In the first quarter of 2020, global capital markets recorded their heaviest losses since the financial crisis of 2008. The main reason for this significantly negative performance was the global spread of the COVID-19 pandemic and the continuing uncertainty over the economic consequences of this development. The sharp fall in the oil price put additional pressure on the global financial markets.
Germany’s leading index, the DAX®, closed the first quarter of 2020 at 9,935.84 points, down 25.0% on the end of 2019. The MDAX® lost 25.7% to finish the first quarter of 2020 at 21,040.71 points. Brenntag shares closed the reporting period at EUR 33.83, a decrease of 30.2% compared with the 2019 closing price.
According to Deutsche Börse AG’s ranking, Brenntag AG ranked 40th among all listed companies in Germany by market capitalization at the end of March 2020. The average number of Brenntag shares traded daily on Xetra® in the first three months of 2020 was approximately 487,000.
The Brenntag Group generated sales of EUR 3,206.1 million in the first quarter of 2020, a slight increase of 0.7% compared with the prior-year period. On a constant currency basis, sales were roughly in line with the prior-year figure. Whereas for manufacturing companies, sales play a key role, for us as a chemical distributor, operating gross profit is a more important factor for increasing our enterprise value over the long term.
The Brenntag Group generated operating gross profit of EUR 745.2 million in the first quarter of 2020, an increase of 8.3% and, on a constant currency basis, 7.1%. Almost all segments contributed to this positive performance at operating gross profit level. The increase in operating gross profit is due predominantly to organic growth in the business, in particular higher operating gross profit per unit.
The Brenntag Group’s operating expenses amounted to EUR 482.2 million in the first quarter of 2020, a rise of 7.3% year on year, or 6.2% on a constant currency basis. The acquisitive growth led to additional costs, as did inflationary tendencies, affecting personnel and transport costs in particular. The Brenntag Group achieved operating EBITDA of EUR 263.0 million overall in the first quarter of 2020, an increase of 10.1% on the prior-year figure. On a constant currency basis, the company achieved double-digit growth rates in the EMEA, Latin America and Asia Pacific segments, which resulted in strong earnings growth of 8.7% at Group level. This growth is predominantly organic.