Brenntag SE — Investor Presentation 2016

Aug 24, 2016

Q2 2016

▌ 10 August 2016

Conference call on Q2 2016 results Corporate Finance & Investor Relations

Q2 2016 Presentation AGENDA

▌Highlights Q2 2016

▌Financials Q2 2016

▌Outlook

▌Appendix

Introductory remarks to Q2 2016 earnings HIGHLIGHTS Q2 2016

Macro Economy	Moderate development in Europe. North America with continuing weak trend. Latin America with challenging conditions overall. Ongoing growth in Asia Pacific.
Gross profit	Gross profit of EUR 603.6m growing at +3.1% (+6.3% fx adjusted).
Operating EBITDA	Operating EBITDA of EUR 215.8m stable at +0.2% (+3.3% fx adjusted).
EPS	Earnings per Share of EUR 0.66 (-4.3%).
Acquisitions	Signing of the Warren Chem acquisition in South Africa. Purchase of the the remaining 49% outstanding shares of Zhong Yung in China.

Acquisitions in South Africa and China HIGHLIGHTS Q2 2016

Target	Rationale	Indicative annual EBITDA contribution (m EUR)	Investment Amount (m EUR)
Warren Chem Pty Ltd. , South 1) Africa	Established Specialty chemicals distributor perfectly complements existing product portfolio and expanding local presence in the region	3.3	~24
Zhong Yung, China (purchase of 49%, now 100% owned by Brenntag)	Zhong Yung is active in the key economic regions in China. The company performed well over the years and is an ideal platform for future growth. Brenntag acquired the remaining 49% stake as per the agreement from 2011.	Zhong Yung has already been fully consolidated	~62

Total Enterprise Value of ~EUR 130m (for M&A in 2016)

Average EV/EBITDA multiple of ~6.2x (excl. Zhong Yung)

1) Closing expected in Q3

Q2 2016 Presentation AGENDA

▌Highlights Q2 2016

▌Financials Q2 2016

▌Outlook

▌Appendix

Income statement FINANCIALS Q2 2016

in EUR m	Q2 2016	Q2 2015	∆	∆ FX adjusted	2015
Sales	2,664.0	2,691.4	-1.0%	2.0%	10,346.1
Cost of goods sold	-2,060.4	-2,106.1	-2.2%		-8,080.1
Gross profit	603.6	585.3	3.1%	6.3%	2,266.0
Expenses	-387.8	-369.9	4.8%		-1,458.6
Operating EBITDA	215.8	215.4	0.2%	3.3%	807.4
Op. EBITDA / Gross profit	35.8%	36.8%			35.6%

Operating EBITDA bridge: Q2 2015 to Q2 2016 FINANCIALS Q2 2016

Effects based on rounded figures

Income statement (continued) FINANCIALS Q2 2016

in EUR m	Q2 2016	Q2 2015	∆	2015
EBITDA	215.8	215.4	0.2%	807.4
Depreciation	-28.4	-27.2	4.4%	-108.7
EBITA	187.4	188.2	-0.4%	698.7
1) Amortization	-12.0	-9.8	22.4%	-36.9
EBIT	175.4	178.4	-1.7%	661.8
2) Financial result	-19.4	-17.8	-9.0%	-112.5
EBT	156.0	160.6	-2.9%	549.3
Profit after tax	102.1	108.1	-5.6%	368.1
EPS	0.66	0.69	-4.3%	2.36
EPS excl. Amortization and Zhong 3) Yung liability	0.71	0.74	-4.1%	2.68

1) Includes scheduled amortization of customer relationships amounting to EUR 9.2m in Q2 2016 (EUR 7.6m in Q2 2015 and EUR 27.7 million in 2015).

2) Thereof EUR -0.1m in Q2 2016 (EUR -0.7m in Q2 2015) are related to a change of the purchase price obligation for Zhong Yung (International) Chemical Ltd., which has to be recorded in the income statement according to IFRS (EUR -23.4m in 2015).

3) Adjusted for the net effect of amortizations and changes in the purchase price obligation for the outstanding 49% in Zhong Yung (International) Chemical Ltd.

