Fuchs Se · XETR:FPE
Fuchs — Fuchs Petrolub — Non-Deal Roadshow (March 2018)
67 slides from Fuchs's roadshow presentation, March 2018
Slide 1: FUCHS GROUP Investor Presentation, March 2018
FUCHS GROUP New Thinking | Investor Presentation, March 2018 | Thomas Altmann, Head of Investor Relations
Slide 2: Agenda
Agenda 01 | The Leading Independent Lubricants Company 02 | FY 2017 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 54% of suppliers of lubricants ordinary shares Established 3 generations ago as a €2.5 bn family-owned business sales A full range of over 10,000 More than 5,000 Preference share is listed lubricants and related employees in the MD
Slide 5: Top 20 lubricants manufacturers
Top 20 lubricants manufacturers ▪ A top-10 ranking lubricants manufacturer ▪ Number 1 among the independent lubricants companies l5
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 58 Operating Companies 33 Production Sites As of Dec. 2017 l7
Slide 8: Full-line supplier advantage
Full-line supplier advantage Sales 2017: €2.5 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 FUCHS sales revenues Industrial goods manufacturing 2017: €2.5 bn Vehicle manufacturing 7% 7% 19% Energy and mining Trade, transport and services 29% 29% Agriculture and construction 9% Engineering / machinery construction Top 20 Customers account for ~ 25% of 2017 s
Slide 10: Organic growth potential in emerging countries
Organic growth potential in emerging countries Market Demand FUCHS Sales (by customer location) -1 % +174 % 36.4 mn t 36.1 mn t € 902 mn € 2,473 mn 19% 27% 51% (1,262) 27% 34% 17% (411) 54% 59% (531) 39% 32% (800) 24% (219) 17% (152) 2000 2017 2000 2017 Asia-Pacific & MEA Americas Europe l 10
Slide 11: 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 12: Investment in the future
Investment in the future R&D, capex, regular amortisation & depreciation R&D expenses 2017: €47 mn Capex 2017: €105 mn € mn 50 120 105 45 100 93 40 35 80 70 30 25 60 52 53 50 47 20 9 PPA 39 9 40 15 28 30 3 10 20 5 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Capex Regular amortisation/depre
Slide 13: Investment initiative
Investment initiative Growth/replacement/efficiency ▪ For 2016 - 2018 around €300 mn capex was planned with focus on the expansion of Mannheim, Kaiserslautern and Chicago as well as new plants in China, Australia and Sweden. As of today we expect capex to be ~ €340 mn. ▪ From today‘s perspective mor
Slide 14: Investment initiative
Investment initiative 150 € mn 100 50 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 l 14
Slide 15: FUCHS' 3C grease commitment
FUCHS‘ 3C grease commitment Germany / USA / China ▪ Globally identical production equipment ▪ Globally identical finishing equipment ▪ Globally identical quality control test devices ▪ Globally similar raw materials ▪ Globally identical quality standards l 15
Slide 16: Strong track record of integrating businesses
Strong track record of integrating businesses Revenues (p.a.) 2016 Ultrachem (US) € 15 mn Chevron Lubricants (US) € 11 mn 2015 Statoil Fuel & Retail Lubricants AB (SVE) € 140 mn Deutsche Pentosin-Werke GmbH (GER) € 135 mn 2014 Lubritene (ZA) € 15 mn Batoyle (UK) € 15 mn 2010 Cassida (global) € 21 mn
Slide 17: FY 2017
02 FY 2017
Slide 18: Highlights FY 2017
Highlights FY 2017 Sales +9% EBIT +1% to €2.5 bn to €373 mn Dividend +2% EPS +4% to €0.91 per pref. share / ▪ Strong organic growth in Asia-Pacific, Africa €0.90 per ord. share and Americas ▪ Slight external growth in North America Outlook 2018 ▪ Slight negative currency effect ▪ Sales +3% to +6% ▪
