The leading independent lubricants manufacturer of the world Dr. Alexander Selent, Vice Chairman & CFO Dagmar Steinert, Head of Investor Relations April 2013
FUCHS the leading independent lubricants manufacturer of the world Founded in 1931 2012 sales revenues: 1.8 bn 2012 number of employees: some 3,800 from 36 countries 33 production facilities 100,000 customers in more than 100 countries Member of the MDAX, the DAXplus Family 30 and the STOXX Europe 600 2
FUCHS - business model FUCHS is fully focussed on lubricants (advantage over major oil companies) Technology, innovation and specialisation leadership in strategically important product areas Independence allows customer and market proximity, responsiveness, speed and flexibility (advantage over major oil companies) FUCHS is a full-line supplier (advantage over most independent companies) Global presence (advantage over most independent companies) 3
FUCHS - long-term strategic objectives Continue to be the world s largest independent manufacturer of lubricants and related specialities Value-based growth through innovation and specialisation leadership Organic growth in emerging markets and organic and external growth in mature markets Creating shareholder value by generating returns above the cost of capital Remain independent which is decisive for FUCHS business model 4
Lubricants Market The largest and fastest growing regional lubricants market is Asia Pacific. North America and Western Europe are mature markets. The focus is on higher value lubricants and specialities. 36.4 mn t 35.0 mn t 20% 27% 28% Eastern Europe 9% (13%) Western Europe 11% (14%) Africa 6% (5%) Middle East 5% (5%) 34% 39% 52% Latin America 9% (8%) 2012 2000 2012 Asia-Pacific & Rest of World Americas Europe North America 19% (26%) Asia-Pacific 41% (29%) *without marine oils Global lubricants demand 2012: 35.0 mn t 5
Australia Italy Egypt Taiwan Turkey Thailand France UK Canada Lubricants Market Ranking Top 20 Lubricant Countries 2012 6.000 K tons 5.000 4.000 3.000 2.000 1.000 0 China USA India Japan Russia Brazil Germany Korea Iran Mexico Indonesia 6
2012 per-capita lubricants demand shows significant growth opportunities 20 19.0 15 10 9.1 7.7 7.7 5.4 5 0 7 3.6 5.0 1.8 Africa World kg Source: FUCHS Global Competitive Intelligence North America Western Europe Middle East Central / Eastern Europe Latin America Asia-Pacific
Competition strong fragmentation manufacturers: 130 major oil companies 590 independent manufacturers 720 manufacturers* High degree of fragmentation continues in the industry Concentration especially among smaller companies sizes: manufacturers volumes % top 10 > 50.0 710 < 50.0 720 100.0 Differences in the size of manufacturers are enormous. World-wide the top 10 finished lubricants manufacturers including FUCHS hold more than 50% of global volumes while the remainder of more than 700 manufacturers share less than 50%. Source: FUCHS Global Competitive Intelligence 8
FUCHS strategic position 9
PETRONAS PERTAMINA GULF / HOUGHTON VALVOLINE FUCHS is strategically well positioned as we are the 9th largest lubricant company in the world* SHELL EXXON BP CHEVRON TOTAL PETROCHINA SINOPEC IDEMITSU FUCHS LUKOIL JX NIPPON OIL * by volume 10 Source: FUCHS Global competitive Intelligence
Among 590 independent lubricants companies FUCHS is the number 1. 11
FUCHS is the Specialist for Lubricants World Lubricants Market 2012 FUCHS Finished Lubricants 2012 MWF/CP/ Greases* 8% Process Oils 10% Automotive Oils 56% MWF/CP/ Greases* 31% Process Oils 1% Automotive Oils 44% Industrial Oils 26% Industrial Oils 24% *metalworking fluids/corrosion preventatives/lubricating greases Source: FUCHS Global Competitive Intelligence 12
FUCHS is the world market leader in strategically important and high-value business segments and niches High-performance speciality open gear No. 1 lubricants (cement industry etc.) Mining specialities (fire-resistant No. 1 hydraulic fluids for underground coal mining and high-performance lubricants Environmentally friendly and No. 1 biodegradable lubricants and processing fluids 13
FUCHS is the world market leader in strategically important and high-value business segments and niches Metalworking fluids No. 2-4 Corrosion preventives No. 2 Forging lubricants No. 2 Greases No. 3-4 14
