany, but starting to reduce headcount, job reductions. I start to feel we are a little bit more time than we expected, but we are coming through on that, that we start to work towards the same goal, and I feel that per CEO piece of it is done, we are working out in the region, Thomas is addressing his part of the organization, and so that's also moving forward, so I think that's good, and we haven't had any industrial action or anything of that. Then on the execution, Thomas will come back to that. We acquired it close to Airdate. That integration goes fine. A nice addition in the UK. And proven again in terms of execution when it's getting really turbulent. We can manage that. Cost reduction program. Well structured. Well followed up. Accountability. Very clear for the different pieces and I feel pretty confident that we now have learned how to deliver on our actions, and I think around 150 million this year should be doable, and Thomas again can go more into that. If we move to Iran, I guess this is the novelty of the court here. I mean, there will always be something nowadays, but this situation is new to us. It has not been so problematic, full of action, but just to give you a feeling, we have only about 150 people individually, so it's not a big impact on sales and gross profit, even though we are doing well there. But sourcing into the chemical industry is, of course, very substantial, and some of you might not know, but if you look at, you know, we all know that the oil, seaborne oil, passing through the hormones is maybe 25 or 30% of the world, and 20% of the LNG is passing through. Everyone knows that, but if you look into some of our core essential chemicals, I'll give some examples, you know, the Monoethylene glycol, 56% of the global trade is going to the hormone sulfur, which is, you know, in one or the other way going a lot into fertilizers and agro, almost 50%. Methanol, more than 40%. Urea, more than 30%. Ammonia, more than 23%. Phosphoric rock, more than 20. Then again, that goes into fertilizer and other things. And then different phosphates. So it's a very, very critical region in our field. So how did this really impact us? And this slide sums it up, what happens. And you could read. But if we instead include the regions, what's happening in the different regions from an energy price shock perspective, supply constraints, supply shock price of the product and the demand, starting in the U.S., the energy price shock, yes, gas prices are up, and the supply constraints, There the impact is quite low, but with the way the U.S. market works, where U.S. have started to export oil, export chemicals, Exxon, Dow, the big companies doing really, really well with windfall, it's not that it protects the U.S. from seeing a lot of price increases on the on the chemicals, where we have participated in that, of course. And I will also say, from a market activity level, in our segments, we don't see a market slowdown. If you then move over to Asia, there, the energy price shock element and the supply shock element with constraints, a lot of Chinese suppliers that didn't call for smasher, they just stopped the trip at the price, or said they won't supply, very high impact, prices went very high, and you also had some drop in demand. But we somehow managed to navigate there. I think we reached almost ceiling prices in APAC on chemicals, and our customers are a bit cautious, I would say. Should they be stark? Should they not? It's... quite dynamic, and it's coming down a bit, but the question is how we go forward. But again, not our biggest region, and we got through with, you know, we are getting through that, and we are managing, delivering, and passing on crisis. Then we get to Latin America. There we had pretty low effect in every respect, and the big difference, Latin America get products from Asia, they get it from also in some respect to Europe and also from the US. And what we have seen is very hawkish buying behaviors and pricing up. Some of it helped that Chinese imports have disappeared or been reduced in some places. So we have done really, really well so far in Latin America. And then in EMEA, we have the energy price Impacts medium to high. Also some constraints because some of the Chinese imports didn't arrive or they got delayed. Middle Eastern imports got delayed. We saw very quick movement on solvents. And there the pricing went up very quickly. Customers, not pre-buying, just taking up a bit of safety stock. Providing some growth, but again, cautious. You know, the big question out there, what will happen to demand in Europe? So that's a little bit of an overview on the Middle East. And then, if you look at our business's essentials, starting on the solvent side, that has been obviously in the middle of the action immediately. And that's where you see that our deliveries in that business are essential. for our customers. They are not commodities. They are super needed. And therefore, there is a pricing element to that and also worth. Some customers have run out. They haven't been our customers and we are helping them and it's almost at any cost to get the product if it's not an ongoing relation. And we step in on all of that if we can. And then on the specialty side, you see that their contracts are in place, smaller volumes, not a quick impact. You see a slight uptick, and I think more will happen, but not that drama, not that action to the same extent, but it will come. Transport costs, all the materials will come up, but it's more gradual. And then I think on nutrition, our nutrition business, if you look at that business, fertilizers, etc., for example, for Europe, they are already in place before the Iran crisis in most of the agricultural areas. So our prediction is that we will see food price inflation and that thing picking up. But the first planting now already had the fertilizers and the rest in place. But I think the impact can be quite substantial, but it's just later in the cycle and And when it happens, we are ready for it. Okay. Go to the next slide on the numbers. If you look at the top line, sales minus 5%, and that was supported. This is against a very good quarter last year. So I'm happy with this number. It was held over the two weeks of March. In that business, We have some businesses growing. Most businesses are not growing at the beginning of the quarter, but Latin America, we had high single-digit growth. Also, our materials science business, you know, 6-7% growth, slightly different dynamics, and that is already 2-4. Very happy about that. So, clearly, the top line, and also the gross profit held by the last one and a half, two weeks of the quarter. Gross profit, minus 1.3% of minus 5% top line, happy about that. And then also quite happy with that on sales, minus 5%, but we only lost 10%. operating EBITDA 8%. So that's a smaller gap there than we've seen, say, two quarters back. That's not only because of cost reduction, obviously, because some transport costs and other things went up very quickly. But to some extent, it's pricing elements and some volume elements that help with that. Mathematics will then improve the gross profit margin. I think another aspect about the gross profit, I'm happy about this, that we are moving away from, you know, we like to have price quality on the business, but we are moving away with, we kind of accept that we have different businesses with different gross margin criteria. I think Brent, I guess, some corners of the business have been way too minimum gross profit for Tom and Shed business. We have capacity and as long as taking a low margin product and it doesn't reduce the price of the profitability of the mid and the high margin product, we have no problem with it. So looking at our total offering to customers with our whole portfolio and accepting a margin profile. And we are at the beginning of that. We will get better at that when we move on. And as I said on the forecast, Q2, it's progressing. We know how to deal with it. And we are not worried about Q2. What we look for is now what happens in the second half of the year on the demand side. Finally, the capital market stay, 12th November. We will mix that up. The people that will attend, obviously, medium, long-term, what we're going to work on the levers and then to meet several of the team members because we start to have a seriously good team here. And I think they're very much part of this executive committee to deliver on our strategy that we are working. We are not done on every piece, obviously. We're going to use the time. but we have the core all the elements and we are working on them and we are also making some real full scale real pile of testing in the business and that's one of the reasons why I like to do this in the second half of the year so that we have tested can we cope with this can we do this obviously not every strategic initiative will be that way but Some of the core elements I'd like to know what we have the capability to move things in the area we want to use as a lever. Over to Thomas.