Fuchs Se · XETR:FPE
Fuchs — Fuchs Petrolub — Non-Deal Roadshow (November 2017)
58 slides from Fuchs's roadshow presentation, November 2017
Slide 1: FUCHS GROUP In Motion – Investor Presentation
FUCHS GROUP In Motion | Investor Presentation, November 2017 | Dagmar Steinert, CFO | Thomas Altmann, Head of Investor Relations
Slide 2: Agenda
Agenda 01 | The Leading Independent Lubricants Company 02 | Q1-3 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 €2.3 bn family-owned business sales A full range of over 10,000 Almost 5,000 Preference share is listed lubricants and related employees in the MDAX
Slide 5: Top lubricants manufacturers 2016
Top 20 lubricants manufacturers 2016 ▪ 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 57 Operating Companies 34 Production Sites As of Dec. 2016 l7
Slide 8: Full-line supplier advantage
Full-line supplier advantage Sales 2016: €2.3 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 2016: €2.3 bn Vehicle manufacturing 8% 19% 7% Energy and mining Trade, transport and services 28% 30% Agriculture and construction 8% Engineering / machinery construction l9
Slide 10: Organic growth potential in emerging countries
Organic growth potential in emerging countries Market Demand FUCHS Sales (by customer location) -2 % +151 % 36.4 mn t 35.7 mn t € 902 mn € 2,267 mn 19% 27% 54% (1,213) 28% +128 % 34% 16% (371) 59% (531) +69 % 53% 39% 30% +349 % (683) 24% (219) 17% (152) 2000 2016 2000 2016 Asia-Pacific & MEA America
Slide 11: Challenges & Opportunities
Challenges & Opportunities Global Networked & Agile Company Profitable Growth Structures Digitalization E-Mobility l 11
Slide 12: Investment in the future
Investment in the future R&D, capex, amortisation & depreciation R&D expenses 2016: €44 mn Capex 2016: €93 mn € mn 50 100 93 45 90 40 80 70 35 70 61 30 60 52 50 50 47 25 39 9 PPA 20 40 30 3 27 28 15 30 10 20 5 10 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Capex Regular amortisation/deprec
Slide 13: Investments 2016 - 2018
Investments 2016 - 2018 Planned investments of €300mn (~ €100mn p.a.) ▪ Expansion of the Mannheim site, Germany (2016-2018) ▪ Expansion of the Kaiserslautern site, Germany (2017) ▪ Expansion of the Chicago site, USA (2016-2018) ▪ New plant in WuJiang, China (2017-2018) ▪ New plants in Australia and
Slide 14: FUCHS' 3C grease commitment
FUCHS‘ 3C grease commitment ▪ Globally identical production equipment ▪ Globally identical finishing equipment ▪ Globally identical quality control test devices ▪ Globally similar raw materials ▪ Globally identical quality standards l 14
Slide 15: 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 16: Q1-3 2017
02 Q1-3 2017
Slide 17: Highlights Q1-3 2017
Highlights Q1-3 2017 Sales +9% to €1,862 mn EBIT +2% ▪ Strong organic growth in Asia-Pacific, Africa to €281 mn and Americas ▪ Slight external growth in North America Outlook 2017 ▪ Ongoing decreasing currency effect ▪ Sales outlook reaffirmed ▪ Earnings forecast downgraded l 17
Slide 18: Q1-3 Group sales
Q1-3 Group sales € mn 2,000 +15 +2 +142 (+0.2%) (+0.9%) (+8.3%) 1,800 1,862 1,703 +159 1,600 (+9.4%) 1,400 1,200 1,000 Q1-3 2016 Organic Growth Acquisitions FX Q1-3 2017 l 18
Slide 19: Regional sales growth Q1-3 2017
Regional sales growth Q1-3 2017 Q1-3 2016 Q1-3 2017 Growth Organic External FX (€ mn) (€ mn) Europe 1,080 1,142 +5.7% +5.9% - -0.2% Asia-Pacific, Africa 451 544 +20.7% +20.3% - +0.4% Americas 260 302 +16.3% +9.4% +5.7% +1.2% Consolidation -88 -126 - - - - Total 1,703 1,862 +9.4% +8.3% +0.9% +0.2% l
Slide 20: Income statement Q1-3 2017
Income statement Q1-3 2017 € mn Q1-3 2016 Q1-3 2017 Δ € mn Δ in % Sales 1,703 1,862 159 9.4 Gross Profit 641 667 26 4.0 Gross Profit margin 37.6% 35.8% - -1.8%-points Other function costs -378 -400 -22 5.6 EBIT before at Equity 263 267 4 1.7 At Equity 13 14 1 EBIT 276 281 5 1.6 Earnings after tax 19
Slide 21: EBIT by regions
EBIT by regions Q1-3 2017 (Q1-3 2016) € mn 50 (47) 281 300 (276) 98 (90) -13 250 (-10) 200 146 (149) 150 100 50 0 EBIT margin Europe Asia-Pacific, Africa Americas Holding/cons. Group before at equity 12.7% (13.7%) 15.7% (17.2%) 16.5% (18.2%) 14.3% (15.4%) l 21
