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FUCHS achieves a slight decline in sales in the first quarter of 2020 - Solid financial basis as the foundation for further development
'The outbreak of the Covid 19 pandemic in China has already left its mark on FUCHS 'quarterly results. Sales and earnings slumps in China resulted in one Consolidated sales decreased by 4% and had a significant impact on EBIT being 6% or EUR 5 million below the previous year at EUR 72 million.
We expect significant sales and earnings losses in the second quarter, which are expected to continue, albeit hopefully, in the second half. FUCHS is facing the crisis well positioned and with a solid financial basis. The stability and equipment of our balance sheet form a solid foundation for further development. The low proportion of fixed costs and the high proportion of material, which allows flexible breathing with sales, have a positive effect. In addition, FUCHS once again benefits from its global presence and broad product portfolio. For example, after strong slumps in China in the first quarter, we see signs of recovery that will help to weaken declines in other regions. '
Stefan Fuchs, CEO of FUCHS PETROLUB SE
Sales: -4% to EUR 616 million
Earnings (EBIT) declined by 6% to EUR 72 million
Covid-19: In Q1 still with comparatively little influence
Great uncertainty about future developments: Significant loss in earnings of around 30% expected for the first half of the year. Adjusted outlook for the full year 2020 not possible in the current situation
Sales and earnings
FUCHS PETROLUB generated sales of EUR 616 million (643) in a challenging economic environment in the first quarter of 2020, moderately below the previous year's level. Growth in the North and South America region continued as a result of acquisitions, but this did not compensate for the slump in sales in the Asia-Pacific region due to the effects of the Covid 19 pandemic in China.
The income statement for the first three months is characterized by the positive upward trend in the gross margin from the previous year, since gross profit rose slightly despite the decline in sales due to Covid 19. At EUR 72 million (77), EBIT was 6% below the previous year. Earnings after taxes decreased by 7% to EUR 51 million (55). Earnings per ordinary share were EUR 0.36 (0.39) and earnings per preferred share were EUR 0.37 (0.39).
Free cash flow before acquisitions was EUR -4 million (13), significantly below the previous year. In addition to an increase in working capital, this is also due to the high investments in fixed assets of EUR 31 million (34).
Sales and earnings of the regions
At EUR 401 million (400), sales in the Europe, Middle East, Africa (EMEA) region were at the previous year's level. Germany is still benefiting from high group deliveries to China at the beginning of the year. Brexit, on the other hand, is weakening business in the UK. The Asia-Pacific region posted a sharp drop in sales of 14% with EUR 146 million (171). The North and South America region continues its positive growth due to acquisitions. The region's sales declined organically by 6%. Positive currency effects in North America compensate for negative effects from South America. The region's total sales thus increased by 4% to EUR 110 million (106).
Positive EMEA EBIT growth due to high intra-group deliveries to Germany at the beginning of the year in China, as well as significant earnings increases in Poland. In addition to a significant slump in China business in February in the Asia-Pacific region, EBIT was also impacted by declining sales in the automotive and mining industries in the North and South America region and by bad debts in North America. In EMEA, EBIT rose by 13% to EUR 43 million (38). The EBIT of the Asia-Pacific region decreased by 19% to EUR 17 million (21) and that of the Americas region by 14% to EUR 12 million (14).
Outlook
In mid-March, the International Monetary Fund (IMF) dramatically lowered its forecast for global economic growth. Given the global Covid 19 crisis, the IMF expects the global economy to shrink by 3%. 2020 will probably bring the worst recession since the Great Depression in the 1930s. The IMF pointed out that estimates depend on the duration of the pandemic and are extremely uncertain.
As a result of the Covid 19 pandemic, FUCHS will also not be able to meet its expectations for the full year published in March. The difficult market environment will worsen in the second quarter. FUCHS anticipates significant earnings losses of around 50% for the second quarter. In the first half of the year, this corresponds to a significant drop in earnings of around 30% compared to the previous year. This statement is fraught with great uncertainty. The impact of the crisis on supply chains, production and customer demand cannot currently be reliably assessed. A further or longer-lasting recession-related decline in demand can have a negative impact on the economic development of FUCHS.
Our solid capital and balance sheet structure is the basis for adequate liquidity. Sufficient precautions have been taken to maintain liquidity, even after the dividend has been distributed.
Contact:
Tel: +49 621 3802-1104
About FUCHS
The FUCHS Group develops, produces and sells high-quality lubricants and related specialties for almost all industries and applications. The company, which was founded in Mannheim in 1931, employs almost 6,000 people worldwide in 62 operating companies. FUCHS is the world's largest provider of independent lubricant manufacturers. The most important markets in terms of sales are Western Europe, Asia and North America.
Important NOTE
This press release contains forward-looking statements based on assumptions and estimates made by the management of FUCHS PETROLUB SE. Even if the management is of the opinion that these assumptions and estimates are correct, the future actual development and the future actual results can deviate significantly from these assumptions and estimates due to various factors. These factors may include changes in the overall economic situation, procurement prices, exchange rates and interest rates, as well as changes in the lubricant industry. FUCHS PETROLUB SE assumes no guarantee and no liability for
FUCHS PETROLUB SE 
