Slide 1: FUCHS Group Investor Presentation
FUCHS GROUP Investor Presentation | January 2020 | Thomas Altmann, Head of Investor Relations
Slide 2: Agenda
Agenda 01 | The Leading Independent Lubricants Company 02 | Q1-3 2019 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 2018 A full range of over 10,000 Around 5,500 Preference share is listed lubricants and related employees in t
Slide 5: Top lubricants manufacturers
Top 20 lubricants manufacturers Number 1 among the independent lubricants companies Manufacturers Market Shares Major oil companies Independent 130 Other 710 Top 10 lubricant manufacturers manufacturers manufacturers* <50% >50% 590 High degree of fragmentation Concentration especially amongst sm
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 l7 As of Dec. 2018
Slide 8: Full-line supplier advantage
Full-line supplier advantage Sales 2018: €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% 19% Sales 2018: Trade, transport and services 28% €2.6 bn Vehicle manufacturing 31% 9% 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) 0% +185 % 36.4 mn t 36.4 mn t € 902 mn € 2,567 mn 19% 27% 50% (1,293) 27% 34% 17% (428) 54% 59% (531) 39% 33% (846) 24% (219) 17% (152) 2000 2018 2000 2018 Asia-Pacific & MEA Americas Europe l 10
Slide 11: Investment in the future
Investment in the future R&D expenses and Capex € mn 60 2.5% 140 6% 52 121 120 50 47 105 44 100 93 39 40 33 80 30 2.0% 4% 58 60 52 50 53 47 11 20 39 11 40 10 PPA 30 PPA PPA 10 20 0 1.5% 0 2% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 R&D Expenses in % of Sales Capex Scheduled amortisation/dep
Slide 12: Investment initiative
Investment initiative Capex 2016-2021 €700+ 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 will peak in 2019 at €180 mn. In 2020/2021 more than €100+ mn p.a
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: FUCHS2025
FUCHS2025 Culture Values and the way we want to communicate Structure Global processes Strategy and standards - Vision for the future - Projects and action - Financial target l 14
Slide 15: 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 beginning of 2020 l 15
Slide 16: Acquisitions 2019
Acquisitions 2019 Automotive retail business Sales 2018 AUD 40mn (~ €25 mn), 65 employees Closing April 1, 2019 Automotive, medical, aerospace and in-vacuum industriy Sales 2018 USD 51mn (~ €46 mn), 180 employees Closing beginning of 2020 Chemical Process Management (CPM) Sales 2018
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: Q1-3 2019
02 Q1-3 2019
Slide 19: Highlights Q1-3 2019
Highlights Q1-3 2019 Sales at previous year‘s EBIT down by 17% to level at €1,952 mn €246 mn; EBIT comparable down by 14% Growth initiative results in costs increasing as planned Outlook 2019 specified Continuing weakness of automotive markets impacting German and Chinese business Sales (-3% t
Slide 20: Q1-3 2019 Group sales
Q1-3 2019 Group sales € mn 2,500 - 23 + 12 + 10 (- 1%) (+ 1%) (0%) 2,000 1,953 1,952 1,500 1,000 -1 (0%) 500 0 Q1-3 2018 Organic Growth External Growth FX Q1-3 2019 l 20
Slide 21: Regional sales growth Q1-3 2019
Regional sales growth Q1-3 2019 Continuing weakness in Europe and Asia Q1-3 2019 Q1-3 2018 Growth Organic External FX (€ mn) (€ mn) Europe, Middle East, Africa 1,201 1,237 -3% -3% - 0% Asia-Pacific 535 542 -1% -4% +2% +1% Americas 320 304 +5% +1% - +4% Consolidation -104 -130 - - - - Total 1,952 1,9
Slide 22: Income statement Q1-3 2019
Income statement Q1-3 2019 € mn Q1-3 2019 Q1-3 2018 Δ € mn Δ in % Sales 1,952 1,953 -1 0 Gross Profit 672 686 -14 -2 Gross Profit margin 34.4 % 35.1 % - -0.7 %-points Other function costs -433 -410 -23 -6 EBIT before at Equity 239 276 -37 -13 At Equity 7 21 -14 -67 EBIT 246 297 -51 -17 Earnings afte
