Fuchs Petrolub ST Stock

Dear ladies and gentlemen, welcome to the Half Year Results 2026 Analyst Conference Call of FUCHS SE. This conference call will be recorded. [Operator Instructions] May I now hand over to Andreas Schaller, Head of Investor Relations at FUCHS SE, who will start the meeting today. Please go ahead.

Thank you, Nadia. Good afternoon, ladies and gentlemen. This is Andreas Schaller speaking. On behalf of FUCHS SE, I wish you a very warm welcome to today's conference call on the results of the first half year 2026. We already preannounced sales and EBIT and the change to guidance for EBIT on Wednesday last week.

Today, we will run you through the full set of numbers. With me on the call today is our CEO, Stefan Fuchs; and our CFO, Esma Saglik; and the IR team. As always, Esma and Stefan will run you through the presentation, which is then followed by a Q&A session. All the documents for this call are available on our homepage, and we assume that you have them in front of you. Please be also aware of our disclaimer on Page 2 of our presentation. And now it's my pleasure to hand over the call to Esma. Please go ahead.

Thank you very much, Andreas. Hello, and also a very warm welcome from my side. I will now walk you through our financial performance for the first half of 2026, starting with the key highlights. Overall, we had a very strong first half year. After a very good start into 2026, our business developed even stronger in the second quarter. Sales reached EUR 2 billion. This is an increase of 11% year-over-year.

The main driver was strong organic growth supported by high customer demand. As a consequence, the strong sales growth translated into strong earnings. EBIT reached EUR 260 million, which is EUR 51 million above last year and an increase of 24%.

Our free cash flow before acquisitions came in at EUR 61 million. This is below the prior year level of EUR 81 million. The main reason is the inflation-driven buildup of net operating working capital. So in summary, the first half of the year was characterized by strong demand, a clear EBIT improvement and the cash flow development that reflects the current inflationary environment and higher working capital.

Now turning to the next slide, let me briefly comment on the quarterly sales. In Q2, our sales were very strong and reached EUR 1.1 billion. This is 14% above Q1 and 21% above Q2 of last year. The main driver was strong demand. Based on our current assessment, around 1/3 of the growth came from growing our business. Another 1/3 came from pre-buying effects and the remaining part came from customers turning to us because other suppliers were short on raw materials and not capable to deliver. So overall, this development shows 2 things.

First, we have a robust market position and demand for our product is strong. And second, our broad sourcing network helps us to supply our customers reliably in a difficult market environment. Let's now have a closer look to the main drivers behind our sales development in the first half year. Organic growth was clearly the main driver. It contributed around EUR 200 million or 12%. This growth was mainly volume driven and came from all regions. In the first 2 months of the year, we saw a normal volume growth at a mid-single-digit level. From March to June, the growth was over proportionally due to the effects I've already mentioned. Overall, price effects played a rather limited role in the first half.

The benefits from lower raw material prices earlier in the year were largely neutralized by the inflationary pressure caused by the Middle East crisis. As a result, price effects were still relatively modest. The impact of the price increases already implemented will come more visible in the second half of the year.

External growth contributed EUR 25 million. This number reflects mainly the full consolidation of our former joint venture in Turkey after the closing of the acquisition, which was end of April 2026. Currency effects were negative at around EUR 26 million or minus 2%. Here, the main burden came from Americas and Asia-Pacific. However, the negative FX impact declined during the second quarter and even turned into a small tailwind.

So in summary, we can say that our strong top line growth was volume-driven and broad-based. Turning now to the EBIT. The strong sales development translated into a very strong EBIT performance. EBIT in Q2 reached EUR 135 million, an increase of 34% compared to the second quarter of last year.

This reflects the strong demand environment and the positive business development across all regions. But we should also keep in mind that Q2 last year was relatively weak, especially in Americas, where the business was affected by uncertainties around the tariff.

Nevertheless, even comparing our Q2 EBIT development with Q1, we were able to improve profitability. EBIT increased by 8% quarter-over-quarter. And this very good result gives us a strong foundation for the full year 2026. Let me now turn to the KPI summary, starting with the gross margin. Our gross margin remained solid at 34.8%. This is slightly below the Q1 level of 35.1%, but broadly in line with the prior year period, which stood at 34.7%.

Functional costs increased by EUR 20 million. This was mainly driven by higher sales and R&D expenses as well as one-off effects in other operating income and expenses. The positive one-time gain from the sale of plant in Australia in Q1 was more than offset by a negative one-off, mainly related to the first-time consolidation of FUCHS Turkey. Selling and R&D expenses were driven by volume growth and reformulation efforts to secure supply.

Our EBIT improved significantly, and we reached an EBIT margin of 13% compared with 11.6% last year -- encouraging is that sales grew by 11%, while functional costs increased by only 5%. This shows that we were able to grow efficiently and convert the strong top line development into a significant improvement in earnings.

CapEx increased year-over-year as well, but we remain in line with our full year guidance. The change in net operating capital was minus EUR 139 million, reflecting the strong inflationary-driven buildup. As a result, free cash flow before acquisitions was below the prior year level.

However, compared to Q1, we were still able to achieve a slight improvement in cash generation. So the key message is we achieved strong earnings growth and delivered a solid free cash flow despite the headwinds of inflation. And now let us have a look at the regional development, starting with EMEA. Sales in EMEA increased by 11%, driven by strong organic growth. All countries had expanded sales.

We saw particular strong contribution from Germany, South Africa, Poland, Italy and the U.K. The growth was mainly volume driven, while price effects were still with lower impact in the first half year. In addition, external growth was supported by the full consolidation of Fuchs Turkey.

EBIT increased by EUR 15 million or 14%. Almost all countries were above previous year EBIT level. The EBIT we see here includes an at-equity income of EUR 3 million, which is mainly coming from our joint venture partner in Saudi Arabia. And as you may have seen in our second press release today this morning, a fire occurred at our production site in Saudi Arabia and caused severe damage to our production facility. Fortunately, nobody was injured.

That being said, we do not expect any production output from this plant for the remainder of the year, but we are confident that we can secure alternative supply sources and continue serving our customers. So in summary, EMEA delivered a very positive performance so far with broad-based organic growth and a solid earnings.

Now moving over to Asia-Pacific. Organic growth was strong at 14%, mainly driven by high customer demand. China and Australia delivered the highest absolute contribution. At the same time, several smaller countries showed a strong relative growth rate. While currency effects were still negative in the first half of the year, we start to see an improvement.

Negative currency effects declined over the past 6 months and turned slightly positive in the second quarter. From an earnings perspective, Asia-Pacific developed very strong. EBIT increased by EUR 27 million or 42%. Also here, China and Australia were the main drivers. Nevertheless, all other Asian countries had a very good growth rate, too.

And that said, the EBIT of Asia also includes a EUR 7 million one-off gain from the land sale in Australia, which we already recorded in Q1. So overall, we can say that Asia-Pacific recorded strong organic growth and a very good EBIT performance.

Let us now turn to North and South America. Sales increased by 7% despite significant negative currency effect. Organic growth was strong at 13% and was mainly driven by North America. Also, South America was significantly above the prior year level. Currency effects remained a burden, especially due to the weaker U.S. dollar. However, the negative currency effect declined, similar trend as we are seeing in Asia. EBIT in Americas improved significantly compared to prior year.

In Q2, EBIT was more than double compared to last year, reflecting a very strong recovery and excellent operating performance. Both North and South America contributed. Overall, the Americas delivered strong top line growth and a significant improvement in profitability despite continued translational currency headwinds.

Now moving over to net operating working capital. Here, we see a strong increase to EUR 910 million, which is mainly driven by inflationary effects on inventory. As a percentage of annualized sales, net operating working capital was relatively stable at 21.3%. The net operating working capital also includes Turkey for the first time, but this is only a smaller part of the increase.

Compared with the prior year, the NOWC buildup was significantly higher and has a clear impact on our free cash flow. Nevertheless, it is a key management task for us to reduce NOWC. The increase, especially in Q2 reflects the contribution of inflation, strong sales growth and the consolidation of our former joint venture in Turkey.

Turning now to net liquidity. As already mentioned, we achieved a free cash flow before acquisitions of EUR 61 million. This was supported by strong earnings, but also reflects the inflationary buildup of net working capital. CapEx in the first half year was below our depreciation level.

In the second quarter, we paid EUR 160 million in dividends. In addition, we had a cash outflow for the full takeover of our former joint venture in Turkey. Overall, net liquidity declined from EUR 151 million at the end of 2025 to EUR 13 million at the end of June. Considering the dividend payment, the acquisition and the inflationary environment, this is still a solid result.

Before turning to the raw material development and outlook, let me briefly summarize the first half year. We had a very strong first half year in 2026. Demand was high, and we were able to support our customers, thanks to our broad global sourcing.

We successfully expanded our business and at the same time, part of the growth was temporary, driven by pre-buying and by additional demand from customers whose other suppliers were short on volume. We achieved the highest EBIT ever recorded in the first half year. This gives us a solid base for the rest of the year.

We also generated a solid free cash flow considering the significant inflationary effect on net operating working capital. All in all, we've once again proven our resilience in a volatile market environment and demonstrated that we can handle challenges.

Now let's move over to the raw material development. We are following the developments in the Middle East closely. A few weeks ago, there seem to be some relaxation in the market with crude prices coming down. But the situation remains dynamic and many supply routes in the Middle East are still blocked.

In addition, several refineries and production units in the Middle East are still not operational. This creates shortages, especially in base oil [Group III] and PAO. Thanks to our broad supply sourcing and our local-to-local sourcing strategy, we were able to secure enough raw materials in the first half year.

This allows us to serve our existing customers, intensify our supplier position with them and also develop new customer relationships. We have also managed raw material cost inflation effectively so far. We have already implemented several rounds of price increases, and we have communicated transparently with our customers. But giving a prediction regarding further development to raw material costs is currently difficult.

We will continue to monitor the situation in the Middle East closely in order to remain agile, both on the sourcing side and on our pricing side. And we know even if the conflict were to end in the next couple of weeks, the supply route opens again, we do not expect the supply situation to normalize before mid-2027.

And our goal is clear. We aim to compensate the cost increases with price increases. Moving to our outlook. First, it is important to say that the strong earnings development in the first half year of 2026 cannot simply be extrapolate.

Part of the volume growth was driven by pre-buying and this will likely reverse in the second half of the year. We also consider a part of the additional demand from customers with supply constraints to be temporary. At the same time, the full impact of cost inflation and price increases will only become visible in the second half of 2026.

Based on the positive development in the first half year, but also taking into account the uncertainty of the market, we are updating our outlook for 2026 as follows. For EBIT, we now expect a range of EUR 460 million to EUR 480 million. This is an increase compared to our previous guidance, which was around EUR 450 million.

As a consequence, for our FVA, we now expect a moderate improvement above the prior year. This reflects the higher earning expectations, even though capital employed is also increased. For sales, we continue to expect a figure significantly above EUR 3.7 billion. This remains unchanged compared to our Q1 outlook.

Free cash flow before acquisitions is still expected to be significantly below EUR 270 million. This is also unchanged compared with our Q1 outlook and mainly reflects the strong increase in net operating working capital due to raw material cost inflation and higher sales price.

So in summary, we managed the challenges around availability and inflation very well in the first half year, but visibility remains limited. And the supply situation is still very dynamic as the conflict is taking unpredictable turns. As we did during the last week's months, we will watch demand development very carefully, and we will continue our transparent communication with our customers regarding the cost development and the necessary price adjustments. We are confident that we will manage the situation well as we did in '21 and '22.

And with that, I end of my presentation and will hand over to Stefan.

Thank you very much, Esma. I just want to additionally provide you with a few news from the FUCHS world aside of what happened in the market, which kept us really busy this year. FUCHS 100 plays a huge role. And as you can see from our slide, FOCUS TO WIN is the name of the game and the whole journey sits on 3 pillars: growth, people and sustainability.

You all know FUCHS 100 comprises the years 2026 until 2031. And if you look at the growth, I always find it fascinating that on our business, there's so much growth potentially available that we really have to somehow self educate us and say we need to FOCUS TO WIN and we can't go after every potential in all the countries at the same time. So that's the one part.

Also, I always say, if you look around the world, FUCHS is probably in the lubricant world, second to none because our global footprint with 70 operating companies, more than 3,000 salespeople in the field, 40 blending plants. We have really a worldwide network, and we can supply the whole range from standard products in high volumes to really minute volumes. I think that's really cool.

And obviously, many of our key customers also appreciate FUCHS for that. And there, you can see that with our customers, John Deere, for example, which we follow through since many, many decades, we were winning the third John Deere Supplier Award, which made us very, very proud and they see also a benefit in getting all they need from partners like FUCHS.

If we move on, on the people front, we always say it is all about the people. And many of you remember the Capital Market Day. But for us also internally important, the rollout of FUCHS 100 was during our global virtual roadshow. And since COVID, we make once a year a global roadshow with 7,000 employees invited, and they all have a lot of fun. The Board participates in the opening and in the closing. There is also a Q&A session.

And our people celebrated in the countries, A, we get the message across to all of them at the same time. And B, they make watch parties, lunch, they cook together, and I think that's just a wonderful opportunity for them. The last part and the third column of FUCHS 100 is about sustainability.

And in the world of lubrication, we know that a lubricant saves more CO2 during the application in our customers' machines and equipment, then you need to manufacture the lubricant. And we have a wonderful tool which is audited with regard to our life cycle analysis.

And here, you see a simple example of an engine oil of viscosity grade comparing a 5W-30, a 0W-20. And on the far right, you can see a 0W-20 ACT, which is for us advanced circular technology. So by using circular raw materials, we can prove to our customers that we can save significant CO2. That brings us to the end of our presentation, and we are looking forward to the Q&A session.

Yes. Thank you very much, Stefan and Esma for the presentation. And now we are ready for the Q&A session. Nadia, please start with the Q&A

[Operator Instructions] and the first question comes from the line of Michael Schaefer, ODDO BHF.

Michael Schaefer from ODDO BHF. So I wonder who joined the Hyrox event, by the way, on the FUCHS 100. On my questions, first one, coming back to the plant accident, which you announced this morning in Saudi Arabia. Esma, you quantified the kind of contribution. However, I would be interested in what kind of role the entire plant plays in the entire group in terms of sourcing raw materials in this region? And you said that there is no output expected in the second half '26. So do you have any kind of visibility when production start and when the plant will be rebuilt in the course of '26. So is this an H2 topic? Or is it dragging into '27? This would be my first question.

The second one is on Americas. I mean you reported the jump in EBIT, EUR 33 million in the second quarter alone. This is not only up significantly from last year, but also compared to the EUR 19 million you reported in the first quarter '26. So what happened there quarter-over-quarter? And how sustainable is this going into the next couple of quarters? Or is this significantly down to the, let's say, the pre-buying activities? So this would be my 2 questions.

All righty. Thanks a lot, Michael Schaefer, for your questions. The Saudi plant, I would say more than 90% is there to supply the business in Saudi Arabia and there's a lot of automotive products there. I would say large parts of the plant are destroyed. There are certain elements which are still functioning.

We have alternative sourcing in the country. We can help out from the FUCHS Group, but to rebuild major parts of the plant is a year plus. So that is also something into next year. And we just have to see what the earnings impact will be. But all in all, as it was stated in the press release with 1.5%, I think it is -- if all would fall away, it is not so dramatic from an earnings perspective.

I mean, as we stated before, thank god, no one was injured and we have a continuous exchange with our Saudi partners, but being in the minority is mainly them. In America, I mean, we had really a wonderful growth in the second quarter. We also -- we had a growth of 24% organic growth in Q2 versus 3% in Q1. And don't forget the comparable quarter last year, Q2 of 2025 was the reason why we had to lower our EBIT outlook for the group because of all the tariffs coming in.

And therefore, we are very happy. They had an outstanding performance. Looking forward, visibility is limited. And therefore, I think they are on a good track record. But whether this will continue like this, I think we will discuss later on the overall outlook. We have stated, don't extrapolate first half. But the other part is also don't extrapolate the second half because you have to look at the year as a whole, and I think that's the basis for the future. I hope that answers your question.

And our next question comes from line of Angelina Glazova from JPMorgan.

I have a few to start with maybe around the guidance. So I understand that the unfortunate events in Saudi Arabia happened after you came out with the guidance upgrade last week. And I understand that in the presentation today, you are still confirming that guidance range provided last week, even though last year, it was 1.5% of group EBIT.

And my question here is, was it that the guidance in the first place was a little bit conservative? Or is it just that you are aiming to continue servicing the customers more from other assets? And if you have, at this stage, any estimate as to how much cost will be required to rebuild the plant, that would also be helpful.

And secondly, if you have any color on the current developments early in Q3 or maybe the visibility of order books that you have at this stage? I'm more curious to understand whether your comments as part of the guidance, which is that temporary effect such as pre-buying and where other customers -- other competitors, sorry, were not able to supply will dissipate in the second half. Is this something that you already are seeing? Or is it more of an expectation that you have at this stage?

And lastly, maybe to challenge you a bit on the guidance as well. Your comments seem to be implying that the part of the volume growth that FUCHS had because of other competitors being unable to supply should also somewhat dissipate in the second half. But would you not be expecting to keep some of that business because FUCHS has shown to be a more reliable supplier. So if you have any sort of feeling as to how much of that business FUCHS could potentially keep going forward, that would also be helpful.

Thank you, Angelina. And I will start actually with your first question in regards to the guidance and the combination of Saudi Arabia. Number one, you have to keep one thing in mind. We are joint venture, and we are in the minority with 52% -- sorry, with 32%, let me correct that, 32%. And in the [at-equity] results, what you are seeing for annualized around 2/3 is coming from Saudi.

And we do not expect right now that the Saudi Arabian occurrence will have an implication on our guidance. For us, the key is actually to serve our customer and be capable actually to still deliver the needs of the local market. So all in all, like we have written in our press release, it is 1.5%, and we do not expect that this will have any implication for the guidance.

I follow up on the current development and on the order book. We don't have an order book statistics, which we look at on an ongoing basis because on the consumer world like we are living in, it's not like if you sell machine tools or large pieces of equipment. We don't want to comment on July. It's A, not over; B, I only have the one or the other feedback from our colleagues. But let July be July, but then you still have in August and September, and then we have to see what the quarter is. At the moment, we really have little visibility.

