The global lubricants supplier FUCHS PETROLUB AG in Mannheim concluded the first half of 2004 against the trend within the industry sector with an above-average growth in sales. At 7.0 %, internal growth proved to be a particular highlight. Nominal sales growth was 5.0 %, thus in total sales in the first six months amounted to €548.9 million (522.5). The Group continued its positive profit development in the second quarter of 2004. At €9.7 million (7.1), FUCHS achieved the highest yet net profit before minority interest within a single quarter. For the entire half-year too, the Group reached a record profit after taxes of €18.9 million (13.2). The earnings per ordinary and preference share are €2.30 and €2.39 (1.71 and 1.80). Before scheduled goodwill amortization, the corresponding earnings are €2.84 and €2.93 (2.43 and 2.52). Despite the burden on the purchasing side the Group is aiming for a double-digit profit increase for the entire year 2004. Base-related, the 43.2% rate of increase in the first half of 2004 will, however, not continue in the second half of 2004.
In addition to the internal growth of 7.0 %, nominal sales growth of 5.0% in the first half of 2004 consisted of an external growth of 0.5 % and negative currency translation effects of 2.5 %. Despite the WYNN'S acquisition, external growth was only 0.5% as figures for business activities sold were missing from the comparison with the previous year. This effect will not, however, continue in the next quarters. The currency translation effect of minus 2.5 % fell monthly as the euro gained in value as early as the second half of 2003.
In the second quarter of 2004, all regions recorded strong internal growth in sales revenues. In addition to our affiliates in Asia and North and South America, the operating units in Germany and other Western European countries achieved significant growth in sales revenues.
One fundamental factor for this successful development was strong growth in sales. Although the net contribution margin was down as a result of increasing prices for raw materials, the increase in sales revenues produced a marked rise in net contribution in absolute figures. As with manufacturing costs, the growth in selling and administrative costs and R&D expenditure was clearly under-proportional at 1.2 %, thus leading to an increase in operating profit in the first half of 2004 by 21.0 % to €51.3 million (42.4).
Growth in earnings before interest and taxes (EBIT) was somewhat lower, rising 15.8 % to €41.8 million (36.1). This reflects lower other operating income, value adjustments on receivables from associated companies and goodwill amortization. Compared to the equivalent period of the preceding year, the EBIT margin rose to 7.6% (6.9). The financial result improved by 23.3 %, reaching €-9.2 million € (-12.0). Earnings before taxes (EBT) therefore increased by 35.3 % to €32.6 million (24.1). With an increase of 43.2 % FUCHS produced record earnings of €18.9 million (13.2) after taxes.
The growth in operating earnings was spread over all three reporting regions. Europe in particular achieved a significant increase in earnings.
Group investment in tangible and intangible assets in the first half of 2004 reached € 9.3 million (8.0). Focus points for tangible asset investment were sites in Mannheim, Stoke-on-Trent in England and Harvey near Chicago, USA. With the purchase of an industrial lubricants company trading under the brand name WYNN'S in France in the first quarter of 2004 the Group strengthened its position as international market leader in the metalworking lubricants sector.
As of 30 June 2004, the FUCHS PETROLUB Group employed 4,240 people (4,162). The number of employees thus increased by 78 (+1.9%) over the preceding year's equivalent date. 1,093 of these were employed in Germany and 3,147 were employed abroad.
Despite the burden on the purchasing side, FUCHS anticipates that continuation of the current growth course, continued cost savings and noticeably reduced financial expenditure will enable the group to achieve a double-digit increase for the year 2004. However, the high, base-related increase rate for the result in the first two quarters of 2004 will continue to weaken in the following quarters. The anticipated positive development of sales revenues will depend on the development of exchange rates and future international cyclical development.
Mannheim, 17 August 2004
FUCHS PETROLUB AG
Öffentlichkeitsarbeit
Friesenheimer Str. 17
68169 Mannheim
Tel.: ++49 (0) 621 3802 - 105
The press release is also available on the Internet under 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.