Good morning, ladies and gentlemen. I'm Jens Birgersson, Group CEO. With me as usual is our Group CFO, Thomas Reisten. Welcome to Brenntag's third quarter result. We have just published them this morning. The quarter came in line with our expectations. Earnings grew again in a volatile and uncertain market. Conditions remain fragile. Inflation, energy, transportation, and freight costs all still weigh on us, but our customers kept buying steadily as much as they did in the second quarter. Operating EBITDA rose 15% to EUR 385 million.
The second quarter had unusually supporting pricing. The third did not, so this result matters. The underlying improvements in our business are holding. Operating gross profit grew 10% to EUR 1.064 billion . Both divisions contributed, so did every Essentials region and also both Specialties segments. Revenue rose 13% to EUR 4.3 billion on stable volumes. Essentials grew sales 17% to EUR 3 billion. Specialties grew 5% to EUR 1.3 billion. Our conversion ratio improved by 1 percentage point to 36%.
Operating EBITDA margin rose marginally 0.1 percentage point to 9%. Demand was comparatively solid, but higher input costs increasingly fed into our gross margin, above all in selected oil-based categories. Turning to the divisions. Essentials grew Operating EBITDA 12% to EUR 276 million. In EMEA, volumes were broadly stable. EBITDA was EUR 86 million, up 6%. In North America, the volume trend was encouraging, and gross profit momentum stayed positive. EBITDA was EUR 169 million, up 18%. In Latin America, EBITDA was EUR 30 million, down 5%. Gross profit grew, but volumes fell. The earthquake in Colombia had a negative impact on demand. We also had some challenges in Mexico with rapid input price increases in the lubricants business that we could not place in the market.
In APAC, EBITDA rose 9% to EUR 6 million. Gross profit improved despite slightly lower volumes outside China. In China, we grew double digit. Specialties grew Operating EBITDA 3% to EUR 110 million. In Life Science, volumes were mixed while pricing momentum stayed positive. EBITDA was EUR 70 million, up 1%. In Material Science, volumes were weaker, but positive pricing continued. EBITDA was EUR 36 million, up 13%. The higher input and transportation costs tied to the Middle East conflict became more visible this quarter as we had anticipated. Visibility is still limited, but the demand picture has barely changed. Industrial activity is broadly stable.
Growth in Western economies stayed subdued, and inflationary pressure stays elevated. Our earnings held up against that backdrop. That is the strength of a diversified business model and of our continued focus on executions. Our recent acquisitions, Chem Tech and Airedale, are integrating well, and at the end of October, we closed the acquisition of Woojin Trading in South Korea in Beauty & Care. I'm happy about that we could close that one. We are also making progress on our key priorities. Commercially, we keep gaining traction. Organic gross profit per working day grew in the quarter even after adjusting for the Middle East.
We expanded several supplier partnerships in Beauty & Care and Pharma, and we also opened a new Nutrition Innovation & Application Center in Jakarta, Indonesia. Simplification is progressing well. In EMEA, we kept streamlining the organization and reducing overhead. We simplified structures further, clarified responsibilities, and strengthened operational ownership as well as leadership. We also made two appointments, a Chief Procurement Officer to centralize indirect procurement and a VP of Operational Transformation to drive the operational standardization.
Both of these functions report to our CEO. Our cost-out program keeps delivering. We generated EUR 47 million of gross savings in the quarter against our 2025 cost base, that to be compared with EUR 41 million in the second quarter and EUR 27 million in the first. We remain on track for around EUR 150 million of gross savings this year, as we have said earlier. In conclusion, we are making tangible progress on all three priorities, and these are the main actions offsetting inflation and higher energy transportation and freight costs that will continue this year. Tomorrow, we will give you a fuller update at our Capital Markets Day.