And therefore, I don't want to comment on the current month, which is not yet over. With regard to the high volume we had in the first 6 months, I mean, we had an 11% sales growth, which was based on significant volume growth in all 3 world regions.

The one part which is taking business from competitors who were not able to supply. I mean, certain parts, we will definitely keep. Also, I think customers will witness that FUCHS is a very transparent and be very much active in order to keep them going, but we will not keep all of that. But how much is difficult to say as of today.

And the next question comes from the line of Lars Vom-Cleff from Deutsche Bank.

With great interest, I listened to you saying you are also intensifying new client relationships. And I remember that in history, you said you would even limit excessive preordering by customers in order to keep the material flowing. So I take it, you have enough material to gain market share from competitors that are struggling? And are you still having this 10% cap for your existing clients? Or could they also start ordering more these days?

Thank you, Lars. I think it's a very important question for us nowadays. We have certain mechanisms in the systems. But to be honest, if you go to industrial accounts for them, pre-buying is not so easy because they don't have a lot of storage space, especially if they have bulk material in tank.

If you go to automotive aftermarket customers, there, you have a little bit more of preordering. In-- we still have availability, but it's a daily battle. If you have certain products with 10 or 15 ingredients and the [one] is not available, we are always able to substitute it, but then you need to communicate with the customer, get an approval. So it's a lot of work for the entire team.

But so far, I must really say they've done an outstanding job from procurement to manufacturing, also to our R&D, product management and sales team. So I'm really proud of the team. And also the one comment Esma made earlier on with that type of a sales volume increase, the cost increase was pretty limited. So we are trying hard to make it all happen. But it's not that we have like everything rightfully available. I mean, Group I and II base oils have eased a little bit on the Group III base oils, polyalphaolefins, it's a little tighter. And then it's different from each world region. But all in all, I think our global communication and the size of the group and how we collaborate with each other, I think we are really in a good position.

Understood. And then maybe shifting to input prices from availability. You indicated, I think, lastly on the Q1 call that you are still ahead of being fully impacted by rising input costs yourself. I mean, yes, we saw that with your first half results. But would you still say that you are faster passing on prices than they hit you in reality?

That's also the three-million-dollar question, Lars. If you look back in '21 and '22, and I said the statement over and over again, there's always running behind impact when raw materials increase, especially when they jump, you run behind for a certain amount of time. And in '21 and '22, we went through a percentage margin valley and then went up. I think all the years in absolute numbers were good years.

But there will be a period of time where we see relative margins drop by the sheer magnitude of what is going to happen. So let's wait and see how the third quarter develops. For me, that's the critical one. But a few weeks ago, everybody saw the window closed and then there is a peace treaty. But as we all watch the news at the moment, I mean, it seems to be more and more parties involved in more countries. So I think it's not yet over from availability and from pricing actions. It's a very dynamic picture. That's all I can say.

And the question comes from the line of Anil Shenoy from Barclays.

Just the 2, please. The first one is on your raw material procurement policy. Now you've said that because of the conflict in the Middle East, the supply chain -- I mean, even if the war were to end tomorrow, the supply chain disruptions could last until mid-2027.

So given the destruction of these petrochemical facilities, which you mentioned in the release, what is your current level of visibility into the alternative sourcing of raw materials? In other words, do you have enough visibility that you'll be able to supply the required volumes to your existing customers for the next say, 6 months or maybe 12 months. So if you could give us some color on how we are able to secure the raw materials. That's the first question, please.

And the second one is, basically, I'm just trying to understand, and thank you so much for giving us the breakdown of the sales growth. So you said 1/3 from growing the business, 1/3 from pre-buying and 1/3 from winning customers from your competitors. But what is your best guess as to how it will unwind in the future? And when do you think that will happen? So my thinking is the pre-buying that you saw in Q2 may not repeat in Q3 and Q4. But then the customers that you've won from your competitors, they may continue. So if you could give us some color on that, please?

Thank you very much, for your questions. Maybe I'll start with the second one because I was a little bit concerned reading some publications from you after our ad hoc release last week. I would want to take the second half of the year as the foundation for how you see FUCHS developing in '27 and '28. And we have already said also don't take the first half year. So I think the pre-buying impact will be over by the end of the year.

So in the first half of the year, additional volumes, the second half of the year, less volumes in the full year, it's equalized. That's as simple as I can explain it. So therefore, the year 2026 must be seen as a whole. The big question is how much from the volumes we have taken on additionally we might keep and it's very difficult to say how much is really taken over from competition because they were not able to supply and how much was organic growth because we were targeting those customers.

But all in all, I would say, by the end of the year, that impact of the pre-buying is equalized with more volume in first half, less volume in the second half. And therefore, my warning or my advice to all of you is don't take the second half as you calculate EUR 460 million to EUR 480 million minus EUR 260 million and you come to EUR 200 million to EUR 220 million as the basis for future earnings because that doesn't reflect the true picture.

Raw material procurement is tight. We have visibility, and we have all our teams engaged. But I think, A, we have a good name in the market; B, I think we have long-term relations. We are not spot buyers. So I would think as of today, if not more is going to happen, that we should be able to continue to supply our customers, if that answers your question.

Yes, it does.

[Operator Instructions] And the question comes from the line of Julia Winckelmann from Bank of America.

So the first one is on the pricing mechanism structures. I wanted to ask if they are different across the segments. So is there any difference across the 3 regions? And then can you also provide an update on the digital transformation program? So where do you stand now? Are you progressing in line with the plan? And maybe also what should we expect in terms of cost impact and or benefits in 2026 and 2027?

And then the last question is on the underlying part of your volume growth. Where do you see the strongest demand trends? For example, is it cooling fluids for EVs or even data centers or is it the medical and food grade application or potentially any benefits from the German industrial spending increase? That would be helpful.

Okay. Julia, thanks a lot for your questions. With the pricing mechanisms, they are not different between the world regions. They are only different from our customer base. I would say very large industrial customers, very large OEM customers in the automotive side, very large mining houses, they are on price variation clauses in all 3 regions, and we have different clauses based on different currencies, different import duty models, et cetera.

And around about, I would say, 25% to 30% of our business is built on those price variation clauses of which we have changed the majority from 3 months to 1 month after the COVID crisis. From the volume trends, it's really across all world regions, and that I think is very important. And it's not only the 3 large countries, but also our smaller companies.

And we have seen a lot of good things. But if you, for example, mention medical or cooling fluids, if they would go up by 20%, you would not see that in the group numbers because all of those segments are still smaller segments. But if I would have to pinpoint one out, I think, would be automotive aftermarket, not because of the pre-buying, but also in the year 2025, also our mining division did well. Industrial output suffered a little bit due to the European part and all the on the tariff. So that's a little bit of background. And Esma is giving you the answer to your digital question.

Julia, in regards to our digital transformation, we are on full speed. We are on track in our project. And as you -- I mean, from a project time line perspective, this year, we are -- we plan to finalize our template, set the system up, test it, and our first go-live plan is in Mexico for next year in March, followed by the U.S. towards July. So from a project perspective and from being on track, we are very well on track and everything is as we are expecting.

From a financial implication, this year, I do not expect a bigger implication at all. I mean we have a budget. We have planned for it. The majority of the cost because of global template, is in the capitalization mode. From next year's perspective, we do not -- we will see some costs coming back.

We have to keep in mind because as soon as we go into localization, it's no more capitalizable. But other than that, with the implementation, I would say, post 6 months, we will see the first benefits also how it's in the region. But nevertheless, the whole project is set for 4 years and the main implication and the benefits of the project we will see of course everyone is on the global system. And yes, that's the update I can give for now.

And the question comes from the line of Martin Roediger from Kepler Cheuvreux.

I have 3 small questions. One is a clarification. When you compare the price increases in Q2, which you said were modest so far and the increase in input costs in Q2, was there a positive net pricing effect? Or was it negative? That's my first one.

Do you want to...

Answer. Martin?

I wait for your answer.

Okay.

Okay.

It's what?

Positive. Next one, please, Martin.

Sorry, I didn't get it by phone. Could you repeat. It's all positive.

Yes.

Yes. Okay. Then regarding your press release about this fire at your joint venture in Yanbu, I guess it was a military attack. Correct me if this is wrong. You say you plan the re-creation of the production capacity. Are there any prerequisites for this decision, i.e., the end of the Middle East conflict? Or will you repair the site in any case despite an ongoing or even escalating conflict?

Martin, I mean, we own 32%. So the main decision maker is our joint venture partner, Alhamrani family. I mean we have a wonderful relation. We have spoken a couple of times since the event happened and we make the decision together. We believe in the country and in the region. And therefore, I would assume that we are rebuilding, but we have to see what is the capacity, where to put it on. And otherwise, on speculations, I can't say anything more than what we have published today.

And the final question is on the cooling agents for data centers. Can you indicate how big that business is today? Do we talk about 1% or 2% of group sales? And are there any, let's say, specific data centers where your technology is not applicable?

This is also an interesting basis. It's not a big business for us today we follow the business. We see it interesting. For me, honestly, there are nicer and probably more valuable niches we go after. But we are after that business, but there's also heavy competition in -- I would say there are probably better opportunities and as many as we have look at our 6 focus areas. It's something we go after, but it's not as big as many of you all sometimes might think.

And now we're going to take our final question for today. And the question comes from the line of Sebastian Bray from Berenberg.

I have 2, please. Thinking about the implied run rate for H2 guidance, can you talk about the profitability of the acquired OPET Turkey joint venture? I assume it will be a small but significant contributor, especially as there was a one-off effect in Q2 that was more negative in that JV.

And my second question is on Asian automotive. The company had very nice volume growth again in China in Q2 seemingly. Is this an area with more or less pre-buying effect? Or is it just because FUCHS is accelerating share gains and maybe some of the competition is not as strong as previously?

Okay. Sebastian, thank you for your question. And let me start actually with the run rate and the profitability in regards to the OPET. I mean, as you've seen right now in the numbers, there is a one-off. We always indicated that already since we announced this acquisition. But also keep in mind the -- I mean, we have to integrate certain things as well in our group environment.

So there will be smaller amounts of start-up or actually integration costs still going on in the second half year. But nevertheless, it is a positive business. In Turkey, it is a big business. But on the other hand, we always have to keep in mind it is a high inflation country, which is actually still accounted on a high inflation. But for the second half year, the one-off will be not repeating as you can imagine, and we will see a contribution coming from the OPET.

And then your question was automotive fluids in Asia and pre-buying. Am I correct?

Exactly.

Okay. I don't see any different pattern of other world regions in Asia Pacific. Therefore, I wouldn't say so if you look on the quarterly growth in Asia-Pacific, it was on the organic side, it was 17%, I think, in 6% in Q1 and 21% in Q2 compared to the Americas, which was even higher in Q2. I wouldn't say there was anything specific over there.

Dear speakers, there are no further questions for today. I would now like to hand the conference over to the management team for any closing remarks.

Yes. Thank you very much, Nadia. Thank you for all your questions. In case you have further questions or want to do a follow-up, please contact the Investor Relations team. And otherwise, we wish you a very good summer period. Vacations are just starting here in the south of Germany, and we hope that the world will be a more peaceful one going forward. And I don't know, Esma, Stefan, do you want to add something?

No. Thank you very much. I mean, for your attendance and the open Q&A. We were really happy with the first half. I think we were all a little bit concerned when the war broke out. I think so far, we have delivered. And for the full year, we are confident. Also visibility is little. And I'd say we just have to watch the situation, but I think we are in good shape.

Yes. Thank you very much.

This concludes this conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Dear ladies and gentlemen, welcome to the First Quarter Results 2026 Analyst Conference Call for FUCHS SE. This conference will be recorded. [Operator Instructions]. May I now hand over to Andreas Schaller, Head of Investor Relations at FUCHS SE, who will start the meeting today. Please go ahead.

Thank you, Heidi. Good afternoon, ladies and gentlemen. This is Andreas Schaller speaking. On behalf of FUCHS SE, I wish you a very warm welcome to today's conference call and the results of the first quarter 2026.

With me on the call today is our CEO, Stefan Fuchs; and our CFO, Esma Saglik; and the IR team with Theresa Landau and Maximilian Seidel. Maximilian is the successor of Niclas and is with us since 2 weeks now. So also a warm welcome to the conference call Maximilian. We are very happy to have you with us.

Thank you very much.

As always, Esma and Stefan will run you through the presentation, which is then followed by a Q&A session. All the documents for this call are available on our homepage, and we assume that you have them in front of you. Please be also aware of our disclaimer on Page 2 of our presentation.

And now it's my pleasure to hand over the call to Esma. Please go ahead.

Thank you very much, Andreas, and hello and also a very warm welcome from my side. I will now walk you through our financial performance for the first quarter of 2026, starting with the key highlights. I can say, we had a very good start into the year. Organic growth continued and even accelerated. In a volatile environment, we once again demonstrated operational resilience and financial strength. Sales reached EUR 934 million, up by 1% year-on-year, which is mainly driven by an organic growth of 5% and this result has been achieved despite significant currency hedges.

Our EBIT came in at EUR 125 million, up by EUR 17 million or 16% versus last year, which marks another new quarterly records. Additionally, it also underlines the quality of our earnings and the effectiveness of our cost discipline. Free cash flow before acquisitions was very solid at EUR 54 million, an improvement of EUR 37 million year-on-year. And this, despite usual seasonal buildup in net operating working capital during Q1. Our earnings per share increased by 15% to EUR 0.68 per share.

Now turning to the next slide, let me briefly comment on quarterly sales. At FUCHS, we see a seasonal increase quarter-on-quarter, which is fully in line with prior year. Nevertheless, sequential sales grew by 8% and at the same time, sales year-over-year increased by 1%.

Let me have a closer look at the main drivers behind our sales development. Sales in Q1 reached EUR 934 million, as said 1% up year-over-year. At the first glance, this looks rather modest. But the underlying performance was much strong. Organic growth continued -- organic growth contributed EUR 42 million or 5%. With that, volume growth was particularly strong with mid- to high single-digit range. This organic growth came from all regions, which reflects successful business wins and especially the strong demand in March.

On the external growth side, the acquisition of IRMCO and ASEOL in 2025 were the main contributors. Currency headwinds remained significant, with a negative impact of around 4%. We expect these headwinds to continue into Q2 and to ease thereafter. Overall, we can say that the underlying sales development was clearly positive.

Looking at the EBIT on a quarterly basis, we see the same seasonal pattern. However, what stands out is the strong EBIT improvement by over 15%, both year-over-year and quarter-over-quarter. With EUR 125 million EBIT marked, new all-time high for a single quarter. This performance was driven by further improvement in our gross margin, contributed cost discipline -- or continued cost discipline and the EUR 7 million one-off gain from the sale of our property in Australia.

Let me now turn to the KPI summary, starting with gross margin. Our gross margin improved to 35.1% that is an increase of 80 basis points year-on-year and fully in line with the development we saw in the previous 2 quarters. Functional costs declined by EUR 7 million. This was mainly driven by the gain from the Australian land sale. As a result, EBIT reached EUR 125 million, which is an increase of 16% year-on-year with an EBIT margin of 13.4%.

Capital expenditures increased year-on-year as well, but is still in line with our full year guidance. Net operating working capital showed the usual seasonal pattern, build up in absolute terms quarter-over-quarter. But at 21% of annualized sales, it remained stable and unchanged compared to the end of last year -- or last quarter.

Finally, free cash flow before acquisitions was very solid with EUR 54 million, an increase of EUR 37 million year-on-year.

And let's have a look to our regional development. Sales in EMEA increased by 5%, driven by organic growth and stronger demand in March. Most countries in EMEA recorded higher sales, particularly strong growth coming from South Africa, Germany, Poland, Italy and the U.K. External growth was supported by the acquisitions from our former distribution partner, ASEOL in Switzerland. EBIT improved significantly, mainly due to margin expansion and higher volume. The main contributors were Germany, Sweden and South Africa. So in summary, the Q1 performance in EMEA was very positive.

Now moving over to Asia Pacific. Organic growth remained strong at 6%, mainly driven by China and Australia, but also many other smaller countries contributed to it. This clearly shows the benefit of our investment in local production. However, strong negative currency effects almost fully offset the growth. As a result, reported sales increased by only 1% to EUR 266 million. From a profitability perspective, the region developed very well. EBIT increased by 38% with China and Australia being the main driver. That said, the Asia Pacific results include the EUR 7 million one-off gains, as mentioned before. But anyway, overall, we can say Asia Pacific recorded a strong organic growth and a high EBIT, which underlines the solid performance of the region.

Now turning to North and South America. Sales declined by 6%, mainly due to significant depreciation of the U.S. dollar over the past 12 months. At the same time, organic growth was 3%, reflecting new business growth, particularly in North America. External growth was driven by the acquisition of IRMCO. EBIT declined by EUR 2 million, and that mainly due to negative FX effects. We also saw a positive business development in South America. Overall, the operational performance of the region is more solid, and we expect FX effects in South America to face after Q2.

In summary, Americas delivered a solid operational performance, which unfortunately was offset by currency headwinds. Now moving over to the net operating working capital. Looking at our operating working capital, we see the usual seasonal pattern, a buildup in Q1 after a low point in Q4. Compared to Q1 2025, net operating working capital improved, both in absolute terms and as a percentage of sales, from 22.4% to 21%, reflecting disciplined working capital management and also the higher demand.

Turning to net liquidity. We achieved the free cash flow before acquisitions of EUR 54 million, driven by strong earnings and a moderate increase in working capital. CapEx in the first quarter was almost in line with our depreciation level. Overall, net liquidity increased by EUR 52 million to EUR 250 million at the end of Q1, a very solid result for the first quarter. But please keep in mind, there was no major cash out in Q1. In Q2, we will see the dividend payment and the cash out for our acquisition of OPET-FUCHS.

Before turning to the material price development and the outlook, let me briefly summarize Q1. We had a very strong start into 2026 with positive organic growth development and the highest quarterly EBIT ever. We more than compensated for significant currency headwinds and once again proved our resilience in volatile market environment.

Now moving over to the material developments. As mentioned during our Capital Markets Day, since the conflict in the Middle East, oil and petrochemical supply chain has come under pressure. High crude prices, longer transport routes and rising logistic costs are putting pressure on input cost, especially for base oil. We see raw material pricing increasing sharply. And to counteract, we have implemented price increases and expect further increases in Q2.

