Fuchs Se · XETR:FPE
Fuchs — Non-Deal Roadshow (November 2018)
62 slides from Fuchs's roadshow presentation, November 2018
Slide 1: FUCHS Group Investor Presentation
FUCHS GROUP Investor Presentation | November 2018 | Dagmar Steinert, CFO | Thomas Altmann, Head of Investor Relations
Slide 2: Agenda
Agenda 01 | The Leading Independent Lubricants Company 02 | Q1-3 2018 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 €2.5 bn family-owned business sales in 2017 A full range of over 10,000 More than 5,000 Preference share is listed lubricants and related employees i
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 Top 20 Customers account for ~ 25% of 2017 sales Engineering / Machinery construction Agriculture and construction Industrial goods manufacturing 7% 7% 19% Sales 2017: Trade, transport and services €2.5 bn Vehicle manufacturing 29% 29% 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) -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 € mn 150 100 50 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 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 2018
02 Q1-3 2018
Slide 17: Highlights Q1-3 2018
Highlights Q1-3 2018 Sales +5% EBIT increase by 6% to € 1,953 mn to € 297 mn (including € 12 mn one-off effect) ▪ Organic growth across all three regions: Europe, Asia-Pacific, Africa and Americas; Outlook 2018 updated: Growth rate decreased in Q3 ▪ Sales +3% to +5% ▪ Negative FX effect impacting sa
Slide 18: Q1-3 2018 Group sales
Q1-3 2018 Group sales € mn 2200 + 164 -6 - 67 (+ 9%) (-) (- 4%) 2000 1,953 1800 1,862 + 91 1600 (+ 5%) 1400 1200 1000 Q1-3 2017 Organic Growth External Growth FX Q1-3 2018 l 18
Slide 19: Regional sales growth Q1-3 2018
Regional sales growth Q1-3 2018 Europe and Asia-Pacific, Africa declining in the course of the year Q1-3 2018 Q1-3 2017 Growth Organic External FX (€ mn) (€ mn) Europe 1,181 1,142 +3% +5% -1% -1% Asia-Pacific, Africa 601 544 +10% +15% - -5% Americas 304 302 +1% +11% - -10% Consolidation -133 -126 -
Slide 20: Income statement Q1-3 2018
Income statement Q1-3 2018 Negative FX-effects impacting EBIT € mn Q1-3 2018 Q1-3 2017 Δ € mn Δ in % Sales 1,953 1,862 91 5 Gross Profit 686 667 19 3 Gross Profit margin 35.1 35.8 - -0.7 %-points Other function costs -410 -400 -10 3 EBIT before at Equity 276 267 9 3 At Equity 21 14 7 50 EBIT1 297 28
Slide 21: EBIT by regions
EBIT by regions Q1-3 2018 (Q1-3 2017) € mn 48 -6 297 (50) (- 13) (281) 300 97 (98) 250 200 158 (146) 150 100 50 0 EBIT margin Europe Asia-Pacific, Africa Americas Holding/cons. Group before at equity 12.2% (12.7%) 15.0% (15.6%) 15.8% (16.6%) 14.1% (14.3%) l 21
Slide 22: Cash flow Q1-3 2018
Cash flow Q1-3 2018 € mn Q1-3 2018 Q1-3 2017 Earnings after tax 219 198 Amortization/Depreciation 42 40 Changes in net operating working capital (NOWC) -57 -91 Other changes -10 8 Capex -73 -66 Free cash flow before acquisitions1 121 89 Acquisitions1 12 -1 Free cash flow 133 88 1 Including divestmen
Slide 23: Q1-3 2018 earnings summary
Q1-3 2018 earnings summary ▪ Strong organic growth across all regions; accelerated growth in North America, declining momentum in Asia-Pacific, Africa and Europe ▪ Negative FX-effects continue to impact sales and earnings ▪ Increase in gross profit as a result of higher volumes and sales prices; mar
Slide 24: Outlook 2018 updated
Outlook 2018 updated Outlook 2018 Updated Outlook 2018 Performance indicator Actual 2017 (March & July 18) (October 18) Sales € 2,473 mn +3% to +6% +3% to +5% EBIT before one-off effect1 € 373 mn +2% to +4% On par with previous year EBIT € 373 mn - +2% to +4% FUCHS Value Added € 250 mn At previous y
Slide 25: Shares
03 Shares
Slide 26: Breakdown ordinary & preference shares
Breakdown ordinary & preference shares (June 30, 2017) 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 s
Slide 27: 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 5,000 0.70 0.60 4,000 0.50 3,000 0.40 0.25 0.30 2,000 0.20 1,000 0.10 0.00 0 Our target: Increase the absolute dividend amount each year or at least maintain previ
Slide 28: Appendix
04 Appendix
Slide 29: Top lubricant countries
Top 20 lubricant countries KT 8,000 2007 2017 ▪ 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 29
Slide 30: Regional per-capita lubricants demand
Regional per-capita lubricants demand kg 25 2007 2017 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 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 33: Challenges & Opportunities
