FUCHS PETROLUB SE The Leading Independent LubricantsThe .
FUCHS PETROLUB SEThe leading independent lubricantsmanufacturer of the worldStefan Fuchs, CEODagmar SteinertSteinert, Head of Investor RelationsGerman, Swiss & Austrian Conference - HandoutJune 2015
Business model & Strategic position2
The leading independent lubricantsmanufacturer of the world Founded in 1931 1.9 1 9 bn sales revenues * 4,112 employees * 50 operating companies worldwide* 30 production facilities * 100,000100 000 customerstiin150150 countriesti* Data 20143
FUCHS - business modelBased on five elementary valuesTrust4Creatingg valueRespectpReliabilityyIntegrityg y
FUCHS - long-term strategic objectives Continue to be the world’s largest independent lubricants company Value-based growth through innovation and specialisation leadership Organic growth coupled with external growth Creating shareholder value through FUCHS Value Added (FVA) principles Remain independent which is decisive for FUCHS’ business model5
The FUCHS Brand house – Brand relaunchBeing first choiceVi tioning6FUCHS PETROLUB SEProximityContinuityTechnology, that pays backLUBRICANTS.TECHNOLOGY.PEOPLE.100% focusholistic solutionspersonal commitmentMy Lubricants Company
Regional breakdownWorld lubricants demand 2000 / 201436.4 mn t27%FUCHS sales revenues 2014: 1.9 bn35.4 mn t19%Europep31 0%31.0%28%Americas34%Asia-Pacific &Rest of World51.9%17.1%53%39%20002014Source: FUCHS Global Competitive Intelligence7by customers’ location
2014 per-capita lubricants demand showssignificant growth opportunitieskg20LatinAmerica9% (8%)19.0WesternEurope11% (14%)151059.07.9EasternEurope8% (13%)7.4535.3494.93.71.70Africa6% (5%)NorthAmerica19% (26%)MiddleEast5% (5%)Word lubricantsdemand2014: 35 mn t((2000: 36 mn t))AsiaPacific42% (29%)Source: FUCHS Global Competitive Intelligence8
Top 20 lubricants countries 2014K ttons7,0006,0005,0004,0003,0002,0001,00009 FUCHS is present in everyimportant lubricants country. China and the USA cover morethan one third of the worldlubricants market.
FUCHS is fully focused on lubricantsSales 2014: 1.9 bnAutomotive lubricants40.1%Other3.1%Industrial lubricants56.8%100,000 ingConstruction &Mining &Trade, services &transportationpassengercars & truckssteel & cementconveyer belt& aeronauticagricultureindustrywind energyilf drailway& foodindustry
Competition – strong fragmentationmanufacturers: HighHi h ddegree off ffragmentationt ti130 major oil companies Concentration especially amongsmaller companies590 independent manufacturers720 manufacturers Differences in the size ofmanufacturers are enormoussizes:manufacturersf tvolumesl%top 10 50.0710 50.0720100.0Source: FUCHS Global Competitive Intelligence11
FUCHS is strategically well positioned Worldwide among the top 10 of thelubricants manufacturers (by volume) Among 590 independent lubricantcompanies the number 1 (by volume)Source: FUCHS Global Competitive Intelligence12
Worldwide network – “strongerstronger networking”networkingproduction sites13
FUCHS – the niche specialist & technical expertR & D expenses in mn Technical leadership through intensive Research & Development. 416 researchers around the globe help our customers to solve their problems. FUCHS PETROLUB spent 33 mn in R&D expenses during 2014.14
Return for shareholders15
During the past 10 years, sales revenues have increasedby 5.5%5 5% pp.a.a and earnings after tax by 16.3%16 3% pp.a.aEarnings after taxSales mn 01,0969001,3651,2001,8191,50030002004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201416
During the past 10 years, FUCHS Value Added has increased by20 % p. a. and market capitalization has increased constantly andpresently is around 5 0002,0001,00037.4450 mn3,0001100.10102.0100186.01182.7200221.9FUCHS market capitalization208.2FVA Fuchs Value Added002004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201417
