Fuchs Se · XETR:FPE
Fuchs — DB German, Swiss and Austrian Conference 2020
63 slides from Fuchs's conference presentation, June 2020
Slide 1: FUCHS Group Investor Presentation
FUCHS GROUP Investor Presentation | June 2020 | Thomas Altmann, Head of Investor Relations
Slide 2: Agenda
Agenda 01 | The Leading Independent Lubricants Company 02 | Q1 2020 03 | Shares 04 | Appendix l2
Slide 3: The Leading Independent Lubricants Company
01 The Leading Independent Lubricants Company
Slide 4: FUCHS at a glance
FUCHS at a glance The Fuchs family holds No. 1 among the independent 55% of suppliers of lubricants ordinary shares Established 3 generations ago as a €2.6 bn family-owned business sales in 2019 A full range of over 10,000 Around 5,900 Preference share is listed lubricants and related employees in t
Slide 5: Top lubricant manufacturers
Top 20 lubricant manufacturers1 Number 1 among the independent lubricant companies Manufacturers Major Market Shares oil companies Independent >100 >700 Top 10 lubricant manufacturers manufacturers manufacturers2 <50% >50% >600 ▪ High degree of fragmentation ▪ Concentration especially amongst smalle
Slide 6: Our unique business model is the basis for our competitive advantage
Our unique business model is the basis for our competitive advantage Technology and innovation leadership in strategically important product areas FUCHS is fully focussed on lubricants FUCHS is a full-line supplier Independency allows reliability, customer & Global presence, R&D strength, market pro
Slide 7: We are where our customers are
We are where our customers are 62 Operating Companies 33 Production Sites l7 As of Dec. 2019
Slide 8: Full-line supplier advantage
Full-line supplier advantage Sales 2019: €2.6 bn (~80% international) by customer location Automotive lubricants Industrial lubricants ~45% ~55% e.g. Engine & gear oils, hydraulic oils, shock absorber fluids, etc. e.g. Industrial oils, MWF/CP* and greases 100,000 customers in more than 150 countries
Slide 9: Well balanced customer structure
Well balanced customer structure Top 20 Customers account for ~ 25% sales Engineering / Machinery construction Agriculture and construction Industrial goods manufacturing 7% 6% 18% Sales 2019: Trade, transport and services 28% €2.6 bn Vehicle manufacturing 31% 10% Energy and mining l9
Slide 10: Organic growth potential in emerging countries
Organic growth potential in emerging countries Market Demand FUCHS Sales (by customer location) +1 % +185 % 36.4 mn t 36.8 mn t € 902 mn € 2,572 mn 19% 27% 53% (1,371) 27% 34% 17% (436) 54% 59% (531) 39% 30% (765) 24% (219) 17% (152) 2000 2019 2000 2019 Asia-Pacific Americas EMEA l 10
Slide 11: Investment in the future
Investment in the future R&D expenses and Capex R&D expenses 2019: €55 mn Capex 2019: €154 mn € mn 60 180 55 52 160 154 50 47 44 140 121 39 120 40 105 100 93 30 80 73 58 11 PPA 20 60 50 53 47 11 39 11 40 10 5 10 20 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Capex Scheduled amortisation/de
Slide 12: Investment program Capex 2016-2021
Investment program Capex 2016-2021 ~ €670 mn € mn ▪ In 2016 - 2018 over €300 mn capex 200 was spent with focus on the expansion of Mannheim, Kaiserslautern and Chicago as well as new plants in China, 150 Australia and Sweden ▪ Capex peaked in 2019 at €154 mn. In 2020 €120 mn and 2021 €80 mn will 100
Slide 13: FUCHS' Strategy
FUCHS‘ Strategy Profitable Growth: Internationalization of core activities Local production in 33 plants Utilize disruptions like e-mobility, digitalization, etc. People: as an opportunity ▪ Employer Branding Global ▪ Culture Agile network structure based standards, ▪ Talent- on common values proces
Slide 14: Strong track record of integrating businesses
