Dear ladies and gentlemen, welcome to the full year 2021 results call of Brenntag SE. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode after the presentation. There will be an opportunity to ask questions via the telephone lines. If any participant has difficulty hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Thomas Altmann, Head of Investor Relations. Please go ahead.
Thank you, Lucas. Good afternoon, ladies and gentlemen. On behalf of Brenntag SE, I would like to welcome you to the earnings call for the full year 2021. On the call with me today is Dr. Christian Kohlpaintner, our CEO. He is in quarantine and will take you through today's presentation from home. Please excuse any sound issues should they occur. I'm also very delighted to welcome Dr. Kristin Neumann, our new CFO as of the beginning of April.
After the presentation, we are open for your questions. All relevant documents have been published this morning on our website at brenntag.com under the section Investor Relations. In the same area, you will find the playback of this conference call later today. Before we begin, allow me to point you to our safe harbor statement, which you will find at the end of the slide deck. Having said this, I will now hand over to our CEO, Dr. Christian Kohlpaintner. Christian, the floor is yours.
Well, thank you, Thomas, and good afternoon to everybody. Before we start talking about the current affairs and the details of our business performance last year, I also warmly welcome Kristin Neumann, who is joining us today. Kristin, thanks a lot for being here.
Thank you, Christian. I'm pleased to be here today, joining the full year 2021 analysts call, and I would like to take the opportunity to introduce myself. My name is Kristin Neumann, and I will take over the position as CFO of Brenntag SE as of April 1 this year. Currently, we are in the transition phase, and I have already started to make myself familiar with the topics I'm going to be responsible for soon. It is a great pleasure for me to be part of and shape the successful transformation of this great company. As some of you might know already, I had been working for LSG Lufthansa Service Holding AG, where I was CFO since mid-2014. Prior to that, I held different top-level management positions, among others, Member of the Board for Continental Europe and CFO UK at Thomas Cook.
Communication with the capital markets is of utmost importance for us, and I very much look forward to be, together with Christian, in close dialogue with analysts and with our current and future investors. Hopefully, I will be able to meet some of you in person within the next couple of months.
Okay. Thank you, Kristin, and welcome to our team. Now, before we get into the business topics, I would like to say a few words about the war in Ukraine. In view of the dramatic situation and the human suffering we are currently seeing in Ukraine, it is difficult for me personally to report to you lightheartedly on our performance in the past year. The here and now is too dramatic and upsetting for that. We strongly condemn the invasion of Ukraine by Russia and the ongoing war in Ukraine. Brenntag has sites in both countries. Our thoughts these days are with our employees and their families, and with everyone in the region who has been affected by this war and its consequences. We are very concerned and are in daily contact with our employees. We are doing everything we can to ease the situation.
To support the people in Ukraine and the refugees, Brenntag will donate EUR 500,000, equally split to UNICEF and the UN Refugee Agency, and we continue to collect further donations via separate Brenntag donation account. In addition, the Board of Management of Brenntag SE has decided the following. We suspend all imports to and exports from Russia and Belarus. This applies for all shipments from and to any Brenntag entity and subsidiary. We discontinue the business of all Brenntag entities and subsidiaries in Russia and Belarus for the time being. These decisions are effective immediately and valid until further notice and will be executed in a controlled manner. We regret having to take this step after years of trustful and excellent working relationships with our employees, customers, and suppliers in those markets.
However, the current situation as well as our values leave us no further choice but to take these decisions. Now let's have a look at the full year 2021, starting with the highlights. Ladies and gentlemen, Brenntag achieved record results in 2021. Our business model again proved its resilience in particularly difficult times of severe pressure on global supply chains. We managed to maintain supply and continued to provide products and services to our customers throughout the year with only very few exceptions. This was mainly achieved due to the long-lasting relationships with our supply partners. As well as the exceptional efforts and expertise of our Brenntag employees. Our unique global presence in 78 countries, our strong position in our industry segments, and our intimate product knowledge helped us to mitigate the macroeconomic challenges we had to face last year.
Of course, also our long-standing customer relationships were very important to navigate well through 2021. Brenntag generated an operating gross profit of around EUR 3.38 billion, which is an increase of 90.6% on a constant currency basis compared to previous year. Our excellent annual results are also reflected in an operating EBITDA of EUR 1.345 billion. On a constant currency basis, this is an increase of 29.5% compared to an already strong operating EBITDA we generated in 2020. The rise in operating EBITDA is almost entirely organic, with strong increases in earnings in both of our divisions, Brenntag Essentials and Brenntag Specialties.
The fact that our operating EBITDA exceeds the upper end of our guidance range of EUR 1.32 billion and against the background that we upgraded the guidance range already twice last year underlines our excellent performance. Our free cash flow came in at EUR 425 million. In 2021, cash flow generation was impacted by higher spend for working capital due to the strong chemical price increases. Therefore, the free cash flow was significantly lower compared to 2020. However, we continued to focus on our strong and efficient working capital management, and we increased our working capital turnover to 8.3 times compared to 7.3 times in 2020.
Earnings per share for the full year 2021 stood at EUR 2.90, slightly lower than in 2020, driven by special items to be explained in detail later in this call. Last year, we were particularly active in M&A. We acquired six companies with a total enterprise value of around EUR 440 million. All these acquisitions are currently exceeding our plans. I am proud to say that Project Brenntag is ahead of plan, and we continue to make very good progress in our comprehensive transformation journey. The management board, together with the supervisory board, are going to propose a dividend of EUR 1.45 to the general shareholders meeting mid of June this year.
This is an increase of 7.4% compared to the dividend we paid for financial year 2020, and it is the eleventh consecutive increase since our IPO in 2010. Finally, on the outlook, we expect our operating EBITDA for the full year 2022 to be in a range of EUR 1.45 billion-EUR 1.55 billion. Now, let me provide some more color on the exceptional economic environment that we are still facing in 2022. The COVID-19 pandemic has been posing major challenges on the global economy and society for two years now. In addition, the global market dynamics were characterized by various cumulative influencing factors.
We saw severe disruptions in global supply chains driven by reduced supply on the one hand that was triggered among others by several force majeure and exceptional weather conditions. We have talked about this over the year, and a recovering global demand on the other hand. Logistics challenges like harbor congestions, container shortages, the blockage of the Suez Canal, and lack of labor led to even further shortages. In addition, 2021 was characterized by strongly increasing energy prices in Europe as well as in China, due to the national dual control policy to reduce greenhouse gas emissions. These factors negatively impacted available capacities in the energy-intensive chemical value chains. Ladies and gentlemen, rising energy prices impact substantial parts of the chemical industry in multiple dimensions. Let me illustrate this by a prominent example.
