As the industry changes, distribution companies must also transform - Brentag announces new strategic growth plan

German chemical distributor Brentag AG has unveiled a new strategic growth plan
until 2026.
The plan includes dedicated growth targets for the company's two global divisions, Brentag Specialty Chemicals and Bruntag Basic Chemicals, as well as the company's digital transformation and M&A goals
.
Brentag calls the new strategy "the second phase of Brentag's transformation journey.
"

Commenting on the transformation of Brentag, CEO Christian Kolpeenturner said: "Chemical distribution is a growing, highly fragmented and indispensable market, and Brentag is the undisputed leader
in this industry.
We have now identified how to strengthen and expand our market position, with the goal of promoting growth
in the global segment through a clear differentiation strategy.
In addition, we are building a comprehensive digital and data framework to better serve our global customer base and achieve greater operational efficiency
.
With the new strategy, the company aims to surpass potential market growth and play a vital role
in a sustainable global chemical distribution ecosystem.
”

Exceed market growth targets

Blentag has decided to make the company's operating profit before interest and amortization (EBITA) its new key performance indicator
under the new strategy.
Brentag Chief Financial Officer Kristen Neumann said the move would properly reflect its profitability
.
The Brentag Specialty Chemicals Division aims to achieve an EBITA compound annual growth rate (CAGR) of 7%~9% by 2026, and the Brentag Basic Chemicals Division achieves EBITA over the same period The CAGR is 4%~5%, the expected EBITA of the entire company The CAGR is 6%~8%.

These goals represent Brentag's efforts to achieve growth rates
that are higher than the growth rate of the chemical distribution market.
In a recent online press conference, Kolpeen Turner said that Brentag expects the global specialty chemicals distribution market to grow at an annual rate of 4%~6% and the industrial chemicals distribution market to grow at a rate of 2%~4% per year by 2026
.
These figures are higher than the expected growth rate
for the chemical manufacturing industry.

Under the new program, the Bruntag Specialty Chemicals Division and the Bruntag Basic Chemicals Division have adopted different strategies aimed at outpacing market growth
.
According to Brentag, Brentag Specialty Chemicals will be the service partner
of choice for innovative and sustainable solutions worldwide.
The division identified 5 key strategic priorities: increasing value-added services, having the most comprehensive and sustainable portfolio, expanding its global footprint, focusing on high-growth customers and industries, and accelerating acquisitions
.
With a network of 81 application development centers, Bruntag Specialty Chemicals will drive innovation in its customers' industries and facilitate its relationships
with suppliers worldwide.

According to Brentag, the Brentag Basic Chemicals division will seek to become the undisputed market leader in its product segment, with the goal of achieving accelerated growth and increased efficiency
.
The highly diverse geographic, industry and product distribution of the Brentag Basic Chemicals division will make its business resilient and a reliable partner
locally and globally.
The division identified 3 strategic priorities: strengthening its local and regional distribution network and optimizing its "last mile" distribution capacity; Enhance global expertise by strengthening global sourcing market intelligence capabilities and expanding global terminal capabilities in strategic ports; Focus on capturing new market potential
through mergers and acquisitions, adding a portfolio of sustainable products and supply chain solutions.

Enhance M&A transaction activity

According to Brentag, the global chemical distribution market was worth nearly €290 billion in 2021, of which specialty chemicals accounted for €124 billion and industrial chemicals for €165 billion
.
Kolpeen Turner said market leader Brentag has an overall market share of just 5 percent
.
This shows that the industry is very fragmented and there is potential
for further consolidation in the market.
This represents a significant growth opportunity
for the company.

Bruntag plans to step up M&A activity to help achieve new growth targets
.
The company said it will double its planned annual M&A spending to 400 million ~ 500 million euros
.
The company said its expanded acquisition strategy will focus on five pillars: accelerating global life sciences growth, strengthening strategic capabilities and market positions, expanding its position in emerging markets, filling gaps to complement the company's existing portfolio, and improving technology capabilities to improve efficiency
.

"We will focus on growth through reinvestment and value-creating M&A activity, while we continue to enforce the financial discipline
that has proven highly successful in the past," Neumann said.
We will also ensure proper integration of acquired companies
.
He told a news conference that Brentag has completed 30 acquisitions in the past five years and is currently monitoring 300 potential acquisition targets, some of which are in intensive discussions
.

Accelerate digital transformation

Brentag's planned Digital, Data and Excellence Transformation (DiDEX) will also help the company achieve new goals
.
The company said it expects DiDEX to generate an annualized net EBITA impact
of €200 million by 2026.
To develop its DiDEX capabilities, Brentag plans to invest a total of around EUR 350 million
by 2026.

According to Brentag, DiDEX aims to transform Blentag into a data- and technology-driven enterprise
.
DiDEX will focus on five pillars: being the easiest business to work with in the chemical distribution ecosystem, unlocking company value from data, modernizing the company's digital business architecture, building capabilities to attract and retain talent, and driving change in value delivery and embedding a continuous improvement mindset in the organization
.

According to Brentag, its goal is to be the most connected and agile supply chain partner in the industry to address key challenges
such as flexibility, sustainability and efficiency.
The company said it will work with key technology companies such as Salesforce and AWS to improve and build its digital business infrastructure
.

Kolpeen Turner told a press conference: "We need to be a company that is more data-focused and
technology-focused.
This includes unlocking the value of our data and creating a scalable technology platform
.
”