Slide 19: FY 2017 Group sales
FY 2017 Group sales € mn 2,600 +206 +17 -17 (+9.1%) (+0.8%) (-0.8%) 2,473 2,400 +206 (+9.1%) 2,267 2,200 2,000 FY 2016 Organic Growth External Growth FX FY 2017 l 19
Slide 20: Sales by customer location
Sales by customer location Sales 2017: €2,473 mn (2,267) Asia-Pacific, Africa 800 (683) Europe 32% 1,262 (1,213) (30) 51% (54) 17% (16) Americas 411 (371) l 20
Slide 21: Regional sales growth FY 2017
Regional sales growth FY 2017 FY 2016 FY 2017 Growth Organic External FX (€ mn) (€ mn) Europe 1,417 1,515 +6.9% +7.1% - -0.2% Asia-Pacific, Africa 620 733 +18.2% +19.7% - -1.5% Americas 349 393 +12.6% +9.4% +4.9% -1.7% Consolidation -119 -168 - - - - Total 2,267 2,473 +9.1% +9.1% +0.8% -0.8% l 21
Slide 22: Income statement FY 2017
Income statement FY 2017 € mn FY 2016 FY 2017 Δ € mn Δ in % Sales 2,267 2,473 206 9.1 Gross Profit 851 882 31 3.6 Gross Profit margin 37.5 35.7 - -1.8 %-points Other function costs -499 -526 -27 5.4 EBIT before at Equity 352 356 4 1.1 At Equity 19 17 -2 -10.5% EBIT 371 373 2 0.5 Earnings after tax 2
Slide 23: EBIT 2017 at previous year's level
EBIT 2017 at previous year’s level € mn 400 +2 (+0.5%) 371 373 300 ▪ Raw material price increases can only be passed on with a time lag ▪ Regional changes in the product and customer mix 200 ▪ Increased scheduled amortization/depreciation of €6 mn ▪ Goodwill impairment in Sweden of €6 mn ▪ Increased
Slide 24: EBIT by regions
EBIT by regions FY 2017 (FY 2016) € mn 65 (62) 373 400 (371) 134 350 -13 (127) (-14) 300 250 187 (196) 200 150 100 50 0 EBIT margin Europe Asia-Pacific, Africa Americas Holding/cons. Group before at equity 12.2% (13.7%) 16.2% (17.7%) 16.5% (17.8%) 14.4% (15.5%) l 24
Slide 25: Cash flow FY 2017
Cash flow FY 2017 € mn FY 2016 FY 2017 Earnings after tax 260 269 Amortisation/Depreciation & Impairment 47 59 Changes in net operating working capital (NOWC) -22 -78 Other changes 13 -3 Capex -93 -105 Free cash flow before acquisitions 205 142 Acquisitions -46 -2 Free cash flow 164 140 l 25
Slide 26: Net Liquidity 2017
Net Liquidity 2017 € mn 450 400 -46 350 -78 300 269 250 Free cash flow before acquisitions -123 200 €142 mn 150 100 146 160 50 0 Net liquidity Earnings after tax Depreciation ./. NOWC Other changes Dividend Other changes Net liquidity Dec 2016 Capex Dec 2017 l 26
Slide 27: FUCHS Value Added (FVA)
FUCHS Value Added (FVA) Decrease by 3% Capital Employed Ø CE 1,252 1,259 1,227 1,236 (1,134) 1,208 Cost of Capital 1,179 123 (114) EBIT FVA 373 250 (371) (257) Q4 Q1 Q2 Q3 Q4 CE 2017 (2016) 2016 2017 2017 2017 2017 2017 Cost of Capital = CE x WACC (10%)
Slide 28: Comparison outlook and results 2017
Comparison outlook and results 2017 Outlook 2017 Outlook 2017 Outlook 2017 Performance indicator FY 2016 FY 2017 (March 17) (August 17) (October 17) € 2,473 mn Sales € 2,267 mn +4% to +6% +7% to +10% +7% to +10% (+9%) EBIT € 371 mn +1% to +5% +1% to +5% At or below FY 16 € 373 mn Low single-digit Lo
Slide 29: FY 2017 earnings summary
FY 2017 earnings summary ▪ Mainly volume driven organic sales growth; stronger euro in the second half of the year results in slight negative FX-effects for the full year ▪ Higher raw material prices, planned increase in costs as well as changes in product/customer mix lead to a less than proportion
