The lubricants specialist Stefan Fuchs, CEO Reiner Schmidt, Member of the Group Management Committee Commerzbank Sector Conference Week 27 August 2013
Overview and business model 2
FUCHS the lubricants specialist 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 Preference shares: 100% free float; Ordinary (voting) shares: 52% FUCHS family 3
FUCHS - business model Fully focussed on lubricants Leader in technology, innovation and specialisation Independent Full-line supplier Global presence 4
Lubricants Market Ranking Top 10 Lubricant Countries 2012 K tons 6,000 6.000 5,000 5.000 4,000 4.000 3,000 3.000 2,000 2.000 1,000 1.000 0 China USA India Japan Russia Brazil Germany Korea Iran Mexico 5
Competition strong fragmentation Manufacturers today: 130 major oil companies 590 independent manufacturers 720 manufacturers High degree of fragmentation. 1.700 manufactures in the nineties. Concentration continues, but slowed down. FUCHS is globally present. FUCHS is the leader in lubrication technology. FUCHS has solutions for all tribological challenges. Lean organisation, fast decision making. Source: FUCHS Global Competitive Intelligence 6
The business model has paid dividends 7
Sales revenues have increased by 5.5% p.a. mn 1.800 1,800 1.500 1,500 CAGR 5.5% 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 8
Earnings after tax have increased by 19.6% p.a. 250 200 Earnings after tax (in 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 9
FUCHS Value Added has increased by 35.1% p. a. 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 10
Reasons for the positive development during the last 10 years Internationalization Via acquisitions in the nineties Frontrunner in emerging markets; market entry China in the mid eighties Forming of a united group Focused Communication For international key accounts For global R&D projects etc. Thorough understanding of customer processes Lifting of synergies Lean cost management Strict cash focus; incentives based on FVA Lowering of debt and reducing tax rate to ~30% 11
Mission Statement Values Sustainability 12
FUCHS 82 years of tradition and continuous growth 1,800 1.800 1,600 1.600 1,400 1.400 Sales mn 1,200 1.200 1,000 1.000 800 600 400 200 0 1931 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 13
Mission Statement of the FUCHS PETROLUB Group 14
Values of the FUCHS PETROLUB Group Trust Creating Value Respect Reliability Integrity 15
Sustainability social ecological economic 16
Good return for shareholders 17
Steady dividend increase IPO 1985; since then every year profit generation and dividend payments Company policy: aim to raise dividends year on year; at least to hold steady Euro 1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00 CAGR 24.5% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 18
Market capitalisation mn 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Dec. '02 Dec. '03 Dec. '04 Dec. '05 Dec. '06 Dec. '07 Dec. '08 Dec. '09 Dec. '10 Dec. '11 Dec. '12 June '13
Financials 20
Sales / EBIT margin before at equity income Sustainable sales growth Euro mn 1.800 1,800 1.500 1,500 1,200 1.200 900 900 1,652 1,819 600 600 300 300 1,041 1,096 1,192 1,323 1,365 1,394 1,178 1,459 0 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012 * comparable 21
Regional sales revenues and EBIT in 2012* 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 22
All world regions contribute to the success EBIT ( mn) 2008-2012 150 100 50 0 Europe Asia-Pacific, Africa North and South America 23
Solid balance sheet 124 mn share buy-back 65 mn pensions mn 800 net debt Dec. 31 equity Dec. 31 600 400 200 0-200 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 24
Highest investment in the company s history mn 70 60 investments depreciation 50 40 30 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 25
EBIT increase by 5.8% or 8.4 mn mn 1-6/2013 1-6/2012 Variance Sales revenues 910.3 910.0 0.3 0.0% Gross profit 343.1 330.1 13.0 3.9% Gross profit margin 37.7% 36.3% Admin., sales, R&D and other net operating expenses 196.1 192.2 3.9 2.0% Expenses as a percentage of sales 21.5% 21.1% EBIT before at equity income 147.0 137.9 9.1 6.6% EBIT margin before at equity income 16.1% 15.2% Income from participations 6.8 7.5-0.7-9.3% EBIT 153.8 145.4 8.4 5.8% Earnings after tax 107.6 101.8 5.8 5.7% Net profit margin 11.8% 11.2% Earnings per share Ordinary Preference 1.51 1.52 1.42 1.43 0.09 6.3% 0.09 6.3% 26
Q2 2013 EBIT is the highest ever mn 80 72.5 72.9 78.8 68.8 73.4 80.4 80,4 60 40 20 0 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 27
Free cash flow at previous year s level mn 1-6/2013 1-6/2012 Gross cash flow Change in working capital 107.6-23.0 105.5-26.4 Other changes -10.3-2.5 Operating cash flow 74.3 76.6 Capex (incl. financial investment) -33.6-33.4 Other changes 4.1 1.8 Free cash flow 44.8 45.0 28
Outlook for the FUCHS Group Outlook for the year 2013 FUCHS confirms its planning for organic growth in 2013 in the low single-digit percent range. To what extent sales revenues will be influenced by changes in currency exchange rates remains to be seen. FUCHS anticipates a further increase in earnings before interest and tax (EBIT), profit after tax, and earnings per share in 2013. FUCHS is planning a high cash flow notwithstanding significant capital expenditure at a similar level as 2012. Outlook is based on a stable economic environment in the next quarters, which is not negatively effected by the various political and financial risks around the globe. 29
Continuation of growth initiative 30
Our asset: global presence 31
Investments in new plants, efficiency and R&D India: Mumbai (2010) Australia: Melbourne (2012) Germany: Mannheim (2012) Germany: Kiel (2012) CHINA: Shanghai (2008) Germany: Kaiserslautern (2009) CASSIDA (2010) USA: Chicago (2012/2013) 32
New plant Yingkou, China - layout 33
New plant Yingkou, China - construction 34
New plant Kaluga, Russia - layout 35
New plant Kaluga, Russia - construction 36
Additional R&D and Sales staff 2,200 2.200 2,100 2.100 production & admin sales & R&D 2,000 2.000 1,900 1.900 1,800 1.800 1,700 1.700 1,600 1.600 2006 (Dec) 2007 (Dec) 2008 (Dec) 2009 (Dec) 2010 (Dec) 2011 (Dec) 2012 (Dec) 37
Our asset: cutting edge technology 30 R&D expenditure ( mn) 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 38
Broad customer base and a huge variety of applications mining cars construction food industry steel trucks agriculture conveyors cement aviation rail wind 39
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. 40