Challenges & Opportunities Global Networked & Agile Company Profitable Growth Structures Digitalization E-Mobility l 33
Slide 34: 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 34
Slide 35: 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 36: Smart services: How FluidVision fits into digitalization strategy
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 37: 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 38: 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
Slide 39: 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 40: 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 41: 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 42: 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 43: Cash allocation
Cash allocation Cash allocation priority Reinvest in the business Return cash to shareholders Capex Stable Dividends Acquisitions Share Buyback l 43
Slide 44: 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 2,500 300 269 2,000 1,394 200 1,500 110 1,000 100 500 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
Slide 45: 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 46: 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 47: Regional Sales and EBIT development
Regional Sales and EBIT development € mn Europe 2017 Asia-Pacific, Africa 2017 Americas 2017 Sales: + 6.9% Sales: + 18.2% Sales: + 12.6% EBIT: - 4.6% EBIT: + 5.5% EBIT: + 4.8% Employees: 3,349 (3,253) Employees: 1,085 (1,062) Employees: 647 (612) 1,600 1,600 1,600 Sales Sales 1,200 1,200 1,200 800 1
Slide 48: 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 49: 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 49
Slide 50: Cash flow FY 2017
Cash flow FY 2017 € mn FY 2017 FY 2016 Earnings after tax 269 260 Amortisation/Depreciation & Impairment 59 47 Changes in net operating working capital (NOWC) -78 -22 Other changes -3 13 Capex -105 -93 Free cash flow before acquisitions 142 205 Acquisitions -2 -46 Free cash flow 140 164 l 50
Slide 51: 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 51
Slide 52: Net operating working capital (NOWC)
Net operating working capital (NOWC)* 650 23.1% 24.0% 600 22.3% 21.8% 22.5% 550 21.0% 21.3% 500 21.0% 78 81 21.0% 450 19.9% 79 400 78 19.5% 350 77 77 73 300 18.0% 2012 2013 2014 2015 2016 2017 Q3 2018 NOWC (in € mn) NOWC (in %)* NOWC (in days) Inventories/days 79 75 76 80 84 84 86 Debtors/days 52 53
Slide 53: FUCHS Value Added (FVA)
FUCHS Value Added (FVA) 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%) l 53
Slide 54: 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 55: Quarterly income statement
Quarterly income statement 2015 2016 2017 2018 € mn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 493 515 531 540 550 586 567 564 618 629 615 611 643 668 642 Gross Profit 188 200 203 200 206 221 214 210 226 226 215 215 225 239 222 Gross Profit margin (in %) 38.1 38.8 38.2 37.1 37.4 37.7 37.8
Slide 56: Quarterly sales by regions
Quarterly sales by regions 2015 2016 2017 2018 Sales (€ mn) Q1 Q2 Q3 Q4 FY 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 1,515 396 395 390 Asia-Pacific, Africa 147 155 141 140 583 144 154 153 169 620 181 182 181 189 733 199 210 192 Am
Slide 57: Quarterly sales growth split by regions
Quarterly sales growth split by regions 2016 2017 2018 Organic Growth (in %) Q1 Q2 Q3 Q4 FY 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 9 5 1 Asia-Pacific, Africa 2.0 2.5 11.0 22.5 9.2 20.9 17.1 23.0 18.3 19.7 18 19 9 Americas -3.4 1.8 -4.0 -1.5 -1.8 9.0 6.4 12.7 10
Slide 58: Quarterly EBIT by regions
Quarterly EBIT by regions 2015 2016 2017 2018 EBIT (€ mn) Q1 Q2 Q3 Q4 FY 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 49 49 60 Asia-Pacific, Africa 27 32 28 35 122 29 32 29 37 127 34 32 32 36 134 33 35 29 Americas 17 16 17 15 65 15 17 15 15 62 1
Slide 59: 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 60: 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 61: Financial Calendar & Contact
Financial Calendar & Contact Financial Calendar Investor Relations Contact February 21, 2019 Preliminary figures for the Full Year 2018 FUCHS PETROLUB SE Friesenheimer Str. 17 March 20, 2019 Full Year Results 2018 68169 Mannheim www.fuchs.com/group/investor-relations May 3, 2019 Quarterly Statement
Slide 62: 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