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Brenntag Forecast Lags Behind Estimates on World Economy

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Aug. 7 (Bloomberg) -- Brenntag AG, the world’s largest distributor of chemicals, forecast annual earnings below analysts’ estimates, citing doubts about the global economy. The stock dropped the most in three months.

Earnings before interest, taxes, depreciation, amortization and one-time items will be in a range of 710 million euros ($945 million) to 735 million euros this year, the Muelheim an der Ruhr, Germany-based company said in a statement today. Analysts were predicting operating Ebitda of 742.6 million euros.

Second-quarter profit and sales missed analyst predictions, and Brenntag said market conditions are “challenging.” The Bundesbank said in July that the German economy, Europe’s biggest, is set to slow for the remainder of this year after a rebound in the quarter. The International Monetary Fund reduced its worldwide economic-growth forecast last month, citing weakening expansion in the U.S. and a slowdown in China.

“The specified Ebitda guidance is a disappointment and may require downward revisions of consensus,” Thomas Maul, an analyst at DZ Bank AG, said in a note to clients. Maul, based in Frankfurt, has a sell recommendation on the stock.

Brenntag fell as much as 6.1 percent to 115.35 euros, the steepest intraday decline since May 8, and was trading down 5.8 percent at 10:05 a.m. That pared the stock’s gain this year to 16 percent, valuing the company at 5.96 billion euros.

Estimates Missed

Second-quarter operating Ebitda fell 8.3 percent from a year earlier to 169.1 million euros, missing the 186.4 million-euro average of eight analyst estimates compiled by Bloomberg. Sales rose 2.2 percent to 2.54 billion euros, lagging behind the average estimate of 2.58 billion euros. Net income declined 15 percent to 68.7 million euros.

Earnings in Europe were hurt by a 17 million-euro provision for an antitrust fine in France, Brenntag said.

“We do not see the promise of any significant improvement in the macroeconomic environment but we remain positive and confident about the underlying market opportunities,” Chief Executive Officer Steven Holland said in the statement.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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