Slide 30: Regional earnings summary
Regional earnings summary Europe: ▪ Almost all companies increased volume driven organic sales revenues ▪ Germany substantially increased intercompany sales / Rest of Europe mainly with local customers ▪ Impairment of €6 mn due to difficult environment, which corresponds to around half of the goodwi
Slide 31: Outlook 2018
Outlook 2018 Performance indicator Actual 2017 Outlook 2018 Sales € 2,473 mn +3% to +6% EBIT € 373 mn +2% to +4% FUCHS Value Added € 250 mn At previous year‘s level Free cash flow before acquisitions € 142 mn At previous year‘s level ▪ Sales growth mainly driven by organic volume growth as well as p
Slide 32: Shares
03 Shares
Slide 33: Breakdown ordinary & preference shares
Breakdown ordinary & preference shares (December 31, 2017) Ordinary shares Preference shares MDAX-listed Free Free Fuchs float float family 46% 100% 54% Basis: 69,500,000 ordinary shares Basis: 69,500,000 preference shares Characteristics: Characteristics: ▪ Dividend ▪ Dividend plus preference profi
Slide 34: Stable dividend policy
Stable dividend policy Dividend per Preference Share Market Capitalization € mn 1.00 0.91 7,000 Payout Ratio 2017: 47% 0.90 6,000 0.80 0.70 5,000 0.60 4,000 0.50 0.40 3,000 0.25 0.30 2,000 0.20 0.10 1,000 0.00 0 Our target: Increase the absolute dividend amount each year or at least maintain previou
Slide 35: Appendix
04 Appendix
Slide 36: Top lubricant countries 2017
Top 20 lubricant countries 2017 KT 8,000 ▪ 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 36
Slide 37: Regional per-capita lubricants demand 2017
Regional per-capita lubricants demand 2017 kg 20 15 10 5 0 l 37
Slide 38: 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 39: Workforce Structure
Workforce Structure 5,190 employees globally Regional Workforce Structure Functional Workforce Structure Other Germany European Marketing 1,516 (29%) Production Countries & Sales 1,557 1,942 2,242 (31%) (37%) (44%) 2017 2017* Asia- R&D 487 Pacific, (10%) Africa 1,085 Americas Admin (21%) 647 774 (13
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 development logistics With our “think tank“ in the FUCHS family, inoviga GmbH, we created a unit aiming computational integrated approaches logistics to deliberately engage in new ways of thinking and to be the driving force behind producti
Slide 42: Smart services
Smart services How FluidVision fits into FUCHS’ digitalization strategy smart services: objectives ▪ Make the lubricant talk in real-time by introducing online condition monitoring via sensors ▪ Empower customers to take immediate actions to keep the lubricant and the machine healthy, preventing unp
Slide 43: Lubricant applications in passenger cars
Lubricant applications in passenger cars In modern cars there are more than 30 different types of greases l 43
Slide 44: Electrification of cars creates new applications
Electrification of cars creates new applications Development passenger car production (in mn) Powertrain ICE HEV BEV 74 89 102 111 120 Applications 13% 10% 24% 37% 98% 97% 85% Engine oil ✓ ✓ – 72% 53% Transmission oil ✓ ✓ ✓ 2010 2015 2020 2025 2030 Greases ✓ ✓ ✓ Combustion Engines Hybrids Electric S
Slide 45: Electric cars – new technology calls for new lubrication
Electric cars – new technology calls for new lubrication ▪ Electrification of cars will lead to new applications and higher requirements for existing applications ▪ Regardless of the powertrain type, every car needs a variety of other lubricant applications ▪ Combustion engines will face further eff