Even if the conflict were to ease, supply conditions are unlikely to normalize before year-end or even -- by 2027. Our sourcing setup is globally diversified, and this gives us flexibility. We are confident that we can secure volumes to serve our existing customers who remain our top priority. And as a result, we remain cautious by taking new businesses.

So in summary, the visibility regarding price development is currently not given, and it is currently impossible to give a clear direction how it will evolve. And as you all recall, in 2021 and 2022, we faced a similar situation, and we managed it quite well. We have proven that we can handle inflationary challenges, and we are confident that we will manage this situation also successfully. Our key learning was to act faster on pricing, which we are currently doing.

And now let's move to the outlook. Based on the current market and pricing dynamics and also assuming there will be no further disruptions to the local -- to the global economy or supply chain, we update our outlook as follows: We now expect sales to increase significantly above EUR 3.7 billion, driven by price increase. As the final extent of the price adjustments are still uncertain, we refrain from giving a precise target. By significant, we refer to double-digit growth.

The sales number includes the OPET-FUCHS acquisition, which we expect to close this week, and we have considered 2/3 of their annualized sales of EUR 100 million. Our EBIT guidance remains unchanged at around EUR 450 million. We expect to offset raw material inflation by price increases. With EUR 125 million EBIT in Q1, we have laid a solid foundation. However, this figure should please not be annualized as Q1 includes the EUR 7 million one-off gains.

In Q2, we expect further one-off related to OPET-FUCHS, which will broadly offset the positive effect from Q1 in the P&L, but without cash effect. Please take into account when you are modeling your 2026 full year numbers. FVA is now expected at slightly below EUR 250 million, reflecting higher capital employed costs. Free cash flow before acquisition is expected to be significantly below EUR 270 million, mainly due to inflation-driven working capital. For cash, the reduction should be modeled consistently with our sales price assumption.

Based on our strong start into the year, we are confident that we will achieve our EBIT target as previously indicated. We remain committed to grow our dividend year after year, as we have done it over the past 6 volatile years. With our FUCHS 100 strategy, we are well positioned and will drive for organic growth, margin improvement and cash generation going forward. And with that, I hand over to Stefan for some more company news.

Thank you very much, Esma, for the positive update. My news will be relatively short because we had a significant exchange with most of you 2 weeks ago in our Capital Market Day. I think if we go to the next slide, you all remember that about 3 months ago, we made a press release to take over the remaining 50% of our Turkish joint venture. And as it was stated in the press release, that's a company with about EUR 100 million in sales and 250 employees.

It's located in Istanbul. The plant is in Aliaga, nearby Izmir. And if everything goes well today and there's nothing to be expected differently, we will close the deal tomorrow, and we will be the proud owner of 100% of our Turkish subsidiary, which will also change the consolidation from an equity towards the full consolidation moving forward.

So most likely, you will see a press release tomorrow afternoon to just say that this will be closed as planned, and we have a wonderful relationship with our partners. Our partner is OPET. OPET runs filling stations, they run refineries in Turkey and they themselves is a joint venture between the large Koc Group and Ozturk family. So we have a good partnership and friendship with them, but we both thought that we, as the lubricant specialist focus fully on that company. And I think that's what we execute and finally.

And then the other little update, but I don't want to go deep. We had, I think, a really good FUCHS 100 kick off 2 weeks ago. Most of you attended our Capital Market Day. You could see all of us engaged. We had the 6 colleagues on stage on our focus areas. In a few words, this is not a revolution, it's an evolution of FUCHS 2025. So whatever we have learned and done during the last 7 years, we can now build on.

So we are really mainly focused on growth, but obviously also on people and sustainability. Two days before we met, we had the internal kickoff and that's really cool because we had a 30-something minute video, which was recorded with watch parties all over the world. So all our people got at the same time, the same amount of news, and I think this was very, very welcome and gives our people direction, especially in challenging times like we have now.

And if you remember, I said the last 7 years were volatile. Since the end of February, we know that also 2026 will be volatile, so that's the eighth year in a row. So I always say volatility is the new normal, but I think with our business model, which is very resilient, we can cope with that. That was the update from Esma and I, and now I hand back to Andreas.

Yes. Thank you very much, Esma and Stefan. And now we can start with the Q&A session, please, operator.

[Operator Instructions]. We will take our first question, and the question comes from the line of Anil Shenoy from Barclays.

My first question is on any pre-buying that you have seen in Q1? We have heard a lot of other chemical companies say that they have seen some panic buying, which has led to some kind of upside in their Q1 numbers. So have you seen any kind of uptick in your volumes because of this pre-buying and if so, in which regions? So that's my first question.

And second question is on your guidance. If I look at the clean EBIT of EUR 118 million in Q1 after excluding the EUR 7 million one-off. And if I extrapolate it for FY, I still get to about EUR 470 million to EUR 480 million, but your guidance is still EUR 450 million. So does that reflect the lag between the price increases and the raw material inflation? And is that why you're a little conservative or is there any other reason? So if you could just help us bridge the Q1 EBIT to the FY guidance?

Thank you very much for your questions. I think they are very, very valid. The first one with the pre-buying, if you compare large chemical companies, you talk about a few products only, which are large bulk items. And normally, their customers have significant tank capacity or they can rent tank capacity. Our customers are involved with a lot of rather small- and medium-sized deliveries, and they don't have the capacity. So even if you go to our larger customers, they have a few bulk tanks for the product, but this is it. When they're full, they're full.

And we have -- maybe in the automotive aftermarket or one of the other distributors who orders a little bit more, we have made sure that we do as much as we can do to not oversupply because we also want to have the pricing stick, but on over 100,000 customers and over 10,000 different, I can't tell you whether there was no impact. But all in all, this whole prebuying and to put large inventories aside is, for us, not a big deal.

I would say the other opportunity for us that so far, we have secured the supplies of our customers, which is always more important than the pricing. And we see more of our competitors being in a limbo situation. And instead of saying overstocking, maybe, I would say, we probably have also picked up the one or the other delivery, which we would have probably not had in the Q1 in normal times. But all in all, I would say when we look back in 2024, we had, let's say, a lower digit amount of volume growth in '25 was a mid-single-digit amount.

Now we are in the higher mid- to higher single-digit amount. So for me, this is still an outflow to FUCHS 2025 strategy. When you look on the guidance, I think we see comfortable with the overall guidance because you can't just extrapolate a record quarter to the full year times 4. We always have seasonal impact in some countries in the summer, in some countries is more towards the Christmas time. So I would be careful with that and I don't want to detail now all the single reasons.

All in all, we feel comfortable. And I think we have made that outlook. In March, the situation has not done any better or didn't come to a conclusion in Iran. Therefore, I would say that we keep an uphold that is a good signal to the market, but I would be a little bit hesitant to just [ extrapolate ].

The next question comes from the line of Constantin Hesse from Jefferies.

Just a couple from my side. Can I just confirm that the guidance implies or assumes that you'd expect a price decline in base oils in the second half, i.e. -- so just the question would be, if they stay at this level because the conflict just continues dragging, are you able to keep pricing relatively elevated and you should be able to keep your EBIT? Or would that put further pressure on your EBIT? That's the first question.

Second question is on -- I mean, obviously, you're holding back on new business, which is probably holding back your growth potential. So if I think about further -- or the current disruption even impacting your sourcing into '27, how should we think about these opportunities lost? Would they potentially go to your competition? And as a result, it would have higher switching costs in order to go back to FUCHS? So do you see this more of a temporary disruption with potential new customers or could this disruption last longer because they would then move to your competitors as a result of it?

Thanks, Constantin. I think 2 good questions. Since it's fresh, I'll start with the second one. Nothing gets lost at the moment because all our competitors face the same challenges. But you have to understand when you have 10,000 products, there's also a lot of reformulating going on. So our procurement team is fully absorbed to secure whatever volumes they can get. Our product management and R&D teams have to reformulate and have to also then talk to our customers with regard to the approvals and the documentation because we can't do anything in the gray zone.

And the other part for our salespeople to negotiate all the sales prices. All of that goes on. And at that moment, I think it's clear that the time of our salespeople to focus on new business is limited compared to the other times what we have initially planned for. But we don't lose any opportunities because all our competitors are in the same area. And as you see in the first quarter, volume was good. Therefore, this lost opportunity, I do not see this keeping the prices up and the whole guidance. We do not see that the raw material will go down immediately.

There are always 2 potential scenarios. The one is that the people order now and then the consumption goes back in the market because the economy will suffer. I mean this old inflation and people now also talk about how higher interest rates potentially coming up, thus the economy normally not good based on already existing tariffs and many other things. This is the one risk which where we need to be careful. The other is that people now do stock certain products and then the economy goes down and then the raw material prices fall sharply. That's the scenario we have seen in the Lehman crisis, '08-'09.

But there's nothing we can do about that. The pricing we put in now will stick until the raw materials go down again. And if you really look back on the large 2 scenarios, the one was Lehman. The prices skyrocketed, and then they fell back, was like really a huge. But in '21 and '22, the raw materials went up by 70% and they actually never came back significantly. A little bit they came back in '25 and also in the first quarter. That's why Esma said the volume growth was bigger than the 5% because there was still in January, February, certain price adjustments downwards. But that's all I can answer you with that regard. I hope that...

Your next question comes from the line of Angelina Glazova over from JPMorgan.

I just have one at this stage. Could you give us a bit more color on how the second quarter is shaping up so far? And maybe to zero-in a bit more on the raw material price dynamics. So you have referred quite a bit to base oils price inflation in your opening remarks, but how are you seeing the additives? Are there also price increases? And if you could compare and contrast the magnitude of those compared to what you're seeing in base oils that will be helpful.

Thanks, Angelina for that question. I think I will answer the first half and then maybe Esma answers the second half a little bit to give you some light on this consolidation change in Turkey because she made a comment earlier that there will be a one-off charge due to absorbing the one-off gain in Q1.

With regard to the trading. So far, we see it unchanged. Obviously, you are right. First of all, the base oils go up, then the chemicals go up with a certain time delay. And then we are out, -- the second round of price increases all over the world, and we do it based on product type, based on region because some regions, it's not only the raw materials, but it's also the currency fluctuation because they have to import certain petrochemicals.

But base oil, they jumped up immediately and now that the rest of the petrochemical supply chain follows, but with a slower cadence. But the one thing is we already explained to you, and I want to emphasize this is not a normal time. But in normal times, if prices go up, we run behind for 6 months to a certain extent and then 3 to 6 months and if they come down, we have the tailwind. What we have learned in '21 and '22, we can't have this period of running behind too long and therefore, the sequence now is much shorter compared to '21 and '22.

So I see that run behind thing a little bit more limited. But obviously, we always say the larger impact probably comes end of Q2 and in Q3 and then to be seen how the economy develops. And maybe Esma put a little bit of light on this Turkey acquisition.

Yes. Maybe one -- or let me start this way, Angelina. There will be 3 key drivers for Q2. Number one, like Stefan said, it's the sequence of the price implementations we are doing to counteract on the material price increases and the inflation. Other than that, we expect actually a good Q2, as we have performed in Q1.

And in regards to the OPET-FUCHS, as you know, right now, OPET is in our equity results. We will take that from equity results up and it goes into our normal EBIT, where you will see higher costs because we have the full consolidation of the cost, but accordingly, the sales and the profitability.

In Q2, due to the -- that we are consolidating now 100%, we expect some accounting topics, like I said before, it will be a negative in our profitability. It's a balance sheet cleanup, but it has no cash implications for our financials. And coming up, all in all, we expect Q2 to be also solid. I mean -- of course, nothing changes all of a sudden, a solid performance. But as Stefan mentioned, the main kick in raw material crisis, et cetera, we expect towards June, July, I would say, kicking strong a little. I hope that answers your question.

We will take our next question, and the question comes from Christian Bell from UBS.

Well done on the really strong result this quarter. I've just got 2 questions. And my first one relates to your guidance. So yes, you obviously, have started the year really strongly. Underlying margins improved this quarter, but the guidance implies a meaningful margin compression over the remainder of the year, obviously. So just given the strong demand backdrop and the pricing power you've highlighted, can you just help us understand what is driving the conservatism a little bit more?

Like is it an assumption that not all cost inflation will be passed through? Is it the timing lag or is it sort of more caution around feedstock availability? So yes, just trying to understand that given how much sales will be going up? Sorry, I'll wait for the second question.

Thanks, Christian. This is for me crystal ball reading. I can't tell you how much sales go up. And especially this year will be a transition year. So let's say, you go up certain percentage in April, a certain percentage in May and then maybe in June, July and then again in the fourth quarter you will only get a pro rata increase for this year, but the impact will be fully there. And therefore, also Esma made a comment with the free cash flow because this is the year-end number only and you get a full hit on the -- let's say, on the receivables and on the inventory from whatever the December increase stands at.

But we have some very high increases in certain countries on oil-based products already now, but I have really no visibility on where we go. And therefore, we say, yes, sales will go up, the EBIT will stay in line. I think that's a solid statement, bearing in mind where we are with all the risks in the market, but I can't really put more light on this. I'm also sitting here, I couldn't say how much sales price increase we will have at the end of the year.

Okay. Fair enough. And then my second question, are you able just comment on volume elasticity at current pricing levels. Are you seeing any signs of resistance as some of these price increases that you're talking about are flowing through? And also, if possible, could you please break down where you're seeing the strongest demand by in-market auto or industrial and by region?

I think Esma has lined it out by region. I mean, we saw good growth in the U.S. or in North America. But in the region America, we were hit by 12% currency headwind in Q1, but also in Asia was good. Europe was good here. With regard to certain industries, I don't think anything has changed, what we told you at the year-end analyst call or on the Capital Market Day. So far, I think we are in a good situation that we have the stuff available.

We see some smaller and larger competitors who have fallouts. And therefore, as I said before, to keep our customers running is the most important and many of our customers in '20 -- or most of them in '21 and '22 were really happy for our performance. Not all the price discussions go through easily, but we push them through and then even if it has to be up to the Board level. But we don't hold back. It's not -- as I said, it's not normal times. And in times of availability, price increases normally goes through easier than in normal times, the availability is fully given.

Sorry, I was more trying to understand that, I guess, the auto versus industrial by end market. But are you basically saying that demand is strong across both auto and industrial, I guess, an equal amount with the...

Yes. I would say so. And as we have spelled out also in the Capital Markets Day, auto is for us a lot of aftermarket. FUCHS branded customer brands, industrial, also specialty rotary motion. So I would say the answer is yes.

The question comes from the line of [ Julia Winkelmann ] from Bank of America.

I have 2. You said that you already did several rounds of price increases. How does this work for your larger contracts, for example, with the OEMs? Because these are typically indexed, so then price increase usually come with a lag. What kind of lag can we expect here? And can you indicate how large the share of index contracts is just to give an idea?

And my second question is on the guidance. The EUR 7 million one-off, was it included when you initially guided the EUR 450 million EBIT for this year? Or is it -- or have you just excluded it with you confirming the guidance?

Okay. Maybe -- thanks, Julia. Maybe I come back on the price variation clauses. We don't have the 1 price variation clause, but we have definitely a number of them always based on is there are more base oil in the product, is there more chemicals in the product. What we have done, we have shortened the cycle. I can't really give you more details on that, but we shortened the cycle compared to '21 and '22, which is really good now.

I would say, Andreas, how much of our total business is under a formula price variation clause is the standard answer normally is around about a quarter or so. So that's a number I would look at. Normally, you have it with large mining customers or with large OEM or industrial customers. So if you count about on the quarter is good. But we have significantly shortened the cycle time that was the important part. And to the EUR 7 million, I think, Esma can comment.

Yes. I mean the EUR 7 million, as I've mentioned, is a one-off in regards to the sale in Australia. It is cash relevant, Julia. And the OPET we have included as well, which is a similar amount, more or less, which is not cash relevant. So it will balance out each other with the positive side that we are actually having -- getting cash in, but doesn't need to pay anything.

Other than for the 50%.

[Operator Instructions]. We will take our next question, and the question comes from the line of Michael Schaefer from ODDO BHF.

First one, I want to come back on your implemented price initiatives. And I think, Stefan, you also at the CMD, you said that you have implemented 2 price rounds in the meantime. I'd like to understand, when we look into the respective regions, whether there is a kind of different speed of implementation to be expected in the quarters ahead? So this would be my first question.

The second probably goes to Esma. I think you're net working capital to sales ambition is 20% or remains 20% as outlined at the CMD, 21% was the rate in '25. So I wondered whether you -- given all the constraints, whether we should think about maybe kind of extra security buffer in raw mats or finished products, which you allow and have baked into this kind of significant free cash flow or significantly below the EUR 270 million type of new guidance? This would be my second one.

And the third one, last not least, I want to come back on the Americas performance. I mean, you posted 3% organic sales growth in the first quarter. Obviously, this is significantly below what you have at the group level. So I just want to understand what holds back there the kind of organic sales growth if you compare this with other regions?

Thanks, Michael. I'll start with the last question. What holds us back there with regard to other regions? It's the economy. When you read about certain large customer segments in North America, they are still not at full throttle. And then also what we had is we had a significant freeze in -- especially in January and the beginning of February, where we have a lot of water-based products either for metalworking or for the mining industry, which really shut us down for a few weeks for those product lines. So those were the main part of it.

Price rounds, I would say the speed is the same around the globe. But it's different steps we take in different regions because -- the U.S. is also hit but a little later, and they are not as much hit from the Strait of Hormuz than other countries. Then you have certain countries where you need to increase more because the currency is a secondary impact, not only the raw material, oil-based price, so to say. So I would say speed is the same, but different timing and different amounts in the different regions.

And it comes to net working capital, Michael, we said the 21% or the 20% is our target, but we know in such volatile times, we cannot actually drive for additional reduction in the inventory. It's more about securing raw material, we will make sure that we can deliver to our customers. But what we are modeling or what we have modeled in and I said that also in my speech, we have a look how the sales is evolving and model that in your cash. Accordingly, we are looking, of course, how we think the price increases will be and model that in our inventory and respectively, to our receivables and payables. We haven't put in our net working capital any assumptions of buffer stock or anything.

