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FUCHS PETROLUB SE Interim / Quarterly Report 2023
170_10-q_2023-11-06_a5ffd2aa-50b1-4b8a-9e97-8d60bcc93d5a.pdf
Interim / Quarterly Report
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Quarterly Statement as at September 30, 2023
Q3/2023
2
Quarterly results
| 1.1 | FUCHS at a glance | 3 |
|---|---|---|
| 1.2 Business development in the first nine months of 2023 |
4 | |
| Development of sales revenues in the Group | 4 | |
| Development of sales revenues by regions/segments | 5 | |
| Group results of operations | 6 | |
| Results of operations of the regions/segments | 7 | |
| 1.3 | Employees | 8 |
| 1.4 | Outlook | 8 |
| 1.5 | Balance sheet | 9 |
| 1.6 | Statement of cash flows | 11 |
Further information
| Financial calendar | 13 |
|---|---|
| Contact and imprint | 13 |
1.1 FUCHS at a glance
1.1 FUCHS at a glance
FUCHS Group
| Change | |||
|---|---|---|---|
| Amounts in € million | Q1 – 3 2023 |
Q1–3 2022 | in % |
| Sales revenues 1 |
2,698 | 2,542 | 6 |
| Europe, Middle East, Africa (EMEA) | 1,566 | 1,511 | 4 |
| Asia-Pacific | 738 | 706 | 5 |
| North and South America | 523 | 482 | 9 |
| Consolidation | –129 | –157 | – |
| Earnings before interest and tax (EBIT) | 313 | 280 | 12 |
| Earnings after tax | 219 | 199 | 10 |
| Investments | 50 | 42 | 19 |
| Free cash flow before acquisitions | 330 | –31 | – |
| Earnings per share (in €) | |||
| Ordinary share | 1.61 | 1.42 | 13 |
| Preference share | 1.62 | 1.43 | 13 |
| Employees as at September 30 | 6,261 | 6,094 | 3 |
1 By company location.
- Sales revenues, driven by prices, at € 2,698 million (2,542), up 6% or € 156 million year-on-year
- Earnings (EBIT) improved by 12% or € 33 million to € 313 million (280)
- Forecast for free cash flow before acquisitions adjusted based on the very good nine months to date despite continuing uncertainty that surrounds the economic environment and the price of commodities and thus also sales:
- Sales revenues: around € 3.6 billion
- EBIT: around € 390 million
- FVA: above the previous year (€ 172 million)
- Free cash flow before acquisitions: around € 380 million (previously: around € 300 million)
1 Quarterly results 2 Further information 3
"Following a good first half-year, in the third quarter we achieved a new record with an EBIT of € 113 million. We thus close the first nine months with an EBIT of € 313 million, an increase of 12% compared to the previous year. The EMEA region contributed significantly to this success across all sub-regions. Our cash flow also continues to develop very positively: uncertainties in the supply chain and the strong increase in raw material and consequently also in sales prices had led to an increase in net working capital as well as high cash outflows over the past two years. In the current year, we have turned the tide as expected. After nine months, we already record a free cash flow before acquisitions of € 330 million. On this basis, we are raising our forecast for free cash flow before acquisitions for 2023 to around € 380 million.
Geopolitically, in addition to the terrible war in Ukraine, a new crisis area has arisen in the Middle East. We condemn the terrorist attack by Hamas on Israel. We also see with horror the suffering of civilians in Israel and Gaza. It is difficult to judge from today's perspective which impact this will have on economic development in general and raw material and sales prices in particular. In addition, there is a strike in the automotive industry in the USA. Despite all the uncertainties, we confirm our full-year forecast for both sales revenues and EBIT and raise our cash flow expectations."
