Monday, April 4, 2016

Gross Profit Margin Percentages for Chemical Distributors

According to the National Association of Chemcial Distributors (NACD), approximately $31.2 billon of recent US chemical sales is through chemical distributors.  (Click here to read about NACD and the chemical distribution industry.)

Also according to NACD, the chemical distribution industry had approximately $14.3 billion in gross profits in 2015, based on data found at their website.  (Click here to go to the NACD page from where this data can be found.)  Using $31.2 billion chemical sales through chemical distributors and the distributors’ $14.3 billion gross profit gives a gross profit margin percentage (gpm%) of 46% ($14.3B/$31.2B).

This gpm% (46%) seems rather high.  For example, two publicly-traded chemical distributors, Brenntag and Univar, only averaged a gpm% of around 20% over the past few years.  Most chemical distributors are private companies with  a lot less in revenues than Brenntag and Univar.  Perhaps smaller, private companies are able to generate larger gpm%s than the larger, publicly-traded companies, at the expense of those buying chemicals from chemical distributors.

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