Brenntag Slumps After Profit Misses on Oil, Venezuela

  • Sales short of expectations on lower oil-based chemical prices
  • Chemical distributor confirms 2016 goal for growth of earnings

Brenntag AG’s first-quarter profit missed analyst estimates after the world’s largest distributor of chemicals was hit by a currency devaluation in Venezuela and slump in demand for additives used by the oil and gas industry.

Earnings were “surprisingly low” due to weakness in the Venezuelan currency, oil and gas and the North American industrial environment, Thomas Maul, an analyst at DZ Bank said in a note to investors.

The shares fell as much as 8 percent, the steepest decline since Nov. 5, and were trading down 6.5 percent at 48 euros at 10:00 a.m. in Frankfurt.

Brenntag stuck to a full-year forecast for an increase in earnings in 2016 as Chief Executive Officer Steven Holland makes acquisitions to broaden the portfolio and add customers. A gain from acquisitions couldn’t offset a 1.7 percent slump in industrial production in the U.S. in the first quarter.

Earnings before interest, tax, depreciation and amortization fell 1.5 percent to 192.1 million euros ($219 million), the Muelheim an der Ruhr-based company said in a statement Monday. Weighed down by a currency devaluation in Venezuela, the earnings missed an average estimate of 203.7 million euros in a Bloomberg survey.

Net income fell 27 percent to 65.9 million euros in the quarter. Sales were little changed at 2.58 billion euros, missing an estimate for 2.73 billion euros.

“In North America, particularly the continuous weak demand of customers in the oil and gas segment as well as the negative growth of industrial production in other customer industries had a negative impact on our results,” Holland said in the quarterly report.

Approaching his fifth anniversary at the helm, Holland is looking to get Brenntag into Germany’s benchmark DAX index, buying two companies in Germany and one in South Africa in the first quarter.

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