Natural gas is needed both as an energy source but also as a raw material, for instance, in the production of ammonia. Producers of ammonia are often contractually limited to pass on their higher manufacturing costs to customers as quickly as they would need to. As a consequence, we observed curtailed production output, and we were and still are experiencing a shortage of downstream products of ammonia, such as fertilizers or urea, and even as a result, we also saw a reduced availability of the diesel fuel additive AdBlue. This is just one simple example, but all these factors mentioned led to the high price volatility and the strongly increased costs for chemical raw materials and for transport. In addition to the well-known challenges we have been dealing with for now several quarters already, the overall global situation has now become extremely serious.
Russia has attacked Ukraine, and we are facing the first war in Europe for decades. This is obviously creating increasing geopolitical risks and further supply shocks are to be expected, which will impact the global economy. We will continue to monitor the situation and developments in Ukraine and Russia, as well as international measures very closely. We regularly conduct a risk assessment on this basis to be able to take further considerate measures if necessary. We are currently taking care of our 35 employees and their families in Ukraine as best as we can, and they are all safe so far. This situation is new to all of us. From a purely operational standpoint, our exposure to both countries, Russia and Ukraine, is less than 1% on gross profit level, so rather minor. Ladies and gentlemen, I will now provide more details on the progress of Project Brenntag.
We have made very good progress throughout the year executing our ambitious transformation program, Project Brenntag. As you remember, Project Brenntag is designed to build a strong basis for sustainable organic earnings growth in the coming years. It will expand Brenntag's global market-leading position through an increased focus, the reduced complexity, and even stronger partnerships with our customers and suppliers. Our new go-to-market approach is now fully implemented globally with dedicated sales organizations for our two global divisions, Brenntag Essentials and Brenntag Specialties. As Project Brenntag is addressing the needs of our different stakeholder groups, we are delighted about the extremely positive feedback we get on our new operating model from our customers and our suppliers. Our business partners appreciated Brenntag's new setup to service their different business and industry needs in a more distinctive and effective way.
Overall, Project Brenntag has achieved already more than half of its expected benefits by the end of 2021 against the baseline of 2019. Since its inception, Project Brenntag contributed around EUR 120 million of additional operating EBITDA, which is expected to ramp up to the well-known EUR 220 million annually by the end of 2023. We have structurally reduced 925 jobs by now and have continued with the optimization of our global site network. So far, we have closed 72 sites out of about 100 planned sites. These measures already resulted in increased utilization rates and improved inventory planning. It has profoundly enhanced our flexibility to serve our customers while at the same time strengthening our supply chain resilience. In addition, we have continued to invest in upgrading and expanding our existing network.
Let me especially mention our investments in two new mega sites in China, as well as consolidation and modernization of several sites in the United States. On slide 6, we illustrate the breakdown of the achieved EBITDA contribution in top line and bottom line levers. Measures addressing our top line contributed around EUR 27 million. The bottom line levers, mainly our go-to-market approach and the site network optimization, as well as our measures with regards to indirect procurement, are summing up to around EUR 93 million. Let me emphasize that we will continue with our focused execution in 2022 to deliver on our ambitious targets by the end of 2023. 2022 was also a very successful year for Brenntag in terms of M&A. In addition to our strong organic growth and the successful Project Brenntag execution, we also pushed ahead with substantial acquisitions.
We have completed 6 transactions with accumulated enterprise value of EUR 440 million. This is the highest investment amount on M&A since 2015 and the second highest since our IPO. Let me emphasize that our newly acquired skills and processes as a consequence of Project Brenntag also strongly support the smooth integration processes of our M&A targets. Brenntag is and remains a very disciplined acquirer. We have strict hurdle rates for M&A, and we are focused on maximizing value creation by synergies from cross-selling opportunities, operational efficiencies, and from bundling purchasing activities. Despite the strong M&A spend in 2021, our leverage remains at a level of 1.5 net debt over EBITDA, and we have ample headroom for continued M&A activities.
We therefore are very confident to continue on our successful M&A trajectory, and we are willing to take decisive actions, as it was the case in 2021, for even more value-accretive M&A should the opportunity arise. We delivered on our promises to strengthen key focus areas and geographies with M&A targets, delivering a sizable operating EBITDA contribution. Around 80% of the M&A spend in 2021 was related to the life science sector, especially to the nutrition industry. The acquisition of JM Swank was a major step in strengthening our Specialties portfolio in North America. JM Swank is a renowned player in the North American market in the distribution of food ingredients.
With this deal, we doubled the size of our nutrition business in North America and became the leading food ingredients and food process chemical distributor in the region, increasing our market share in food ingredients in the United States from 3%-6%. The acquisition of a majority stake in Zhongbai Xingye provided our market entry for food and nutrition in China and fits our strategy of expanding our specialties business in Asia. As a result of those acquisitions, our global nutrition business grew now to almost EUR 2 billion sales in 2021. With decisive strategic steps in M&A, we increased the share of the nutrition-focused industry within Brenntag Specialties now to 30% of its global total gross profit. Overall, we are very pleased with the integration progress so far, and the performance of our acquisitions is also ahead of our plans.
In a nutshell, our acquisitions contributed in total EUR 33 million to our operating EBITDA, of which the majority was attributable to the deals closed in 2021. In the current year, 2022, we continued on our successful M&A path with our market entry into Israel. Beginning of March, we have acquired Y.S. [uncertain], one of the largest specialty chemicals distributors in the country. [uncertain] offers a broad product portfolio coinciding with some of our Brenntag Specialties focus industries such as personal care, HI&I, and nutrition. The company generated EUR 39 million sales in 2021, signing and closing occurred simultaneously last week on March 3. Now, ladies and gentlemen, I will now talk about our key financial figures for the full year 2021, and I will start with the development of operating EBITDA.
On slide 10, you see the bridge of operating EBITDA from full year 2020 to full year 2021. The financial performance in 2021 was excellent despite very challenging macroeconomic and operational conditions, as I mentioned before. In the full year 2020, operating EBITDA amounted to EUR 1.058 billion. You see a translation of foreign exchange effect with a headwind of about EUR 19 million. You see our acquisitions contributing EUR 33 million to the operating EBITDA growth. Here, the majority of the contribution from our M&A activities is attributable to Brenntag Specialties. Our FX-adjusted EBITDA growth rate for the whole group came in at about 30%. On slide 11, you find a more granular view by division and all other segments.