FUCHS research and development 10% of total staff more than 350 chemists, engineers and other technical experts work in R & D around the globe and ensure technical leadership in key products and application areas. 15
FUCHS PETROLUB Group Customer Portfolio Customer Sectors* Construction 2% Transport & Service 3% Capital & Consumer Goods 6% Agriculture & Forestry 6% Other Sectors 2% Trade 25% Energy & M ining 9% Engineering 8% Vehicle Co mpo nents 10% Vehicle M anufacturing 15% Producer Goods 14% *Breakdown as percentage of sales 2012 Source: FUCHS Global Competitive Intelligence 16
FUCHS manufactures in 33 production plants all over the world 17
FUCHS strategic position is a combination of Comments High Degree Of Specialisation & Technical Excellence Local & Flat Organisation Size & Global Presence Motivated Employees Independence & Financial Strength Focus On Higher Value Lubricants around 1.8bn in sales (70% outside Germany, Asia Pacific is FUCHS 2nd largest regional market), #9 worldwide and by far the largest independent producer, close to customers leader in innovation, specialisation & technology, clear focus on highvalue products & market segments, basis for strong profitability, high cash flows & value creation optimized and highly flexible cost structure, highly committed teams in management, production, R&D, sales and admin supported by company s independence, steering via FVA tool successful 18
The business model has paid dividends 19
During the past 10 years, sales revenues have increased by 5.5% p.a. Euro mn 1.800 1,800 CAGR 5.5% 1.500 1,500 1.200 1,200 900 600 1,065 1,041 1,096 1,192 1,323 1,365 1,394 1,178 1,459 1,652 1,819 300 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012 * comparable 20
During the past 10 years, EBIT has increased by 13.8% p.a. EBIT (Euro million) EBITDA (EUR mn) 320 300 280 260 240 220 200 180 160 140 120 100 80 60 40 20 0 7.6% 8.1% 8.8% 12.1% 10.7% CAGR 13.8% 15.3% 16.6% 15.6% 14.7% 14.1% 12.1% 80.6 84.4 94.8 128.8 161.2 195.2 171.7 179.9 250.1 263.5 293.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012 EBIT EBIT margin before at equity income 19% 17% 15% 13% 11% 9% 7% 5% EBIT margin before at equity income EBIT growth -- 4.7% 12.3% 35.9% 25.2% 21.1% -12.0% 4.8% 39.0% 5.6% 11.2% * comparable 21
During the past 10 years, earnings after tax have increased by 19.6% p.a. 250 200 Earnings after tax (in Euro mn) 150 100 50 0 CAGR 19.6% 34.7 40.2 48.7 74.2 97.2 120.3 110.3 121.4 171.6 183.1 207.3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012 Earnings growth 15.9% 21.1% 52.4% 31.0% 23.8% -8.3% 10.1% 41.4% 6.7% 13.2% * comparable 22
During the past 10 years, FUCHS Value Added has increased by 35% p. a. and generated a significant premium on our cost of capital 250 FVA = Fuchs Value Added 200 150 100 CAGR = 35.1% 50 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Fuchs Value Added (FVA) 10.3 24.1 37.4 71.4 100.3 136.5 110.1 116.8 182.7 186.0 208.2 23
During the past 10 years, dividends have been increased by 24.5% CAGR (preference shares): 10.9% since 1985 1.40 1,40 1.20 1,20 1.00 1,00 0.80 0,80 0.60 0,60 0.40 0,40 0.20 0,20 0.00 0,00 CAGR 24.5% 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* * proposal to the Shareholders Assembly on 8 May 2013 24
In 2012, the world economy slowed down 25
During the year of 2012, the world economy slowed down World GDP forecast (growth yoy in %) 6 5 4.8 4.9 4.6 5.3 5.4 5.2 Country 2011 2012 2013 (e) 4 3 2 2.6 3.5 2.3 2.9 3.6 2.8 3.8 3.2 3.5 USA Euro Area Germany Japan 1.7 1.4 3.0-0.7 2.3-0.4 0.9 2.0 2.0-0.2 0.6 1.2 1 China 9.2 7.8 8.2 0-1 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-0.7 (p) India 7.1 Source: IMF 4.5 5.9-2 26
In 2012 the key industries developed weakly, but still considerably Production 2012 engineering 6.3% steel 1.2% automotive 4.0% chemical 2.0% lubricants -0.5% -2% 0% 2% 4% 6% 8% 27
Financial statement 2012 28
2012 at a glance Double-digit growth in sales and earnings Sales growth has been driven by volume, sales price increases and positive currency effects Gross margin up to previous year s level Planned cost increases due to our growth initiative Cash, equity and equity ratio up again We have earned a premium on our cost of capital again. 30% increase in dividends signals confidence into the future. 29