I think mathematically, there will be an increase in the percentage. I mean Esma takes it very seriously. You've seen at the end of the first quarter, but you just have to bear in mind that the inventory and receivables at year-end, we have the value of the inventory and receivables in the month of December or maybe in November also. But the sales will still be in a dynamic stage because if you have increase suddenly in the beginning of November another 20%, we only have 2 months. So you look at a lower sales number with a tough balance sheet number of the cash and then the NOWC. So mathematically, you will get such a year higher percentage at the end of the year.

The denominator will actually change. Yes.

The question comes from the line of Martin Roediger from Kepler Cheuvreux.

Just one question left for me. Regarding Asia Pacific. If we take out the EUR 7 million onetime gain from the disposal of this property in Australia, the, so to say, underlying EBIT margin in Asia was rather -- still was good, close to 15% margin. Is it fair to say that you now have exceeded a certain threshold in your business in China and Australia, which are the 2 most important countries in Asia, so that any additional sales is falling down to the bottom line, so we have a big leverage effect. Is that the right understanding?

I would say, Martin, my understanding is that they performed very well, especially with regard to China and Australia, but the things just fall through is never the case because you need to manufacture still, you need to ship it still. But I think they run at a very good dynamic at the moment. And this is for us the high-performing part. But aside of that, also really India worthwhile mentioning and a lot of other countries in Southeast Asia.

So this is at the moment our positive horse in the stable, but we are also product of our European and American business. But definitely from an efficiency standpoint, they do very well.

And let me maybe add one thing that was also mentioned in the Capital Market Day. We clearly said we are going -- that's one of our key elements. We are going to use our existing asset base, which will automatically bring a better conversion of additional sales into our profitability. And that's what we are seeing right now as well.

Your next question comes from the line of Lars Vom-Cleff from Deutsche Bank.

A quick follow-up question for Esma, and I have to apologize in advance that I did not properly pay attention. You quantified significantly as above 10%. So above 10% with regards to revenue. If I take the EUR 3.7 billion you were guiding for, you would already reach the lower end of your 2031 targets this year was significantly, i.e., 10% meant as a year-on-year change compared with '25 sales being the basis?

Thank you, Lars. Number one, with significant, I said it's a double digit. It can be 10, plus, plus, plus. We don't know where it will end. We know -- it's unforeseeable what the dynamics will be. But you are right. But when we put the guidance out with the EUR 3.7 million (sic) [ EUR 3.7 billion ], there was no inflationary increase and not such a volatile market environment considered. For us, it's right now important that we hold our profitability. And yes, it will be -- that the sales will be inflated due to the market dynamic. And probably you are right, it can hit the EUR 4 million (sic) [ EUR 4 billion ], the lower end of our guidance or even, I don't know it yet.

Lars, I think also what is true. If you look at what Timo said at the end of FUCHS 100, there is a small print. And the small print is the assumptions we have taken with regard to FUCHS 100 for the financial targets. And one assumption was stable currencies based on August 2025 and stable raw material prices.

And we also said we will review each year where we stand. It's much too early now, but I think every year, we will review it. We compare it to our plans. And we're also willing to do updates at a certain time. That's what we missed in FUCHS 2025. I think it's only fair if you make a 6-year projection that you put it under certain assumptions. And obviously, we are way out of the assumption on raw material price stability.

Yes.

Completely understood. It was neither meant as criticism nor -- it was just for me to understand, and I mean, Esma, you're still relatively cautious, but EUR 3.7 billion multiplied with at least 10% easily brings you to above EUR 4 billion. That was the only point I'm making.

And you are right.

This concludes today's question-and-answer session. I'll now hand the call back to Andreas Schaller for closing remarks.

Yes. Thank you very much, everybody, for your questions. I think we had a very strong start into 2026 and it will be a lot of work now going forward to manage all the supply and demand, but we are very positive that we can do that from the experience from the past. If you have further questions, please do not hesitate to contact the IR team.

And with that, I would close the call. Thank you for your interest and participation, and you may disconnect now. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

[Presentation]

Good morning, ladies and gentlemen, and a warm welcome to the Fuchs Capital Markets Day 2026. My name is Andreas Schaller. I'm the Head of Investor Relations at Fuchs, and I will be your moderator today. I'm very pleased to welcome all of you who joined us here in person at the headquarters in Manheim. I would also like to extend a warm welcome to everybody who is following our live stream. Thank you very much for taking the time today and for your continued interest in Fuchs.

Before we start with the presentations, let's have a quick look at today's agenda. The Capital Market Day is divided into 2 presentation sessions. After my introduction, the members of the Executive Board will introduce themselves. And then we will have a look back at the last strategy cycle FUCHS2025, together with our CEO and CFO. Before, we then present the new strategy cycle FUCHS100, with our Deputy CEO. After that, we will have enough time to answer your questions before we go into a coffee break. After the coffee break, we will have deep dives into the focus areas for growth that we will present together with specialists from each area.

Before we start, and I hand over to management, I would like to remind you as always, of our disclaimer regarding forward-looking statements. I assume that you are familiar with the language and the content, so I will not read this out to you. If you're not familiar, then please review the presentation material, where you can find whole disclosure. This Capital Markets Day will be recorded today on April 16, 2026, and a replay will be available on our web pages together with the presentation material. And now please welcome the members of our Executive Board for a short introduction. Thank you for being with us today. And we will start with our CFO, Esma.

Yes. Thank you very much, Andreas. And also a very warm welcome from my side. So my name is Esma Saglik and I'm now with Fuchs since May last year. It's almost a year and being responsible for the area of the CFO. I'm looking back on 25 years of experience several areas also as a CFO. And I have studied International Business Management and Economics, I'm a Charted accountant. And after my introduction, I would like to hand over to my colleague, Matt.

Thank you, Esma. My name is Mathieu Boulandet. I am French. I'm 43 years old. I joined Fuchs the first of August 2025 as CTO, and I am a chemical engineer from background. And I did join folks with more than 20 years of experience in the lubricants industry. having worked for 2 of our major competitors in the past across the lubricants value chain in various geographies, in Europe, in the Middle East and in Asia. And I went over to Ralph.

My name is Ralph Rheinboldt, I'm 50 years old, and I started my career at Fuchs in 1998, and I'm a member of the Board since 2009. Looking at my responsibilities, I overlooked the region of Europe, Middle East and Africa. And on top of that, I look after 2 of our 5 global divisions which is namely the Industrial division and the specialty division and I hold PhD in Business Administration.

My name is Timo Reister. I joined Folks in 2009. And I started for Fuchs actually in the United States, spent 5 years there, relocated to Asia to Shanghai for 2 years. and came back to Manheim in 2016, became a Board member back then in charge of Asia Pacific, Africa, Middle East, Today, I'm in charge of our 2 world regions, Asia Pacific and Americas. The 2 world regions I worked in before. And I also covered the 3 remaining sales divisions with OEM, aftermarket and mining. Since January 2024, I'm the Deputy CEO of the company, and I also hold the PhD in economics.

Good morning from this side and a very warm welcome to you. I'm Stefan Fuchs. In a few months, I will be 30 years with folks. I started also in the U.S., I've been there for almost 3 years, came back and then I was engaged in Europe. And now I am the CEO since 22 years, and I'm as excited as on day 1 because it's a wonderful business model and a sound really plan moving forward. I must say I stand here as a very happy person today because we have a wonderful management team. We had 2 changes last year, ESMA with us since a few weeks now than almost 1 year. met almost 3 quarters of the year. And the 5 of us really form a great team. And we meet on a monthly basis.

We discuss all important topics for the folks for the future, but we also love with each other. And I think that's very, very important for us. We have also had substantial succession planning in the U.S. and in China this year. And therefore, we have also made our whole group management committee younger. So I'm in good shape. We have a good team moving forward. And now I would like to ask my colleagues to go back to their place and I will then kick off the presentation.

Thank you very much for the introduction. Stefan, the stage is yours. .

Thank you. We want to do a little review on FUCHS2025, and it's amazing how fast the time goes by, because the last 7 years, we were engaged in FUCHS2025. And as I told our colleagues at our Global Management meeting the year 2026 is the eighth year in a row with a high degree of volatility. If you think about the U.S.-China trade war, COVID, then the Russian innovation in the Ukraine. We had a massive inflation in the year 2022, and there were many, many other happenings around the world and increasing conflicts already last year in the Middle East. .

We had a lot of tariffs, and we had Trump 2.0. So the last 7 years were really volatile. But I think we have really accomplished a lot on FUCHS2025, did very, very good to the Fuchs Group. And I want to run you a little bit through today. I think we are stronger than we've ever been in the past. You know, for me, we continue to have endless opportunities. I'm 58 years old when I was born. There were 4 billion people on the planet, soon will be in 10, but at the same time, the standard of living goes up. People want to live in the house, they want to go to vacation, they want to take an airplane, bus train. And that means you have to manufacture always more and more with less input.

And that is a big Eldorado for specialty lubricants. And therefore, we have got so many opportunities. We have still white spots in the Fuchs Group, being a decentral company, has a lot of advantages, but also some of our colleagues around the world put a different emphasis on different growth segments. And therefore, we have white spots, which is an opportunity. We also don't have yet a full penetration with our large customers because sometimes we only accomplish 1 or 2 niches. So there's more to sell to the existing base. And we want to form more global partnerships as we have done already now. And I always say without arrogance, but there is no second folks in the lubricants world.

We have a worldwide coverage. We have more than 10,000 product formulations, and we have a very, very dedicated team and we supply everything out of 37 plants around the globe. And I think that whole base is really cool. Now I want to show you a few examples of our applications, and it's always important when you look at folks we live in our mind in the application of our customers. We want to create benefit and make their processes more efficient. Unfortunately, Andreas only provided me with 15 minutes, but here, I could talk for 2 hours. But we chose about Three examples for you. The first one, because we receive a lot of question goes with regard to the infrastructure program, not only in Germany, but also in many other countries in the world. There's a lot of things happening with regard to road bridge, airport and railway construction going on.

Here, you talk a lot about heavy-duty automotive products. You also talk about specialties for the cement mills for steel mills in the whole concrete industry. So that is a very, very interesting field and we participate. The other part, I think, which is also very interesting, and that's, for example, a segment we had not on our radar 10 years ago is the whole semicon industry. So first of all, when you have a machine producing chips, that machine needs lubrication, like a robot. And today, they also want to have PFSI lubrication. And you don't do an oil change with a robot. Normally, you take the part out, it goes in the maintenance shop, they clean it and relublicate it. And that's how it works also with the machines producing chips. And we manufacture today those products in [ Fairhaven ] at in clean rooms, and that is a very interesting business for us. Those customers have got 1 horror scenario, and this is outgassing in their machines.

So when we supply metal bank companies, manufacturing parts for the semicon industry, they want to have special metal working fluids and cleaners to prevent outgassing later when they assemble the machines, manufacturing chips. And I think we are a big player in that market, and it's very interesting for us to go forward, and we are scaling the NI business since a couple of years, mainly to Asia, but also to Europe. We also received a lot of questions from you regarding the whole defense part. And many of the applications we show you or the examples are like 1% of sales. Also defense is not huge to us. But since decades, we supply different militaries with a lot of automotive heavy-duty lubricants for the whole fleet, so to say, but you also have a lot of metalworking fluids for the manufacturing of the parts in those equipments. And you have got also a lot of specialty products because also drones need lubrication, and many other drugs. So this is a whole new area coming up.

So when people, for example, asked, yes, is automotive industry going down from a manufacturing standpoint in Europe, might be, but I'm sure that defense will quite take up some of that part moving forward. When we now review FUCHS2025, I think thinking back, I'm proud of 1 thing. When COVID hit us at the beginning of 2020, we didn't pull the blanket over our head. We were looking what can we do, and we spend the time where all our people were locked up at home, and we had everything in place from our teams and video conferences, et cetera, so that helped us. But we spend a lot of time to do a lot of count work on segmentation and on planning. And that's what we also can build on FUCHS100. That was the cool part during Kobi. Our people were all fascinated and they worked very hard to segment their business in the countries according to our core segments we have. And therefore, we have achieved a lot, but as always, there's improvement. And Timo will show you later in FUCHS100, but we will do a little bit different compared to FUCHS2025. When you look at FC2 we always speak about the triangle. And there is a famous saying which says culture eat strategy for breakfast. And I think that is so true, and we have a wonderful culture at folks.

We have the people walking the extra mile and especially now in those days, which we all experienced, I think that is very important. We pushed 3 key elements in the FUCHS2025 strategy with regard to the culture part. So first of all, we didn't want that people remain in their comfort zone and had a closed mindset. So we really push the people to have a growth mindset and to continuously change. And if you experience Fuchs continue to change almost on a daily basis. And I think we have really -- when you look around and you all know the Germans are probably a little bit more staff or conservative regarding compared to Chinese or U.S. colleagues, I think became a very, very long way. The hierarchy-free communication was very important to us not to have a big gap between leading people and colleagues.

So I think that is important. And if you watch us as the Board, we want to be front runners and show a good example. And the other part is the open feedback culture, and feedback. It doesn't help always to tell colleagues what they did great. On feedback, it's also important to give constructive feedback to improve yourself. And we say feedback is a gift, honestly, also for me, in the beginning, when you receive a lot of feedback, you don't feel it as a gift. You need to train that and make sure. But is so important to understand how people perceive you. And it doesn't help to say, yes, but I didn't want to do that, but it's -- that is a really big deal, and I think we have come a long way, that never stops.

We have culture codes in our large subsidiaries, and they help us to transport the message. And I think only if you really receive feedback in a good manner, then you can make another step forward on that whole feedback culture. The other part is, if you look on our structural side, Fuchs is a decentral group. So all the people in the country report to the CEO in the country. There is a high degree of decision-making in the country, and we pay uncapped incentives on the results on the FDA in the country. Now we also know that we don't want to allow that every country does everything on their own, and our managing directors, they are simple guys. If we can help them, they are more than happy to receive help.

So we have established networks, you can think about every function the company has from IT to finance to purchasing, to R&D. And in the network, the peers of the large countries sit on the table. And then they decide what do we do on HR in the year 2026 in the Fuchs and once the HR responsibilities of the large countries sit on the table, there is not a lot of headwind because they were part of the decision-making. And I think we learned a lot, we also defined as a board operating model of the Fuchs Group, and I think Dave can build on the future.

On the left side, you see the strategy part. And as I said it before, if we have got so many opportunities and so many different markets to focus, 20 years ago, we said, no matter where you go, grow by 10%, make an EBIT greater than 15%, and you are good in shape. We have large segments, and we don't want to allow that the country, which is, for example, a key country in wind does not follow up on wind. And again, we have no fights with our countries. They see we provide them with help to grow their top line. And we had defined at that time, 12 large segments, and we have defined key countries for those segments. And I think we have established quite a lot, and I always say, as an example, when we go to the cement industry, we are a leading provider for the open gear lubrication in the cement mill, that's the heart of the cement mill. But we don't lubricate the conveyor belt, the excavators, the packs, the forklifts and all other things.

And this is a high Eldorado for us to just sell more products to the existing accounts. to fill the wide spots in certain countries where we are not yet fully involved with a certain segment and to establish more global partnerships as multipliers and enablers. And I think there, we have quite a lot to do to make us even better. The 1 thing is, if you ask me, what is the problem of the Fuchs. Our problem is we have endless opportunities. There are niche applications wherever you think about. And the secondary thing is we get excited very easily. So we can't run after everything at the same time. And therefore, I think it's very important and what Timo will tell you later is only if we focus, we win. And therefore, we have dedicated sales teams, application engineers in our segments, talking the customer language and helping them, but we can't run after everything which comes to our mind. And I think that's the big deal what we have learned. We have kicked off the 100 -- lFUCHS100 strategy a few weeks ago with our global management meeting, but really officially, we kicked it off on Tuesday internally. So we had watch parties in 67 subsidiaries. We had a 32-minute video on the whole FUCHS100, had a lot of fun. So it was important to have an emotional kickoff.

Today, we had the press release. And now I think it's really the official later rollout of the FUCHS100 strategy together with you. You also know you have learned in the introduction that Timo is my deputy, so he's the Deputy CEO. And as I always say, my contract runs until the middle of 2029. And when you change during a strategy cycle, the CEO or there's a proper succession, you don't want to change the strategy. And therefore, I think it was very important for continuity and for the company. Timo was involved heavily and he was leading the FUCHS100 strategy buildup, and I look forward later to see him on stage. But before we come to Timo, I'm happy now to hand over to Esme, who will run you through the financial part of our update today. Thank you very much for the first part.

Thank you, Stefan. And yes, actually, we go to the future FUCHS100 and listen about our strategy from Timo. I will take the next 20 minutes and walk you through our financial performance during our strategy cycle FUCHS2025. And let's start with the overview. So in 2019, when we defined our financial targets for our strategy cycle, we were under the assumption that the world will be actually continuing in a normal way. But honestly speaking, what we have faced was completely the opposite.

So we had the COVID pandemic, then we had supply chain disruptions, inflationary increases, the war in the Ukraine and other geopolitical tensions, which are still continuing with the Middle East conflict. And considering the circumstances, we were capable to grow our business with a mid-single-digit percentage. And on the other hand, we generated cash even above the average what we were thinking or what our target was, and that in an inflationary environment. We paid dividends to our shareholders year-on-year, but we also have to be honest to ourselves, we haven't achieved the EUR 500 million EBIT target. We were initially -- it was our ambition, and we were initially considering nor we have achieved the 15% EBIT, which was our -- yes, which was our target. But let less, considering all the circumstances and the market volatility we have been in, we can say we have delivered a solid result, which also underlines actually the quality and the resilience of our business. And now I would like to dive a bit deeper into our financials and starting with the top line.

So over the strategy cycle, we increased our sales by 5.6% year-over-year from EUR 2.6 billion to EUR 3.6 billion and that in a flat market environment. The growth or the organic growth came mainly by volume and price increases, which we have implemented over the course of the strategic cycle. External growth came from strategic investments. We have taken or acquisitions we have taken, like Stroup, Lobo, we heard about Nybefore or BOSS which were actually strengthening our technological portfolio and on the other hand, also expanding our market presence. But unfortunately, we also faced currency headwinds, especially in 2025, which decreased our sales trajectory.

