The essential factors driving the internal growth by 13.2 % were considerable increases in raw-material prices, which subsided slightly in the third quarter, and mix improvements. Low margin businesses were also discontinued. In relative terms, the greatest growth in sales revenues was seen in the Asia-Pacific region and Africa. Europe, on the other hand, saw the highest absolute growth in sales revenues. The positive currency translation effect continued to recede and only made a 0.9 percentage point contribution to the increase in sales revenues. The sales-dictated deconsolidation of the LIPPERT-UNIPOL Group and also of our company in Bangladesh resulted in negative external growth of 0.9 %.
Thanks to an increase in sales revenues by 13.2 %, it was possible to overcompensate for the considerable increase in the cost of sales which had occurred as a consequence of the increases in raw-material costs. Careful appreciation of costs meant the selling and distribution, administration and R&D costs only experienced a moderate increase of 2.1 % over the comparative value for the previous year. This resulted in operating profit rising to €120.8 million (90.9), an increase of 32.9 %.
As expected, the pre-tax income of €7.6 million resulting from the sale of land no longer required for operational purposes which was included in other operating income in the previous year did not materialize again. Despite this, earnings before interest and taxes (EBIT) were €120.6 million (97.4), an increase by 23.8 %. EBIT therefore make up 12.1 % (11.0) of sales revenues.
As a result of reduced financial liabilities, the negative financial income improved to €9.5 million (11.6). After taxes, this then leaves income of €71.8 million (56.0).
Investment in property, plant and equipment and intangible assets was relatively restrained in the third quarter, amounting to €13.2 million (17.6) in the first nine months of 2006. The main bulk of investments went in particular on expanding and modernizing existing plants in Germany, England, Italy and the USA.
As of 30 September 2006, the FUCHS PETROLUB Group employed 3,792 people (4,158). As a result of consolidation through the sale of two companies, the number of employees decreased over the preceding year's equivalent date.
Raw-material costs have developed differently in different regions. The FUCHS PETROLUB Group continues to work on the basis that prices will remain high. FUCHS PETROLUB will respond to the cost increases on the purchasing side with price increases, a focused specialization strategy and a stable cost base. The weakening, which could be observed in the third quarter, of the price-related increase in sales revenues will continue in the fourth quarter due to base effects, which means that the increase in sales revenues over the whole year will fall behind the rate of 13.2 % achieved after nine months. The Group is raising its forecast and expects a double-digit increase in earnings before interest and taxes (EBIT) compared to the previous year's value of €128.8 million, which was positively influenced by profits resulting from the sale of land.
The nine months of 2006 at a glance
FUCHS PETROLUB Group
| (Values in € million) | 1-9/2006 | 1-9/2005 |
|---|---|---|
| Sales revenues 1 | 999.5 | 882.6 |
| Europe | 656.6 | 581.4 |
| North and South America | 181.9 | 165.4 |
| Asia Pacific, Africa | 178.1 | 151.3 |
| Consolidation | -17.1 | -15.5 |
| Earnings before interest and taxes (EBIT)2 | 120.6 | 97.4 |
| Net profit for the nine months | 71.8 | 56.0 |
| Gross cash flow | 87.1 | 70.4 |
| Capital expenditure3 | 13.2 | 17.6 |
| Employees (on 30.9.) | 3,792 | 4,158 |
2 In property, plant and equipment and intangible assets
Mannheim, 9 November 2006
FUCHS PETROLUB AG
Public Relations
Friesenheimer Str. 17
68169 Mannheim
Tel.: ++49 (0) 621 3802 - 105
The press release can also be found on the Internet at www.fuchs-oil.de.
Important note
This Press Information contains statements about future development that are based on assumptions and estimates by the management of FUCHS PETROLUB AG. 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. FUCHS PETROLUB AG 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 press release and assumes no liability for such.