Slide 23: EBIT by regions
EBIT by regions Q1-3 2019 (Q1-3 2018)1 € mn 300 41 8 246 (45) (10) (297) 250 67 (80) 200 150 130 (162) 100 50 0 EBIT margin EMEA Asia-Pacific Americas Holding/cons. Group before at equity1 10.2% (11.4%) 12.5% (14.8%) 12.8% (14.8%) 12.2% (14.1%) 1 2018 comparable l 23
Slide 24: Cash flow Q1-3 2019
Cash flow Q1-3 2019 € mn Q1-3 2019 Q1-3 2018 Δ in % Earnings after tax 176 219 -20 Amortization/Depreciation 54 42 29 Changes in net operating working capital (NOWC) -11 -57 -81 Other changes -22 -10 >100 Capex -103 -73 41 Free cash flow before acquisitions1 94 121 -22 Acquisitions1 -10 12 >-100 Fre
Slide 25: Q1-3 2019 earnings summary
Q1-3 2019 earnings summary Decrease in sales in EMEA and Asia-Pacific mainly due to weakness of the automotive market in China and Germany; Slight improvement in North America in Q3 compared to Q2 Positive FX effects North- and South America (+4%) due to a strong US dollar, minor negative effect
Slide 26: Outlook 2019
Outlook 2019 Actual Outlook 2019 Performance indicator 2018 March 19 August 19 October 2019 Sales €2,567 mn +2% to +4% -3% to +0% Upper end of -3% to +0% EBIT comparable €371 mn -5% to -2% -27% to -17% Upper end of -27% to -17% EBIT €383 mn -8% to -5% -30% to -20% Upper end of -30% to -20% l 26
Slide 27: Shares
03 Shares
Slide 28: Breakdown ordinary & preference shares
Breakdown ordinary & preference shares (December 31, 2018) 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 preferen
Slide 29: 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 € € mn 7,000 Payout Ratio 2018: 46% 0.95 1.00 6,000 0.80 5,000 0.60 4,000 3,000 0.40 0.27 2,000 0.20 1,000 0.00 0 l 29
Slide 30: Appendix
04 Appendix
Slide 31: Top lubricant countries
Top 20 lubricant countries KT 8,000 2007 2018 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 31
Slide 32: Regional per-capita lubricants demand
Regional per-capita lubricants demand kg 25 2007 2018 20 15 10 5 0 l 32
Slide 33: 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 34: Workforce Structure
Workforce Structure 5,446 employees globally Regional Workforce Structure Functional Workforce Structure Other Germany European Marketing 1,634 (30%) Countries & Sales Production 1,948 2,303 1,681 (36%) (43%) (32%) 2018 2018* Asia- R&D Pacific, 523 Africa (10%) Americas Admin 1,174 690 (21%) 815 (13
Slide 35: 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 36: Challenges & Opportunities
Challenges & Opportunities Global Networked & Agile Company Profitable Growth Structures Digitalization E-Mobility l 36
Slide 37: 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 38: 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 39: 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 40: 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 41: 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 42: Cash allocation
Cash allocation Cash allocation priority Reinvest in the business Return cash to shareholders Capex Stable Dividends Acquisitions Share Buyback l 42
Slide 43: 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) 2,567 288 3,000 300 2,500 2,000 200 1,500 1,178 121 1,000 100 500 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EBIT (in € mn) FVA (i
Slide 44: Development EBIT – Cost of Capital – FVA
Development EBIT – Cost of Capital – FVA € mn 450 400 383 EBIT 371 373 Cost of capital 342 350 FVA 312 313 293 300 264 257 250 246 250 251 250 230 222 208 195 200 180 183 186 172 161 150 129 137 110 117 100 132 100 86 123 71 113 90 96 78 85 83 50 37 61 62 63 67 58 59 49 0 2004 2005 2006 2007 2008 20
Slide 45: Stable EBIT in 2018
