Notwithstanding a less-than-favorable market and business environment, the globally operating lubricant producer FUCHS PETROLUB AG in Mannheim/Germany continued to perform successfully over the first half of the year: consolidated sales were up by 7.9 % to € 478 m (443) and operating profits, at € 30.7 m (31.3), were maintained at almost the same level. Compared to the first half of 2000, however, turnover and price factors meant that a higher level of working capital had to be financed, and acquisitions were reflected in increased interest expenses, entailing a drop in mid-year net income of 16.9 % to € 8.5 m (10.2), while the cash flow and the inflow of funds from current operating activities showed an increase. At € 14.1 m, capital expenditures during the first half of the year were € 0.9 m up on the previous year (13.2). The group was employing 3,938 people on 30 June.

5.5 % of the rise in sales was attributable to internal growth; external growth accounted for 2.1 %. The euro's exchange rate against other currencies showed disparate developments, and when netted out its overall effect on sales was a mere 0.3 %.

A regional breakdown shows the biggest relative increases in turnover for Germany (+ 8.4 %) and the other European countries (+ 8.3 %), with the group's companies in Central and Eastern Europe making a particular contribution here. Among the Asian companies, sales in China were up by an impressive 64 %. At the group's American subsidiary, however, the USA's economic downturn meant that the rise in sales figures was attributable solely to currency translation rates.

It is gratifying that contribution profits rose by € 7.9 m or 3.9 % during the first half of 2001, although compared to the first half of 2000 the oil price level meant that the cost of materials consumed was up by € 26.9 m or 11.3 %. The remaining increase in gross profits of € 6.0 m (+3.7 %) after processing costs was not, however, sufficient to entirely cover the € 6.7 m (+5.0 %) rise in selling expenses and other divisional costs. Nevertheless operating profits remained almost unchanged at € 30.7 m (31.3).

On a netted-out basis, exceptional items were € 0.4 m down on the preceding year, while investment income during the period under review rose by € 0.3 m, so that earnings before interest and taxes (EBIT) came to € 29.6 m (30.4).

Increased financing costs (+ € 1.7 m) resulting from a higher level of working capital compared to the preceding year, from acquisition expenses in the meantime, and a longer-term financing package, were offset only partially by a € 0.8 m reduction in tax expenses, so that the group's mid-year result, at € 8.5 m, is € 1.7 m or 16.9 % down on the preceding year's figure.

Among the regions, particular success was achieved in Central and Eastern Europe, and the group's German specialty companies, too, exceeded their sales and earnings targets. In Asia, the Chinese companies improved their mid-year results. The improvement in our UK subsidiary's performance, already perceptible during the year's first quarter, was gratifyingly maintained.

Investments in tangible and intangible assets during the first half of 2001, at € 14.1 m, were € 0.9 m up on the previous year (13.2). The international division accounted for € 10.2 m (72 %) of this sum. A significant part of investments in tangible assets went to plant expansion projects in Indonesia, Argentina and the USA. In Germany, completion of FUCHS DEA SCHMIERSTOFFE GMBH & CO. KG's logistics center accounted for a major share of total capital expenditures.

On 30 June 2001, the group was employing 3,938 people (3,837), 101 (+2.6 %) more than on the preceding year's equivalent date. 938 of them were based in Germany, and 3,000 abroad, though it should be noted that at FUCHS EUROPE the workforce showed a net decrease of 35 people (-2.8 %), due to restructuring initiatives at some subsidiaries.

For the second half of 2001, the group does not yet anticipate any significant recovery in worldwide industrial activity, and expects global, and particularly Western European lubricant demand to fall short of the figures for 2000. Input material prices, too, are forecast to stay high, and it remains to be seen how the exchange rates of the euro and the US-dollar will develop. So on present-day indications, profits during the second half of 2001 will not reach the preceding year's level. Sales, though, are expected to rise, reaching a projected € 965 m (902).