Nov 12 (Reuters) - German chemicals distributor Brenntag (BNRGn.DE) , opens new tab reported a 4.9% drop in its quarterly core profit on Tuesday, missing market expectations, as it paid more to implement its digital transformation while growing volumes drove up transportation costs.

Its shares, down 26% since the start of the year, fell 3% by 0710 GMT in early Frankfurt trade.

The group's operating earnings before interest, taxes and amortisation (EBITA) fell to 281.1 million euros ($298.9 million) in the third quarter, below analysts' average forecast of 292 million euros in a poll , opens new tab by Vara Research.

Quarterly sales reached 4.06 billion euros in the same period, down slightly from last year and short of analysts' consensus of 4.13 billion euros.

"Our cost-saving measures are showing positive effects and we made good progress in executing our divisional strategies. However, we cannot be satisfied with the outcomes yet and need to step up our efforts," CEO Christian Kohlpaintner said in a statement.

Brenntag announced measures to reduce operating costs and counteract inflation-related cost increases last year, expecting 300 million euros annual cost-out effect by 2027.

"Q3 was another difficult quarter with ongoing strong competition and pressure on average selling prices. Brenntag counterbalanced that with increasing internal efforts to optimize pricing, the structure and reduce costs," Baader Helvea analyst Christian Obst said in a note to clients.

Germany's chemical industry suffered throughout 2023 from high production costs and weak demand amid rising inflation. The sector flagged first signs of recovery early in the year, but that optimism has since faded as the country's industrial outlook continued to deteriorate.

Brenntag said it expected the challenging geopolitical, macroeconomic and operational conditions to persist for the rest of the year, and confirmed its full-year guidance for an operating EBITA of 1.1 billion to 1.2 billion euros, which it has cut twice this year.

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https://www.reuters.com/markets/commodities/brenntag-reports-q3-core-profit-below-expectations-2024-11-12/