But all in all, we were capable actually, if we summarize everything, we grew our business via volume growth; and secondly, our customers appreciated our value proposition even in inflationary times by accepting also price increases and helping us to grow organically. But now the question is, where did we grow? And if we look to our regions, all regions grow mid-single digit and even outperform that. And our development you are seeing here, especially in Americas and Asia Pacific was not unintended, it was a clear strategy of our FUCHS2025 cycle. And we grew actually in areas where we were talking about segmentation before. And we know actually, we have expanded our footprint in these regions, and this outcome is the harvesting of it. So both regions grew and both regions gain share.

Also, to grow in EMEA, I think, is not negligible. We grew 5%. It was a mixture of organic growth and external growth. But considering the difficult industrial environment, that's a very solid result. And 1 of the key success drivers behind this growth was our segmentation approach, as we heard before from Stefan. And here, please note we start our numbers from 2021 onwards because as of 2021, our numbers for the segmentation was available. So segmentation was 1 of our most strategic shifts we have done in FUCHS2025 It changed our way how we were prioritizing and how we were allocating our resources to the areas we want to grow. And the financial effects, as you can see, is visible.

Our target segments outgrow the rest of our portfolio. And the key takeaway, and we hear that before also from Stefan, our segmentation approach worked, and we grew actually our business with this approach. And now I would like to stop with the top line and move to the profitability. And let's see what happened there. Our EBIT has grown broadly in line with our sales by 5% per year. And we see actually in the cover 2020, a temporary setback in our profitability. But nevertheless, over the course of the years, we grew in absolute terms our profitability and reached our highest level in 2025. And this growth was actually achieved despite inflationary hits we have faced in '21 and '22.

From a margin perspective, from an EBIT margin perspective, we had a small or we had some -- or we had some fluctuations actually. And this was -- the reason here was the inflationary increases we faced -- but I think we did a good job, and we see actually that our margin went back to a robust level of 12% in a bench markets overperforming the chemical industry. And while we are talking about the inflationary increase, I think it's worth to take a minute and have a look how we have managed our -- the situation in '21 and '22. Let's take a closer look to our EBIT margin. Like I said before, '21 and in '22, inflation hit us and costs were actually raising rockedly. And what we can see, we had a hit in our profitability or in our gross margin, where our gross margin went temporarily back to 30.9%. And but we didn't stand still. We were reacting on it. And we were watching the situation closely. We implemented price increases.

And as we can see, over the course of the time, we went back to a robust level. And by 2025, we came to a level of 34.9%. I think that 1 shows in summary, inflation can be a temporary challenge. But I think we also have to proof record that we can manage just such challenges quite successfully. So I have to drink something now. But still, we said at the beginning, I said we are not there where we wanted to be. And our clear target was to achieve the 15% EBIT, which is still our ambition, and we know we are not yet there. But we are confident to be capable to get there. And we see 2 levers, and we will hear later more in our 100 strategy, how we can get there. So first lever is efficiency. We have launched certain projects where we expect in the future to work much more efficient, which will also help us actually to drive our EBIT profitability. And secondly, we will drive for growth. You all and in the discussions yesterday, we heard you have invested, et cetera.

Yes, we have invested into our structure. Our structure is in place. Our asset base is in place, and now it's time to drive our growth and turn and convert it into a higher profitability. And with leveraging our existing structure, we believe we can do that. Our foundation is set, and now our focus is to drive profitable growth and reach the 15%. And talking about the foundation, I think it's worth to look at our CapEx. Another area where we are operating very efficient. As you can see, our heavy investment cycle ended in 2020. And since then, we are on a level of 2% of sales in our CapEx. Going forward, we expect also a CapEx level, which is around the number of 2025. Also what you see is that our capital returns are stable with around 1.9 turns. Yes, overperforming the chemical industry, so being better than the chemical industry, and this means actually that we are using our CapEx very efficient, and we are a capital-light model, which is definitely supporting a strong cash generation. And I would like to now talk a bit about our FDA.

Another area where we are creating value and where we are doing a good development. And this cycle -- this slide shows clearly how we are using our capital. We generate turns which are far above the capital costs and this in a constant and very disciplined manner. In recent years, you see that our ROCE was above 21%, which is a very good level for the lubrication industry, and it is also outperforming, again, the chemical industry. And this resulted over the -- to a value-add generation of EUR 1.4 billion, and that in a sustainable way. And when we talk about value creation, value creation ends up in cash, I would like to move over to cash, I think here, we definitely proved we can deliver cash, -- across the strategic cycle, our cash conversion has been very strong.

Our target was 0.8%, and we were even in the average above. And since 2019, it has resulted to a cash of EUR 1.6 billion, which is, I think, a very strong result. And even during the inflationary years of '21 and '22, where we had a hit -- due to inflation, we had to invest approximately EUR 350 million in our net working capital to support our business, we were still cash positive. And that shows that we have the strong ability to generate cash and that even in challenging times. And yesterday, I heard a couple of times, what are you doing with your cash? How are you allocating your cash? And frankly speaking, there will be no revolution in our cash allocation. We will actually continue the path and yes, the guideline we are having. We have an internal guideline which says 1/3 of our cash we are using for M&A and 2/3 of our cash, we are turning back to our shareholders or using for any share buyback programs.

And since 2019, we have returned, as you can see, EUR 1.2 billion back to our shareholders. We have also initiated the share buyback program, which was going on from 2022 until 2024, and we have invested almost EUR 300 million in M&A. And probably, you will ask you, you're talking about 1/3, 2/3, and this ratio is actually not taking to that. And you're right. And but this is not about that we didn't want to invest into M&A Frankly, we are prepared to even invest more into M&A if we have the right target. And while we are talking about cash allocation and shareholder return on this slide, you can see our long and reliable dividend track record. And based on our strong earnings and our cash generation in 2025, we will continue our progressive dividend policy.

In our AGM in May, we will propose another dividend increase of EUR 0.06, which is counting to a year-over-year increase of 5% for 2025. And that would mark also our 24th consecutive dividend increase, which underlines also the stability and the reliability we are offering to our shareholders. And finally, let me close the FUCHS2025 strategy cycle with some key takeaways. When I look at folks for me and for us, for stands for resilience and continuity, combined with focused growth and strong execution ability. As you can see, we delivered solid results over our strategic cycle, even we were facing difficult times. And on the other hand, our segmentation approach worked. We generated growth over our strategy cycle.

Finally, I think in summary, we can say we are happy, like Stefan mentioned before, with our FUCHS2025 strategy. We learned a lot, but also we have executed a lot. We know we are not there in regards to our profitability, but we are convinced with the foundation we are having. And going forward, being much more focused on growth and turning it into valuable profitability, we will be capable to achieve also this ambition target. And with that, I would like to close actually the FUCHS2025 strategy cycle from a financial perspective and would like to hand over to my colleague, Timo, who will talk about our next chapter FUCHS100.

Thank you very much, Esme. Today is a very exciting day for all of us because finally, we have a chance to introduce our new strategy cycle to you. And this strategy cycle is the result of a lot of work that went into our strategy development. In contrary to other companies that maybe work extensively with some strategy consulting firms. We do our strategy inside the company with hundreds of colleagues involved. And all of them have been very excited when we kicked off our strategy with the entire team earlier this week, and they're very motivated to drive execution now. So we made sure that you were busy during breakfast, and we sent you a press release earlier today. And I already had a couple of conversations.

So you studied it extensively. And I will go now through the details of FUCHS100, and after the coffee break, we will have an additional session on FUCHS100 with experts joining us that will provide more clarity on our focus areas. And you'll also have the chance for questions after this session. So a lot about FUCHS100 today. What you will read in our documents and what you will also hear in my presentation a lot is the word focus. Stephan already touched on it. So for us, we want to make sure that in our new strategy cycle, we concentrate our time, efforts and resources on the things that create most value. that sometimes not so easy for us because we are a very ambitious organization. And also our market is very diverse. So focus is really critical. It will be all about focus.

We will be turning 100 years in 2031, and that's why we picked the name FUCHS100. We find it an appealing name, and we want to make sure that we drive growth in the next 6 years, so we can all celebrate great results with you in the year 2031. But at Fuchs, it's all about continuity and long-term thinking. As FUCHS2025 builds the foundation for FUCHS100 will build the foundation for the years after this strategy cycle. So it's not just about the next 6 years. It's again about the long-term perspective of folks. The 1 part at folks we are really proud of is our history. 95 years, and we have always been able to go with times and to develop solutions for our customers that help them to succeed with their technological transformation. It started with oil imports from the U.S.

And today, we supply many high-tech applications in various industries. We have the most comprehensive and most sophisticated product portfolio of all lubricant companies, and we are the largest independent lubricant manufacturer in the world. This is something which is not easy to copy, and this is something we want to further develop in the coming years. I've just 1 slide on FUCHS2025 and I think it fits well because some of you asked me this question yesterday. Malls or what are the main points of FUCHS2025 that you also find important for FUCHS100. The first 1 is our customer and market focus. We introduced segmentation, which allowed us to slice the big lubricant market in smaller pieces we can focus on, and we can develop expert knowledge on. That's a massive achievement, and you have seen it with SMA.

Our growth rates in these segments have been higher than outside the focus segments. And this is something we can incorporate and we will incorporate in FUCHS100. The other part is shared and multiplied best practices and new business development through a better international collaboration. Are we perfect in that regard, transferring successes from A to B? No. But during FUCHS2025, we have gotten a lot better, which helps us to increase our hit rates regarding the opportunities we go for, and we will continue to build on that. A strengthened market presence, through improved local setups, but also through our acquisitions. We had some very nice acquisitions in FUCHS2025, and we will be able to leverage on these in FUCHS100, and a positive cultural development. Some of you may wonder why we talk so much about people, about culture. I can only tell you this is a massive competitive advantage for us. We have very loyal employees.

Stefan mentioned succession topics we had going on the last couple of years. Just 3 weeks ago when we had our global management meeting, we farewell to U.S. colleagues, the CEO, the former CEO and the former CFO with combined over 80 years of folks experience. They have dedicated their entire work lives to us, and they didn't call it a day at 5 p.m. at night when something had to be done. They stay till midnight and they motivated other to join them on their journey and to follow their big shoes. And this is what Fuchs is about. So the culture work in FUCHS2025 was extremely successful, and this will be another focus during FUCHS100, you also asked me yesterday, what are the things you would do differently or what didn't go so well in FUCHS2025?

And if I have to point out 1 element, it's -- maybe we were a little bit overly ambitious here and there. We wanted to do too many things at the same time. And we decided that was also based on the feedback we collected from around the world that we need to be stricter with ourselves. We need to be more disciplined in focusing what really matters because we also understand where we focus, we win. If we really focus on something, we usually do a great job with great outcomes. And that's why it's important for us to do fewer things but do them right. Also, what was 1 of the main findings during the strategy development process that I want to present to you hear, there is so many opportunities out there for us. The lubricant market appears to be flat in the coming years or rather flat. We expect a volume growth of 0.8% over the next 6 years.

So 1 could think, well, this is a very slow and stable market. But the opposite is actually the case. There's a lot of technology changes. There's a lot of regulatory changes. There is new customer requirements, and all of these changes create opportunities for us. For us, during FUCHS100, we identified that there's 4 megatrends that are very relevant for us. The first 1 is regionalization. You all know it. There is more protectionism out there. So we are in a good position that we have close to 40 plants that we are close to our customers. There's a lot of nearshoring going on, and this needs to be supported by a strong lubricant company like us. There is also the mobility transformation. There is different driveline concepts now on the road, and this situation will continue.

So in some regions, we see an increasing population of internal combustion engines even in others, we see different concepts, all these concepts need to be supported. We have the mega trend of AI and digitalization that's changing the world, also in maintenance with predictive modeling with other things that needs to be supported. And there's the megatrend of sustainability in some areas in the world has gotten a little quiet on sustainability, but this is a mega trend that's there to stay. We are sure about that. We see it our customers, they continue to have their net 0 targets. There is a demand for more sustainable lubricants, and we all need to help to decarbonize the world. And the beauty for focuses that across all these 4 megatrends, our products enable innovation. So with these mega trends, opportunities open for up for us, and we want to go after these opportunities. Switching to the structural changes of the lubricant market we identified that there's a diversification on the demand side. On the 1 hand, you have a commoditization of high-volume applications, but also an increased need for digital tools to support these business positions, also regulatory changes, supply chain requirements that come up near shoring, I mentioned before.

Then you have a specialization that accelerates. This requires a higher R&D power, fast time to market and also a deep understanding of customer applications. Stefan stressed that we live in customer applications like nobody else. Sometimes our sales professionals in the field, they know the application better than the customer. And they are also with us for many years. So they bring the experience. They are sometimes used as consultants by our customers. That's the USP of folks. On the supply side, we see that some of our competitors struggle. We have different types of competitors.

On the 1 hand side, we have the large players. They struggle with complexity and they try to take complexity out of their system by trimming down their product portfolios by scaling down on technical support by reducing their R&D teams. And partially, they also exit markets and market segments because they are just too cumbersome for them. On the other hand, we have smaller players, and they very often don't have the resources to meet all the requirements that customers have nowadays. They also don't have the global footprint and the global reach. And with that, we feel that we are uniquely positioned. We can handle complexity. We make sure that we get paid for complexity, and we can scale both our core business and the specialty business. So what sets us apart?

First, the full range of lubrication solutions that we have. I said it, we have the best portfolio in the industry, and we continue to work on this portfolio. We are passionate about customer-specific solutions. So it's not that we force our customers to take a second best solution that we have on the shelf. We are willing to enter R&D projects with them and to develop something for them. And that becomes more and more important. We are independent and financially stable. I don't need to tell you because you know our equity situation, our financial situation very well. But it's a big deal for our customers that we are not out there for sale. Some of our competitors have been sold just recently and customers are irritated. They don't know what's going to happen.

So we create additional projects because we are there for the long term. We are the reliable party in the lubricant market. and that's something that's highly appreciated by our customer base. Our application and process know-how. This is something that you cannot build overnight. We hired also people from target industries that bring application know-how and that educate the people that we have already in the company. And with that, we can create a lot of additional value. We are best-in-class in R&D. We are very happy that we have met on board who helps us to further strengthen our R&D setups around the world. We have 3 big hubs, 1 in Germany, 1 in China, 1 in the U.S. and they operate in networks as well. We have satellite laboratories. We work more efficiently in R&D and we learn faster from each other than ever before.

And this is a very, very nice setup for us. In short, market dynamics and our unique strength create opportunities. but to take full advantage, we must sharpen our priorities even further. And therefore, the clear mission of FUCHS100 is focus to win. We tried to summarize the key to winning in 1 headline that sticks with you, and it's also on the summary slide. What we consider the key to winning is delivering customer-specific technology-driven solutions powered by global, regional and local collaboration. This is really what will help us to win in the marketplace. During FUCHS100, we will focus on 3 key elements: it's growth, its sustainability and people. Regarding growth, we have defined 6 focus areas. You have seen them in the press release, but I will go through them later, and we'll hear more in detail in the session after the coffee break with our experts. I'm sure you're very curious about these focus areas.

In these focus areas, we want to expand, and we want to specialize. Yesterday, during our dinner conversation, I noticed that it's also important to explain the lubricant market to you because there's different views out there and different assumptions, and I think it's important for you to understand how we look at the lubricant market. What I added here to the slide is some market data based on a client study. It's 2025 data on the left where you see that 66% of the lubricant market is considered automotive. This is by volume, and 34% is considered nonautomotive.

The lubricant market is expected to grow at a rate of less than 1% over the next 6 years, 0.8%. And and will ultimately look like what you see on the right chart, very similar in 2031 compared to 2025, 65% automotive and 35% non-automotive. What we did now is we took the market data, and we added the FOC data, and that's the outer rings. And what you see is that Fuchs has a stronger representation in the nonautomotive market. Our market share there is slightly above 4%. In the automotive market, we consider our market share to be around 2%. So -- and this will not change during FUCHS100. We will continue to have a stronger representation in the nonautomotive part of the market.

Diving a bit deeper in the automotive part of the lubricant market. You see that almost 70%, so 48% of the total market but 70% of the automotive market is aftermarket. In the aftermarket, there was also a question yesterday, we have a market share of around 1%. And only. So this means, for us, this is a large growth opportunity. It's almost half of the lubricant market where we only have 1% and there's very profitable business in that market. We'll have large growth opportunities not only during FUCHS100 but for the coming decades, and we'll talk more about the composition of that part. We have a very low representation right now with our market share of around 1%, and we try to gain more business.

The second largest piece of the automotive market is customer brands. In a way, that's also aftermarket, but it's not under our own brand. It's under the customers brand. One example would be the Mercedes Benz oil that we supply. So that's customer brands. That's 14% of the market. And this is followed by mining and first fill with 2 percentage points each. What is our representation, our exposure in first fill. We have a below-average exposure on engine oils because in many cases, they are just commercially not so attractive for us. We have a higher representation in the higher-technology lubricants, which we call [ Ather ]. These are gear oils and other products where we see more value and where we can play the technology cargo. We also try to explain to you the structure of the aftermarket. And this is this slide.

Very often, I hear aftermarket, that's all passenger cars. I can only tell you that's totally wrong. There is 1.4 billion passenger cars in operations, so by the number of vehicles this part is dominating, but the lubricant consumption, is much higher in other areas. And that's why the market, the aftermarket looks like this. 39% only is passenger cars. 61% of the market is not related to passenger cars. There's areas like commercial vehicles, agricultural vehicles, heavy-duty vehicles with a very high lubricant demand. for heavy-duty vehicles. We talk about a lubricant demand average maybe 400 liters per year, but there is applications with over 1,000 liters per year. We don't know it because we don't see it on a daily basis because these machines operate elsewhere, but the lubricant demand there is massive. EV transformation. That was something we explained during our Capital Market Day in 1, and I want to follow up on this explanation. What we added here to the presentation is a picture of a car with an internal combustion engine. And you see 2 types of applications. You see the dark blue applications. These are related to the combustion engine. And you see the light blue applications.

These are drive train independent. If I take away the applications that are only there because of the combustion engine, this part remains. If I now switch to an electric vehicle, still there because these application points are not related to the drivetrain. But we have additional application points that are EV specific that are now new and that come on top. And a lot of these application points are very, very demanding. In many of these points, you talk about for life lubrication, you talk about new requirements like noise suppression because you don't have an engine noise anymore. So you hear every little raddle noise in the car, which a consumer doesn't like.