Brenntag Essentials reported operating EBITDA growth of over EUR 178 million, and Brenntag Specialties grew by EUR 136 million, which is an FX-adjusted growth rate of 29% and 34% respectively. Both divisions saw a headwind in FX translations of around EUR 10 million each. Acquisitions contributed EUR 6 million in Brenntag Essentials and EUR 27 million in Brenntag Specialties. Operating EBITDA for the full year 2021 came in at EUR 1.345 billion, reflecting an FX-adjusted growth of 30%. Brenntag accomplished to translate the positive gross profit growth into an over proportionate growth of operating EBITDA. This had a particular positive effect on our group conversion ratio. The conversion ratio increased by 290 basis points to 39.8%.
For the full set of figures in this graph, please refer to pages 24 and 25 in the appendix of this presentation. We also are providing this bridge for the Q4 2021, which can be found in the appendix of this presentation as well. Operating EBITDA in Q4 2021 amounted to EUR 346 million with an FX-adjusted growth rate of 33%. In general, the trends we saw throughout 2021 also continued into the Q4 last year. In this environment, both divisions performed very well. For further details, again, please refer to page 28. Now, let me come briefly to the performance of both divisions. Both of our two global divisions delivered excellent results in their first reported year within the new operating model.
As a reminder, in talking about growth rates, we generally talk about FX-adjusted growth rates. Brenntag Essentials showed a strong performance and achieved excellent results. Operating gross profit grew 16.1% year-on-year to around EUR 2.07 billion, with operating EBITDA reaching EUR 843 million, 28.6% above previous year. Operating EBITDA development was almost entirely driven by organic growth. All segments contributed to this positive performance. EMEA and North America showed a particularly strong performance. Asia Pacific and especially China performed somewhat weaker towards the end of last year due to constraints in local supply chains, including COVID-19 lockdowns in cities with port access, high energy costs, as I have mentioned before, as well as product shortages.
Our Brenntag Essentials division had to deal with various challenges such as these high energy prices, inflationary cost development, particularly for transport, and the pressure on the supply chains. In this environment, we managed to maintain deliveries to our customers largely uninterrupted. Conversion ratio for this division came in at around 41%. This is an increase of 400 basis points compared to the full year 2020. Regarding the development of conversion ratios in our Brenntag Essentials segments, please refer also to the appendix.
In Brenntag Specialties, the overall macroeconomic environment was also impacted by COVID pandemic, also inflationary cost development as well as supply shortages. In this environment, Brenntag Specialties reported an operating gross profit increase of 25.4% year-on-year to around EUR 1.28 billion, with an operating EBITDA climbing up by 34.3% to now EUR 567 million. Earnings grew mainly organically but also supported by the acquisitions we closed last year. This growth was broad-based across all segments, with a particularly strong growth contribution in Americas and in EMEA. In EMEA, we saw strong growth in nutrition and personal care, HI&I throughout the year. Also, lubricants performed well in 2021. In Americas, the focus industry, nutrition, personal care, HI&I, Material Science, and lubricants showed a particularly good performance.
For the full year 2021, the conversion ratio for the division developed very positively to around now 44%, an increase of 270 basis points. Also, for Brenntag Specialties, we provide the details of conversion ratio development in the appendix on page 25 of the slide deck. In summary, ladies and gentlemen, we are very satisfied with the performance of our divisions. On slide 14, we come now to the income statement. We generated a strong operating gross profit of around EUR 3.38 billion. In the course of last year, we have talked a lot about the overall inflationary environment. We saw rises in chemical prices but also in other cost items. The latter is reflected in our operating expenses. Operating expenses, excluding special items, increased by around 14% in 2021.
Besides higher logistics, fuel, and energy costs, the vast majority is related to higher variable personal expenses, especially in Q3 and Q4 due to the very strong results. Now let me explain our special items in more details. For the full year 2021, we report special items of around EUR 229 million. The majority of special items include expenses and provisions from excise duties of EUR 175 million resulting from a routine review of the alcohol and energy tax payments. The German authorities claim documentation mistakes regarding the selling of denatured alcohol. That is alcohol which is used outside of food and drinking applications. There are no concerns raised about the proper use of these alcohol products. The risk has consistently been reported in our risk report, and it refers to business activities several years ago.
Brenntag disagrees with the assessment by the authorities and has filed an appeal. Our legal opinion differs from that of the tax authority. Let me explain how this topic developed last year. In the Q2 2021, Brenntag received a tax decision notice of EUR 63.1 million, which we reported in our quarterly results accordingly. Further tax decision notices in the amount of EUR 30.9 million were issued in the Q4 2021, leading to a total amount of around EUR 94 million. This figure is cash flow relevant, and the payment has been executed already. These tax decision notices refer to the years 2014 to 2016. Although our legal assessment differs from the opinion of the authorities, we had to comply and execute the respective payments.
As a precautionary measure, we decided to fully provision potential future liabilities out of ongoing tax assessments in Germany up to the year 2018 with additional EUR 81.5 million. As stated above, tax assessments with payment obligations were received in the course of the Q4 , and it became apparent that the authorities are not willing to participate in mediation talks. It came therefore, we assumed that also further tax assessments will likely include payment obligations, and this change in circumstances induces a revised assessment that the outflow of financial resources is now deemed to be more likely than not, and accordingly, provisions are to be recorded for the expected payment amounts, which we did accordingly. Other special expenses are related to our ongoing activities for Project Brenntag in the amount of EUR 35 million, mainly for severance and consulting costs.
Amortization also increased as previously communicated with Q1 results. Here, the majority of around EUR 65 million is related to our enhanced approach with regards to digital, data, and IT. We had to recognize the increased speed at which the market is moving and developing. After critically evaluating our existing assets and IT initiatives against the future needs of our customers and supply partners, we made the necessary amendments across our IT portfolio. We are in the process of detailing out our digital data and IT value creation roadmap and the digital operating model, and will report on the implementation of our future digital business architecture in due course.
As a consequence of the special effects, profit after tax came in at still strong levels and amounted to around EUR 461 million. As a consequence, earnings per share ended up weaker than in 2020, amounting to EUR 2.90, impacted by the specialty items or special items I previously mentioned. Page 15 shows our cash flow relevant items. Free cash flow generation can be attributed to several factors. First of all, we were able to grow our operating EBITDA strongly. Secondly, CapEx spending amounted to EUR 214 million for the full year due to new timelines driven by planning and preparation efforts for some of our key investment projects.
Thirdly, we spent about EUR 500 million for our working capital compared to an inflow of more than EUR 300 million last year, where we saw an extraordinary development of our free cash flow. Free cash flow for 2021 amounted to EUR 425 million. This is again a strong free cash flow and fully in line with the long-term expected trend. Free cash flow generation in 2021 was impacted by higher spend for working capital due to strong chemical price increases. However, working capital management measured by working capital terms continues to be strong. I will come to the details in a minute. Coming to further cash flow items, we paid EUR 272 million for interest and taxes last year. Payments for our M&A transactions amounted to around EUR 440 million.
