For the third year in succession, international lubricants provider FUCHS PETROLUB AG has achieved a new high in earnings in the history of the company. Group sales revenues rose by 5.3% to €1,096 million, with operating profit reaching a peak of €107.4 million (€93.2 million) as a result of further optimization of cost structures. Net income for the year 2004 rose by 29.8% to €40.1 million (€30.9 million), following on seamlessly from the high rate of increase from the previous years. The total return on capital employed thus rose to 19.0%. Earnings before scheduled goodwill amortization per ordinary and preference share amounted to €5.97 and €6.14 (€5.31 and €5.50) respectively. The Executive and Supervisory Boards thus recommend to the shareholders that dividends be increased by €0.10 to €1.66 per ordinary share and €1.83 per preference share. For 2005, FUCHS PETROLUB once again expects a rise in net income for the year.
Internal growth reached 6.7%, mainly from our North and South American subsidiaries, but also from our companies in Australia, China and Eastern Europe. This internal growth was driven by volume in all regions, supported by mix changes and price changes. The Group was thus able to build further on its position in the world market. The balance of revenue from newly consolidated and divested companies resulted in an external growth of 1.0%. The appreciation of the euro also continued in 2005, albeit to a lesser extent than in previous years, with currency-translation effects running to -2.4%. On balance, this means that total Group sales revenues reached €1,096.3 million (€1,040.9 million).
Excellent organic growth in many markets was more than enough to offset the negative effects from currency translation. An improved product mix and increase in sales prices limited the erosion of our contribution margin caused mainly by high base-oil prices. Europe generated the highest contributions to earnings, followed by America and Asia-Pacific, Africa. The rationalization of administration and development activities, together with the optimization of sales, meant that operating profit reached a peak of €107.4 million (€93.2 million). The operating margin rose to 9.8%, after 9.0% in 2003. Earnings before interest, taxes and goodwill amortization (EBITA) reached a new high at €104.8 million (€94.4 million). Earnings before interest and taxes (EBIT) thus grew by 14.8 % to €86.2 million (€75.1 million).
The financial result improved by 18.6% on the previous year's figure. The Group's tax rate remained almost at the level of the previous year at 40.5% (40.6%). This means the FUCHS PETROLUB GROUP was able to improve significantly on its record earnings of the previous year once again, despite increasing raw material costs. At €40.1 million (€30.9 million), net income for the year was 29.8% higher than the previous year.
Investments in property, plant and equipment in 2004 were dominated by projects at our sites in Mannheim and Chicago (USA). Total investments in this sector amounted to €22.2 million (€18.7 million). As the result of merging production sites and taking other measures to improve efficiency, the rate of capital expenditure at 2% of sales revenues was considerably less than the previous years' average. Goodwill acquired from acquisitions amounted to €8.7 million (€0.8 million).
Worldwide, the FUCHS PETROLUB Group employed 4,155 people (4,220) as of 31 December 2004. Year-on-year, the total workforce has thus fallen by 65, or 1.5%. This is mainly the result of restructuring measures in Asia and Western Europe. The Group employed 3,058 (3,117) people abroad and 1,097 (1,103) in Germany.
The Group successfully increased its sales revenues in the first two months of the year 2005. The company expects that raw material prices will continue to rise and that the market will remain volatile. FUCHS PETROLUB counteracts this development by continuing their strategy of specialization and concentration as well as by increasing sales prices and endeavors to offset the increase in raw material prices. Concentration on the specialties sector of the lubricants business and continued optimization of cost structures will be given high priority in 2005, too. Moreover there will be no regular goodwill amortization anymore and financing expenses will decline. Overall, the Group is striving for a rise in net income for the year once again.
Given the excellent profit and cash flow generation, the Executive and Supervisory Boards propose to the shareholders that dividends for the past year be increased by €0.10 each to €1.66 per ordinary share and €1.83 per preference share.
Mannheim, 6 April 2005
FUCHS PETROLUB AG
Public Relations
Friesenheimer Str. 17
68169 Mannheim
Phone: (0621) 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.