So this requires lubricants and very unique lubricants. And therefore, it's a question that we have been asked, so what's the impact on you of the transition from ICE to EV. We consider it net neutral to positive, in particular because we also focus on high-value, high-margin applications in e-vehicles. That's very important to understand. Now we have talked enough about automotive. Let's go to the nonautomotive part of our market. And there, you see the dominating area is industrial oils with 18% followed by metal processing, greases and based on process fluids. The growth drivers in this part of the market are energy generation, production automation robotics, food, semicon, medtech, railway, all very exciting fields.

Our folks position in that part of the market is very strong. We have a leading position in Greece, that goes back to a very strong manufacturing footprint with state-of-the-art grease plants on all continents and with an R&D and application of how that's second to none. So this is a position of strength that we can utilize during FUCHS100. And we also have a very broad and leading-edge specialty lubricant portfolio for the other areas. What's our focus positioning to give you a feel on where we stand today. General industrial above average, metalworking fluids above average greases above average, and rotary motion is a little bit of an exemption here. We consider ourselves only average regarding the market representation. This is something we want to change during FUCHS100 and we'll be working very hard on that area.

Special application solutions, that's something we really love. Food and packaging representation above average. And the requirement for food-grade lubricants is getting stricter and stricter. In the past, it was only the machines directly involved in food processing. Now it's the entire value chain. It's everything that needs to be lubricated in a plan. It's also the logistics around the warehouses. So more and more higher demand for food-grade lubricants around the world. Medtech, exciting area for us. compatibility plays a big role, certifications, player, we grow, not everyone can do that. are very strong with that. And we did also strategic acquisitions in that space with NI having a strong med tech portfolio, but also BOSS in Europe, an area where we are already above our average, and we want to build on our strength. Semicon, I can keep that 1 short because Stefan elaborated on it, very exciting area for us.

So that lower outgassing that's required in semicon will actually learn with space applications, because they also don't like outgassing. And we transferred what we learned there to another high-tech area, and we see that customers love our solutions. Nowadays, the PFAS ban out there, which is changing the market entirely. And we are the first company that offers PFAS-free solutions in that space. Very exciting growth area for us. And railway also very good above average with more to come. That's a business where we really need to internationalize more. Our biggest business sits in Europe right now. We are picking up speed in the Americas and in Asia, and we will grow there as well. This brings me to the 6 focus areas. Here summarized on that slide.

So the 6 focus areas will generate the majority of our growth in the coming 6 years. We will still be a full line supplier, but we will give these 6 focus areas priority. And these are customer brands, automotive aftermarket rotary motion, performance greases, new mobility and special application solutions. Our experts will tell you exactly what's in these focus areas, why do we think we have a competitive advantage? And how do we execute on our plans. Looking at our sales split today, it's roughly 50-50 focus areas and 50% rest of the business. But the majority of our growth will come from the focus areas, we believe roughly 2/3. That means that picture will change and the share of the focus areas is expected to increase in the coming years. Acquisitions. We have been able to realize a couple of nice acquisitions in recent years.

And these acquisitions fit very well to our focus areas. And we continue to watch out for acquisitions. It's now also very easy for us to screen the market for acquisitions that give us the highest value because we know what we want to focus on. What I want to highlight here is the specialty acquisitions we did with and also BOSS that we can leverage not only in Special Application solutions but also increases. And sometimes it takes some time to train our people to initiate customer projects.

Some of them have long sales cycles. But in FUCHS100, we want to harvest on these acquisitions, and we feel we are in a very good position to do so. Coming back to the focus elements of FUCHS100, I want to now move to the people aspect. This has 2 dimensions for us during FUCHS100 is the people empowerment. We want to make sure that we continue to train our people. that we also give them the decision-making power to unfold their full potential and that we further work on our very strong company culture. What I want to highlight here is the foundation we can build on is very solid. We did our first global employee survey last year and 87% of our employees said that they feel proud or very proud to work for folks. They also feel empowered to make the decisions they need to make to succeed with their jobs. I don't think there's many companies out there that have that. And you will also feel that today when we go on the plant tour, working for folks is not just a job.

For many people, it's passion, it's a sense of feeling to the belonging of a great team is the sense of making a difference for our customers. And that's something we can build on. The winning culture that was also mentioned on the slide is a combination of 2 elements. One, the strong bonding culture, the family-oriented bonding culture we already have in the group, but two, performance culture, which we want to push more by focusing more on KPIs by educating our people across all functions and levels more on our financials and by also pushing performance across the board. The 2 points we want to mention here is also cross-country and cross-functional collaboration. You have that in all organizations. It's like people tend to only look at their area and they don't think so much about what does that do to the net or how can we efficiently work together.

And we see that, in particular, with our big competitors that struggle where sometimes the right hand doesn't know what the left hand does. We don't want to be like that. So we need to make sure that we work together that we align and our HR teams around the world have put a nice program together to further also invest in our culture, intercultural competence and to make sure that we do better than others on that. We also have very nice and new performance management tools, all digitalized, all standardized in the group, that will help us to create more transparency to also identify talent earlier and to make sure that we get the career pathing right and that we have a full pipeline regarding internal succession.

So the folks team is going to be in the focus once more during FUCHS100. And the last part of the elements you want to focus on is sustainability, fast sustainability, again, 2 dimensions. The first 1 is our path to net zero. We remain committed to be a net 0 company by the year 2050. A which means 90% reduction of our emissions. We also continue to be committed to our midterm targets, which is the 42% reduction of Scope 1 and 2 by the year 2030, and a 25% reduction of our overall emissions by the year 2035. We had to update our past to net 0 as FUCHS100 comes with some growth. So it's getting more challenging. We feel we have a very good handle on Scope 1 and 2 with actions already implemented and identified.

Examples are switch to green energy, but also replacement of equipment, for example, investing in e-boilers, and that will help us to get to where we need to get to. Scope 3 is more challenging because Scope 3, we need support. We need support by our suppliers with the raw materials, and we also need to support by our customers. So 1 emphasis in FUCHS100 will be to not sit down and wait for the support, but to create that support. And how do we want to create that support. We want to create that support by highlighting and quantifying the customer benefits of our products in a smarter way. The beauty about lubricants, lubricants are by nature, sustainable. Our products help our customers to reduce energy consumption, to reduce water usage to reduce waste.

So that's very positive, and that needs to be quantified more. And lubricants have an overall positive sustainability leverage, how we call it. you generate less CO2 with the manufacturing process of the lubricants and with the product, then what you can save during time of operation when the lubricant is in use. And that's a unique feature of our products. And so for us, it's about transforming customer benefits into strong sales arguments. We have a department that creates life cycle analysis for data -- for companies and for cases. And some of them are very powerful. Sometimes it's like that you need 2 KG to manufacture the lubricant, but you can save hundreds of KG in the application. And that's something that will become increasingly relevant for our customers. And we are very systematic in quantifying that. And we also do some industry committee work to make sure that we apply the same standards and that we can compare ourselves to competition.

So that's very important to us. And that closes this chapter. And now I come to a part that's maybe the most interesting 1 for all of you because it's our financial targets. But before I get to that part, I want to talk a bit about the assumptions that we used when we put our financial targets together. And there's 4 different type of assumptions I want to go through first. its market and economic environment. So when we put together our financial targets, we assume that there is no unexpected decline in the lubricant market that is in contrast to current market studies where the lubricant market is heading. We also assume that there is no disruptive competitors' behavior that changes the lubricant market fundamentally.

We don't see that right now. we felt it was important to really put it in there. And we also assume that there is no catastrophic events that severely negatively impact the entire lubricant market like another pandemic. So that's not factored in our numbers. Second, supply chain and raw materials, we based our numbers on stable supply chains, largely stable supply chains and also availability of critical raw materials. And you will have all the fine print in your documents. I just give you the highlights right now. geopolitical conditions.

No massive escalation of geopolitical conflicts that shut down economies also largely intact trade relationships, no further deterioration. That was the assumption there. And regulatory environment and policies that the regulatory environment evolves in a predictable manner, with no approach changes and the same is true for other policies like taxes and tariffs. Again, you will have all the fine print in your documents. There's also other macroeconomic assumptions I want to highlight. First of all, we based our numbers on fixed currencies based on August 2025.

So we don't forecast currency development or anything. This is a neutral effect for us in our numbers, as of August 2025. And raw material cost inflation, sales price development, we also assume stability here. And this brings me now to our financial targets for 2031, and first, sales. We want to grow our sales from EUR 3.63 billion to between EUR 4.5 billion, organically, as I said. That's a CAGR of between 2% and 4%. We want to realize an over proportion of the EBIT growth growing our EBIT from EUR 435 million in 2025 to between EUR 550 million and EUR 600 million by the year 2021. And we want to realize an EBIT margin of between 13% and 15%, heading towards our 15% long-term EBIT potential.

There was a question that came up before we met all in here today, and that was, all right, we can just take the upper ends of all your numbers and calculate your new target. This is not how it works. If we say we realize an EBIT between EUR 500 million and EUR 600 million, that's it. It doesn't mean we realized EUR 4.5 billion at 15%. And so it needs to stay within the corridor of all these financial KPIs to make sense for us. What are the drivers that help us to get there?

Let's cover the sales side first. is realized growth in the focus areas we identified also to leverage our superior application and R&D know-how and to deliver value add through a customer-centric approach that has made us so successful. EBIT and cash flow, again, 4 points to mention, pricing and purchasing excellence, that's critical for us. operating leverage of existing CapEx and OpEx. That's also what Esma highlighted in her FUCHS2025 review.

Focus on efficiency, and that's a new approach for us. So Esma brings a lot of competence to the company and has a clear target picture for our finance departments around the world. and they will take the lead in this and help us to drive efficiency. So operational efficiency and excellence, but also realizing the improvements we want to realize through our T2G value case, and I will come back to that. And net working capital optimization in 2025, we finished at around 21%. And we want to get to during FUCHS100.

T2G is the largest global project we have in the folks Group. It's a big investment for us. Important to understand, this is not just a technical conversion from R3 to [ S/4HANA. ] It's a transformation. It's a business transformation. We use this T2G journey to simplify and standardize our processes to clean up our data to improve our governance, and this will allow us to build a more effective IT architecture, also to use a IMO to enable automation and seamless integration and to improve transparency. And we see that this will help us to create a return on investment due to higher effectiveness and efficiency due to also an improved competitiveness by a better customer and supplier experience, so will be easier to do business with. And we see a net positive impact starting the year 2030. This is when all the rollouts will have been completed. You see it on the bottom there, we are right now in the testing phase. The first region that will go live -- is the region Americas, followed by Asia and then by EMEA.

And by 2029, we will be done. And this is then the time we will see more of the benefits. Cash. We are strong in generating cash, and we will remain strong in generating cash. The targets we put out here is we want to continue to realize a cash conversion rate that averages at least 0.8% on net income. This will put us in a position to pay increased dividends also in the coming years to further build on our strong track record, and we also want to make sure that we continue to pursue targeted M&A. We have a short list of targets, and we work also with the owners of these targets to develop relationships. Lubricant industry is still highly diversified. There is still a lot of room for consolidation. But in the lubricant industry, it's not so much about coal deals. It's about gaining the trust of a family owners.

So they ultimately sell their businesses to us. And that's what we will continue to do. We will continue to invest time in these relationships. So we are there when these owners are ready to sell. And this brings me already to the summary slide for FCS. Our mission during FUCHS100 is focused to win. We want to focus to win by focusing on 3 central elements with growth, sustainability and people. The 6 focus areas that we have identified that will drive the majority of our growth, our customer brands, automotive aftermarket, new mobility, rotary motion, performance greases and special application solutions.

Our sales targets for the year 2031 is to finish between EUR 4 billion and EUR 4.5 billion. And our EBIT target for 2031 is to realize an EBIT of EUR 550 million to EUR 600 million and an EBIT margin between 13% and 15%. I can only tell you after these kickoffs that we had earlier in the week, -- our teams around the world are now exciting to start with the execution. Everyone feels super motivated and what we saw during is that when it gets rough out there because of negative external circumstances, back then it was COVID, now it's the water I ran. It helps our teams to have that North Star out there to know what their game plan is -- so this helps to manage us and stay positive through difficult times. And we have a highly motivated team that wants to show all of you that we can realize the targets we have defined during the strategy process.

And with that, I hand over to Stefan, who will now summarize the equity story for you. Thank you very much.

Thank you very much to both to Esma and to Timo. I had a great time listening to you, and I just want to summarize a little bit on the equity story before we go into the Q&A session. So to really to start from the bottom to the top, I think, and it's very important to say we have an existing very strong asset base. If you look here from the right, we have about 38 manufacturing plants. We have 67 subsidiaries all over the world.

So this is there, and we are ready to grow with that. I think R&D plays a major role, and Timo mentioned it. It's good to have met with the 20 years of experience. And so the R&D part and the technical part is really important to us. The very left is also important because for us, complexity is no problem. We have large competitors. They don't like complexity. We make complexity as a part of our business model. And we do whatever it takes for our customers as long as we get properly paid for that. The second part, also important is our winning mindset. And what Timo said, the first global employee survey, I always say there are certain things you can't pay for -- but when 87% of your people say they are proud to work for Fuchs like TSMs, and that goes a very, very long way. I think we are focused on growth. And you know the expression, profit is opinion and cash is king.

We are very focused on cash. And therefore, the combination of the profit and loss account with the balance sheet, combining the Fuchs value added as the basis of our incentivation, I think, is a very important part, and customers played a major role. We do whatever it takes to satisfy our customers, and we come back a little bit later to that. Now also, it's not only focused on the focus areas, but it's also focused on the execution. And if you look, we have about 3,000 salespeople in the field. We do 3/4 of our business direct with our customers. So we are very, very close to our customers, and we are ready to execute. We gained market shares in shrinking markets. And you remember that 1 long-term sheet where we show Europe going down year-by-year as a look-in market and we grow year-by-year. So shrinking markets is not a problem to us. It's very often an opportunity and value-based pricing is also very important.

So to sum it all up, profitable growth. And I think to went through the whole growth areas. The strong cash flows is very, very important. We measure ourselves in cash and a higher return to our shareholders summarizes all of that up. Now I want to ask my Board colleagues to come on the stage. And before we go into the Q&A, we want to make a general statement to you. You have heard now in the last 1.5 hours, a lot about our long-term strategy. I think we have a solid foundation. We have a wonderful culture, and we have a very good plan moving forward. We are also aware that you and many other players in the capital market are very nervous on the short term and the Middle East conflict. And therefore, we want to shed some light to you on current trading.

As you know us, we always walk the talk. And for us, growth was also important in the FUCHS2025 strategy. And in the year 2024, we had a very nice volume growth. In the year 2025, it was even higher from the volume core side. The year 2026 started really good in the first quarter. So we were really on a growth path. Now we know with the whole Middle East conflict coming up, there will be supply chain problems. There will be availability issues, and there will be pricing. But I think very, very important. We are ready for it. It's going to be a demanding time. I mentioned it before. It's the eighth year of volatility in a row. I think you can call volatility the new normal. Good that we are in all the world regions. So we are local for local and regional based. I think that is a major asset we have at the moment. And I think we have gone -- we have gone out 4 weeks ago with the first price round.

We had the second price round as we speak. But if you think back in the year 2022, after, after the Russian innovation, we experienced in the year 2022 a 70% raw material increase. I have never experienced that my fastest ever experience that. And if you think about Lehman and the beginning of Covid, the raw material prices went up and down and up and down in 2022, they stayed up. There was a little bit '24, '25, a little bit softening, but not a big deal, but our customers loved us at the time. We went with multiple rounds of steps which they could digest and we always kept them running. Don't forget, we are no heating oil traders.

We do a lot of technical products, which are very critical for applications, and we kept our customers running the whole time. If you look to some of our large companies, the current order book is probably double as big as it is normally. So the biggest thing at the moment is to make sure we supply our existing customer properly, and we secure all the volumes -- is a massive time for our purchasing people for product management, for R&D, for our salespeople. We are already busy in reformulating certain products. We do that all totally transparent with our customers. We get written approvals for deviating to the original formulation. But we have done very well in 2022. I can promise you we do very well this time as well.

And I think it's more important if you think back in 2022, and we checked it also the profit didn't go down. And that shows the resilient business we have. Yes, there will be a sales inflation. Yes, it will cost us cash from the NOWC when you think about you inflate all your receivables, you insulate all your inventories. I mean, obviously, it costs you some cash. But good that we don't have to go to the bank. If you need a bank in those times, it's not good. And I think both Esma and Matt will shed a little bit more light to that. And then we are more than happy on your Q&A. And I hope you don't spend the whole Q&A on the short-term trading.

Thank you, Stefan. And yes, as Stefan said, we wanted to let some light on it. So Obviously, we are monitoring as closely as we can. The Middle East conflict. It's very dynamic. But as of today, what we wanted to share with you is, first of all, we remain very confident we will be able to find the volumes we need of raw materials in order to serve our existing business. And as Stefan said, our first priority is and will remain to deliver our existing business. So we are very cautious when it comes to acquiring new businesses. We will, of course, look at everything we can, but the priority is clear.

On the pricing side, we have experienced strong price increases, and this is due to a basal market that is today short and as well as the pressurized supply routes for crude oil for petrochemicals and obviously, having a repercussion on our raw material. As Stefan said, we already reacted with price increases to the market. And from today's perspective, what we can say is that it is very likely that more price increases are needed during the second quarter and maybe beyond. And last but not least, to just look forward in the future, even if this conflict were to end today, and the would be open without any restrictions whatsoever. It is very unlikely that the situation would normalize before year-end at least. Okay. And I just wanted to make sure that you had visibility of that. And that's true for availability, that's true for prices. And when it comes to the financial impact of that, I will hand over to Esme.

And like Matt said, actually, that will have an implication on our guidance. And for now, we are currently assuming that we will be compensating the increases we are facing. And that means actually that we are holding on our level. In regards to our sales, of course, to price increases, it will inflate the sales, and it will go up. That's our expectation. And on the other hand, I mean, Stefan mentioned it before as well, these increases will also have an effect in our net working capital and respectively, also in our cash. But I think, all in all, when we look where we are right now, we believe from a profitability perspective that we can compensate the current situation, and we have proven that actually in the past.

Ready to go. Okay. Thank you very much for the statement on the current situation. And then we would start with the Q&A session. We first take questions from the room, so you already raise your hand. That's very good. Please wait until you get the microphone and then we can go ahead. So we start maybe with the Sebastian. Please.