Finally, in June last year, we paid a dividend for the fiscal year 2020 in the amount of EUR 209 million. Now, coming to the details of working capital. Working capital amounted to around EUR 2.1 billion at the end of last year. This is an increase of more than EUR 700 million and is mainly driven by high chemical prices, particularly in the third and Q4 . Despite this price and inflationary-driven increase, we turned the working capital 8.3 times, which is significantly above last year's level of 7.3 times. This improvement demonstrates the strength of our working capital management. Let me also briefly touch upon our value creation metric, ROCE. Brenntag creates consistently substantial value with our ROCE being significantly above our WACC of 7.1%.
For 2021, our ROCE came in at 15.5%, 140 basis points higher than previous year. Excluding the special items mentioned previously, our ROCE would be even better at 19.6%. Now, coming to balance sheet and maturity profile. Our net financial liabilities amounted to around EUR 2.1 billion at the end of 2021 compared to EUR 1.3 billion at the end of 2020. The increase of net financial liabilities is driven by the operating development of our business, in particular by working capital development, as well as the payments for this year's acquisitions. Our leverage, that is net debt to operating EBITDA, amounts to 1.5. I would like to draw your attention also to our Bond 2029 in the diagram on the right-hand side. Brenntag continues to maintain a strong financial profile.
With the issuance of our Bond 2029, we have further structured our financial profile for the long term, and the bond provides very attractive conditions. It has a maturity of 8 years and carries an annual coupon of 0.5%. It is the first bond issue to take place under our EUR 3 billion Debt Issuance Programme, newly established in 2021. Now, let me come to our dividend payments. The Management Board and Supervisory Board will propose a dividend of EUR 1.45 for the 2021 financial year to the general shareholders meeting mid of June. This is the 11th consecutive dividend increase since our IPO. In terms of net income, the proposed dividend represents a payout ratio of 50%. This puts us at the upper end of our corridor of 35%-50%.
In total, we will pay out more than EUR 220 million to our shareholders. Ladies and gentlemen, let's come now to the outlook for 2022. We expect the overall geopolitical, macroeconomic, and operational conditions to remain challenging. In particular, we expect the war in Ukraine to be a deeply prevailing topic in the coming months, if not for much longer. Also, supply chains have been and still are under severe pressure, further impacting production and supply. We also continue to closely monitor all developments around COVID-19, and we will keep implementing all necessary measures to meet the requirements and regulations in all our markets and regions. Given the magnitude of the current supply chain disruptions, we only expect some normalization of market conditions much later in the year 2022.
Against this background, we expect a positive performance at operating EBITDA level in 2022, with both divisions contributing to this growth. For the financial year 2022, Brenntag expects an operating EBITDA between EUR 1.45 billion and EUR 1.55 billion. The forecast takes into account benefits from Project Brenntag, as well as contribution to earnings from acquisitions already closed. Moreover, it assumes that exchange rates will remain stable on the level at the time of the guidance publication.
Any potential impact on the global economy arising from exceptional influencing factors such as the COVID-19 pandemic, current geopolitical developments, pressure on the global supply chains, inflationary tendencies and price volatility cannot be reliably forecasted and are therefore not included in this guidance. With this, I would like to conclude the presentation and Thomas and myself, we are more than happy to answer your questions now.
Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your questions answered before it's your turn to speak, you can dial zero two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question is coming from Suhasini Varanasi at Bank of America. Your line is now open.
Yes. Good afternoon, gentlemen, and thanks for taking my questions. I have three, please. The first one is regarding your 2021 organic EBITDA growth. If I exclude the contribution from Project Brenntag, that would have been roughly a 15% year-over-year. Can you give us an indication of the split between price and volume? And also again, excluding the positive contribution from Project Brenntag, looks like the conversion ratio was down year-over-year.
Yeah, if you can give a little bit more color on this. Second question is related to your 2022 EBITDA guidance. A midpoint, what is your underlying assumption in terms of organic growth and also the split between price and volumes? Last question is on Project Brenntag. You mentioned that it's proceeding faster than expected. What are the reasons for that? What could be the moving parts that might potentially lead you to achieve more than EUR 220 million? Thank you.
Okay. Suhasini Varanasi, thanks a lot. You know, I will start maybe with the Project Brenntag question, then to the guidance and then to the explanation of the EBITDA growth last year and also Thomas in particular for the last question, ask him also to chime in if necessary. On Project Brenntag, you know, we are making very good progress. As I've said, I think we have already now 50% or more than 50% of the projected impact realized. I think we are progressing quite well with the implementation of our operating model. Also, the top line levers are contributing positively. I mean, you saw it in the slide.
You know, also our site network optimization makes good progress. Overall, we are, you know, quarter by quarter, building this impact now, and we see currently a very good momentum, which we would like to maintain. We are very confident that the EUR 220 million we have promised to you will also be materialized. Now on the 2022 EBITDA guidance, when we look at the moving parts, we have, of course, you know, the impact from the FX side. We currently expect about, you know, an impact on FX of around EUR 25 million. Then we have also M&A impact of around EUR 25 million of the already closed, as I said, targets.
Then we have, you know, about EUR 80 million currently in view for Project Brenntag. That means that we expecting an organic growth. I mean, you can calculate the number which is, you know, contrary to what we did expect, if you remember, when we were talking about normalization slowdown and how much negative impact we can expect this year from a normalization of market conditions. We don't see that in this extent as we have maybe foreseen last year. Now on the 2021 organic EBITDA growth, I think what is important is, first of all, the EUR 120 million of Project Brenntag are since inception. We had already an impact of last year.
We need to basically take the EUR 105 of Project Brenntag as an impact. It's you know that this is a pure sort of measures we are undertaking. These are actually you know our bottom line cost impacts which we have. Headcount reductions are progressing well and we see the impact here. Also you know when we look on our top line levers this is you know also delivering to Project Brenntag. In all fairness you know given the good market environment and the good constellation for pricing initiatives it's getting increasingly opaque to say you know what is really related to Project Brenntag top line levers versus the normal course of commercial activities.
This is why I always, in the recap from this year, always focus on the top line, on the bottom line impact, because this is really, you know, what counts, and this is what I'm really looking for. Overall, as I said, we are pleased with the progression. The EBITDA growth has been almost exclusively price driven, so very little volume impact, little bit different from Essentials to Specialties. Overall, you know, we see a quite satisfying development in 2021. Again, if Thomas wants to add something, please feel free to do so.
Yeah. Hi, Suhasini Varanasi. This is Thomas Altmann. I think Dr. Christian Kohlpaintner answered all of your questions. Correct?