We will set out how we intend to strengthen growth, improve operating leverage, and create more value for shareholders in the year ahead. We will also provide updated midterm guidance. Let me be clear on one thing. Tomorrow builds on the platform we already have, and it is not about introducing a completely new Brenntag. Executing better, raising productivity, and accelerating profitable growth are core themes of tomorrow. That is the direction we have been working on throughout this year, and we will continue work on those. What we report today gives us confidence.
The actions we launched are starting to translate into lasting operational and financial improvements, but much remains to be done. For the rest of the year, we still expect subdued demand, continued geopolitical uncertainty, and more volatility in energy and freight markets. At the same time, customer buying patterns are expected to remain stable, and our commercial initiatives, simplification measures, and cost-out program all continue to support us. With that in mind, we reaffirm our Operating EBITDA guidance of EUR 1,350 million-EUR 1,450 million. We expect the full year to be toward the upper end of the range. With that, let me hand over to Thomas. He will take you through the financials in more details. Thank you.
Thank you, Jens, and good morning as well from myself. Let me begin by highlighting that we had another solid quarter, characterized by resilient demand, disciplined commercial execution, continued progress on our key priorities, and positive earnings momentum. While market conditions remain mixed across regions and end markets, customer activity levels remain stable and broadly in line with our expectations. Revenue increased by 13% year-on-year to EUR 4.3 billion, while Operating gross profit increased by 10% to EUR 1.064 billion. Chemical prices remained at elevated levels throughout the quarter, supporting gross profit development.
At the same time, higher sourcing costs increasingly flowed through our income statement, resulting in an operating gross margin of 24.9%. We see this as a temporary timing effect, whilst not affecting the positive trend over the longer term. Operating EBITDA increased by 15% year-on-year to EUR 385 million, while the EBITDA conversion ratio improved by 1.3 percentage points to 36.2%. Importantly, earnings growth was supported by both divisions, reflecting the broad-based nature of the improvement across the group. As Jens already highlighted, group Operating EBITDA margin increased by 0.1 percentage points to 9%.
Divisional Operating EBITDA margins also remained resilient despite the challenging macroeconomic environment and higher intercompany charges. Demand remained stable throughout the quarter, while the disciplined margin management, commercial execution, and the continued delivery of our cost-out program supported profitability. We delivered EUR 47 million of savings from our cost-out program in the quarter, helping to offset ongoing inflationary pressures and higher transportation and energy costs. I would also like to elaborate on our free cash flow development, which amounted to EUR 183 million in the quarter.
While elevated chemical prices continued to drive higher working capital requirements, the associated cash outflows eased compared with the previous quarter. As a distributor, higher chemical prices typically result in higher inventories and receivables, which temporarily increases working capital requirements and weighs on free cash flow. This is a normal feature of our business model and primarily reflects the higher value of products moving through the supply chain, rather than any significant change in underlying inventory volumes. As inventories and receivables are replenished at higher prices, additional cash is temporarily tied up in working capital.
During periods of rising chemical prices and improving earnings, working capital requirements typically increase and temporarily weigh on free cash flow. Conversely, when pricing environments normalize or decline, working capital is released and cash generation improves. This development is consistent with Brenntag's countercyclical cash flow profile and also in line with our historical patterns. Let me now take you through the divisional performance in more detail. Both divisions expanded Operating gross profit in the third quarter compared to the previous year, supported by resilient demand, disciplined commercial execution, and a constructive pricing environment. In Brenntag Essentials, Operating gross profit rose by 12%, with all regions contributing to the growth.
As already underlined, the operating gross margin increasingly reflects the higher sourcing costs associated with elevated chemical price levels. In addition, gross profit per unit normalized in selected product categories, where we benefited from particularly favorable pricing conditions in the second quarter, including solvents and selected lubricants and performance materials. In Brenntag Specialties, Operating gross profit increased by 5%, with contributions from both Life Science and Material Science. Overall, gross margin levels remained resilient. While volumes remained broadly flat, our commercial teams continued to capture opportunities arising from positive pricing trends in selected markets.