Strong track record of integrating businesses M&A transactions with more than € 10mn sales (p.a.) (GLOBAL) (DE) (SE) (AU) (US) € 21 mn € 135 mn € 140 mn € 25 mn € 46 mn* 2010 2015 2019 2014 2016 Lubricants (ZA) (GB) (US) (US) € 15 mn € 15 mn € 15 mn € 11 mn * Closing January 24, 2020 l 14
Slide 15: Acquisitions 2019
Acquisitions 2019 ▪ Automotive retail business ▪ Chemical Process ▪ Automotive, medical, aerospace ▪ Sales 2018 AUD 40mn Management (CPM) and in-vacuum industry (~ €25 mn), 65 employees ▪ Sales 2018 €4 mn, ▪ Sales 2018 USD 51mn ▪ Closing April 1, 2019 60 employees (~ €46 mn), 180 employees ▪ Closing
Slide 16: Growth market Africa
Growth market Africa ▪ Africa represents 6% of the global lubricant market ▪ FUCHS intends to increase its presence in this rapidly growing market ▪ FUCHS South Africa generates € 75 million in sales p.a. with 280 employees ▪ Joint ventures were founded in Tanzania and Egypt in 2019 ▪ At the beginni
Slide 17: FUCHS CO2-neutral as of 2020
FUCHS CO2-neutral as of 2020 ▪ Since 2010 already 30% reduction of energy consumption-specific CO2 emissions per ton of FUCHS lubricant produced ▪ From 2020 onwards, all FUCHS locations worldwide will be CO2-neutral - from energy consumption in production to consumables in administration ▪ Emissions
Slide 18: Q1 2020
02 Q1 2020
Slide 19: Highlights Q1 2020
Highlights Q1 2020 €616 mn Outlook Q2 / HY 2020 ▪ Significant earnings drop in the order ▪ Impact of COVID-19 still Sales down by 4 % of 50% expected in Q2 relatively small in Q1 ▪ This represents a significant decline ▪ Sales and earnings drop in in earnings of around 30 % for the China first half
Slide 20: Sales development
Sales development € mn - 4% YoY 700 668 656 643 642 643 653 614 620 616 600 500 400 300 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 l 20
Slide 21: Q1 2020 Group sales
Q1 2020 Group sales € mn 800 - 39 15 -3 (- 6%) (2%) (0%) 643 616 - 27 (- 4%) 300 Q1 2019 Organic Growth External Growth FX Q1 2020 l 21
Slide 22: Regional sales growth Q1 2020
Regional sales growth Q1 2020 Q1 2020 Q1 2019 Growth Organic External FX (€ mn) (€ mn) Europe, Middle East, Africa 401 400 0% 0% - 0% Asia-Pacific 146 171 -14% -16% +3% -1% Americas 110 106 +4% -6% +10% 0% Consolidation -41 -34 - - - - Total 616 643 -4% -6% +2% 0% l 22
Slide 23: Income statement Q1 2020
Income statement Q1 2020 € mn Q1 2020 Q1 2019 Δ € mn Δ in % Sales 616 643 -27 -4 Gross Profit 218 217 1 0 Gross Profit margin 35.4 % 33.7 % - +1.7 %-points Other function costs -148 -142 -6 4 EBIT before at Equity 70 75 -5 -7 At Equity 2 2 0 0 EBIT 72 77 -5 -6 Earnings after tax 51 55 -4 -7 l 23
Slide 24: EBIT development
EBIT development (Q3 2018: €12 mn one-off effect from sale of at equity share) € mn - 6% YoY 120 101 104 92 (92) 86 89 90 77 80 75 72 60 30 0 Q1 '18 Q2 '18 Q3 '18 Q4' 18 Q1' 19 Q2 '19 Q3 '19 Q4' 19 Q1' 20 l 24
Slide 25: EBIT by regions
EBIT by regions Q1 2020 (Q1 2019) € mn 100 12 0 72 80 (14) (4) (77) 17 (21) 60 43 (38) 40 20 0 EBIT margin EMEA Asia-Pacific Americas Holding/cons. Group before at equity 10.2% (9.0%) 11.6% (12.3%) 10.9% (13.2%) 11.4% (11.7%) l 25
Slide 26: Cash flow Q1 2020
Cash flow Q1 2020 € mn Q1 2020 Q1 2019 Δ in € mn Δ in % Earnings after tax 51 55 -4 -7 Amortization/Depreciation 20 18 2 11 Changes in net operating working capital (NOWC) -41 -17 -24 >100 Other changes -3 -9 6 - Capex -31 -34 3 -9 Free cash flow before acquisitions -4 13 -17 >-100 Acquisitions -95
Slide 27: Q1 2020 earnings summary
Q1 2020 earnings summary ▪ Organic sales decrease in APAC and Americas / EMEA stable at previous year’s level ▪ External growth in APAC (NULON) and Americas (ZIMMARK & NYE) ▪ Increased gross profit compensates slightly higher manufacturing costs ▪ Positive upward trend in gross margin from previous