Stable EBIT in 2018 € mn 2014 2015 2016 2017 2018 Δ 17/18 Sales 1,866 2,079 2,267 2,473 2,567 3.8% Gross Profit 693 791 851 882 899 1.9% Gross Profit margin 37.2% 38.1% 37.5% 35.7% 35.0% -0.7%-points Other function costs -400 -467 -499 -526 -542 3.0% EBIT before at Equity 293 324 352 356 357 0.3% EB
Slide 46: Solid balance sheet and strong cash flow generation
Solid balance sheet and strong cash flow generation € mn 2018 2017 2016 2015 2014 Total assets 1,891 1,751 1,676 1,490 1,276 Goodwill 174 173 185 166 88 Equity 1,456 1,307 1,205 1,070 916 Equity ratio 77% 75% 72% 72% 72% € mn 2018 2017 2016 2015 2014 Net liquidity 191 160 146 101 186 Operating cash
Slide 47: Regional sales growth 2018
Regional sales growth 2018 Europe and Asia-Pacific, Africa declining in the course of the year 2018 2017 Growth Organic External FX (€ mn) (€ mn) Europe 1,546 1,515 +2% +3% 0% -1% Asia-Pacific, Africa 783 733 +7% +11% - -4% Americas 409 393 +4% +13% - -9% Consolidation -171 -168 - - - - Total 2,567
Slide 48: EBIT by regions
EBIT by regions 2018 (2017)1 € mn 59 11 383 (61) (9) (373) 400 121 350 (128) 300 250 192 (175) 200 150 100 50 0 EBIT margin Europe Asia-Pacific, Africa Americas Holding/cons. Group before at equity1 11.5% (11.4%) 13.9% (15.4%) 14.4% (15.5%) 13.9% (14.4%) 12017 comparable l 48
Slide 49: Cash flow 2018
Cash flow 2018 € mn 2018 2017 Δ in % Earnings after tax 288 269 7 Amortization/Depreciation 58 59 -2 Changes in net operating working capital (NOWC) -48 -78 -39 Other changes -30 -3 - Capex -121 -105 15 Free cash flow before acquisitions1 147 142 4 Acquisitions1 12 -2 - Free cash flow 159 140 14 1 I
Slide 50: Net Liquidity 2018
Net Liquidity 2018 € mn 500 450 -63 400 350 -48 -30 300 288 250 Free cash flow before acquisitions -126 200 €147 mn 10 150 100 160 191 50 0 Net liquidity Earnings after tax Depreciation ./. NOWC Other changes Dividend Other changes Net liquidity Dec 2017 Capex Dec 2018 l 50
Slide 51: Net operating working capital (NOWC)
Net operating working capital (NOWC)* 650 23.4% 24.0% 22.8% 600 22.3% 21.8% 22.0% 550 21.3% 21.0% 500 19.9% 83 20.0% 450 85 81 400 79 18.0% 78 350 73 77 300 16.0% 2013 2014 2015 2016 2017 2018 Q3 2019 NOWC (in € mn) NOWC (in %)* NOWC (in days) * In relation to the annualized sales revenues of the la
Slide 52: Adjusted 2018 quarterly figures accounting for the new segment reporting structure
Adjusted 2018 quarterly figures accounting for the new segment reporting structure EMEA Asia-Pacific North and South America 2018 comparable Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Sales by company location 415 414 408 381 1,618 178 191 173 164 706 95 104 105 105 409 EBIT before at equity incom
Slide 53: Quarterly income statement
Quarterly income statement 2016 2017 2018 2019 € mn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 550 586 567 564 618 629 615 611 643 668 642 614 643 653 656 Gross Profit 206 221 214 210 226 226 215 215 225 239 222 213 217 224 231 Gross Profit margin (in %) 37.4 37.7 37.8 37.1 36.6 35.8 35.0
Slide 54: 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 Sales PR & Marketing Management, Supply Chain, Sustainability, inoviga GmbH, Strategy Mining Division, OEM Division Dr. Ralph
Slide 55: 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 56: Financial Calendar & Contact
Financial Calendar & Contact Financial Calendar 2020 Investor Relations Contact February 20, 2020 Preliminary Figures 2019 FUCHS PETROLUB SE Friesenheimer Str. 17 March 19, 2020 Full Year Results 2019 68169 Mannheim www.fuchs.com/group/investor-relations April 30, 2020 Quarterly Statement Q1 2020 Th
Slide 57: 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