Stefan Fuchs, Chairman of the Executive Board of FUCHS SE
1.2 Business development in the first nine months of 2023
Development of sales revenues in the Group
Development of sales revenues in the Group (in € million)
Sales revenues in the Group at € 2,698 million (2,542), 6% up year-on-year; negative exchange rate effects re duce significant organic growth
- Organic growth in the first nine months driven by price increases in the second half of 2022
- Currencies continued to weaken, especially in the Asia-Pacific and North and South America regions, with an increasingly negative impact over the first nine months
Development of sales revenues by regions / segments
600 500 400 300 200 100 523 (9%) 482 (13%) – –22 (–4%) North and South America (in € million)
EMEA records increase in sales revenues of € 55 million or 4% to € 1,566 million
- Organic growth mainly as a result of price adjustments in the second half of 2022 and therefore with a downturn over the course of the year
- Almost all companies with significant growth; strong absolute and relative growth especially in Great Britain, Poland, France and Italy
- Negative currency effects mainly from South Africa, Sweden and Eastern Europe
Asia-Pacific region with sales revenue of € 738 million (706), up 5% or € 32 million year-on-year despite high negative and strengthening currency exchange rate effects on sales revenues over the year
- Strong organic growth mainly price-driven
- Australia and Southeast Asia with strong business and pricing developments and marked double-digit organic gains
- Driven by the Chinese renminbi, Asian currencies continue to weaken significantly; headwinds also affecting the Australian dollar
North and South America region boosts sales revenues by 9% or € 41 million thanks to strong organic growth
- Strong organic growth in North America predominantly due to significant price increases; auto industry strike starts affecting business at the end of the third quarter
- South America also reports strong price-driven growth
- Strong negative currency effects mainly from Argentina, but as a result of the weakening of the US dollar also from North America