In particular, Pharma and Material Science delivered strong sequential growth in gross profit per unit, partly supported by pricing effects related to the Middle East conflict. Overall, the quarter demonstrates the resilience of our business model, robust divisional performance, and our ability to convert favorable market dynamics into profitable growth. Let me now provide an update on our cost-out program, which continues to make a meaningful contribution to the improvement in our profitability. Execution remains firmly on track, and we delivered EUR 47 million of savings in the third quarter, compared with EUR 41 million in the second quarter, and EUR 27 million in the first quarter.
As a result, cumulative savings reached close to EUR 115 million in the first nine months of 2026, demonstrating the continued momentum of the program. For the fourth quarter of 2026, we expected another substantial contribution from the program in line with the current quarterly run rate. Consequently, we are very confident to achieve our full-year target. Savings are being driven by structural measures, including the reduction of central costs, organizational simplification, and ongoing productivity improvements. Since September 2025, we reduced our workforce organically by approximately 800 FTE, underlying the structural nature of the actions taken. As inflationary pressures continue to offset part of the benefits, the overall contribution to profitability remains significant.
Following the rebasing of the program to the fiscal year 2025 cost base, we continue to target cumulative savings of EUR 200 million-EUR 250 million by 2027. Let me now provide some further detail on the development of our operating expenses. Reported OpEx increased year-on-year, primarily reflecting the stronger business performance and the associated increase in bonus provisions and other performance-related incentives. In addition, we continue to face broader inflationary pressures, particularly from higher energy, transportation, and freight costs. At the same time, our cost-out program delivered EUR 47 million of savings in the third quarter, partly mitigating these headwinds.
The program is therefore making an increasingly meaningful contribution to our cost base and supporting the structural improvement of our operating model. The underlying contribution of the cost-out program is even stronger when adjusting for temporary OpEx headwinds related to the Middle East escalation, including higher energy costs and increased variable remuneration. While part of the savings continues to be offset by inflation, energy, and transportation costs, as well as temporary cost provisions, the underlying delivery of the program remains firmly on track.
Overall, we continue to maintain strict cost discipline while selectively investing in commercial initiatives that support our future growth. Looking ahead, we expect the contribution from the cost-out program to increase further as additional measures take effect. Brenntag is well on track to deliver EUR 150 million in cost-out savings for fiscal year 2026 as planned. Let me now turn to the development of Operating EBITDA. Operating EBITDA increased by 15% year-on-year to EUR 385 million, reflecting continued organic growth and disciplined margin management across the group. The main driver was organic growth, which contributed EUR 43 million to the year-on-year increase.
Foreign exchange effects also turned favorable compared with the prior quarter, while the overall M&A contribution remained limited. The quarter saw contributions from the recently completed acquisition of Airedale and also Chem Tech. Demand remained resilient across the group despite continued uncertainty and limited visibility across our end markets. At the same time, our continued focus on commercial execution and disciplined margin management supported a positive earnings development. Importantly, organic earnings growth saw contributions from both divisions, all Brenntag Essentials regions, and both Brenntag Specialties segments.
Overall, the quarter demonstrates the continued positive momentum of our business and our ability to deliver profitable growth in a volatile market environment. Let me conclude with our outlook for the full year. We confirm our full-year 2026 Operating EBITDA guidance of EUR 1,350 million-EUR 1,450 million. Within this, we expect our full-year result to be toward the upper end of that range. Our outlook assumes no broad-based decline in customer demand across our end markets and reflects the usual seasonal patterns.
The fourth quarter typically sees lower overall activity due to fewer working days, the holiday period, and seasonal weather effects. We remain focused on disciplined execution of our key priorities and rigorous cost management. Overall, we believe the business is well-positioned for the remainder of the year. With that, I will conclude this presentation. We are very much looking forward to highlighting the details of our strategy for growth and margin development at the Brenntag Capital Markets Day tomorrow.