Sales revenues 2012 30
Double-digit growth in sales driven by organic growth and currency effects Euro mn 1850 58.8 1,819.1 1800 1750 1700 1650 1600 1,651.5 107.0 1.8 organic growth external growth currency effects Increase in sales by 10.1% or 167.6 mn to 1,819.1 mn Organic growth +6.4% or 107.0 mn External growth 0.1% or 1.8 mn Currency effects 3.6% or 58.8 mn 1550 1500 1450 1400 sales 2011 sales 2012 31
The segment automotive lubricants has grown faster than the segment industrial lubricants Product portfolio other 3.4% (3.1) sales revenues 1,819.1 mn automotive lubricants 39.5% (38.0) Sales of automotive lubricants increased overproportionally by 14.7%. Industrial lubricants increased by 6.8%. industrial lubricants 57.1% (58.9) 32
Again high growth rates in Asia-Pacific, Africa 200 74.0 Europe Euro mn 74.5 Asia/Pacific, Africa 37.7 North and South America 167.6 Group* 150 Organic growth Currency effects External growth 100 50 0 41.6 63.3 20.4 32.9 8.9 17.3 1.8 0.0 0.0 107.0 58.8 1.8 Total growth in % +7.4 +18.1 +13.3 +10.1 Organic growth in % +6.3 +10.1 +7.2 +6.4 * incl. consolidation effects of - 18.6 mn 33
Profit and loss statement 2012 34
Further increase in profitability Euro mn 2012 2011 mn % Sales revenues 1,819.1 1,651.5 167.6 10.1 Gross profit 666.0 (36.6%) 604.6 (36.6%) 61.4 10.2 Sales, admin., R&D expenses -376.1 (20.7%) -346.7 (21.0%) 29.4 8.5 Other operating result -11.1 0.5-11.6 n.a. EBIT before participations included at equity 278.8 (15.3%) 258.4 (15.6%) 20.4 7.9 Result from participations included at equity 14.2 5.1 9.1 178.4 Earnings before interest and tax (EBIT) 293.0 263.5 29.5 11.2 Financial result -1.6-3.7 2.1-56.8 Taxes 84.1 76.7 7.4 9.6 Earnings after taxes 207.3 (11.4%) 183.1 (11.1%) 24.2 13.2 35
Tax rate has been stable at 30%* Tax rate (in %) 40 35 30 36.4 35.9 34.4 35.5 34.4 34.9 32.2 31.1 30.1 30.3 29.1 25 20 15 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * years 2002 2004 adjusted by planned goodwill amortization 36
Quarterly development 2012 37
Quarterly sales revenues Euro million 500 400 403.8 414.6 420.9 412.3 448.4 461.6 469.2 439.9 300 200 100 0 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Previous year s figures have been adjusted for reasons of comparability 38
Gross profit increases quarter by quarter and reaches previous year s level mn Q1 12 Q2 12 Q3 12 Q4 12 2012 2011 Sales revenues 448.4 461.6 469.2 439.9 1,819.1 1,651.5 Gross profit 161.9 (36.1%) 168.2 (36.4%) 172.9 (36.8%) 163.0 (37.1%) 666.0 (36.6%) 604.6 (36.6%) Sales, admin., R&D expenses 92.2 (20.6%) 96.7 (20.9%) 95.6 (20.4%) 91.6 (20.8%) 376.1 (20.7%) 346.7 (21.0%) EBIT before income from particip. 68.4 (15.3%) 69.5 (15.1%) 75.6 (16.1%) 65.3 (14.8%) 278.8 (15.3%) 258.4 (15.6%) EBIT 72.5 72.9 78.8 68.8 293.0 263.5 Earnings after tax 51.5 50.4 55.0 50.4 207.3 183.1 Net profit margin 11.5% 10.9% 11.7% 11.5% 11.4% 11.1% * comparable 39
2012 gross profit margin increases quarter by quarter Gross profit margin (as a percentage of sales) 45 36.6 35.9 35.2 32.1 34.2 38.3 42.2 40.0 40.1 39.8 38.5 37.2 37.7 36.9 36.2 35.8 36.1 36.4 36.8 37.1 40 35 30 25 20 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 40
Quarterly EBIT and quarterly EBIT margin before at equity income EBIT Euro mn 70 60 50 40 30 20 10 0 13.7% 13.3% 12.4% 8.6% 8.9% 13.1% 17.9% 18.2%17.1% 16.8% 17.1% 15.4% 16.3% 15.5% 15.5% 15.3% 15.3% 15.1% 16.1% 14.8% Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11* Q2 '11* Q3 '11* Q4 '11* Q1 '12 Q2 '12 Q3 '12 Q4 '12 20% 15% 10% 5% 0% EBIT margin before at equity income * comparable 41
Balance sheet and cash flow 42
Solid balance sheet increase of equity ratio to 70.5% and net payment items of 134.8 million Euro mn 2007 2008 2009 2010 2011 3 2012 Equity 325.9 315.3 392.9 546.5 658.2 781.7 Equity ratio 45.6% 44.8% 52.7% 61.1% 66.8% 70.5% Return on equity (ROE) 37.1% 33.3% 35.3% 36.6% 31.0% 29.0% Return on capital employed (ROCE) 38.3% 32.0% 32.8% 42.7% 39.1% 39.7% Net debt 1 (-) / net cash (+) -7.7-104.6 +31.7 +72.4 +64.9 +134.8 EBIT/financial result 2 23.2x 19.3x 25.7x 54.2x 72.8x 183.1x 1 excl. pensions 2 adjusted by participation write-offs 3 comparable 43