Group results of operations
Income Statement
| Change | ||||
|---|---|---|---|---|
| in € million | Q1 – 3 2023 |
Q1–3 2022 | absolute | relative in % |
| Sales revenues | 2,698 | 2,542 | 156 | 6 |
| Cost of sales | –1,836 | –1,744 | – 92 | 5 |
| Gross profit | 862 | 798 | 64 | 8 |
| Selling and distribution expenses | –359 | –341 | – 18 | 5 |
| Administrative expenses | –138 | –128 | – 10 | 8 |
| Research and development expenses | –56 | –52 | – 4 | 8 |
| Other operating income and expenses | –3 | –3 | 0 | – |
| EBIT before income from companies consolidated at equity |
306 | 274 | 32 | 12 |
| Income from companies consolidated at equity | 7 | 6 | 1 | 17 |
| Earnings before interest and tax (EBIT) | 313 | 280 | 33 | 12 |
| Financial result | –9 | –5 | – 4 | 80 |
| Earnings before tax (EBT) | 304 | 275 | 29 | 11 |
| Income taxes | –85 | –76 | – 9 | 12 |
| Earnings after tax | 219 | 199 | 20 | 10 |
| Thereof | ||||
| Non-controlling interests | 1 | 1 | 0 | – |
| Profit attributable to shareholders of FUCHS SE |
218 | 198 | 20 | 10 |
| Earnings per share in €1 | ||||
| Ordinary share | 1.61 | 1.42 | 0.19 | 13 |
| Preference share | 1.62 | 1.43 | 0.19 | 13 |
1 Basic and diluted in both cases.
- Sales revenues in the first nine months after price adjustments in the previous year 6% or € 156 million over previous year, despite increasing pressure from currency effects
- Gross profit benefits from price adjustments, increasing at a slightly disproportionately high rate compared to that of sales revenues by € 64 million or 8%
- Gross margin continues an upward trend through the year to date; a marked sequential improvement from 30.9% in the first quarter to 32.2% in the second quarter and 32.9% in the third quarter; overall margin after nine months at 31.9% by 0.5 percentage points above the previous year's value (31.4)
- Primarily inflation-driven increase, in particular in personnel, freight and energy costs, results in a rise in other function costs of 6% or € 32 million
- At equity income rises by € 1 million to € 7 million compared to the previous year, which was burdened by the devaluation of an African at-equity company
- EBIT increases by € 33 million or 12% to € 313 million (280); continued sequential improvement in EBIT relative to sales revenues to 12.9% in the third quarter; EBIT margin improves by 0.6 percentage points year-on-year to 11.6%
- Increased interest rates and greater financing requirements as a result of share buybacks rise financial costs by € 4 million to € 9 million
- Earnings after tax of € 219 million, up by € 20 million or 10% compared with the same period in the previous year (199)
- Earnings per ordinary share and per preference share each improved by € 0.19 to € 1.61 and € 1.62 respectively
Results of operations of the regions / segments
| in € million | EMEA | Asia-Pacific | North and South America |
Holding/ consolidation |
FUCHS Group |
|---|---|---|---|---|---|
| Q1–3 2023 | |||||
| Sales revenues by company location | 1,566 | 738 | 523 | –129 | 2,698 |
| EBIT before income from companies consolidated at equity |
148 | 80 | 62 | 16 | 306 |
| in % of sales | 9.5% | 10.8% | 11.9% | – | 11.3% |
| Income from companies consolidated at equity |
7 | – | – | – | 7 |
| Segment earnings (EBIT) | 155 | 80 | 62 | 16 | 313 |
| Investments | 17 | 18 | 14 | 1 | 50 |
| Number of employees as at September 301 |
3,899 | 1,045 | 1,162 | 155 | 6,261 |
| Q1–3 2022 | |||||
| Sales revenues by company location | 1,511 | 706 | 482 | –157 | 2,542 |
| EBIT before income from companies consolidated at equity |
117 | 88 | 59 | 10 | 274 |
| in % of sales | 7.7% | 12.5% | 12.2% | – | 10.8% |
| Income from companies consolidated at equity |
6 | – | – | – | 6 |
| Segment earnings (EBIT) | 123 | 88 | 59 | 10 | 280 |
| Investments | 17 | 14 | 6 | 5 | 42 |
| Number of employees as at September 301 |
3,918 | 973 | 1,054 | 149 | 6,094 |
1 Including trainees.
EMEA (Europe, Middle East, Africa) with a very strong third quarter after nine months significantly higher than the previous year: EBIT improved by 26% or € 32 million to € 155 million
- A large majority of the companies with significant improvement in results; encouraging developments in Germany in particular; also Sweden, Great Britain, Poland and Italy with the highest absolute and relative growth rates
- At equity income increased by € 1 million to € 7 million (6)
- Slightly negative exchange rate effects
China's weakness as well as negative currency effects put a strain on Asia-Pacific. EBIT decreases by 9% to € 80 million (88) year-on-year
- China also down year-on-year in the third quarter
- India and Australia with high absolute and relative earnings growth rates
- Negative currency effects from all countries
North and South America with EBIT after nine months of € 62 million (59) by € 3 million or 5% above the previous year
- Both North and South America with positive earnings contributions; at the end of the third quarter, the strike in the automotive industry in North America begins to affect our business
- Negative exchange rate effects intensified; especially South America but also North America with weakening currencies
1.3 Employees 1.4 Outlook
Global workforce increases by 167 to 6,261 (6,094) em ployees compared with September 30, 2022, meaning 157 employees more than on December 31, 2022.
In its current October outlook, the International Monetary Fund (IMF) forecasts historically sluggish global economic growth for the current year of 3.4%, which is 0.4 percentage points below last year's growth. This forecast does not yet take into account the escalating clashes in the Middle East and their impact.
FUCHS thus continues to operate in a challenging environment with great uncertainties regarding economic development in general and changes in commodity prices in particular. The uncertain course of the war in the Middle East adds to these uncertainties.
However, due to the very good first nine months, we are slightly adjusting our forecast for the total year:
- Sales revenues: around € 3.6 billion
- EBIT: around € 390 million
- FVA: above the previous year (€ 172 million)
- Free cash flow before acquisitions: around € 380 million (previously: around € 300 million)
Our global track record and solid financial base remain robust, and FUCHS continues to focus on profitable growth and the implementation of FUCHS2025.