Cash flow statement FINANCIALS Q2 2016

in EUR m	Q2 2016	Q2 2015	2015
Profit after tax	102.1	108.1	368.1
Depreciation & amortization	40.4	37.0	145.6
Income taxes	53.9	52.5	181.2
Income tax payments	-45.2	-56.9	-174.2
Interest result	21.8	18.2	71.5
Interest payments (net)	-16.2	-10.2	-67.2
Changes in current assets and liabilities	-32.2	-35.3	60.6
Change in purchase price obligation/IAS 32	0.4	0.9	24.9
Other	-10.0	-7.7	-16.8
Cash provided by operating activities	115.0	106.6	593.7

Cash flow statement (continued) FINANCIALS Q2 2016

in EUR m	Q2 2016	Q2 2015	2015
Purchases of intangible assets and property, plant & equipment (PPE)	-25.7	-20.7	-126.7
Purchases of consolidated subsidiaries and other business units	-15.0	-18.8	-500.8
Other	1.2	1.7	5.9
Cash used for investing activities	-39.5	-37.8	-621.6
Capital increase	-	-	-
Payments in connection with the capital increase	-	-	34.3
Purchases of companies already consolidated	-41.4	-	-
Profits distributed to non-controlling interests	-1.0	-1.3	-1.9
Dividends paid to Brenntag shareholders	-154.5	-139.1	-139.1
Repayment of (-)/proceeds from (+) borrowings (net)	-2.1	-123.7	218.7
Cash used for financing activities	-199.0	-264.1	112.0
Change in cash & cash equivalents	-123.5	-195.3	84.1

Balance Sheet as of June 30, 2016 FINANCIALS Q2 2016

in EUR m

6,983		6,983
463 1,573	Cash and cash equivalents Trade receivables	2,231	Financial liabilities Trade payables
353 881	Other assets	1,127	Other liabilities
	Inventories	366 160	Other provisions
2,762	Intangible assets 1)	431	Other
	Property, plant and equipment	2,668	Equity
951
Assets		Liabilities and Equity

1) Of the intangible assets as of June 30, 2016, some EUR 1,271 million relate to goodwill and trademarks that were capitalized as part of the purchase price allocation performed on the acquisition of the Brenntag Group by funds advised by BC Partners Limited, Bain Capital, Ltd. and subsidiaries of Goldman Sachs International at the end of the third quarter of 2006 in addition to the relevant intangible assets already existing in the previous Group structure.

Balance Sheet and leverage FINANCIALS Q2 2016

in EUR m	30 June 2016	31 Mar 2016	31 Dec 2015
Financial liabilities	2,230.5	2,211.1	2,255.2
./. Cash and cash equivalents	463.4	580.2	579.1
Net Debt	1,767.1	1,630.9	1,676.1
1) Net Debt/Operating EBITDA	2.2x	2.0x	2.1x
Equity	2,668.0	2,698.4	2,690.5

Financial stability of Brenntag Group FINANCIALS Q2 2016

• Business demonstrates ability to de-leverage constantly

• Investment grade ratings from Standard & Poor's ("BBB") and Moody's ("Baa3")

• Balanced and long-term maturity profile

• High flexibility due to undrawn revolving credit facility of EUR 600m
• 1) Net debt defined as current financial liabilities plus non-current financial liabilities less cash and cash equivalents.

Working capital FINANCIALS Q2 2016

in EUR m	30 June 2016	31 Mar 2016	31 Dec 2015
Inventories	880.5	866.3	897.1
+ Trade receivables	1,572.8	1,494.3	1,426.5
./. Trade payables	1,126.7	1,077.1	1,055.5
Working capital (end of period)	1,326.6	1,283.5	1,268.1
(year-to-date) 1) Working capital turnover	8.1x	8.1x	8.0x
Working capital turnover (last twelve months) 2)	7.9x	7.9x	8.0x

• 1) Using sales on year-to-date basis and average working capital year-to-date.
• 2) Using sales on LTM basis and average LTM working capital.