Since IPO in 1985 we have paid dividendsDi id d per preferenceDividendfshareh(adjusted for changes in equity structure) 0102011201220132014
Pay-out ratio almost 50%in %19
Q1 2015 and outlook20
Good start into the year 2015 Sales revenues up 8% to 493 million (currency adjusted 1%) Earnings before interest and tax (EBIT) up 8% to 82 million Outlook for the financial year improved due to currency effects21
Q1 2015: EBIT rose by 8% to 82 mn mnQ1/2015Q1/2014Sales revenues492.6456.835.87.8%Gross %EBIT81 781.775 675.6616.18 1%8.1%Earnings after 037.9%7.9%Gross profit marginSales, admin., R&D and other net expensesExpenses as a percentage of salesEBIT before income from at equityEBIT margin before income from at equityIncome from at equityNet profit margin22Earnings per shareOrdinaryPreferenceVariance
Q1 2015: Organic growth in AsiaRegionalRil salesl growththst1 quarter 2015Asia-Pacific /Africa27.1 mnOrganic growthCurrency effectsExternal 0 0.031.47.4-3.0Total growth-2.2% 22.7% 17.1% 7.8%Organic growth-2.8%2 8% 3 2% 3.2%-1.3%1 3%-0.7%0 7%External growth 1.1% 3.5%0.0% 1.6%Currency effects-0.5% 16.0% 18.4% 6.9%* Consolidation effect 2.0 mn23323.23.819 119.14.2North- andSouth America
Q1 2015: Increased segment earnings for AsiaPacific Africa and North and South AmericaPacific,1st quarter 2015 mn100 20.4%755025 20.4%-4.6% 8.1%16.5(13.7)-0.8(-1.5)North andSouth 39.4(41.3)0EuropeEBIT margin before14 0%income from at equity 14.0%(previous year)24(14.3)Asia-Pacific,AfricaGroup15 8%15.8%18 7%18.7%15 8%15.8%(16.4)(18.2)(15.9)
Q1 2015: As expected, net operating working capitalincreased mnQ1/2015Q1/201459.660.6-17.9-32.1Other changes-3.737363.6Operating cash flow38.032.1Capex-7.8-6.5Other changes0.00.2Free cash flow30.225.8Gross cash flowChanges in net operating working capital25
Outlook 2015 for the FUCHS Group FUCHS pplans further ggrowth in sales and volumes in 2015 Should the euro remain weak, EBIT is expected to increase by a mid tohigher single-digit percentage. We plan capex to exceed the previous year’s value and reach up to theinvestments of 2012 and 2013 Free cash flow is again expected to exceed 150 million26
Growth initiative27
Growth initiative – we have significantly expandedour global footprint mnMain focus of investments were the construction of newplants in growth regions, the modernization andexpansion of our large sites as well as an expansion ofour R&D capacitiescapacities.CapexDepreciation28
Growth initiative: capital expenditure projectsSpecialty grease plants USA andChina; copy German setupTest field MannheimModernisationof holdinggbuildingPlant Mannheim 2013 - 201529
New jobs with focus on sales and technology2,1002,0001,9001 8001,800production & administration1,700sales & technology1,6001,5002009 (Dec)302010 (Dec) 2011 (Dec)2012 (Dec) 2013 (Dec)2014 (Dec)Nearlyy 70 % ofthe 600 jobscreated duringthe last 5 yearswere in sales andtechnology.
Growth initiative: acquisitions 2014 Acquisitionqof the lubricant business of LUBRITENE ggroupp in Mayy 2014 Sales approx. 15 mn p.a. Business mainlyy exists of lubricants for miningg and the food industryy Acquisition of the lubricant business of the Batoyle Freedom Group in June 2014 Sales approx. 15 mn p.a. Business exists of automotive and industrial lubricants as well as lubricants forthe glass industry31
Growth initiative: acquisitions 2015 Acquisitionqof the Deutsche Pentosin-Werke GmbH ((Signingg g Mayy 2015)) Sales approx. 135 mn p.a. 190 employeesp y Two German production locations in Wedel and Dormagen as well as a smallersubsidiary in Sao Paulo, Brazil Leading manufacture of quality lubricants and specialties for the internationalautomotive industry for more than 80 years The transaction is subject to the approval of the antitrust authorities32
Appendix - The year 2014- Shareholder structure33