FUCHS SE
Mannheim, October 26, 2023
1.5 Balance sheet
1.5 Balance sheet
| Change | ||||
|---|---|---|---|---|
| in € million | Sept 30, 2023 | Dec 31, 2022 | absolute | relative in % |
| Assets | ||||
| Goodwill | 253 | 254 | – 1 | 0 |
| Other intangible assets | 79 | 93 | – 14 | – 15 |
| Property, plant and equipment | 738 | 751 | – 13 | – 2 |
| Shares in companies consolidated at equity | 58 | 54 | 4 | 7 |
| Other financial assets | 8 | 8 | 0 | 0 |
| Deferred tax assets | 37 | 38 | – 1 | – 3 |
| Other receivables and other assets | 7 | 7 | 0 | 0 |
| Non-current assets | 1,180 | 1,205 | – 25 | – 2 |
| Inventories | 555 | 635 | – 80 | – 13 |
| Trade receivables | 556 | 507 | 49 | 10 |
| Tax receivables | 8 | 8 | 0 | 0 |
| Other receivables and other assets | 34 | 42 | – 8 | – 19 |
| Cash and cash equivalents | 207 | 119 | 88 | 74 |
| Assets held for sale | 5 | 7 | – 2 | – 29 |
| Current assets | 1,365 | 1,318 | 47 | 4 |
| Total assets | 2,545 | 2,523 | 22 | 1 |
1.5 Balance sheet
| Dec 31, 2022 | Change | |||
|---|---|---|---|---|
| in € million | Sept 30, 2023 | absolute | relative in % | |
| Equity and liabilities | ||||
| Subscribed capital | 139 | 139 | 0 | 0 |
| Group reserves | 1,433 | 1,440 | – 7 | 0 |
| Group profits | 218 | 259 | – 41 | – 16 |
| Equity of shareholders of FUCHS SE |
1,790 | 1,838 | – 48 | – 3 |
| Non-controlling interests | 3 | 3 | 0 | 0 |
| Total equity | 1,793 | 1,841 | – 48 | – 3 |
| Pension provisions | 6 | 7 | – 1 | – 14 |
| Other provisions | 8 | 9 | – 1 | – 11 |
| Deferred tax liabilities | 52 | 53 | – 1 | – 2 |
| Financial liabilities | 27 | 18 | 9 | 50 |
| Other liabilities | 3 | 1 | 2 | >100 |
| Non-current liabilities | 96 | 88 | 8 | 9 |
| Trade payables | 276 | 231 | 45 | 19 |
| Other provisions | 17 | 15 | 2 | 13 |
| Tax liabilities | 26 | 18 | 8 | 44 |
| Financial liabilities | 170 | 161 | 9 | 6 |
| Other liabilities | 167 | 169 | – 2 | – 1 |
| Current liabilities | 656 | 594 | 62 | 10 |
| Total equity and liabilities | 2,545 | 2,523 | 22 | 1 |
1.6 Statement of cash flows
1.6 Statement of cash flows
| in € million | Q1 – 3 2023 |
Q1–3 2022 |
|---|---|---|
| Earnings after tax | 219 | 199 |
| Depreciation and amortization of non-current assets | 73 | 70 |
| Change in non-current provisions and in other non-current assets (covering funds) | 0 | –1 |
| Change in deferred taxes | –1 | –1 |
| Non-cash income from shares in companies consolidated at equity | –7 | –6 |
| Dividends received from companies consolidated at equity | 3 | 6 |
| Gross cash flow | 287 | 267 |
| Gross cash flow | 287 | 267 |
| Change in inventories | 63 | –185 |
| Change in trade receivables | –57 | –113 |
| Change in trade payables and remaining other liabilities1 | 38 | 41 |
| Change in other assets and other liabilities (excluding financial liabilities) | 53 | 0 |
| Net gain/loss on disposal of non-current assets | –3 | 0 |
| Cash flow from operating activities | 381 | 10 |
| Investments in non-current assets | –55 | –42 |
| Proceeds from the disposal of non-current assets | 4 | 1 |
| Cash paid for acquisitions | –4 | –1 |
| Cash acquired through acquisitions | 0 | 0 |
| Cash flow from investing activities | –55 | –42 |
| Free cash flow before acquisitions2 | 330 | –31 |
| Free cash flow | 326 | –32 |
| Dividends paid for previous year | –144 | –143 |
| Purchase of own shares | –93 | –31 |
| Changes in financial liabilities | 3 | 145 |
| Purchase of non-controlling interests | –1 | 0 |
| Cash flow from financing activities | –235 | –29 |
