Fuchs (FPE3) Q2 2024 earnings summary

Executive summary

• EBIT rose 9% year-over-year to €218 million, with margin recovery to 12.4% and all regions contributing to earnings growth.

• Sales declined 3% year-over-year to €1,764 million, mainly due to price adjustments and currency effects, despite positive business development in key markets.

• Earnings per share increased 13–14% year-over-year; share buyback for preference shares completed, ordinary shares near completion.

• Free cash flow before acquisitions dropped by €95 million year-over-year, primarily due to higher net operating working capital build-up.

• LUBCON acquisition closed July 26, 2024, expanding the industrial lubricants and greases portfolio, to be integrated from August.

Financial highlights

• Gross margin improved to 34.4% from 31.5% year-over-year, driven by price realization and operational efficiency.

• EBIT margin rose to 12.4% from 11.0% in the prior-year period.

• Free cash flow before acquisitions was €69 million, down from €164 million in H1 2023, due to net working capital build-up.

• CapEx was lower at €29 million versus €38 million last year; full-year investment expected to match depreciation.

• Earnings after tax reached €155 million, up 10% year-over-year.

Outlook and guidance

• Full-year 2024 guidance confirmed: sales around €3.6 billion, EBIT around €430 million, and free cash flow before acquisitions around €250 million.

• Net working capital expected to average 21%-23% of sales, with unwind in H2 supporting cash flow.

• No significant raw material cost spikes expected; pricing anticipated to be stable or slightly up.

• Ongoing geopolitical tensions and raw material price developments remain key uncertainties.

• Seasonal ramp-up expected through Q3, with Q4 typically weaker due to holidays.