Slide 28: Outlook 2020 – No statement for FY 2020
Outlook 2020 – No statement for FY 2020 Performance indicator Actual 2019 Former Outlook 2020 H1 - 2020 Sales € 2,572 mn +0% to +4% EBIT € 321 mn +0% to +4% ~ -30% FUCHS Value Added € 174 mn ~ € 170 mn Free cash flow before acquisitions € 175 mn ~ € 130 mn Capex € 154 mn € 120 mn As of March 4, 2020
Slide 29: Shares
03 Shares
Slide 30: Breakdown ordinary & preference shares
Breakdown ordinary & preference shares (March 31, 2020) Ordinary shares Preference shares MDAX-listed Free Symbol: FPE Symbol: FPE3 Free float Fuchs ISIN: DE0005790406 ISIN: DE0005790430 float 45% family WKN: 579040 100% WKN: 579043 55% Basis: 69,500,000 ordinary shares Basis: 69,500,000 preference
Slide 31: Stable dividend policy
Stable dividend policy Our target: Increase the absolute dividend amount each year or at least maintain previous year’s level Dividend per Preference Share Market Capitalization € Payout Ratio 2019: 59% 18 years 0.97 € mn 1.00 of consecutive 7,000 dividend increases 6,000 0.80 5,000 13 % 4,000 0.60
Slide 32: Appendix
04 Appendix
Slide 33: FUCHS – Key Investment Highlights
FUCHS – Key Investment Highlights FUCHS-Long-Term Performance 1 18 years of consecutive dividend increases vs. DAX & MDAX1 10000% 2 Strong FCF generation & CAPEX with returns above WACC We supply 100,000 customers in more than 150 countries with 8000% 3 a full range of >10,000 lubricants and related
Slide 34: Top lubricant countries
Top 20 lubricant countries KT 8,000 2007 2019 ▪ China and the USA cover more than one third of 7,000 the world lubricants market ▪ FUCHS is present in every important lubricants 6,000 consuming country 5,000 4,000 3,000 2,000 1,000 0 l 34
Slide 35: Regional per-capita lubricants demand
Regional per-capita lubricants demand kg 25 2007 2019 20 15 10 5 0 l 35
Slide 36: Base oil / additives value split
Base oil / additives value split ▪ Base oil prices do not necessarily follow crude oil 20% prices ▪ No direct link between additives and crude oil 60% prices. We even face price increases for certain raw materials where supply/demand is not balanced or special situations occur 80% ▪ Special lubrican
Slide 37: Workforce Structure
Workforce Structure 5,627 employees globally Regional Workforce Structure Functional Workforce Structure Germany 1,670 EMEA w/o Marketing (30%) Germany & Sales Production 2,280 2,428 1,772 (40%) (44%) (32%) 2019 2019* Asia-Pacific R&D North and 521 932 South (17%) (10%) America Admin 745 775 (13%) (
Slide 38: FUCHS – Act together
FUCHS – Act together Mission statement Lubricants Technology People Technological leadership in Basis for our success: Fully focused on lubricants strategically important fields loyal and motivated workforce Values Trust Creating value Respect Trust is the basis of our self- We deliver leading techn
Slide 39: FUCHS2025 – Vision
FUCHS2025 – Vision High performance organization driven to Know-how and state of the continuously improve and art technology linked with adapt to technology and top service are a matter of market changes. course. Unique company culture with family roots and a strong value foundation. An independent,
Slide 40: Challenges & Opportunities
Challenges & Opportunities Global Networked & Agile Company Profitable Growth Structures Digitalization E-Mobility l 40
Slide 41: Digitalisation will fundamentally change our value creation
Digitalisation will fundamentally change our value creation ▪ inoviga GmbH is a think tank outside the operative business ▪ Driving force behind digitalization projects ▪ Develops prototypes and tools for digital business models ▪ Current topics: ▪ eCommerce ▪ Digitalized product development & produ