Yeah. Just to clarify, I was also asking if possible to have a rough indication of what is your underlying assumption for the organic growth in 2022 in terms of split between prices and volumes?
Yeah.
Thank you.
Currently, the situation is extremely fluid, Suhasini, as we see. We saw some volume recovery, you know, coming in Q4, and that momentum kept into Q1. We see some impact, but not dramatically. Again, still, supply chains are under severe pressure. Not all products are available, and that situation could get even worse. From that perspective, I would not bet too much on a massive volume recovery just because, you know, supply is limited at least in the first half. We need to see how Q3 and Q4 plays out. You know, given Ukraine and everything which is going on, we don't expect a volume recovery to kick in very quickly. From that perspective, the progression is related mainly to pricing.
Thank you.
You're welcome.
The next question is coming from Isha Sharma at Stifel. Your line is now open.
Hi. Good afternoon. Thank you for taking my questions. I have two, please. Given the substantial increase in gas and oil prices and their impact on chemical prices, is it fair to assume that the net working capital outflow again this year will be as high as in 2021, that is around half a billion EUR? And can we expect more structural improvement in the net working capital management from Project Brenntag? And the second one would be, could you remind us of your priorities in terms of use of cash? At what level of leverage can we expect additional shareholder return? Thank you.
Hey, Isha. Thanks for your questions. Let me go maybe step by step. The development on gas and oil price is extremely volatile right now. I mean, you can read it every day in the press. I mean, it's very, very hard to predict. Of course, you know, gradually this price escalations on the energy side will move further down the value chain. You see announcement of large producers in the chemical space for massive price increases. I think the inflationary trend on the chemical prices. I think we cannot really avoid. We will see that this will coming down. I would say the next three to six months. I would expect a rather large extent.
Of course, we will do everything what we can do to improve further working capital turnover and try to mitigate as much as possible that impact on our working capital. You know, all hands on deck basically to make sure that we are pushing back on these inflationary trends on the working capital side with clear management decisions around working capital. On the priorities of use of cash, so we have now a net debt leverage, net debt to EBITDA leverage of 1.5. You know, we have always guided around a level of 2, which is comfortable. Now we need to, you know, see how we are using that cash. I mean, we have made substantial acquisitions last year. I mentioned it, EUR 440 million alone in 2021.
Our guidance on M&A is, at this point of time, still unchanged, EUR 200 million-EUR 250 million per year. Again, as I said, should the opportunities arise, we are also willing to take decisive steps. Our M&A pipeline is healthily filled. You saw just one example coming out of that. I would expect us to continue that successful M&A path. Of course, you know, our return to shareholders through increased dividends is also an important part of our strategy and guidance, yeah.
Thank you. Get well soon.
Thank you.
The next question is coming from Rory McKenzie at UBS. Your line is now open.
Good afternoon. It's Rory here. Three from me, please. Firstly, can you be more explicit about where your volumes are compared to pre-pandemic levels? You know, could we assume they're still 5%-6% below 2019, for example? Secondly, on the expansion you've seen in the gross profit per ton over this time period, can you talk about how much of that is on a like-for-like basis, and what the current chemical price inflation environment means for that gross profit per ton, however long it lasts? Maybe those two first, then I've got a question on the provisions. Thank you.
Yeah. I think when we look at the volumes, and again, we should differentiate between essentials and specialties, because in specialties, we believe a volume number is less meaningful, because sometimes you're trading small products with very little volume. There could be, you know, shifts there. So overall, we're still volume-wise a little bit down from pre-pandemic levels. I think Thomas has more accurate numbers available. In particular, we see that we have not fully recovered yet the pre-pandemic levels, but are on a good trajectory to do that. Again, let me also maybe explicitly mention that, because I didn't say it in the previous question from Suhasini Varanasi. We also took deliberate choices.
I mean, this situation, this market conditions with you know supply shortages is forcing you to make also deliberate choices when it comes to the profitability of the business you want to serve and which you don't want to serve. We also have been also as part of Project Brenntag very clearly said, okay, we are, for instance, eliminating negative or dilutive margin business. Some of the results you see here, maybe less progression on the volume side, but a nice progression on the margin side. I think this is what we currently see. As I said before, in the next six months, I do not expect any major volume recovery out of the risks and the shortages I have described earlier.
that means the expansion of gross profit per ton is of course you know driven by two elements. One is of course Brenntag has a remarkable capability of you know basically rolling over pricing or pricing escalations which we receive from our supply partners into the market with a relatively short delay until that happens. Unlike the chemical manufacturers our setup our business model allows for rather quick and speedy adjustment on the pricing. that means the inflationary trends we have on the raw material side we are confident to roll them into the market.
Of course there is now, as I said, a much more focus also on value-based pricing, where we clearly are saying, okay, in particular in the specialties field, we believe, the company and the services we are providing, are getting stronger and stronger. That you see also in the gross profit per ton number shown. I think it's a mixed, a mixture of both major areas. I think our confidence that we are able to deal with this inflationary environment is rather high.
Thank you. Just a quick follow-up. I guess price volatility and price, I guess, opacity is also relevant in this market. Has the exceedingly volatile market also gonna play into this ease of expanding your margins at the moment?
Well, I think I frequently say it in our calls and also when I talk to our large investors, that volatility is an environment which is very good for Brenntag, and actually in both directions. I think the volatility is managed very well by the company, and stagnation over a long period of time, over years like we had it from, let's say, 2014 to 2017 or 2015 to 2018, you know, this kind of stable environment is actually detrimental because it is chewing into your margins. This volatility, I would say, is a general market condition which is supporting Brenntag's pricing capability. From that perspective, you know, we see this volatility as something we can deal with, and it's actually playing into our cards.
That's great. Thank you. Just if I can, on the provisions you took, can you explain how you quantified the extra EUR 81.5 million?
Mm-hmm.
Can you outline the timeline and tests you would have before you took any provision reversals and how they would be treated? Thank you.
Rory, the EUR 81.5 million, you know, is of course now encompassing everything what we foresee as a really full potential risk out of those assessments up to 2018, where then, you know, procedures were adjusted to what your tax authorities deem to be the right procedures. Again, the debate is around around how is European law translated into national law, in particular into the German law, and how is it interpreted by the customs authorities, which is, you know, here responsible in Germany for that particular case, and whether this tax requirements is really in proportion.
In that debate, you know, as I said, we have filed an appeal, we will, you know, as we are very convinced that this is, you know, not justified, that we will, you know, take all the necessary legal actions to get this clarified. That takes time, so we do not expect there are short-term positive news. I must say this, you know, are proceedings which can take five to seven years. In that range, you should not expect anything changing from that provisions which we have built now. Again, we fully provisioned now the German topic, and I think this is very important to get this out of our way.