Free cash flow FINANCIALS Q2 2016

in EUR m	Q2 2016	Q2 2015	∆	∆	2015
EBITDA	215.8	215.4	0.4	0.2%	807.4
Capex	-26.5	-22.7	-3.8	16.7%	-130.1
∆ Working capital	-24.6	-25.6	1.0	-3.9%	87.0
Free cash flow	164.7	167.1	-2.4	-1.4%	764.3

Segments FINANCIALS Q2 2016

in EUR m		EMEA	North America	Latin America	Asia Pacific	All other segments	Group
Operating gross profit	Q2 2016	278.8	246.3	42.9	45.6	3.8	617.4
	Q2 2015	263.8	243.9	50.5	36.9	4.0	599.1
	∆	5.7%	1.0%	-15.0%	23.6%	-5.0%	3.1%
	∆ FX adjusted	8.3%	3.5%	-9.1%	31.2%	-5.0%	6.2%
Operating EBITDA	Q2 2016	100.5	93.2	11.4	17.3	-6.6	215.8
	Q2 2015	92.9	98.4	16.1	13.7	-5.7	215.4
	∆	8.2%	-5.3%	-29.2%	26.3%	15.8%	0.2%
	∆ FX adjusted	11.2%	-3.1%	-24.2%	33.1%	15.8%	3.3%

FINANCIALS Q2 2016

Update North America: Trends in Gross Profit with Oil & Gas customers and industrial production

Total 2014 = USD 299m Total 2015 = USD 260m

At constant FX Rates; IP Growth US source: Board of Governors of the Federal Reserve System

Q2 2016 Presentation AGENDA

▌Highlights Q2 2016

▌Financials Q2 2016

▌Outlook

▌Appendix

OUTLOOK

	2015 H1 2016	Comments	Trend 2016
Gross profit	EUR 2,266m EUR 1,190m	 Meaningful increase expected due to the acquisitions carried out in 2015 and higher volumes  All regions are expected to support the performance albeit to different degrees (Latin America excl. Venezuela).
Operating EBITDA	EUR 807m EUR 408m	 Guidance range: EUR 800m to EUR 840m for the full year 2016.
Profit after tax	EUR 368m EUR 168m	 General development driven by growth of operating EBITDA.  Negative impact from asset-write-off in Venezuela.

OUTLOOK

	2015 H1 2016	Comments	Trend 2016
Working capital	EUR 1,268m EUR 1,327m	 To a large extent a function of sales growth  Expected to grow significantly in 2016
Capex	EUR 130m EUR 44m	 Capex spending increase to ca. EUR 150m driven by projects for business expansion.
Free Cash Flow	EUR 764m EUR 296m	 As the reduction in working capital of 2015 is not expected to be repeated in 2016, we expect a reduction in free cash flow of more than 10% despite the positive EBITDA development.

THANK YOU FOR YOUR ATTENTION

Steven Holland, CEO

• With Brenntag since 2006

• 30 years of dedicated experience

• Region Latin America, Corp. Communications, Development, HR, HSE, Internal Audit, M&A and Compliance

Georg Müller, CFO

• With Brenntag since 2003

• 10 years of experience in chemicals distribution

• Corp. Accounting, Controlling, Finance & IR, IT, Legal, Tax, Risk Management, Brenntag International Chemicals

We are ready to answer your questions!

Contents APPENDIX

	Page
Income Statement H1 2016	23
Cash flow statement H1 2016	25
Free Cash Flow H1 2016	27
Segments H1 2016	28

Income statement FINANCIALS H1 2016

in EUR m	H1 2016	H1 2015	∆	∆ FX adjusted
Sales	5,244.1	5,265.3	-0.4%	1.7%
Cost of goods sold	-4,053.9	-4,122.7	1.7%
Gross profit	1,190.2	1,142.6	4.2%	6.3%
Expenses	-782.3	-732.2	6.8%
Operating EBITDA	407.9	410.4	-0.6%	1.4%
Op. EBITDA/Gross profit	34.3%	35.9%

