The Brenntag Group expects 2024 to be another financial year shaped by the war in Ukraine, the Middle East conflict, geopolitical tensions and an only slow fall in inflationary pressures. This continues to result in a still greater-than-average degree of uncertainty over growth expectations for the global economy in 2024. Oxford Economics currently predicts that the global economy, measured in terms of industrial production (IP), will grow only slightly in 2024: Weighted by the sales generated by Brenntag in the individual countries, this results in a forecast average real IP growth rate of +1.2% in 2024.
In light of the continuing economic uncertainty and the fact that global economic growth is expected to remain subdued, Brenntag expects the Group’s operating EBITA for financial year 2024 to be between EUR 1,230 million and EUR 1,430 million. This includes improvements in earnings and additional expenses arising from our digitalization strategy. Our forecast takes into account the contributions to earnings from acquisitions already closed and assumes that exchange rates will remain stable compared with those at the time of the forecast.
After the Brenntag Specialties and Brenntag Essentials divisions recorded a decline in operating EBITA in 2023, the Brenntag Group expects a moderate rise in operating EBITA in both divisions in 2024. It is expected that Brenntag Specialties will report a slightly higher relative rise in operating EBITA. The forecast increase in operating EBITA is lower than the meaningful increase expected in operating gross profit due to the fact that further initial expenditure will be incurred in connection with the digitalization initiatives. Brenntag expects the rise in the Group’s operating gross profit to be driven by a rise in operating gross profit in both divisions. In this case, it is anticipated that the relative rise at Brenntag Specialties and Brenntag Essentials will be of a similar magnitude.
Following a decrease in working capital turnover in the past financial year, Brenntag anticipates that, in 2024, it will achieve a moderate improvement in working capital turnover compared with the reported averages for the past financial year. Overall, however, Brenntag expects the planned business activity and the improvement in working capital turnover to result in a moderate increase in working capital.
Assuming that exchange rates remain stable, Brenntag expects free cash flow in 2024 to be significantly lower than in the previous year. This takes into account capital expenditure of around EUR 350 million in financial year 2024, including expenditure to optimize the global site network. Brenntag is also investing more in safety and sustainability at the sites. Further investments relate to measures under Brenntag’s digitalization strategy. It is intended to use this free cash flow to continue to ensure Brenntag’s acquisition strategy and dividend policy and fund the expenses in 2024 in connection with the implementation of the company’s transformation and growth strategy. At the same time, it is intended to maintain liquidity at an adequate level.