Sebastian Bray of Berenberg Bank. Can we go back to the original EUR 500 million EBIT target. What made the difference for the incremental EUR 65 million of EBIT that folks didn't quite get there with it? And why is 231 different? .

nAnd my second question is on the your EBIT margin target. So it sounds as if the company is gently stepping away from the a point estimate and has moved to a range of 13% to 15%. Is that because of the incremental investment required to achieve the growth it's targeting? Or is there another reason behind it.

Thank you, Sebastian. I think I answered the first question on the EUR 500 million goal because Esma wasn't here at that time. 1 thing we fell short is we didn't put any conditions to the goal. And I think people rightfully today put conditions behind his numbers today and our numbers, and we will look at them on a yearly basis. But as I mentioned before, if you look on COVID, the Russian innovation, the high inflation, the tariffs, the Middle East conflicts, Donald Trump 2.0. All of that was not known. And in that time, it makes us proud to have grown to EUR 435 million. And you're right, we are short of EUR 65 million, but we should have probably better put conditions behind this high inflation in 2022, the exchange rates, we had not conditioned it. And I think we will review our goals on a yearly basis.

And I think today EBIT percentage range, Esma can answer your question.

Frankly, I mean, I would like to answer first what you say we are going away slightly from our 15%. That's not the case. I mean we had to condition it because certain things are happening, volatility in the market, et cetera. we believe from today and for the future to the 15%, I'd also like Timo has said, we will work more efficiently. We were talking about the T2G project, which is changing our entire setup and actually will help us to drive work more efficient and drive efficiency.

On the second hand, we all know we invested a lot in the past in our footprint, in our assets. We don't need any more this capital addition to support our growth and the cost addition to support our growth. And that will definitely help us to convert our growth we are generating in a much higher profitable earning. And that are the 2 levers where we are believing, and we are confident it's not only a belief that we will achieve the 15%.

The next question from Martin.

Martin Roediger from Kepler Cheuvreux. First of all, you talked about the huge growth opportunities you see in the future. You want to focus on growth segments. You have obviously a promising future, you mentioned the great management team. You mentioned a great culture, the great positioning. And you also indicated that the market growth is now accelerated to 0.8% in the next 5, 6 years, why it was more or less flattish in the past. So I don't understand why Fuchs is now reducing the organic sales growth target from previously mid-single digits, which is 5% to now 2% to 4%. Why is your target lower than before, while the prospects are very promising. That's my first question.

Yes. I think if you look at our targets, our sales targets, we generated them with a bottom-up approach. And there's many things that play a role. Partly, it's also product mix, it's other areas. And the numbers that we put together actually the numbers that resulted from these business plans that we have in the country. Again, we also base these developments on stable prices, no sales price inflation. You know exactly that in our -- in the past and Esma highlighted during her section, sales price inflation was part of the mid-single digits. .

So if that comes on top, I think we'll not be far away from where we were, but this is not part of the assumptions we put into place. And what you have also noticed that we have factored in over proportional EBIT growth rates that are in the mid-single digits and that are above historical averages. And with that, we feel it's a very strong set of numbers we have put together given the assumptions that we have used, to come up with them.

Adding to that, I think looking back, there's no -- there's M&A included. Looking forward, it's organic only. So I think that -- and Timo also mentioned that we continue to look at M&A targets. So that, I think we leave to you to figure in how M&A we are going to do. And that I think needs to be taken into account to.

Okay. The second question is on your pricing strategy from history, I know that you used to do your pricing strategy, partly on customer profitability and not on individual products because the reason was that you differentiate between large customers who bought many products in your portfolio compared to some clients who occasionally bought 1 or the other product only. So do you intend to change that kind of approach, how you deal with the pricing strategy with your clients? Or would you stick to the previous approach? .

We have always -- we have not changed our approach, and we always had the same approach. We don't have the 1 and only global price increase. It's not that the 5 of us sit there and hit the button and say that's it. We have price increases on the regions. So at the moment, the impact on base oil, for example, in Asia is much bigger compared to Europe or to the Americas. And we always build it on product groups. So heavy oil based, probably at the moment, a little bit more.

On the side, the rates might be a little bit lower, but we still need a lot. We have a lithium issue at the moment because of the battery. So we really make sure that we are very transparent to our customers, and we ask for what we need. And I think there is no change. What we have given clear guidance to our people around the world is don't make compromises. And in times of availability, we go out and we make sure that we have a higher rate of execution when we come back.

Next question comes from Constantin.

Constantin from Jefferies. A couple of questions on my side. I'm sorry to be in race, but I'm still trying to understand this EBIT guidance that you've given. I get the figures the $4.5 billion on the sales, obviously, would translate probably to EUR 600 million. If I do the profitability calculation on that, that still takes me to the lower end of that range. So I'm still trying to figure out what exactly is that range all about, like what is missing to take to the 15%? And yes, I'm just trying to understand why you're giving us both given that the 15% isn't even achievable in 31 yet?

As Esma pointed out, I think the clear goal is to go for the 15%. This is also what we communicated to our teams and they bought in. So they want to support us to get -- at the same time, we also want to be realistic. As Esma pointed out, there's a couple of market circumstances out there that will maybe also hinder us from reaching the 15% during FUCHS100, so by the year 2031. And we want to make sure that we give you a realistic picture that we don't base everything on the upper end, but that we give you that range which we feel is the most likely scenario during that time. .

Can you tell us, Timo, what these things are that are keeping you away from the 15%? What are these scenarios that are not taking you there.

Well, it's a combination of things. Of course, we also need to see where we realize the sales growth some areas that are more profitable than others. So product mix plays a role. There's also other things that still need to be determined, maybe additional customer requirements that come up that cost us money. So it's not that we live in a certain world where we know everything. And what we wanted to do is, and that was also the feedback we got from all of you in Ponton, the numbers that we give you the numbers we commit to and that the numbers are realistic numbers.

Do we want to go for the maximum? Yes. But we also need to make sure that it's somehow based on realistic assumptions.

And constantly, if I may add, Timo said a very important part. We need to be we are so excited. So we need to be also a little bit more realistic. And normally, you always build on top when you plan, but there are also things happening, which we have not envisaged which we don't like. And I think in that combination, it's a very solid plan for me. .

And on the other hand, I mean, we want to deliver. So we want to deliver what we have promised. And I mean I'm here for a cycle of a year now, and we were frequently poking 15%, 15%, even we know, for example, the denominator was accelerated. And here, the numbers you see, we clearly said we promise we will deliver what we have promised. .

Understood. My other question would be on M&A. You obviously generate a ton of cash. The balance sheet isn't -- I mean, it's quite limited. I mean, $150 million to $200 million net cash. In terms of potential future M&A. Is there anything that could come up that could be quite a large acquisition in this market and you would could potentially lose out on that because you don't have enough cash on the balance sheet as a result of it or our M&A opportunities in the future, rather more specialized bolt-on acquisitions for which you don't really need to have a EUR 0.5 billion balance sheet, for example. .

We have got no restrictions on M&A. And also our Supervisory Board tells us why don't you do more? But as you know, we talk to a lot of families and you can't enforce people to sell their business. I think when we get an opportunity like a or upon, we are also willing to pay good money because we can scale those things. In the year, 2015 for our experience, we did 2 large acquisitions, and both within Ralph area of responsibility. They were pretty demanding on us Pentosin and Statoil.

So it took us a few years to make them really FVA positive. We have got no restriction. It's not that the 5 of us stand there and say we don't want any bank debt. So from a calculating standpoint, when I go back to university, there is nothing which we could not afford. But we also don't want to go stupid. On the other part, there are not the large opportunities. They are not out. There are maybe 3 companies between EUR 200 million and EUR 400 million. There are a couple of very large ones where either they are not available or it makes no strategic sense. And then we don't want to deviate. So we don't want to go outside of the lubricants including cleaners and forming and everything to go outside in the specialty chemical area. We want to stick what we know.

And as Timo explained to you, we have got so many opportunities that we really need to focus now and that's the 1 part. But there's nothing hindering from our part. Maybe you can just give it to the right, Felix.

Yes. Thank. Two questions from my side, a for one. Just following up on Constantin's question regarding sort of like the ranges. I mean if we take the upper end of your revenue guidance, upper end of your EBIT margin, I mean you get on an absolute EBIT number quite a bit above -- does that mean that maybe sort of like the swing factor is a bit more coming from the lower end or profitability lower-end products and volumes, which could -- are maybe more cyclical, and if they come back are, yes, positive for the absolute EBIT margins, but detractive on the margin percentage.

I mean, perhaps I can try to answer to start the answer. I think you should also look at our range in the top line. and that goes to EUR 4 billion to EUR 4.5 billion. And that comes very much back to what Timo said. It depends where we grow. You will hear later in the deep dive session about customer brands, about automotive aftermarket, where we have internally very, very ambitious targets. And at the same time, you hear about EV and specialty application, let's say, high value, higher relative contribution to the bottom line and depending how the business will look like in 2031, it just is different where we grow more, where we achieve or overachieve our targets. And that brings us to the band of sales top line.

And at the same time, it also is decisive for what will be the absolute EBIT and the EBIT margin. that I think you try to -- I think we try to be realistic not to take everything, which was submitted, bottom up, and make a band in both areas in the top line and also in the EBIT. And then the EBIT ratio, the ambition is 15%, but the EBIT ratio is in between 13% and 15%, depending on how would the final portfolio looks like.

Okay. Just -- and second question, I mean, you've defined the 6 target growth areas, and you've given the sales split right on this. Could you maybe give us also a bit of color on of the CapEx of the organic investments that you're going to do, how large the share will be of these 6 target segments within organic investment. And I don't know whether you can also share how much of your EBIT are these 6 segments end market segments currently making?

Actually, we don't do an EBIT breakdown by focus area or by market segment, and I don't think we plan on changing that. Regarding the investments, I think, Esma pointed it out, regarding CapEx, we don't see higher CapEx levels than in the past. It's more the year 2025 will be a reference for the coming years. And of course, CapEx projects that support or how we call it, enable our focus areas, get priority. And this is actually what we have done during the FUCHS100 strategy process where we have identified the focus areas and then also identified what's needed to realize the success, partly it's CapEx, partly it's OpEx, partly people.

And this is how we have built our financial planning, and this is all reflected and also in the financial numbers we have put together. But we can now not say this is EUR 20 million CapEx in XY, this is not how we will communicate it. I think the cool part of the assets is that we have spent most of our and which is the basis for future growth. So we have built a lot of grease plant in the U.S., in Germany and in China. They are there. To extend them is not such a big deal. On the other hand, the EV fluids are made in the same plants like the combustion engine fluids. So we don't have any restriction in the number of sites we have is plenty to add another warehouse, to add another blending deck or more tanks is not a EUR 40 million exercise. And therefore, we feel comfortable with the number to come, including T2G.

Thank you. Appreciate it. I think we have another question here in the second row. .

[ Peter Spengler at Zetbank. ] You shared with us the market growth or the global market growth of 0.8%. So can you maybe elaborate a bit on the areas or like the regions like U.S., Asia, Europe and so forth, and its connected maybe to that. So all the chemical producers that I now have a large efficiency programs running for the future. And so maybe you can also tell us what your kind of cost control concepts are for the next 5 or 6 years.

Regarding the market development, you're right, it's 0.8% we predict for the coming years. This is by volume. That's the first part. That's important to us. And secondly, there is not these massive variances between the regions. You have Asia a little higher than Europe and the Americas is somehow in between, but this is all very, very close together. So it's not that like you have 1 region with 8% and the other was negative 5%. This is not happening. It's rather a flatter market in Europe, and slightly below 2% growth in Asia, but it's all very similar.

If it comes to cost efficiency projects or measures what you have mentioned? Number one, what I would like to highlight when we talk about efficiency measures, we are not talking about restructuring. That's number one. And going forward, and Timo has showed it, we will change the way how we are working. And we talk about transform to growth. A lot of people keep just S/4 HANA in the mind and even mentioned it. It's not an update of an IT system. It's a transformation we are going through, getting the same language in the company means the same data working with the same processes.

And definitely, this will have an implication to our structural work and how we work in the future. That's number one. Secondly, you heard probably last year about cost avoidance, cost measures we have taken in place. And we were very happy, frankly, speaking, with the outcome. It was a lower middle million digit what we have achieved last year. And what we will do, we will continue with our cost discipline. It's not that we are just saying, okay, now we are growing and we are tightening -- we are losing our belt. We will be very cautious and questionalized. If everything what we are doing is needed. And that took a certain cultivation -- and I think we are there now. It was very nice to see in our strategic process when our colleagues were actually talking about what they want to do. the efficiency topic and how we are going forward was actually synced into the organization. And there, we definitely expect to have test thing going forward.

And that's what I expect from a CFO being a sparing partner and the business partner. So we were sitting down on a board in the middle of last year. And Esma made us discussing this topic. We agreed on an amount, and we got a monthly update and we overachieved the amount. And I think that's what a good CFO is there. .

Another question over here, for Michael. Maybe Constantin, you can hand back the microphone or yes. .

Thank you very much. more time to think about it. Michael Schaefer from ODDO BHF.

Two questions from my side. You will focus a lot on automotive aftermarket also as a growth driver in the new strategy. So well, my first question is looking backward. So why so weak in the past -- so what is the -- I mean, at least from the outside, you are not breaking down EBIT contribution and things like that. But from the outside at least, maybe I would at least assume that this is a rather let's say, profitable or more profitable business maybe than others. So why what went wrong in the past, let's put it that way. And also related to that, going forward, I mean, certainly, we have the Mercedes aftermarket deal just closed. We all knew that it came with implementation costs.

So going forward, so what are the kind of, let's say, regional focus areas? And what should we assume also in terms of sort of extra costs in expanding this one? So this would be my first question. The second, I would then go to your working capital to sales target of 20% ambition. So there's no time stamp on it. So when should we think about you're in a position to reach 20% of capital to a net win car to sales? .

Not this year. Do you want the other question .

Yes. Maybe we'll start with the automotive aftermarket. You are right. As I pointed out, our market share there is right now around 1%, which is fairly low compared to how we are positioned elsewhere. I would say in the past, we're more focused on the business relationships with the OEMs, with we got all the approvals also to work with them on first fill applications didn't capitalize on this in the aftermarket. It was just not a focus in many markets. The lubricant market is so big, and we focus on other things that we're back in the day, maybe a little more exciting for us. Should we have -- could we have started earlier in the automotive aftermarket? .

Maybe yes. And I think what we see now is, again, in markets where we focus on automotive aftermarket, we have a lot of success. We can capitalize also on developments that we did for other areas. And now we just want to systematically roll it out. And yes, a little late to the game in some markets. You will hear later on from Christian, who will come on stage, for example, in the U.S. and Mexico, we are just starting. So it just was kicked off 2 years ago, 3 years ago, and now we are finally gaining strength. But that's also the beauty about Fuchs. There is enough growth opportunities there. And for us, it's not about looking backward. It's about what can we do in the future to accelerate our growth. And for us, this is a very exciting area with all the that it covers not only passenger cars, but also the heavy-duty machinery, commercial vehicles, all that in there.

And Michael, as Timo explained earlier on, all the customer brand is aftermarket. So it's not only the 1 you mentioned or any large OEM you think about also part dealing companies who supply construction companies or agricultural companies. They also have a whole thing, a whole line of their own applications. we don't meet their customers when we approach the market. So we don't fight with each other, and those are nice businesses. We have a lot of industrial equipment manufacturers who want to also participate in the consumables. So we do a white label or private label with them as well. So it's a very, very broad area, and it's a very stable business.

And when it comes to the net working capital, I like that question, especially in the times where we just said we will have a hit or we face it in the net working capital this year. Definitely like Stefan said, it will be not this year. And again, depending how we are getting out of the cycle. But when we set the targets and when we discuss that also with the community, we said, actually, it needs a time window of 2 to 3 years to be sustainably there. We can do crazy things to get this -- to get this target, achieve this target by year-end. But what we want to do is having a sustainable level of -- and if you ask me as the CFO, hard to even say slightly below.

Okay. Looking at the time, I would say we take maybe 1 more question now before the break here from the room. And we have another round later -- we have another Q&A round later, and we also have 1 question, I think, that we can take from the online and maybe Lars, saw you raised your hand as.

Okay. Then please -- just 2 quick questions. 2/3 of the margin improvement is operating leverage. -- in which region you see the most? And is it only growth? Or could it be also some asset consolidation? That's the first one. The second one, you talk about efficiency and operating leverage. How about margin mix within the margin guidance because as we talk about aftermarket, I understand today contribution is probably lower than history that dilute the margin short term -- but I believe there is also a margin mix story to improve the margin given the value added on the aftermarket. .

Okay. I mean in 2025, yes, there -- we will always have a margin mix story. I mean when we look like in the specialty businesses, et cetera, where we have a strong margin and when we look in other areas where we have margin or average margins, especially in 2025, we had this situation. And when you were referring like to the Mercedes business in Americas, we had to dip. We are now leveraging it. We expect actually this business going into profitable, good, even above average margin and such puts and takes we will have. But I think 1 of the strengths we are having is actually the mix our segments where we are operating. And we are driving for higher margins when we talk from a contribution margin perspective, if you talk from an earning margin perspective, and we talked a lot yesterday about it by leveraging our existing base currently, we will be capable to turn that in much more efficient earnings.

For me, another big part will be the transform to grow. And when you look how we deal with our customers, our service people have to overcome a lot of shortcoming sometimes, and they spend a lot of time on the phone with our customers demand planning, logistics. And I have good hopes on transform the road that we become much more efficient because -- we have companies today, they are 115% in net operating working capital at very high EBIT levels. And it doesn't mean that we have to restructure anything. We have a growth scenario and then we can just grow with the existing team, and that's part of the efficiency as well.

Okay. Then we take a final question from online.

Yes. There's really only 1 that we haven't answered so far, that is which business segments will face the greatest headwind structurally on the long run? And what are these headwinds you see to the business?

For the business segments with the biggest headwinds are maybe the ones we have deprioritized because we really identified the ones that show the biggest growth potential for us. But we don't have a specific business segment where we feel right now, oh my gosh, we are losing out or the market is going away. I think it was also 1 goal. Initially, when we did the business segment screening during FUCHS2025, we had 12 global ones. In total, we had over 30 segments, including the local ones. These were all segments with like a good potential. And therefore, we don't see any market collapsing right now, we don't see us under pressure with business breaking away in 1 area that we didn't see before. So I don't think we have that. .