Income statement (continued) FINANCIALS H1 2016

in EUR m	H1 2016	H1 2015	∆
EBITDA	407.9	410.4	-0.6%
Depreciation	-57.2	-53.7	6.5%
EBITA	350.7	356.7	-1.7%
1) Amortization	-24.2	-19.0	27.4%
EBIT	326.5	337.7	-3.3%
Financial result 2)	-69.1	-41.5	66.5%
EBT	257.4	296.2	-13.1%
Profit after tax	168.1	199.3	-15.7%

2) Thereof EUR -1.0m in H1 2016 and EUR –1.3m in H1 2015 are related to change in purchase price obligation Zhong Yung (International) Chemical Ltd., which has to be recorded in the income statement according to IFRS.

¹⁾ This figure includes for the period January to June 2016 scheduled amortization of customer relationships totalling EUR 18.4 million (H1 2015: EUR 14.8m).

Cash flow statement FINANCIALS H1 2016

in EUR m	H1 2016	H1 2015
Profit after tax	168.1	199.3
Depreciation & amortization	81.4	72.7
Income taxes	89.3	96.9
Income tax payments	-89.0	-110.7
Interest result	42.1	36.4
Interest payments (net)	-23.6	-21.6
Changes in current assets and liabilities	-86.0	-78.5
Other	31.7	-27.8
Cash provided by operating activities	214.0	166.7

Cash flow statement (continued) FINANCIALS H1 2016

in EUR m	H1 2016	H1 2015
Purchases of intangible assets and property, plant & equipment	-49.7	-39.7
Purchases of consolidated subsidiaries and other business units	-46.1	-44.4
Other	3.4	2.4
Cash used for investing activities	-92.4	-81.7
Capital increase	-	-
Payments in connection with the capital increase	-	-
Purchases of companies already consolidated	55.9	-
Profits distributed to non-controlling interests	-1.0	-1.3
Dividends paid to Brenntag shareholders	-154.5	-139.1
Repayment of (-)/proceeds from (+) borrowings (net)	-8.4	-135.6
Cash used for financing activities	-219.8	-276.0
Change in cash & cash equivalents	-98.2	-191.0

Free cash flow FINANCIALS H1 2016

in EUR m	H1 2016	H1 2015	∆	∆	2015
EBITDA	407.9	410.4	-2.5	-0.6%	807.4
CAPEX	-44.1	-37.6	-6.5	-17.3%	-130.1
∆ Working capital	-67.9	-44.7	-23.2	-51.9%	87.0
Free cash flow	295.9	328.1	-32.2	-9.8%	764.3

1) The figures for 2014 have been adjusted owing to the first-time application of IFRIC 21 (Levies).

Segments FINANCIALS H1 2016

in EUR m		EMEA	North America	Latin America	Asia Pacific	All other segments	Group
Operating gross profit	H1 2016	546.4	490.5	86.5	87.5	6.9	1,217.8
	H1 2015	520.2	471.7	100.2	70.3	7.9	1,170.3
	∆	5.0%	4.0%	-13.7%	24.5%	-12.7%	4.1%
	∆ FX adjusted	7.1%	4.7%	-7.5%	31.0%	-12.7%	6.2%
Operating EBITDA	H1 2016	188.8	177.8	23.8	32.2	-14.7	407.9
	H1 2015	181.1	186.3	31.5	24.8	-13.3	410.4
	∆	4.3%	-4.6%	-24.4%	29.8%	10.5%	-0.6%
	∆ FX adjusted	6.7%	-4.1%	-18.8%	35.9%	10.5%	1.4%

CONTACT

Investor Relations

Thomas Langer Diana Alester René Weinberg Phone: +49 (0) 208 7828 7653 Fax: +49 (0) 208 7828 7755 E-mail: IR@brenntag.de Web: www.brenntag.com

This presentation may contain forward-looking statements based on current assumptions and forecasts made by Brenntag AG and other information currently available to the company. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Brenntag AG does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments. Some information contained in this document is based on estimates or assumptions of Brenntag and there can be no assurance that these estimates or assumptions are or will prove to be accurate.

Disclaimer