Okay. Understood. Thank you very much.
Hey, Rory. Thomas here. Just to back up the remarks on the volumes, which Christian just mentioned a few minutes ago. Basically, if we compare the volumes today with the pre-pandemic level, you can fairly assume that volumes are low single digit below pre-pandemic level.
That's great. Thank you very much.
The next question is coming from Chetan Udeshi at J.P. Morgan. Your line is now open.
Hi. Thanks for taking my question. I think the first question I have is, have you seen any change in, you know, the ordering patterns in terms of supply landscape? In the last two weeks, you know, post the, you know, say, the worsening of the war and the dynamics around that would be useful to know. Second question is, you know, I go back to the question I had asked back in Q3 . I mean, I still struggle to see where is the obvious benefit of Project Brenntag on numbers. Because if I look at this sequential development in Q4 on gross profit, gross profit is up, like, 5% and the OpEx is up 10%.
OpEx is actually growing twice the rate of gross profit growth, even on sequential basis. I mean, what is going on on the OpEx line? Can you just help us sort of, you know, split it into different components? Because, you know, given that we've already achieved half our Project Brenntag savings and do not see that at least on a visible basis in P&L, I just struggle with that.
Okay, Chetan. Yeah, thanks a lot. Maybe I start with the short-term question around do we see a change in the order pattern. I would say not massively yet, but I believe that's maybe just a little bit, the quiet before the storm. I think of course, the situation is very volatile. It's hard to predict right now and every day is actually a new day, one is to say in this situation. Largely orders and order patterns are determined by availability of product. This is every day's discussion with the customers. Do we have product? Can you supply? And then the pricing discussion starts, but everybody knows and is aware of this massive inflationary environment we are in.
I think pricing discussions have been now a second priority because product availability supersedes anything else. Whatever we can supply and have a chance to supply, we are doing. Again, being able in a remarkable way to really adjust to the almost monthly and weekly changing pricing changes we are faced with from our key suppliers. I think this is what I see right now. It will be get a little bit more rough, I must say, in March, April and May. This is at least my prediction when we see maybe more sanctions kicking in.
I mean, you saw the announcement yesterday, with Russian oil to the U.S. and not doing this one. The benefit of Project Brenntag, I mean, Chetan, I know this is always a discussion point. We, you know, on the OpEx side, again, we have been faced, and Thomas can maybe give you more granularity. We have been faced with OpEx increases from various angles. One is of course, you know, the escalation which we have on the OpEx side, on the logistics costs and also the energy costs we have to bear. It's quite a substantial impact, because again, you know, we have partly our own drivers with our own trucks, but we also of course have third-party logistics.
Here, you know, logistics costs, I mean, you can read it and you have seen it, container costs, trucking costs and so on and so forth, are really impacting that OpEx picture. The other large big bucket is of course, that we had, based on the variable compensation and phenomenal year in 2021, which pushed up, variable compensation for our employees substantially. This has been a major contributing factor when you even look at the PEX. Even if you would look at PEX as a total, you would be, seeing an escalating number. When you really start to drill it down into fixed versus variable, you see that the huge majority of the PEX increases is coming from variable compensation. I think I'm not alone here in with our company.
This you will see in other companies as well. This is also driving OpEx. You know, we have made substantial acquisitions, so OpEx costs from those newly acquired targets are also running into that OpEx number and is also adequately reflected. I think it's a mixed bag as we have already discussed several times. You know, I'm sure that we can provide you the granularity you need to have to assess that better going forward. Thomas, I mean, feel free if you wanna add something.
Yeah.
Hi, Chetan Udeshi. Yeah, maybe a few thoughts on the cost base, basically. First of all, if you look at the costs of operating expenses and personnel expenses, you should first basically exclude the special items. If we exclude the special items and then we talk about the, let's say the operating costs, we saw an increase of around 14%. Just as Christian Kohlpaintner's mentioned, really the majority of that increase, first of all, is related to organic cost increases. Of this organic cost increase, basically the majority relates to personnel expenses. That is the big bucket in the increase in the costs, which is then basically driven by higher variable personnel expenses, which are more than offsetting the decrease in fixed personnel expenses.
That's helpful. Maybe if I follow up on the previous first question I asked is, I mean, you talked about the similar trends. I was curious if you are seeing maybe more supply disruptions than was the case before the war, or have you not seen that yet in terms of your suppliers, you know, providing you with the supply.
I think this is my expectation that this will work down the value chain over the next weeks. I think it depends a little bit on gas availability and. Is Russia, for instance, supplying enough gas to Germany, also to Europe in general? This will have an impact on the chemical industry about this topic. We see, of course, key materials which are coming out of Russia being under threat. I mean, this is of course, naphtha. Naphtha, you know, massive raw material for the chemical industry. Let's see how that develops. Pricing already escalating, you know that. The domestic production in Russia, I mean, the chemical industry in Russia is not extremely well developed.
You still see the impact more on the, you know, basic chemical side. For instance, if I take my example I used for ammonia, you know, I'm getting increasingly concerned about availability of ammonia and fertilizer and downstream products. We need to see how that plays out because it's also tied to gas and to gas costs, of course. I think this is, I would say, a scenario which is not a trivial one at this time. I think it will, depending on how long the conflict and the war continues and the sanctions are imposed, this could now work down the next months further down in the value chain. To which extent is hard to say, but I do expect impacts here.
Thank you.
You're welcome, Chetan Udeshi.
The next question is coming from Dominic Edridge at Deutsche Bank. Your line is now open.
Hello, and thanks for taking the questions. Just a couple from myself, and apologies for going back to the point about volume. Could you just maybe discuss it versus the market? Because I suppose you feel that you've sort of maintained your share in the market, or you're above or below the market in terms of the Essentials business in particular. Secondly, is your working assumption still that, as you know, or should our working assumption, sorry, be still that if prices fall, that should drive a bit more volume as well through the system, if we do see some normalization later on this year?
Just finally, in terms of the quarterly developments, I know that obviously there was a bit of a slowdown we saw in the APAC business in particular, in the Essentials side. Is there anything we should read into that, or is that just literally a to do with a tough comp? Thank you very much.
Dominic, thanks a lot for the question. So when we look again on the volume development, I think this is described before. We took also in this scenario quite deliberate choices. Volume demand, at least in our case, was to some extent hampered or limited by the product availability. We could definitely not sell everything we would have liked to sell. We had, you know, to curtail supply to major customers, but also customers in general. This is still continuing. We clearly see that volume growth is limited by supply, at least in our area and globally.
