LONDON (ICIS)--Brenntag is to start a cost saving programme through a reduction of its workforce by 1,300 employees – 7.4% of 17,500 – and the closure of 100 sites globally, the German chemicals distribution major said on Tuesday.
Brenntag said it aims to post €220m higher earnings by 2023, after the full cost cutting programme – which it has named Project Brenntag – is implemented.
Out of the 1,300 jobs to be cut, 200 of them will be in Germany.
The total net cash outflow to incur in course of the implementation of Project Brenntag is expected to amount to around €370m, the firm added.
The company said it would aim to avoid compulsory redundancies but did not clarify how the process would pan out.
“The measures will be further elaborated over the coming months in line with local rules and labour regulations,” it said.
“Brenntag plans to use natural fluctuation, mutually agreed separation, and regular and early retirement schemes to perform the adjustments in a socially responsible manner.”
From January 2021, the distribution major will be structured under two global divisions: Brenntag Essentials and Brenntag Specialties.
While Brenntag did not mention on Tuesday how the pandemic has affected its operations, second-quarter results were already hit by the global crisis.
The firm’s CEO said at the time the uncertainty caused by the pandemic made impossible to issue a forecast for 2020, adding that the possibility of a “severe impact” could not be ruled out.
Second-quarter sales and income were down but operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) managed to stay on the positive.
|Brenntag (€/m)||Q2 2020||Q2 2019||Change|
Brenntag is due to publish its third-quarter results on 4 November.
Brenntag is one of the largest chemicals distributors globally, and its network of sites expands across most regions.
The company aims to close 100 of those facilities, although it did not clarify how much that would contribute to the savings programme.
“The optimisation envisions closing sites to consolidate the site network in geographies and improve the utilisation of existing sites. Brenntag plans to close about 100 sites across all regions, half of which are Third-Party 3 Logistics Sites,” it said.
“At the same time, the Group will invest into existing and new sites, create regional hubs, and close white spots in the network.”
By midday local time, the company’s shares were up by nearly 5.5% on the Frankfurt Stock Exchange.
CEO Christian Kohlpaintner concluded: "This step [workforce reduction] will be anything but easy for us, but it is necessary to ensure Brenntag’s success in the long-term.
"We intend to perform any planned reductions in a socially responsible manner and strive to avoid compulsory redundancies.”
Front page picture: Brenntag's headquarters
in Essen, Germany