By Matteo Allievi and Jagoda Darlak
(Reuters) - German chemicals distributor Brenntag on Wednesday forecast 2023 core earnings in the bottom half of its previous guidance range amid persistently low demand.
The group now expects full-year operating earnings before interest, taxation, depreciation and amortization (EBITDA) of 1.6-1.7 billion euros ($1.8-1.9 billion), versus 1.6-1.8 billion euros previously.
However, some analysts were reassured by the modest downgrade, considering the economic slowdown and weakness elsewhere in the chemicals sector.
"Everyone looks at the profit warnings of BASF, Lanxess, underestimating the resilience of Brenntag's business model. That has been reflected in the Q2 results," Alster analyst Thomas Wissler said.
Brenntag shares were up 3.2% at 0749 GMT.
The company reported a 23% drop in second-quarter operating EBITDA to 409.7 million euros, just above analysts' average estimate of 408.7 million euros in a poll by Vara Research.
Concerns about an economic slowdown have hit demand for industrial products used in automobiles, cosmetics, food packaging and electronics, pushing chemical companies, including industry leader BASF, to trim their forecasts.
"For the second half of 2023, we expect a continuously tough and highly challenging market environment," Brenntag CEO Christian Kohlpaintner said in a statement.
Quarterly profits fell at both of Brenntag's divisions, specialties and essentials, with the former weighing more on results due to declining volumes and falling sales prices.
The essentials division - a wholesale business for process chemicals - showed more resilience, although Latin America and Asia-Pacific earnings still fell sharply on a slump in demand, particularly in Brazil and China.
Brenntag is facing calls from Engine Capital and PrimeStone to spin off its specialties business, joining other German companies such as Bayer (ETR:BAYGN) and Thyssenkrupp (ETR:TKAG) in facing similar investor demands.
PrimeStone, which holds a 2% stake in Brenntag, says the separation would boost the company's shares, which are up about 15% year-to-date.
($1 = 0.9118 euros)