Secondly, again, talked about the deliberate choices we did on the margin aspects and value creating business. A situation like this also, as I said, allows you to take choices and maybe, you know, let business go, which you should have let go already quite some time ago. This is, you know, one part of Project Brenntag to go step by step through that and saying, "Is this business worth to maintain or not?" This has also an impact on volumes. I'm not that concerned that we are making now a big mistake or losing massive market share. I think we drive currently the company for profitability, but because we don't see a volume play really materializing at this time.
It could change quickly. I mean, again, you know, as I said, I think at least the next three to six months are on the volume price dimensions, really interesting and decisive ones. We are highly alert and if not paranoid that we don't miss the tipping point where actually, you know, pricing will stimulate volume growth, which we then can really cater to because we have enough material. What I see right now, this is not the situation yet. Pricing is still by far the driving force in that game. Now the slowdown in APAC in Essentials, I mean, one needs to be fair.
Asia Pacific has had, and I was talking about this, Q3 and Q4 was a rather subdued development because we had still lockdowns in Southeast Asia and in China as well, you know, in Shanghai. You've read about it. Also availability of workers has been an issue. We saw, you know, a Q4 in Asia Pacific, which was in general less active. Also Q4 typically is a more slower quarter anyhow. Again, the comparable to Q4 2020 in Asia Pacific was very hard to beat. We had a strong Q4 in 2020 in Asia. It was really difficult to show a massive progression now in this Q4 as well.
Let me also say that we see in the momentum step by step a recovery now. China is actually developing the last two months positively. Again, with a grain of salt, we need to be careful. It has been, you know, Chinese New Year. It has been the Beijing Olympics, which already, of course, had an impact on Q4, in particular in China with reduced economic activity. We see this coming out of the woods now step by step. I think we are a little bit more optimistic for Asia-Pacific than we were maybe the last one or two quarters. This is how I would frame the answer to your questions.
Thank you very much.
Dominic, thanks.
The next questions come from Markus Mayer at Baader Helvea. Line is now open.
Yeah. Good afternoon, Christian and Thomas. I have two, three questions for you if I may. The first one is again on Russia and Ukraine. You said direct exposure is roughly 1% of the gross profit, but what about the indirect exposure in particular on your supply? Could you give some clarification here? And also, the same question for your competitors. Are any of your competitors more exposed to Russia directly or indirectly than you? And what might this mean also for the market share situation in Europe going forward? That's my longer first question. My second question is on the strong start you said you had in 2022.
Was this also due to restocking at your customers as inventory levels in many end customer industries are said to be very low, and this might also continue with this supply tightness? My last question would be on M&A. You said you have ample M&A headroom, but are the M&A discussion currently ongoing due to this environment or they're currently paused, as the market or the M&A participants are struggling on what kind of economic growth assumptions should be taken into account in the DCF models of the respective companies?
Markus, thanks a lot for the question. Coming to the first question on Russia, Ukraine, and Belarus. I include Belarus in that for simplification reasons. I'd say yes, it's about a combined 1% of gross profit, and it is almost exclusively a domestic game. It's very little product which is moving out of Russia, let's say, into Europe, or almost nonexistent from Belarus, and the same is true for Ukraine. Those are typical markets where we have, you know, a push into those markets from suppliers from different locations and then, you know, bringing those into Russia.
As I said, in many cases, the chemical industry in Russia is not as sophisticated developed, so that, you know, the domestic business is and the business, you know, going out of Russia is rather small in our case or almost ignorable. How that plays out now to other areas, I mean, I mentioned there are certain supply chains which need to be watched very carefully. I mentioned here in particular, as I said, ammonia and downstream products, urea and these kind of more basic chemicals. We need to see how that will play out.
The other chemical industry in Europe, of course, is, you know, somehow relying on energy supply, gas supply in particular, but also naphtha, as I mentioned before. We have, you know, impacts, let's say, in areas like the automotive industry. I mean, you see that the large car manufacturers have actually partial shutdowns of their operations because, you know, they get not the proper equipment, for instance, out of Ukraine. That will have also of course impact on our business at some point of time because with the subdued automotive industry, we also somehow are, you know, exposed.
Nevertheless, I think this broad position of Brenntag across all the industries, more or less with our 190,000 customers, we believe that we have this inherent risk balance in our portfolio, which allows us really to, or will not expose us now to a massive issue if one of those industry segments is really suffering. Again, I reemphasize it. Situation is currently very volatile. Every day is something new. We need to see how that plays out in the next weeks and months. The restocking in 2022 you're asking for, really hard to tell, I have to say, because still product availability is a topic. The restocking, although maybe desired or wanted, is practically maybe not possible.
You have mentioned it yourself. I mean, I think I predicted it also in Q3 call, some customers cannot even restock material for their peak season, which is actually Q1. I see rather stock levels on a lower end than on a higher end in Q1 and going well into Q2. There is, of course, always a pull trying to get material. But whether there is really a restocking possible, I make my question marks. On the M&A side, I think it's a mixed picture.
I think the larger transactions and these kind of things. I have the impression over the last weeks have slowed down a little bit, maybe because of the uncertainty and because of, you know, large private equity houses and others. Non-strategics may be a little bit less active than we have seen it in 2021. Nevertheless, more strategic to strategic discussions are just continuing. This is, you know, you saw Ashkenazi that was a typical strategic to strategic deal with no other private equity also involved. I believe that this M&A activity on that level continues. I would say the larger deals are currently, you know, considered or looked at in a more cautious way than they would have been maybe three months ago or two months ago.
Okay. Thank you so much.
You're welcome.
The next question is coming from Rajesh Kumar at HSBC.
Hi, good afternoon, and thanks for taking the questions. The first question is, now that you've done your specialty business as a separate unit for one year, what are the new, you know, risks and opportunities you've discovered which you wouldn't have known if it was, you know, merged with the other division? I mean, you know, what have you learned by splitting the two up after one year? Second question is, if I look at your end market exposure in the specialty business, your organic growth in theory should be faster than IMCD or Azelis, which have a lot more life sciences in it. So I'm just asking, what is it that you need to do, to accelerate the organic growth to the level that your end market exposure should allow you to do?
is it just me as an analyst just getting lost on my spreadsheet and missing the fact that you are a much bigger business on specialty business, so 5.5% organic growth is, in dollar terms, a lot more growth than any of your peers. Some color there would be very helpful.
Yeah.
Third would be, you know, just how and when do you want to communicate a bit more detailed strategy on the specialty business again to the market? Are you going to do it this year at some point or next year? That would be helpful. Thank you.