Free cash flow more than doubled Euro mn Gross cash flow Changes in net current assets Changes in other current assets Operating cash flow 2012 219.0-24.9 9.0 203.1 2011 134.9-59.9 14.2 89.2 Investments Acquisitions Other changes Free cash flow -71.4-0.9 9.6 140.4-37.0-0.4 7.2 59.0 44
Net operating working capital (NOWC) at previous year s level Year 2006 2007 2008 2009 2010 2011 2012 NOWC/sales(%) 18.7 18.8 22.8 18.9 19.6 21.1 21.0 NOWC(Euro mn) 242.3 251.3 283.5 229.9 294.1 347.4 369.9 Inventories/days 68 72 83 74 73 78 79 Debtors/days 57 55 52 51 54 55 52 Payables/days 51 50 37 46 44 44 39 NOWC 23% 22% 21% 20% 19% 18% 17% 16% 15% 22.8% 21.0% 21.1% 21.0% 20.0% 19.8% 19.6% 18.7% 19.6% 18.8% 18.9% year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 45
Highest investment in the company s history Euro mn 80 6% Apart from the construction of the new sites in growing regions such as Russia and China or the modernization of existing plants such as in the U.S., we have inaugurated the new research and development centre in Mannheim. 70 60 50 40 30 20 10 3.0% 27.0 30.2 27.2 24.3 23.9 19.7 20.8 20.0 20.0 22.5 26.4 26.9 27.9 2.7% 28.8 1.8% 2.0% 2.4% 1.4% 18.7 22.2 28.8 18.2 1.8% 24.4 3.3% 46.6 2.6% 30.1 2.2% 32.5 2.3% 37.0 3.8% 71.4 5% 4% 3% 2% 1% 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0% 46 investments depreciation investments as a percentage of sales
Major projects Germany: Kaiserslautern Germany: Mannheim Germany: Mannheim Germany: Kiel CHINA: Shanghai (2008) India: Mumbai (2010) 47 CASSIDA Russia: Kaluga (2011/2012)
Regions 48
Regional sales revenues and EBIT in 2012* Euro mn (variance to LY %) Asia-Pacific, Africa* Sales 486.8 +18.1% EBIT 96.3 +33.2% EBIT margin** 17.1% (16.6) 29.4%*** (25.6) Sales FUCHS 1,819 EBIT margin** 15.3% (15.6) Europe* Sales 1,080.7 +7.4% EBIT 133.6 +1.4% EBIT margin** 12.3% (13.0) North and South America* Sales 320.3 +13.3% EBIT 67.5 + 7.0% EBIT margin** 21.1% (22.3) 17.9%*** (17.5) 52.7%*** (56.9) * companies locations ** before at equity ***customers locations 49
Employees 50
FUCHS is expanding with an increased focus on personnel development Number of employees (on 31 Dec.) 4.000 4,000 FUCHS is expanding and acquired 285 employees since 2009. 3.500 3,500 3.000 3,000 We have budgeted for another 2.500 2,500 3,584 increase in 2013. 3,773 3,669 3,488 2.000 2,000 1.500 1,500 1.000 1,000 2012 2011* 2010 2009 * comparable to 2012 51
Outlook 52
Outlook for the FUCHS Group Outlook year 2013 The Group is planning for organic growth in 2013 in the low single-digit percent range. To what extent external growth will be possible through acquisitions or whether sales revenues will be influenced by changes in currency exchange rates remains to be seen. The Group anticipates a further increase in earnings before interest and tax (EBIT), profit after tax, and earnings per share in 2013. In 2013, the Group is planning capital expenditure at the same level as 2012. FUCHS also wants to generate a significant premium on the cost of capital (FVA) in 2013. 53
Shareholder structure 54
Shareholder structure as of 31 December 2012 Ordinary shares in % Total equity in % Maw er Investment Management Ltd., Canada 3.0% Fuchs family 51.7% Fuchs family 25.8% Others 40.1% Others 74.2% DWS Investment, Frankfurt 5.2% Base: 35,490,000 shares (ordinary shares) Base: 70,980,000 shares (ordinary and preference shares) 55
Disclaimer This presentation contains statements about future development that are based on assumptions and estimates by the management of. Even if the management is of the opinion that these assumptions and estimates are accurate, future actual developments and future actual results may differ significantly from these assumptions and estimates due to a variety of factors. These factors can include changes to the overall economic climate, changes to exchange rates and interest rates and changes in the lubricants industry. provides no guarantee that future developments and the results actually achieved in the future will agree with the assumptions and estimates set out in this presentation and assumes no liability for such. 56