EBIT at previous year’syear s level mn Mio. in %1,831.634.31.9693 2693.2689 9689.9333.3050.5Gross profit margin37.2%37.7%Admin., sales, R&D and other net operating expenses-400.6-391.19.52.4Expenses as a percentage of sales21 951.1EBIT313.0312.30.70.2Earnings after tax219.9218.61.30.6Net profit s revenuesGross profitEBIT before at equity incomeEBIT margin before at equity incomeIncome from participationsEarnings per share in OrdinaryPreference34201420131,865.9
Organic sales growth in all three world regions– high growth rate in AsiaRegional sales growth2014Asia Pacific /AfricaNorth- andSouth America8.718.6Group*34.3 mn50Organic growthCurrency effectsExternal -8.2-28.5-30Total growth 0.8% 3.7% 2.8% 1.9%Organic growth 0.3% 6.0% 5.5% 2.7%External growth 0.9% 0.9%0.0% 0.8%Currency effects- 0.4%- 3.2%- 2.7%- 1.6%* Consolidation effect - 1.7 mn35
Regional sales revenues and EBIT in 2014*2014 mn(variance to previous year %)Europe*sales1,112.9 0.8%EBIT162.0 6.2%EBIT margin** 14.4% (13.7)Asia-Pacific, AfricaAsia-PacificAfrica*sales516.5 3.7%EBIT105.6 2.1%EBIT margin** 16.8% (18.3)FUCHS sales revenues1,865.9EBIT margin** 15.7% (16.3)NorthNth andd SouthS th America*Ai *sales316.0 2.8%EBIT51.6 -17.0%EBIT margin** 16.3%(20.2)36* by companies‘ location** before at equity*** by customers‘ location
Breakdown of group sales revenues by customer sectorFUCHSsales revenues2014: 1,866 1 866 mnAs a percentageAtoff salesl* Manufacturing industry producer goods, capital goods, consumer goodsSource: FUCHS Global Competitive Intelligence37
Record free cash flow of 187.9 187 9 mn mn20142013Gross cash flow257.9230.0Changes in net current asset-14,0-8.611.4-0.9Operating cash .80.0Other changes7.02.2Free cash flow187.9149.9Changes in other current assets38
Lower capital cost rate leads to an increase inFUCHS Value Added (FVA) by 3.5%3 5%20142013 230 mn(FVA) 222 mn(FVA)EBITEBIT 313 mn 312 mnCost ofcapitalCost ofcapital 83 mn 90 mnCapital employed 833 mnCost of capital10.0%39Capital employed 786 mnCost of capital11.5% FVA 3 5% 3.5% EBIT 0.2% Capital Employed 5.9%
Solid balance sheet – equity ratio to 71.7% andnet payment items of 185.7 185 7 mn mn20102011201220132014q yEquity546.5658.2781.7853.5915.6Equity ratio61.1%66.8%70.5%73.5%71.7%Return on equity (ROE)36.6%31.0%29.0%26.7%25.7%Return on capital employed (ROCE)42 7%42.7%39 1%39.1%39 7%39.7%39 7%39.7%37.6%72.464.9134.8167.4185.7Net liquidity40
Shareholder structure41FUCHS PETROLUB AG
Breakdown of sharesOrdinary sharesPreference shares69,500,000ordinary shares*) voting rights notification: DWS Investment, Frankfurt: 5.2% (15 Dec. 2003)42Free float100 %Fuchs family53 %Free float *47 %69,500,000preferenceshares
DisclaimerThis presentationThit ticontainst istatementst tt aboutb t futuref tddevelopmentlt thatth t arebased on assumptions and estimates by the management of FUCHSPETROLUB SE. Even if the management is of the opinion that theseassumptionstiandd estimatesti t are accurate,t futuref tactualt l developmentsdlt anddfuture actual results may differ significantly from these assumptions andestimates due to a variety of factors. These factors can include changes inthe overall economic climate, procurement prices, changes to exchangerates and interest rates, and changes in the lubricants industry. FUCHSPETROLUB SE provides no guarantee that future developments and theresults actually achieved in the future will match the assumptions andestimates set out in this presentation and assumes no liability for such.43
FUCHS PETROLUB SEInvestor RelationsFriesenheimer Str. 1768169 MannheimPhone 49 (0)621 3802 1201, Fax 49 (0)621 3802 7201ir@fuchs-oil.de, www.fuchs-oil.com
53 49 10 Eastern Europe 8% (13%) Word lubricants demand 2014: 35 mn t 5.3 (2000: 36 mn t) 3.7 1.7 4.9 0 5 North America Asia-Pacific 42% (29%) 19% (26%) Source: FUCHS Global Competitive Intelligence 8. Top 20 lubricants countries 2014Top 20 lubricants countries 2014 Kt . Leading manufacture of qualit
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