Hey, Rajesh. Thanks a lot for the questions. You know, let me start maybe with what we did learn on specialties now for one year. First of all, I mean, it's now one year, and we have now created, you know, the dedicated sales forces to specialties and to essentials. One of the key learnings actually it's not so easy to separate, you know, once you have one company together to separate those commercial efforts and that commercial setup. I mean, it looks easy on paper, but practically it's sometimes quite difficult to assign customers, to assign products, and these kind of things.
I would say the task of basically making Specialties and Essentials on a commercial side more separate from each other is actually, you know, quite a tough job. That's important to know. Interesting enough, the people sort each other very quickly from left to right. You know, you have specialty sellers who are saying, "I always wanted to sell specialties, and then always had to deal with this caustic or caustic soda tank trucks. I'm so happy that I can now bring my technical know-how and competence to the game and do that." You have here on the other end guys who said, "You know, this little bitsy specialties, you know, I wanna sell big tank trucks.
You know, this is what I like. I think the people sorting themselves, which is good, but I still while you have sorted them, you also identify gaps, of course, and capabilities. In particular, in the specialties field, not so much that our people who went to the specialties business are lacking the capabilities, just that, you know, here and there you would need maybe more people to beef up those capabilities and bring it to the street and bring it to full fruition for full traction. And there, you know, I think, we need to fully flex our muscle now once we have done this first year behind us on the specialty side and also continue to invest in our application and technology know-how going forward.
This is currently emerging. That means, you know, that, you know, of course I'm not 100% satisfied with the performance. If I see, you know, some of the exposure we have to life cycle and life science and to certain industry segments, that I believe we still have not reached the peak performance when it comes to growth in that sector. That's, I would say, a key task which we have to get right in the next 12-24 months. On the next step of Brenntag's transformation and Brenntag's strategy going forward, we will communicate later in the year to the markets, most likely in fall or late fall.
We're currently developing what I have already discussed with our large investors, also with you here and there, what we call Horizon 2, and that, you know, again, will be a holistic phase of the next chapter of Brenntag where, of course, you know, topics like digital, ESG will play the appropriate role. From that perspective, we expect, as I said, in late fall to come back to you with the strategy updates and how the next chapter of Brenntag will look like.
Thank you very much.
You're welcome, Rajesh Kumar.
The next questions come from Rikin Patel at Exane BNP Paribas.
Hi. Thanks for taking my questions. Just two left. Firstly, just following up on your comments on guidance. If you think about the upper end and the lower end of the range, could you maybe describe what takes us to those two scenarios? And then secondly, another follow-up on OpEx costs. Could you maybe just give us an indication of what you're assuming for underlying OpEx inflation within your guidance for 2022? Thanks.
Yeah. I will ask Thomas to get ready for the OpEx question. I will talk about tax and what we have been seeing so far. Coming to the guidance, I mean, it's actually a rather mathematical topic. You know, we are very early in the year. We have chosen a range that we feel comfortable with. This is EUR 100 million between the upper and the lower end, and this is coming more or less from our considerations, what is a reasonable target for midpoint. We have talked about the various influencing factors, being it FX, being it M&A, being it the Project Brenntag contributions.
Of course, you know, the low end could be related. Then the underlying organic growth, sorry for that. If you take all of those together, and then, you know, the lower end would mean, you know, maybe a less efficient execution of Project Brenntag, less contributions, maybe a less underlying organic growth. We can see FX and M&A I think is more or less set. Then, you know, we see of course on the upside side, maybe a faster than expected organic growth. Pricing still is very, very strong, I have to say. Momentum from Q4 into Q1 has maintained well. Let's see how that plays out. This is what I would say to the guidance.
On the OpEx costs, just to give you a flavor on the OpEx costs, and this is, you know, what we assumed as the base salary adjustments globally. We had budgeted 2.7%, and we have just completed all the union's negotiations and everything which you need to do, and we came out now at about 3.1% globally. That means, yes, you see inflationary trends. You don't see, you know, massive salary increases requested. As I said, you know, for this year, with 3.1% we are actually we came out rather good considering this inflationary environment.
The variable cost, tax cost is an important topic, of course, with, again, a very good trajectory we have started into 2022. We need to see how the variable comp will play out. On the logistics costs and other energy costs, again, hard to predict what it is. I think, Thomas can give you maybe a little bit more granularity on what we have planned for. We still believe that we are operating in an inflationary environment also in those dimensions.
Yes. Hi, Rikin Patel. Thomas here. Regarding the OpEx inflation, I would say it would be fair to assume a mid-high single-digit inflationary trend for the year 2022.
Great. Thanks. That's helpful.
The next questions come from Christian Cohrs at Warburg Research.
Yes, good afternoon. Just one question left for me. When you presented actually the transformation program, you were guiding us for net cash out in the magnitude of EUR 370 million to be expensed via special items in the P&L, but also via CapEx. Now, the special items related to the transformation project so far were rather moderate. Compared to the EUR 370 million, first of all, is this figure still valid? Where do we stand? What to expect for the remaining two years? Thank you.
Hey, Christian. Thanks for the question. Absolutely right. The EUR 370 million we said, and it was a combination between investment and OpEx. First of all, I think what we have managed so far quite well was the severance payments. I think overall, we used and tried to use as much as possible, you know, fluctuations and other things. We did it all in a socially responsible manner. What we had negotiated with the unions in the various countries sometimes was above what we expected, but in many cases was below. I would say the whole severance payment bucket is actually smaller than we have thought in the past.
Let me also remind you, in this EUR 370 million for Project Brenntag, we have basically also investment projects in there, which need a more proper planning, as we had to discover, particularly investments into the mega sites we had indicated. Let's also be fair, we had in the whole program considered the costs for those investments, but no impact on the Project Brenntag delivery. What you always saw from Project Brenntag was what will happen in the year, in the years, up to 2023. Some of the investment costs, and some of the investments would have been done already in 2023, but only creating an impact in 2024, 2025, which we never considered in Project Brenntag.
We were quite tough on putting the costs into the whole program and communicate this while knowing that some of the benefits will even come after the Project Brenntag timeframe. Maybe that helps a little bit to illustrate that. We will prudently manage that bucket going forward, but we can expect that maybe that bucket will not be used to the full extent.
That's clear. Thank you.
You're welcome.
Ladies and gentlemen, now we have no more questions waiting in the queue. I would like to hand over to Thomas Altmann, Head of Investor Relations, to conclude this conference call.
Thank you, Lucas. This brings us to the end of the conference call for today. Thank you very much for joining us and your interest in Brenntag. If you have any further questions, please don't hesitate to contact us. We will publish our Q1 2022 results on May 11th, 2022. Until then, we're looking forward to further discussions with you. That's it for today. I wish you all a good day and a great week. Thank you and goodbye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.