Brenntag beats profit view but warns crude costs may stay high
Quarterly Performance and Market Impact
By Ozan Ergenay and Marta Frackowiak
May 13 (Reuters) - German chemicals distributor Brenntag delivered a quarterly core profit beat on Wednesday, helped by price hikes and cost cuts, but warned about higher crude-related costs in the coming months due to the Middle East conflict.
The U.S.-Israeli war with Iran has disrupted fuel and feed-stock markets, impacting global supply chains and driving up prices for the energy‑intensive chemical industry.
Cost Management Strategies
CFO Thomas Reisten said on a call with reporters and analysts that higher fuel and transport costs linked to tensions in the Middle East were being passed on to customers through surcharges and price increases, allowing the company to maintain its 2026 earnings guidance despite broader economic uncertainty.
Industry-Wide Price Increases
To offset higher costs, chemical companies including Brenntag, Wacker Chemie, Lanxess, BASF, Evonik, EMS Chemie and Sika have raised prices, in some cases multiple times across different products.
Brenntag's Financial Results
Brenntag's operating EBITA declined 17.9% to 217 million euros ($254 million) for the first quarter, exceeding analysts' average estimate of 208.8 million euros in a poll by Vara Research.
Oil Prices and Geopolitical Uncertainty
Oil Prices Expected to Remain Elevated
Geopolitical uncertainty continues to weigh on markets, as peace talks between Iran and the U.S. have stalled and trade through the Strait of Hormuz remains disrupted, driving further increases in oil and gas prices.
Brenntag's Oil Price Outlook
Asked about Brenntag's oil price estimate for the coming months, CEO Jens Birgersson said that major oil producers expected oil prices to remain elevated for the rest of the year, averaging around $100 a barrel, with some forecasts pointing to prices rising as high as $125 during the summer.
"They say that due to the strategic oil reserve roll down in the U.S., even if it (war) stops tomorrow, it will not reset itself immediately, and that is why their advice to us is to assume oil prices being high the rest of the year," he said.
Chinese Competition
Impact of Chinese Chemical Exports
The European chemicals industry has faced heavy price pressure over the past year as Chinese producers increased exports to the region, helped by trade tensions that made Europe relatively more attractive than the U.S. market.
Recent Shifts in Competition
However, recent industry commentary suggests that the Chinese competition has eased since the Iran war began.
Brenntag said it has seen a pullback in Chinese chemical exports with the Middle East conflict temporarily reducing competition in Europe, but stressed that the impact on its distribution business was limited, with flows returning and market conditions normalising.
($1 = 0.8543 euros)
(Reporting by Ozan Ergenay and Marta Frackowiak in Gdansk; Editing by Mrigank Dhaniwala)