Slide 46: EU project ODIN – Cooperation with BOSCH, Renault and GKN
EU project ODIN – Cooperation with BOSCH, Renault and GKN Goal: Optimal integration of a high speed electric motor with a multi-speed gear train in a single gearbox/housing, including the power electronics and thermal management unit. The resulting integrated electric drive shall be as compact and l
Slide 47: Further market consolidation to be expected
Further market consolidation to be expected Manufacturers ▪ High degree of fragmentation 130 Major oil companies ▪ Concentration especially amongst smaller companies Independent lubricant manufacturers* 590 Market Shares ▪ Differences are enormous Other 710 > 50% manufacturers Top 10 manufacturers <
Slide 48: 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 49: Cash allocation
Cash allocation Cash allocation priority Reinvest in the business Return cash to shareholders Capex Stable Dividends Acquisitions Share Buyback l 49
Slide 50: 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) 2,473 2,400 300 269 1,800 1,394 200 1,200 110 100 600 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EBIT (in € mn) FVA (in € mn) 15.1
Slide 51: Development EBIT – Cost of Capital – FVA
Development EBIT – Cost of Capital – FVA € mn 400 371 373 342 350 EBIT 312 313 Cost of capital 293 300 FVA 264 257 250 246 250 250 230 222 208 195 200 180 183 186 172 161 150 129 137 110 117 100 100 86 123 113 71 90 96 78 85 83 50 37 67 58 61 59 62 63 49 0 2004 2005 2006 2007 2008 2009 2010 2011 201
Slide 52: EBIT increase of 1% in 2017
EBIT increase of 1% in 2017 € mn 2013 2014 2015 2016 2017 Δ 16/17 Sales 1,832 1,866 2,079 2,267 2,473 9.1% Gross Profit 690 693 791 851 882 3.6% Gross Profit margin 37.7% 37.2% 38.1% 37.5% 35.7% -1.8 %-points Other function costs -391 -400 -467 -499 -526 5.4% EBIT before at Equity 299 293 324 352 35
Slide 53: Europe
Europe 2017 Sales + 6.9% / EBIT - 4.6% € mn 1,600 Sales 1,500 1,400 1,300 1,515 1,200 1,417 1,100 1,227 1,104 1,113 1,000 2013 2014 2015 2016 2017 200 EBIT 180 160 196 187 140 153 162 162 Employees 2017: 3,349 (3,253) 120 2013 2014 2015 2016 2017 l 53
Slide 54: Asia-Pacific, Africa
Asia-Pacific, Africa 2017: Sales + 18.2% / EBIT + 5.5% € mn 700 Sales 600 500 733 620 583 400 498 517 300 2013 2014 2015 2016 2017 130 120 EBIT 110 134 127 100 122 103 106 90 Employees 2017: 1,085 (1,062) 80 2013 2014 2015 2016 2017 l 54
Slide 55: Americas
Americas 2017: Sales + 12.6% / EBIT + 4.8% 400 € mn Sales 350 300 393 353 349 250 307 316 200 2013 2014 2015 2016 2017 80 EBIT 70 60 62 65 62 65 50 52 Employees 2017: 647 (612) 40 2013 2014 2015 2016 2017 l 55
Slide 56: Solid balance sheet and strong cash flow generation
Solid balance sheet and strong cash flow generation € mn 2013 2014 2015 2016 2017 Total assets 1,162 1,276 1,490 1,676 1,751 Goodwill 82 88 166 185 173 Equity 854 916 1,070 1,205 1,307 Equity ratio 74% 72% 72% 72% 75% € mn 2013 2014 2015 2016 2017 Net liquidity 167 186 101 146 160 Operating cash flo
Slide 57: Net operating working capital (NOWC)
Net operating working capital (NOWC)* 600 21.8% 22.3% 550 22.0% 21.3% 21.0% 21.0% 500 450 19.9% 81 20.0% 400 79 78 350 77 77 73 300 18.0% 2012 2013 2014 2015 2016 2017 NOWC (in € mn) NOWC (in %) NOWC (in days) * In relation to the annualized sales revenues of the last quarter l 57
Slide 58: Net operating working capital (NOWC)
