(Update: Adds comments from press conference, share price)
MANNHEIM (dpa-AFX) - Lubricant manufacturer Fuchs has started the year with significant growth in several areas. 'In addition to business expansion and disciplined cost management, this positive development was driven in particular by additional demand in March and the successful sale of a property in Australia,' CEO Stefan Fuchs said in a statement on Wednesday. While the company raised its sales target for the current year due to inflation, it lowered its forecast for free cash flow before acquisitions due to sharply higher raw material costs and selling prices.
The figures were very well received by the market. The preference shares rose by more than nine percent in morning trading, making them one of the top performers on the MDax, the index for mid-cap stocks. Most recently, the stock was up around 8.5 percent at 40.76 euros. According to analyst Constantin Hesse from investment house Jefferies, Fuchs exceeded expectations with its figures. The reduced target for free cash flow before acquisitions, on the other hand, had already been anticipated.
In the first quarter, sales grew by one percent to 934 million euros. CFO Esma Saglik said that strong volume growth was the main contributor to this increase. However, there were headwinds from unfavorable exchange rates. Excluding currency effects, revenue would have grown by five percent. Saglik also expects negative currency effects for the current second quarter.
Operating performance was significantly stronger during the quarter: earnings before interest and taxes (EBIT) rose by 16 percent to 125 million euros. This represents the highest quarterly result in the company's history. While the company earned significantly more operationally in the Asia-Pacific region, earnings in North and South America fell by almost a tenth. Fuchs attributed this primarily to the weaker US dollar. In the Europe, Middle East and Africa (EMEA) region, the company was able to significantly improve its result, thanks mainly to Germany and South Africa.
Bottom-line profit amounted to 89 million euros, also up 16 percent year-on-year. With these key figures, Fuchs exceeded analyst expectations. The company more than tripled its free cash flow before acquisitions to 54 million euros.
'The conflict in the Middle East and in particular the closure of the Strait of Hormuz will present us with major challenges in the current financial year, regardless of how the dispute continues,' said CEO Fuchs. Rising raw material prices and supply bottlenecks are already challenging the company today. The situation is expected to remain tense in the coming months. Consequently, the company intends to offset rising raw material costs with timely price increases.
For the current year, sales are now expected to rise significantly to over 3.7 billion euros. Free cash flow before acquisitions is now expected to be well below 270 million euros. Previously, the plan called for sales of 3.7 billion euros and free cash flow before acquisitions of 270 million euros. Meanwhile, operating profit (EBIT) is still expected to improve to 450 million euros.
CEO Fuchs confirmed the recently announced new medium-term targets. By 2031, sales are expected to climb to between 4.0 and 4.5 billion euros. Management is targeting EBIT of 550 to 600 million euros. Compared to 2025, this would represent an increase of a good 26 to nearly 38 percent. The corresponding margin is then expected to be 13 to 15 percent.
To achieve these goals, Fuchs intends to focus on six areas. These include the automotive aftermarket, lubricant and cooling solutions for all types of vehicles with new drive technology, as well as special lubricants for food, medicine, semiconductors, and rail transport.
The automotive and commercial vehicle industry is particularly important for the Mannheim-based lubricant manufacturer, which employs nearly 6,900 people. The transition from internal combustion engines to electric motors is therefore also leading to changes at Fuchs. In addition, the Group has customers in sectors such as mechanical engineering, metal processing, mining, aerospace, as well as agriculture and forestry./mne/nas/jha/
