Fuchs (FPE3) Q3 2024 earnings summary

Executive summary

• EBIT rose 7% year-over-year to €334 million, with margin recovery to 12.5%, despite a 1% sales decline to €2,666 million, mainly due to negative currency effects; all regions contributed to growth.

• Earnings per share increased by over 10%, reaching €1.78 (ordinary) and €1.79 (preference), supported by operational strength and share buyback.

• Free cash flow before acquisitions dropped to €194 million from €330 million, mainly due to higher net operating working capital build-up.

• The acquisition of LUBCON Group was completed, and a new electrolyte production plant opened in Kaiserslautern.

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

Financial highlights

• Gross margin improved to 34.6% from 31.9% year-over-year, mainly due to lower material costs and strong pricing.

• EBIT margin increased to 12.5% from 11.6% in the prior-year period.

• Free cash flow before acquisitions at €194 million, down from €330 million, with net liquidity expected to be around zero at year-end.

• Capex reduced to €38 million from €50 million year-over-year.

• Earnings per share grew double-digit, aided by operational results and share buyback.

Outlook and guidance

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

• Confident in delivering guidance despite ongoing market challenges; Q4 expected to be seasonally weaker due to holidays.

• Strategic EBIT target of €500 million remains, but achieving it depends on macroeconomic tailwinds.

• Slight sales growth expected, mainly volume-driven with stable prices; strict cost management to offset inflation and S/4 Hana rollout costs.

• Economic environment expected to remain challenging, with global growth at 3.2% but Germany revised down to 0% for 2024.