Net operating working capital (NOWC) Year 2012 2013 2014 2015 2016 2017 Sales (€ mn) 1,819 1,832 1,866 2,079 2,267 2,473 Annualized last quarterly sales (€ mn) 1,760 1,810 1,852 2,161 2,256 2,442 NOWC/sales (%) 21.0 19.9 21.0 21.3 21.8 22.3 Inventories/days 79 75 76 80 84 84 Debtors/days 52 53 56 54
Slide 59: Quarterly income statement
Quarterly income statement 2015 2016 2017 € mn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 493 515 531 540 550 586 567 564 618 629 615 611 Gross Profit 188 200 203 200 206 221 214 210 226 226 215 215 Gross Profit margin (in %) 38.1 38.8 38.2 37.1 37.4 37.7 37.8 37.1 36.6 35.8 35.0 35.2 Other function
Slide 60: Quarterly sales by regions
Quarterly sales by regions 2015 2016 2017 Sales (€ mn) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Europe 278 293 321 335 1,227 349 372 359 337 1,417 368 383 391 373 1,515 Asia-Pacific, Africa 147 155 141 140 583 144 154 153 169 620 181 182 181 189 733 Americas 88 88 91 86 353 85 87 88 89 349 104 1
Slide 61: Quarterly sales growth split by regions
Quarterly sales growth split by regions 2016 2017 Organic Growth (in %) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Europe 1.8 4.7 4.7 2.7 3.5 5.5 3.3 9.0 11.0 7.1 Asia-Pacific, Africa 2.0 2.5 11.0 22.5 9.2 20.9 17.1 23.0 18.3 19.7 Americas -3.4 1.8 -4.0 -1.5 -1.8 9.0 6.4 12.7 10.1 9.4 FUCHS Group 1.1 3.7 3.0 5.2
Slide 62: Quarterly EBIT by regions
Quarterly EBIT by regions 2015 2016 2017 EBIT (€ mn) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Europe 39 44 45 34 162 43 52 54 47 196 46 48 52 41 187 Asia-Pacific, Africa 27 32 28 35 122 29 32 29 37 127 34 32 32 36 134 Americas 17 16 17 15 65 15 17 15 15 62 17 15 18 15 65 Consolidation -1 -2 -1 -
Slide 63: The Executive Board
The Executive Board Stefan Fuchs: CEO, Corporate Development, HR, PR, Dr. Lutz Lindemann: R&D, Technology, Supply Chain, Dr. Timo Reister: Asia-Pacific, Africa Americas Sustainability, OEM, Mining Dr. Ralph Rheinboldt: Europe, LUBRITECH, SAP/ERP- Dagmar Steinert: CFO, Finance, Controlling, IR, Syste
Slide 64: Executive Compensation & FUCHS Shares
Executive Compensation & FUCHS Shares Executive Board Supervisory Board 25% 50% of variable compensation of variable compensation must be invested in FUCHS preference shares with must be invested in FUCHS preference shares with a 3 year lock-up period a lock-up period of 5 years. The vesting period
Slide 65: Extention of contracts of the Executive Board until 2023
Extention of contracts of the Executive Board until 2023 The contracts of the Executive Board members Dr. Lutz Lindemann, Dr. Timo Reister, Dr. Ralph Rheinboldt and Dagmar Steinert are extended until December 2023 ▪ Dr. Lutz Lindemann (57 years): 19 years at FUCHS, Member of the Executive Board sinc
Slide 66: Disclaimer
Disclaimer This presentation contains statements about future development that are based on assumptions and estimates by the management of FUCHS PETROLUB SE. Even if the management is of the opinion that these assumptions and estimates are accurate, future actual developments and future actual resul
Slide 67: Financial Calendar & Contact
Financial Calendar & Contact Financial Calendar 2018 Investor Relations February 22, 2018 Preliminary figures for the Full Year 2017 FUCHS PETROLUB SE Friesenheimer Str. 17 March 21, 2018 Full Year Results 2017 68169 Mannheim www.fuchs.com/group/investor-relations April 27, 2018 Quarterly Statement