Brenntag shifts focus to cost cuts and digital growth amid weak demand
Brenntag, the world's largest chemical distributor, has announced a major shift in strategy to improve efficiency and financial performance. Despite a drop in revenue and profits last year, the company has ruled out splitting its business and will instead focus on cost cuts and digital growth.
The move comes as its share price recovers from a recent low, and investors await key updates in May.
In fiscal 2025, Brenntag faced a tough market. Revenue fell to €15.2 billion, while operating EBITDA dropped 8.6% to €1.29 billion, reflecting weak global demand. Yet the company still managed to increase free cash flow to €941 million, showing financial strength in difficult conditions.
Instead of breaking up its Essentials and Specialties divisions, Brenntag will keep them together to maintain synergies. CEO Jens Birgersson argued that a full separation would risk losing competitive advantages. The new plan focuses on streamlining operations and cutting costs aggressively.
An accelerated efficiency drive aims to save around €300 million annually by 2027. At the same time, Brenntag is pushing ahead with its digital transformation. The 'DiDEX' initiative will invest roughly €350 million by 2026 to modernise supply chains, with expectations of adding €200 million in annual earnings.
Looking ahead, the company forecasts operating EBITDA between €1.15 billion and €1.35 billion for 2026, suggesting demand will remain weak. Investors are now watching two key dates: May 1, 2026, for first-quarter results, and the Annual General Meeting, where a €1.90 dividend will be voted on.
Brenntag holds around 17-18% of the global chemical distribution market, far ahead of competitors like BASF's logistics arm, which mainly serves internal needs. Unlike industrial gas firms such as Linde and Air Products, Brenntag's growth relies on acquisitions in specialty chemicals and digital innovation.
Brenntag's share price has rebounded from its 52-week low of €45.22, reflecting investor confidence in the new strategy. By focusing on cost savings, digital upgrades, and maintaining its market-leading position, the company aims to strengthen its financial footing. The next financial update and dividend vote in May will provide further clarity on its progress.