Slide 42: Electrification of cars creates new applications
Electrification of cars creates new applications Global light-duty vehicles sales forecast (in mn units) Electrification is an opportunity for FUCHS to further strengthen its market leadership with technically advanced solutions 144 131 14 RoW ▪ Electrification of cars will lead to new applications
Slide 43: Lubricant applications in passenger cars
Lubricant applications in passenger cars In modern cars there are more than 30 different types of greases Central hydraulic system Skin parts / washing oils Corrosion prevention for wire cables Processing seat components Axle drive Power steering Air conditioning Engine handling Engine Transmission
Slide 44: Lubricant applications in passenger cars
Lubricant applications in passenger cars Electrification brings a variety of opportunities for FUCHS Powertrain ICE HEV BEV Corrosion preventive for Applications battery housing Coolants for power electronics Coolant for battery Greases for bearings in E- Motor Cleaners in battery Engine oil ✓ ✓ – M
Slide 45: Long-term objective: Focus on Shareholder Value
Long-term objective: Focus on Shareholder Value ▪ Organic growth through strict customer focus, geographic expansion and product innovation Drive returns ▪ Improve operating profitability through margin and mix management, operating cost management and efficiency improvements ▪ Capex with returns ab
Slide 46: Cash allocation
Cash allocation Cash allocation priority Reinvest in the business Return cash to shareholders Capex Stable Dividends Acquisitions Share Buyback l 46
Slide 47: Unique track record for continued profitability and added value
Unique track record for continued profitability and added value Sales (in € mn) Earnings After Tax (in € mn) 3,000 2,572 300 228 2,500 172 2,000 200 1,459 1,500 1,000 100 500 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 EBIT (in € mn) FVA (i
Slide 48: Development EBIT – Cost of Capital – FVA
Development EBIT – Cost of Capital – FVA € mn 450 400 383 EBIT 371 373 Cost of capital 342 350 321 FVA 312 313 293 300 264 257 250 246 250 251 250 230 222 208 195 200 180 183 186 174 172 161 150 129 137 110 117 100 147 86 132 100 123 71 114 90 96 78 85 83 50 37 61 62 63 67 58 58 49 0 2004 2005 2006
Slide 49: Stable Sales in 2019
Stable Sales in 2019 € mn 2015 2016 2017 2018 2019 Δ 18/19 Sales 2,079 2,267 2,473 2,567 2,572 0.2% Gross Profit 791 851 882 899 890 -1.0% Gross Profit margin 38.1% 37.5% 35.7% 35.0% 34.6% -0.4%-points Other function costs -467 -499 -526 -542 -580 7.0% EBIT before at Equity 324 352 356 357 310 -13.2
Slide 50: Solid balance sheet and strong cash flow generation
Solid balance sheet and strong cash flow generation € mn 2019 2018 2017 2016 2015 Total assets 2,023 1,891 1,751 1,676 1,490 Goodwill 175 174 173 185 166 Equity 1,561 1,456 1,307 1,205 1,070 Equity ratio 77% 77% 75% 72% 72% € mn 2019 2018 2017 2016 2015 Net liquidity 193 191 160 146 101 Operating ca
Slide 51: Regional sales decline 2019
Regional sales decline 2019 Sales in EMEA, Asia-Pacific and Americas decline slightly 2019 2018 Growth Organic External FX (€ mn) (€ mn) EMEA 1,579 1,618 -2% -2% - -0% Asia-Pacific 718 706 +2% -1% +2% +1% Americas 418 409 +2% -1% +0% +3% Consolidation -143 -166 - - - - Total 2,572 2,567 +0% -1% +1%
Slide 52: EBIT by regions
EBIT by regions 2019 (2018) € mn 400 49 12 321 350 (59) (11) (383) 93 300 (102) 250 167 200 (211) 150 100 50 0 EBIT margin Europe Asia-Pacific, Africa Americas Holding/cons. Group before at equity 9.9% (11.4%) 13.0% (14.4%) 11.7% (14.4%) 12.1% (13.9%) l 52
Slide 53: Cash flow 2019