Slide 22: Cash flow Q1-3 2017
Cash flow Q1-3 2017 € mn Q1-3 2016 Q1-3 2017 Earnings after tax 191 198 Amortisation/Depreciation 35 40 Changes in net operating working capital (NOWC) -45 -91 Other changes 17 8 Capex -53 -66 Free cash flow before acquisitions 145 89 Acquisitions -20 -1 Free cash flow 125 88 l 22
Slide 23: Q1-3 2017 earnings summary
Q1-3 2017 earnings summary ▪ Sales and earnings target met for Q1-3 2017 ▪ Capex increase according to plan ▪ Higher raw material prices, strong euro and planned increase in costs lead to a less than proportional increase in earnings ▪ Raw material price increases can only be passed on with a time l
Slide 24: Updated outlook 2017
Updated outlook 2017 Outlook 2017 Outlook 2017 Outlook 2017 Performance indicator Actual 2016 (March 17) (August 17) (October 17) Sales € 2,267 mn +4% to +6% +7% to +10% +7% to +10% EBIT € 371 mn +1% to +5% +1% to +5% At or below FY 16 Low single-digit Low single-digit FUCHS Value Added € 257 mn Bel
Slide 25: Shares
03 Shares
Slide 26: Breakdown ordinary & preference shares
Breakdown ordinary & preference shares (September 30, 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 prof
Slide 27: Stable dividend policy
Stable dividend policy Dividend per Preference Share Market Capitalization € mn 1.00 7,000 0.89 Payout Ratio 2016: 47% 0.90 6,000 0.80 5,000 0.70 0.60 4,000 0.50 3,000 0.40 0.30 2,000 0.17 0.20 1,000 0.10 0.00 0 Our target: Increase the absolute dividend amount each year or at least maintain previou
Slide 28: Appendix
04 Appendix
Slide 29: Top lubricant countries 2016
Top 20 lubricant countries 2016 KT 7,000 ▪ China and the USA cover more than one third of the world lubricants market 6,000 ▪ FUCHS is present in every important lubricants 5,000 consuming country 4,000 3,000 2,000 1,000 0 l 29
Slide 30: Regional per-capita lubricants demand 2016
Regional per-capita lubricants demand 2016 kg 20 15 10 5 0 l 30
Slide 31: 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 32: Workforce Structure
Workforce Structure 4,898 employees globally Regional Workforce Structure Functional Workforce Structure Other Germany European 1,415 (29%) Marketing Production Countries & Sales 1,554 1,837 2,218 (32%) (38%) (45%) 2016 2016 Asia- R&D Pacific, 447 Africa (9%) 1,040 Americas Admin (21%) 606 679 (12%)
Slide 33: FUCHS & E-mobility
FUCHS & E-mobility Development passenger car production (in mn) Implication for FUCHS 102 120 Revolution – Complete switch to only EVs: 74 89 111 13% 10% 24% - No power train; reduced oil consumption 37% - New additional high value applications - Sales per car would decrease slightly 98% 97% 85% Evo
Slide 34: 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 35: Acquisitions 2016
Acquisitions 2016 Sales 2016: €5 mn / EBIT 2016: €1 mn Deal Structure Share Deal; €15 mn sales p.a.; purchase price €26 mn Industrial specialty lubricants Focus (e.g. for compressors and industrial maintenance) Closing 1st December 2016 Acquisition of Chevron’s foodgrade lubricants and white oil bus
Slide 36: 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 37: Cash allocation
Cash allocation Cash allocation priority Reinvest in the business Return cash to shareholders Capex Stable Dividends Acquisitions Share Buyback l 37
Slide 38: 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) 2,267 2,400 300 260 1,800 1,365 200 1,200 120 100 600 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EBIT (in € mn) FVA (in € mn) 16.4
Slide 39: EBIT increase of 8% in 2016
EBIT increase of 8% in 2016 € mn 2012 2013 2014 2015 2016 Δ 15/16 Sales 1,819 1,832 1,866 2,079 2,267 9.0% Gross Profit 666 690 693 791 851 7.5% Gross Profit margin 36.6% 37.7% 37.2% 38.1% 37.5% -0.6 % points Other function costs -387 -391 -400 -467 -499 6.7% EBIT before at Equity 279 299 293 324 35
Slide 40: Europe
Europe 2016 Sales + 15.5% / EBIT +21.0% € mn 1,500 Sales 1,400 1,300 1,200 1,417 1,100 1,227 1,081 1,104 1,113 1,000 2012 2013 2014 2015 2016 200 EBIT 180 160 196 140 153 162 162 Employees 2016: 3,149 (3,112) 120 134 2012 2013 2014 2015 2016 l 40
Slide 41: Asia-Pacific, Africa
