Brenntag (ETR:BNR) executives said demand remained broadly stable in the second quarter and into the start of the third quarter, while the chemicals distributor continued to benefit from a higher pricing environment and progress in commercial and cost-efficiency initiatives.
During the company’s second-quarter 2026 results call, CEO Jens Birgersson said the company had not seen a broad-based market recovery or an expected near-term acceleration in volumes. “We basically see it holding steady,” Birgersson said. “We don’t see an uptick, and don’t at the moment expect any big changes.”
Specialties Shows Relative Strength
Brenntag said its Specialties segment showed comparatively better volume performance than its Essentials business, particularly in material science. Birgersson characterized material science as the “top performer” in Specialties and said the improvement was partly market-driven.
He also pointed to internal commercial measures, including a reduced emphasis on gross profit per ton in favor of total gross profit, customer relationships and using the Essentials sales platform to reach smaller customers. The company said it was seeing early benefits from having Specialties and Essentials teams work more closely together.
In life sciences, Brenntag said it was making progress across several business areas, though nutrition remained comparatively flat. Birgersson said the company had not yet seen the same cost inflation or pricing pressure in nutrition that has emerged in other areas. He added that the company was addressing issues tied to the integration of prior U.S. acquisitions, which had weighed on nutrition volumes but were improving.
CFO Thomas Reisten said Brenntag’s Specialties business recorded a 0.6 percentage-point year-over-year improvement in gross profit margin and a 3.3 percentage-point increase in EBITDA conversion to 38.6%. He said the improvement reflected commercial initiatives rather than only inventory-price movements.
Pricing Benefits Expected to Moderate
Management said the second quarter benefited initially from sales of lower-cost inventory at higher prevailing market prices. Reisten said replenishment costs increased as the quarter progressed, reducing the initial benefit, though gross profit trends remained positive into the third quarter.
Reisten said Brenntag expects the pricing-related benefit to decrease progressively during the third quarter. At the midpoint of its outlook, the company assumes performance in the fourth quarter will move closer to the prior-year level.
The company said risks to that view include a potential improvement in product availability or a reduction in oil prices, while a prolonged period of supply constraints and elevated prices could provide an opportunity. Management said it had not seen evidence of demand destruction, with volumes broadly flat overall, a slight decline in Essentials and positive year-over-year volume development in Specialties.
Birgersson said customers increased inventory during late March and April after having operated with very lean inventories amid falling prices. However, he said the company did not believe customers were sitting on an inventory bubble or preparing to substantially reduce stock levels.
Working Capital Increase Seen as Temporary
Reisten said Brenntag recorded a €353 million working-capital outflow in the second quarter, primarily because higher product prices increased the value of inventory. He described the increase as a “temporary technical effect” rather than a volume-driven inventory build.
Total sales increased about 11%, according to Reisten, while inventory rose about 11.8%. Accounts receivable and payable also increased broadly in line with one another. The company said it had not encountered significant product shortages and had been able to continue supplying customers.
Brenntag’s working-capital turns improved to 7.5 times, Reisten said. He added that working capital appeared to have peaked at the end of the second quarter and that the company had begun to see a smaller release of working capital early in the third quarter.
Cost Program Targets €150 Million This Year
The company said its cost-efficiency program reached a €41 million run rate in the second quarter, up from €27 million in the first quarter. Reisten said Brenntag continues to target about €150 million of savings during 2026 from the initiatives underway, followed by a €200 million to €250 million level in 2027.
- Brenntag has reduced headcount by more than 800 employees year over year, according to management.
- Management said most current savings actions are structural and are expected to continue benefiting future periods.
- Personnel costs in the second quarter also reflected higher bonus provisions, sales incentives and other items, which Reisten quantified at about €40 million net.
Birgersson said the company is reducing management layers, simplifying processes and seeking to increase productivity across operations and sales. He described the current savings target as an early stage in a broader effort to improve competitiveness and scale benefits.
On competition, Birgersson said Chinese suppliers remain active, particularly in Asia, and could increasingly target Latin America as Chinese chemical capacity remains elevated and domestic demand stays relatively flat. He said competition is more straightforward in essential products, while specialty products have different distribution dynamics and could also create sourcing opportunities for Brenntag.
Brenntag said it will report third-quarter results on Nov. 11, followed by its 2026 Capital Markets Day on Nov. 12.
About Brenntag (ETR:BNR)
Brenntag SE purchases and supplies various industrial and specialty chemicals, and ingredients in Germany, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates in two segments, Brenntag Essentials and Brenntag Specialties. It provides just-in-time delivery, product mixing, blending, repackaging, inventory management, and drum return handling. The company serves customers in various end-market industries, including nutrition, pharma, personal care, water treatment, and lubricants; and home, industrial, and institutional markets, as well as coatings and constructions, polymers, and rubber industries.