Cash flow 2019 € mn 2019 2018 Δ in € mn Δ in % Earnings after tax 228 288 -60 -21 Amortization/Depreciation and impairment 79 58 21 36 Changes in net operating working capital (NOWC) 45 -48 93 - Other changes -23 -30 7 -23 Capex -154 -121 -33 27 Free cash flow before acquisitions1 175 147 28 19 Acqu
Slide 54: Net Liquidity
Net Liquidity € mn 450 400 -75 -23 45 350 300 228 -131 250 -13 -7 200 -22 150 Free cash flow before acquisitions 191 €175 mn 100 193 50 0 Net liquidity Leasing Earnings after D&A, Imp ./. NOWC Other Dividend Acquisitions Other Net liquidity Dec 2018 tax Capex changes changes Dec 2019 l 54
Slide 55: Net operating working capital (NOWC)
Net operating working capital (NOWC)* 650 24.0% 23.4% 23.3% 600 22.3% 22.5% 21.8% 550 21.8% 21.0% 21.3% 500 21.0% 450 400 19.5% 350 77 78 79 81 85 80 85 300 18.0% 2014 2015 2016 2017 2018 2019 Q1 2020 NOWC (in € mn) NOWC (in %)* NOWC (in days) * In relation to the annualized sales revenues of the la
Slide 56: Quarterly income statement
Quarterly income statement 2017 2018 2019 2020 € mn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 618 629 615 611 643 668 642 614 643 653 656 620 616 Gross Profit 226 226 215 215 225 239 222 213 217 224 231 218 218 Gross Profit margin (in %) 36.6 35.8 35.0 35.2 35.0 35.8 34.6 34.7 33.7 34.3
Slide 57: 2019 quarterly figures by region
2019 quarterly figures by region EMEA Asia-Pacific North and South America 2019 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Sales by company location 400 399 402 378 1,579 171 184 180 183 718 106 106 108 98 418 EBIT before at equity income 36 39 48 33 156 21 23 23 26 93 14 15 12 8 49 in % of sales
Slide 58: Quarterly sales & EBIT by regions
Quarterly sales & EBIT by regions 20181 2019 2020 Sales (€ mn) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY EMEA 415 414 408 381 1,618 400 399 402 378 1,579 401 Δ Y-o-Y in % - - - - - -4 -4 -1 -1 -2 0 Asia-Pacific 178 191 173 164 706 171 184 180 183 718 146 Δ Y-o-Y in % - - - - - -4 -4 4 12 2 -15 Am
Slide 59: Quarterly sales growth split by regions
Quarterly sales growth split by regions 2019 2020 Organic Growth (in %) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY EMEA -3 -3 -1 -1 -2 0 Asia-Pacific -5 -6 -1 8 -1 -16 Americas 8 -2 -1 -7 -1 -6 FUCHS Group -1 -3 0 0 -1 -6 2019 2020 External Growth (in %) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY EMEA - - - - - - Asia-Pacifi
Slide 60: The Executive Board
The Executive Board Stefan Fuchs: CEO; Corporate Group Development, HR, Dr. Lutz Lindemann: CTO; R&D, Technology, Product Dr. Timo Reister: Asia-Pacific, Americas, Industrial Division PR & Marketing, Strategy, Inoviga GmbH Management, Supply Chain, Sustainability, Mining Division, OEM Division Dr. R
Slide 61: Executive Compensation & FUCHS Shares
Executive Compensation & FUCHS Shares Executive Board Supervisory Board 27,5% 50% of variable compensation of variable compensation must be invested in FUCHS preference shares with must be invested in FUCHS preference shares with a 4 year lock-up period. a lock-up period of 4 years. l 61
Slide 62: Financial Calendar & Contact
Financial Calendar & Contact Financial Calendar 2020 Investor Relations Contact July 30, 2020 Half-year Financial Report 2020 FUCHS PETROLUB SE Friesenheimer Str. 17 November 3, 2020 Quarterly Statement Q3 2020 68169 Mannheim www.fuchs.com/group/investor-relations The financial calendar is updated r
Slide 63: Disclaimer
Disclaimer The information contained in this presentation is for background purposes only and is subject to amendment, revision and updating. Certain statements and information contained in this presentation may relate to future expectations and other forward-looking statements that are based on man
Fuchs — DB German, Swiss and Austrian Conference 2020 on 6ix