Asia-Pacific, Africa 2016: Sales + 6.3% / EBIT + 4.3% € mn 700 Sales 600 500 620 583 400 487 498 517 300 2012 2013 2014 2015 2016 130 120 EBIT 110 127 100 122 103 106 90 96 Employees 2016: 1,040 (1,029) 80 2012 2013 2014 2015 2016 l 41
Slide 42: Americas
Americas 2016: Sales - 1.2% / EBIT - 4.0% € mn 350 Sales 300 353 349 320 307 316 250 200 2012 2013 2014 2015 2016 80 EBIT 70 60 68 65 50 62 62 52 Employees 2016: 606 (588) 40 2012 2013 2014 2015 2016 l 42
Slide 43: Solid balance sheet and strong cash flow generation
Solid balance sheet and strong cash flow generation € mn 2012 2013 2014 2015 2016 Total assets 1,109 1,162 1,276 1,490 1,676 Goodwill 85 82 88 166 185 Equity 782 854 916 1,070 1,205 Equity ratio 71% 74% 72% 72% 72% € mn 2012 2013 2014 2015 2016 Net liquidity 135 167 186 101 146 Operating cash flow 2
Slide 44: Net operating working capital (NOWC)
Net operating working capital (NOWC)* 600 22.7% 550 21.8% 22.0% 21.3% 21.0% 21.0% 500 450 19.9% 83 20.0% 400 79 78 350 77 77 73 300 18.0% 2012 2013 2014 2015 2016 30.09.2017 NOWC (in € mn) NOWC (in %) NOWC (in days) * In relation to the annualized sales revenues of the last quarter l 44
Slide 45: Regional sales growth FY 2016
Regional sales growth FY 2016 2015 2016 Growth Organic External FX (€ mn) (€ mn) Europe 1,227 1,417 +15.5% +3.5% +14.0% -2.0% Asia-Pacific, Africa 583 620 +6.3% +9.2% +2.0% -4.9% Americas 353 349 -1.2% -1.8% +2.6% -2.0% Consolidation -84 -119 - - - - Total 2,079 2,267 +9.0% +3.3% +8.6% -2.9% l 45
Slide 46: EBIT by regions
EBIT by regions FY 2016 (FY 2015) € mn 62 (65) 371 400 (342) 127 350 (122) -14 (-7) 300 250 196 (162) 200 150 100 50 0 Europe Asia-Pacific, Africa Americas Holding/cons. Group EBIT margin before at equity 13.7% (13.1%) 17.8% (18.2%) 17.9% (18.4%) 15.5% (15.6%) l 46
Slide 47: Income Statement FY 2016
Income Statement FY 2016 € mn FY 15 FY 16 Δ € mn Δ in % Sales 2,079 2,267 188 9.0 % Gross Profit 791 851 60 7.5 % Gross Profit margin 38.1% 37.5% - -0.6 % points Other function costs -467 -499 -32 6.7 % EBIT before at Equity 324 352 28 8.6 % At Equity 18 19 1 3.4 % EBIT 342 371 29 8.3 % Earnings aft
Slide 48: Cash flow
Cash flow € mn FY 15 FY 16 Gross cash flow 274 298 Changes in net operating working capital -1 -22 Other changes 8 24 Operating cash flow 281 300 Capex -50 -93 Other changes 1 -2 Free cash flow before acquisitions 232 205 Acquisitions -170 -41 Free cash flow 62 164 l 48
Slide 49: Net Liquidity 2016
Net Liquidity 2016 € mn 350 300 41 250 200 205 114 -5 150 100 101 146 50 0 Net liquidity Dec 2015 Free cash flow before Acquisitions (cashout) Dividend Other changes Net liquidity Dec 2016 acqu. l 49
Slide 50: FUCHS Value Added (FVA)
FUCHS Value Added (FVA) Increase by 5% Capital Employed 1,179 Cost of Capital 114 (96) 1,154 Ø CE 1,143 1,134 (960) 1,108 EBIT FVA 371 257 1,087 (342) (246) Q4 Q1 Q2 Q3 Q4 CE 2016 (2015) 2015 2016 2016 2016 2016 2016 Cost of Capital = CE x WACC (10%) l 50
Slide 51: 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 Gross Profit 188 200 203 200 206 221 214 210 226 226 215 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 Other function costs -110 -1
Slide 52: 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 Asia-Pacific, Africa 147 155 141 140 583 144 154 153 169 620 181 182 181 Americas 88 88 91 86 353 85 87 88 89 349 104 101 97 Consolidatio
Slide 53: 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 Asia-Pacific, Africa 2.0 2.5 11.0 22.5 9.2 20.9 17.1 23.0 Americas -3.4 1.8 -4.0 -1.5 -1.8 9.0 6.4 12.7 FUCHS Group 1.1 3.7 3.0 5.2 3.3 9.3 5.7 10.2 2016 2017
Slide 54: 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 Asia-Pacific, Africa 27 32 28 35 122 29 32 29 37 127 34 32 32 Americas 17 16 17 15 65 15 17 15 15 62 17 15 18 Consolidation -1 -2 -1 -3 -7 -2 -3 -4 -5 -14
Slide 55: 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 56: 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 57: 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 58: Financial Calendar & Contact
Financial Calendar & Contact Financial Calendar 2018 Contact 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 April 27, 2018 Quarterly Statement Q1 2018 Investor Relations May 8, 2018 Annual Gene