| Cash and cash equivalents as at Dec 31 of the previous year | 119 | 146 |
| Cash flow from operating activities | 381 | 10 |
| Cash flow from investing activities | –55 | –42 |
| Cash flow from financing activities | –235 | –29 |
| Effect of currency translations | –3 | 6 |
| Cash and cash equivalents at the end of the period | 207 | 91 |
1 Remaining other liabilities relate to advance payments received and liabilities from customer discounts.
2 Free cash flow before cash paid for acquisitions and before cash acquired through acquisitions.
1.7 Share price development of FUCHS shares
1.7 Share price development of FUCHS shares
Performance* of ordinary and preference shares in comparison with DAX and MDAX (January 1, 2023 – September 30, 2023)
Preference share Ordinary share DAX MDAX * Price trend including dividends.
Source: Bloomberg
Dates 2024
| March 12, 2024 | Annual Report 2023 | |
|---|---|---|
| April 30, 2024 | Quarterly Statement as at March 31, 2024 | |
| May 8, 2024 | Annual General Meeting | |
| July 30, 2024 | Half-year Financial Report as at June 30, 2024 | |
| October 30, 2024 | Quarterly Statement as at September 30, 2024 |
The financial calendar is updated regularly. You can find the latest dates on the webpage at
www.fuchs.com/financial-calendar
Note regarding the Quarterly Statement
In case of deviations between this English translation and the original German version of this Quarterly Statement, the original German version takes precedence.
Note on rounding
Due to rounding, numbers presented in this Quarterly Statement may not add up precisely to totals provided, and percentages stated may not precisely reflect the absolute figures to which they refer.
Disclaimer
This Quarterly Statement contains statements about future developments that are based on assumptions and estimates by the management of FUCHS SE. Statements about future developments are all statements that do not refer to historical facts and events and contain such forward-looking formulations as "believes," "estimates," "assumes," "expects," "anticipates," "forecasts," "intends," "could," "will," "should," or similar formulations. Even if the management is of the opinion that these assumptions and estimates are accurate, future actual developments and future actual results may differ significantly from these assumptions and estimates due to a variety of factors. These factors can, for example, include changes in the overall economic climate, changes in procurement prices, changes to exchange rates and interest rates, and changes within the lubricants industry. FUCHS SE provides no guarantee that future developments and the results actually achieved in the future will match the assumptions and estimates set out in this Quarterly Statement and assumes no liability for such. We do not assume any obligation to update the future-oriented statements made in this Quarterly Statement.
Financial calendar Contact and imprint
If you have any questions regarding the company or should you wish to be added to our mailing list for corporate publications, please contact our Investor Relations team:
E-mail: [email protected]
Lutz Ackermann
Head of Investor Relations Telephone +49 621 3802-1201 Fax +49 621 3802-7274 [email protected]
Andrea Leuser
Manager Investor Relations Telephone +49 621 3802-1105 Fax +49 621 3802-7274 [email protected]
Claudia Rippke
Specialist Investor Relations Telephone +49 621 3802-1205 Fax +49 621 3802-7274 [email protected]
Publisher
FUCHS SE Einsteinstraße 11 68169 Mannheim Germany www.fuchs.com/group