We have got more time for questions later, but I can only ask you enjoy the next session because on the 6 focus areas, we bring our experts in you don't get often the opportunity to talk to other people than to us. And I think that will be a very highlighting section where we go through the 6 focus areas -- there's always a partner with them, but we bring the experts in. And then we should have also some questions to them later, but we have enough time today. .

Okay. Very good. Thank you very much for all the good questions. We will now take a break and restart on time 20 minutes past 11. Thank you very much.

[Break]

Welcome back after our coffee break. And now we start with the second part of our Capital Markets Day. And this is something special that you don't see that often actually at Capital Market Days, we have invited specialists from the 6 growth focus areas, and they will do interviews with board members in order to deep dive into the respective growth areas.

We think that this is probably very interesting for you. And yes, we will start with the first session on performance squeezes and I invite Matt on the stage, who will host this session.

Thank you very much, Andreas. And I am very happy to be in front of you today to speak about Greases. It's a fascinating product, and we will try to articulate that. In order to do that, I will ask my colleague, Thomas Litters to please join me on stage. Thomas come with us. And let me introduce Thomas briefly, is our research and development senior expert for crises. Thomas has more than 31 years of experience in Fachs Group. He has spent 31 years working on greases. So it's really a true expert. Thomas is a chemical engineer from background, and it's very nice to have you with us today, Thomas.

Hi, everybody. I'm very excited to be here. Great.

Let me ask the first question. Usually, when we speak about lubricants, I think everyone thinks of a liquid oil. So something from the can that liquid. Actually, Greases are also lubricants. Thomas, can you tell us a little bit about the difference between oil and greases.

Well, the easiest way I can explain it is a crease is like containing an oil. And it's a sigilubricating oil and so it offers a lubricant that remains at the location point and act as a seal, like a physical barrier against contaminants. So it offers a lubricant that remains at the lubrication point. And it remains at the part to be lubricated to avoid or to prevent that try start that try running. And the beauty of use increase is -- it simplifies machine designs and production costs because there is no need for oil circulation and oil filters.

There are a lot of other benefits to the creases and just cost reduction, the main thing is they rely on advanced chemistry and manufacturing processes, and there's a high necessity for tribological know-how and deep application understanding.

Absolutely. And so greases bring a lot of benefits to the applications. Additionally to that, it's fair to say that we find greases in a wide variety of applications across multiple sectors. And there is a lot of technology within these grades that are needed. Can you guide us through where we find grass on the market? And can you tell us more about the opportunities you see when we are talking about these applications.

Now, Matt, you find creases in almost every industry. Look at the center of this slide, you see here a roller bearing. More than 80% of those are grease lublicated, and they're used in many traditional industries. See here at the left part of the slide, you see here for instance, the steel plant, mining industry, textile industries or construction industry, and there are many other industries, too. And in the view of the modernization of manufacturing processes, the sustainability agenda of these traditional high energy-intensive industries leads to a growing demand for high-performance lubricate increases, especially to reduce friction and to extend the service life of machines.

Additionally, there is -- there are high-tech applications requires squeeze in fast-growing demand such as electric vehicles, electronics, or medical devices, food production or robots, and these industries are asking for very specific product properties, and there's a fast-growing demand for performance reset which requires high R&D effort and specific manufacturing technologies. This makes performance squeezes. There's no doubt more expensive than oil, but we've traditionally better margins. This is accepted by the market due to the proven benefits of a lubricate increase for the application. I would say nowadays a grease is not just a lubricant, it's an essential design tool for engineers.

Thank you, Thomas. And I think -- the takeaway is that greases intrinsically have a lot of value. So we discussed earlier about the profitability story. It is definitely a focus area that will help us drive the profitability part. As you've heard from Thomas, there is a lot of complexity in the chemistry of it. And there is also a lot of complexity in the manufacturing of it. It is probably the most complex product range we have to produce within Fuchs.

Thomas, can you tell us a little bit more about the market opportunities that you are seeing as well as how we are positioned and how do you believe we're going to win against competition in that field.

Our market share today is higher in grease than its overall in lubricants. And we are well positioned for the future as we established global R&D and manufacturing excellence in that way, that first. We our R&D capabilities and application engineers are close to the customers. By this, they are trained in our comprehensive grease portfolio and know-how, and they are able to extract their benefits from our products, thanks to our grase technologies.

The second is we invested for several years in our manufacturing footprint of grease. And we have built up a unique setup of 3 exact same grease plants in U.S., Germany and in China. And by this, we are able to produce similar exact high-quality increases with same properties for the global market. I think we are a little bit proud of this because we believe we left here a unique footprint in our industry.

Looking to the future, I think we are in action. We bring added value with our ability to anticipate, act fast and globally on any regulatory requirements affect increases, and our strategy will be to co-engineer and to co-develop creases close together with our customers and partners. And our competitive advantage is our ability to turn global and regulatory pressure into product innovation in a complex product category. Thanks to our global product compliance and R&D setup.

Thank you very much, Thomas, for these insights. So we are coming to the end of the deep dive. And as a summary, what I wanted to highlight just as what Thomas said. So we are in a leading position with performance greases, that's a good base to capitalize on. These products are highly complex, and therefore, they have a lot of value. That's part of the profitability story as we push this category out there in the market. The opportunities are massive and present in every single sector. So we have a great chance to differentiate there. we're going to do that with our dedicated team, as you said, and we have the 3 R&D hubs in the U.S. in Germany and in China to support this activity.

And last but not least, we have a unique global manufacturing footprint for these performance cases that we can leverage in order to be close to the customers and answer this very high needs.

Thank you very much, Thomas, for being there. And with that, I will hand over to Timo for the next deep dive.

Thank you very much, Matt and Thomas. I can tell you that no grease expert worldwide doesn't know Thomas Litters. Thomas Litters is the extra that's out there. And his time is very valuable because there's always problems here to solve. So we are very grateful that he made some time for us today. And it was very exciting to hear you speak about your area of passion, so very, very great.

Now we come to another focus areas. And yesterday, I was asked how we develop people within folks and whether there is also a chance for people that work in a subsidiary to take over a holding position. So today, I have actually an example. I want to welcome Krisztian Rada on stage. He's our Head of Automotive Aftermarket, and Krisztian Rada started for us at Fuchs Hungary, worked his way up, was ultimately the Managing Director there, and he did great in his job, so we moved him over to the holding and made him in charge globally of our automotive aftermarket. Please welcome, Krisztian. Thank you very much for being here.

Thank you. Happy to be here.

Okay. Krisztian, we have already talked about the automotive aftermarket during my presentation about the size of the automotive aftermarket, and I felt some excitement here in the room that we need to do more in that aspect. And now we have you, so can you please explain to us what's the automotive aftermarket about? And what position does Fuchs have in this market?

So thank you. So no pressure that you have interest in the automotive aftermarket. Thank you. So automotive aftermarket market, many of you -- could you just quick -- many of you might think that also the vast market is nothing else and just passenger cars. So oil change once the car reaches its out of warranty period and change the engine oil. So passenger cars are very important just because there are 1.4 billion cars on the road that we present a significant demand for lubricants. The market is very complex. And the route to market is also very complex. So we are in cooperation with different kind of partners like distributors, like retail partners, like hard parts companies, like workshops, workshop chains, also branded car dealerships to reach our customers in the passenger car segment, offering them full portfolio, so not just engine oil, but also transmission, also break fluids, also power steering fluids, coolant so many kind of applications, what you find in the passenger car segment.

But passenger cars are not the only one. And I would like to mention the agriculture and forestry segment. So agriculture was maybe partly mentioned in the morning session. So the world population is growing. All the people need food. So the food industry is heavily relying on the agriculture. So in the agriculture, you see tractors, harvesters specialized equipment. So these are essential investment of the farmers because these essential investment, this equipment enables them to produce their products effectively. And this equipment is really highly technically demanding. So uptime is absolutely critical. It's a no go that a truck or harvester is not working in the season time. So it has to be always reliable and up and running. So 1 kind of -- so a typical agriculture machinery need 100x more lubricants than a car. And Fuchs has just a blueprint also in the agricultural segment, so market leader in Poland and Australia. So that's a great example of what we can just multiply in many other markets.

The next 1 on the list is the off-highway equipment. Maybe when you last time drive nearby road construction site, maybe were also angry that it caused some delays as you come to your destination. Maybe next time, you will have a different look with a different eye on the construction side because you will see also the buggers, also the excavators, the dumpers, the planars, so all that equipment, which is moving earth on that construction side. So they just do their job. And such a monster requires 150x more lubricant than our passenger car. And in this case, this equipment might also work reliably because if these machines are not moving, they don't earn money for their owners. And in this case, we are a reliable partner for those customers with our high technology products. And again, an example in South Africa, we are market leaders in the road construction off-highway segment.

Let's jump then to the next one, which is commercial vehicles, still heavy duty on highway. So we talk about trucks and buses. The demand -- the technical demand what we face in this segment is a little bit different than on off-highway. So the high mileage is the challenge what we have to face. So trucks often run 10,000, 12,000 kilometers per month, but is even more, sometimes 15,000 kilometers and by having such a high mileage, fuel efficiency plays a critical role. So a typical midsized trucking company, 500 trucks every truck is running 10,000 kilometers. You can just calculate the fuel consumption. And just by having the right lubricants, you might achieve maybe 2% of fuel savings. So this is again the right arena for us to play with our high-technology products.

So the next 1 on the list is motorcycles. It's a completely different category. So we might see also the commuter bikes, which is a primary transportation metal in Southeast Asian region, having hundreds of millions of commuter bikes. We are close to market leader position in Vietnam, having the local infrastructure, production, sales partners the ones we talk about the high capacity, high power leisure bikes, we can also call an example. So in the U.K., we are market leader in that specific segment.

And the last 1 on the list is the stationary aggregates. These are untypical automotive aftermarket segment. Let me talk about the typically, the diesel-fueled emergency power generation aggregates or the natural gas or biogas-fueled cogeneration, heating pad plans, complicated work. These are the so-called gas engines. So in remote locations, stores, produce energy or heat for their users. So these are untypical, I say, but at the end of the day, these are just engines, just a little bit bigger. So the same technology that we have can be used in a fantastic way.

Thank you, Krisztian. I think you impressively explained to us that there is many different examples, many different applications in your area of responsibility. The marketing team around Tina was or kind of put a slide together and you see it here. There is like many options, also many success stories in the group. We talked earlier today about transferring success stories from market A to market B. This is 1 focus for Krisztian in the coming years.

But now if we look at the development of the automotive aftermarket, we got another question from our analysts before. And this is about the future of the aftermarket, given there's a trend towards electrification. So why is this still a massive growth opportunity for Fuchs Krisztian?

Yes. First, it's very simple. It's a huge market with solid margins and Fuchs has only around 1% market share. So there is a huge headroom ahead of us to grow.

Second, many people talk about electrification of the mobility, but what we see that internal combustion engines will remain dominant in the upcoming case. Maybe there is a different speed of change in some countries like China or Norway or the Netherlands. Also different level of the change in the segments, maybe in the passenger car or the motorcycle, there's a factor change, but the change of electrification of the change of propulsion in heavy-duty arena might be much lower. So in my opinion, the internal combustion engines remain dominant in the upcoming years and decades.

And if you have a look on the statistics, what the number of new cars are registered, let's discard but all kinds of vehicles. We see that in the upcoming years, the internal combustion engine population globally grows. So as of today, next year, it continues to grow. And our estimation is that in the late 2030s, we will come to a peak point and the peak point will be followed by a long plateau because there is a long period of time until these aggregates are in use, typically the passenger cars 16, 17 years, but the agricultural machinery even longer, off-highway construction machinery even longer. So we can expect for a longer period of use of the internal combustion engine, so which gives us a fantastic opportunity.

And you also already mentioned the opportunity to use the experience from 1 country to the other. So we had already successes in many European countries. So why not just copy/paste in different countries, in different regions. So in the U.S.A., we started the automotive aftermarket business just 2 and 2.5 years ago. So we are at the beginning of our journey in a huge market. In Mexico, which just started in 2026, and Sub-Saharan Africa represents a widely unserved opportunity where we are preparing to enter.

Thank you very much, Krisztian. I like your example about the U.S. because that's by far the largest automotive aftermarket. And we have just started there. So many decades of growth opportunities ahead of us. But if we go further and I ask you now about our starting point and our plan moving forward, how would you describe that?

So I think segmentation is really a key point. So I just listed the subsegments within the automotive aftermarket. And I think it's important to understand the relevance of the individual segments per country. So there is a combination of segment and country. And if you ask me, we would just -- we should just roll out the successful experiences that we just gathered in 1 country to another one. In this case, I would say we have already high market share in France, typically in the passenger account market, but there is an opportunity in France for the agriculture business. We have already a high market share in Germany with passenger cars and in agriculture, but the market share is relatively low in the off-highway road construction segment. So I think by just applying the experience is what we got in 1 country, in 1 segment, applying to another country in another segment, that would be a great starting point.

Also, I would like to mention that we have some -- still have some countries where our infrastructure could be further developed. I mean our supply position, production positions, but also just having the right sales infrastructure in the given countries might help to upscale the business in these regions.

Third one, very important. So also the aftermarket business is changing in the direction of digitalization. So our partners would like to discover order, follow, track their orders. Also some budgets might come up e-commerce, integration, ERP integration, digital catalog solutions. That's something what we have done already a lot, but I think that's an arena where we have to continue and invest into our digital presence. We see brand awareness, brand awareness just matters in automotive aftermarket is pretty important as 1 of the buying main customer's eyes is the emotion. I think the cooperation with renowned massive, it helps a lot. We are looking for additional cooperation with OEMs, really helping us to increase our brand awareness contributing in a measurable way to increase our business in the automotive aftermarket arena.

And the last point on list I would like to mention that also in the aftermarket, we see a consolidation of the market players kind of conglomeration of market players, so hard parts companies as companies merge, they represent a higher buying power. They become international. So previously, the aftermarket was very much a local business now becomes more international. So with our customers, we have to also grow our infrastructure by establishing international account structures. And I believe all the measures that I have listed put us in the right place to continue our growth journey in the automotive aftermarket segment.

Thank you very much, Krisztian. I think what we take from your presentation is the automotive aftermarket is an exciting market for us and therefore, also a focus area in Fuchs 100. We start with a fairly low market share but we have a game plan on how to improve that market share. One element is improved international collaboration to transfer accessories from market A to market B, and with the additional volumes we bring on with that business, we'll be able to utilize our operating leverage, which will help us also to drive our profitability in the right direction.

And with that, I thank you very much, and welcome the next speaker. Thank you very much.

The next speaker, I want to welcome on stage actually came to us through an acquisition. So it's Philipp Niemax. He came with the Pentosin acquisition, and this is 1 element of acquisitions that cannot be underestimated. We do not only buy technology, customer access or set up in a certain geography. We also get good people with the acquisitions. And we are very happy that Philipp is with us today. He is a Head of Global Business segment in the OEM division and welcome, Philipp.

Thanks for having me, Timo.

Philipp, we talked already about the automotive aftermarket with Krisztian and your customer brands focus area that you want to explain today is closely related to the automotive aftermarket. So what is it all about?

Okay. Customer brands are aftermarket products that are sold under their own label of the customer. Fuchs provides the products, the customer labeling and is also taking care of the logistics to the garage. This can be done for all kinds of vehicles.

The picture on the slide shows an example of an engine oil branded by Mercedes Benz. If you have a look to the lower left, you can see the Fuchs logo. We are working here as a technology and logistics partner. Of course, we are also providing products to OEMs outside partner cars, for example, to the agricultural area. The benefit of the customer is that we can generate aftermarket business. The end customer trust that the product has a high quality and is specifically made for the application of this product. This is what we at Fuchs are taking care of. We are leveraging our technological know-how by providing first lubricants to the OEMs. So it's a win-win situation for all participants.

Thank you very much. And we learned from Krisztian that in the automotive aftermarket, we have a fairly small market share and a big growth potential. Is that similar to customer brands?

Partially, it is. It's a market of upsize of volume, and we expect that the volumes remain on a high level beyond 2014. So next slide. One difference is that we already have an above average market share inside the segment. However, it is still in the low to mid-single digits, and we have plenty of room to grow. It is not necessarily a large volume when it comes to single customers. And we've seen large players moving out due to reduce still complexity. The business is very complex. But this is exactly the point where Fuchs comes into the game. We know how to handle complexity. So like with the automotive aftermarket, like Krisztian explained, we, in general, have good success businesses that we can now easily transfer to other regions around the world. We want to leverage our existing business relationships that we are having with OEMs like we did last year, we're going to see the spend for the aftermarket business in North America and Canada. So we want to leverage it to other regions. So all in all, we have very good opportunities to grow within the segment and to gain new market shares.

Okay. So the growth will mainly come from taking share from others. How exactly do we want to do this? And why do customers decide for Fuchs?

So first of all, we have very good relationships to OEMs since many years. They know about the product. They know about the performances and the quality. And besides this, we offer them additional services. We're offering them digital services that makes the light user. We're offering them digital order platforms, for example, or smart meters to control inventories. We are also taking care of the logistics to the garage of the customers. We are working here with distributors, so that all the products from Fuchs are coming out of 1 hand. This is a huge advantage of focus. And of course, with our Fuchs global footprint worldwide, we can transfer businesses from 1 region to the other region, exactly like Krisztian mentioned before. And we want to deepen and we must deepen and extend our relationships with OEMs that we're having right now. But of course, we also have a lot of opportunities with new customers. So we saw in the last 1, 2 years, new business opportunities with Chinese OEMs are coming up. And therefore, we have very good success stories with markets like in Europe, Mexico, South Africa and in other countries. So there's a lot to come, and we are very good prepared for the Volkswagen strategy, and I'm very happy to be here today. Thank you very much.

Thank you very much, Philipp. Just to summarize it. So customer brands, a very exciting area for us. We have a couple of good success stories, for example, Mercedes Benz, you're all aware of this, but also triumph in the motorcycle area. And customers go with folks because we have the necessary approvals. We have the necessary support teams. We also have digital tools that we can offer to these customers to monitor consumptions in the market better than before. So we see a bright future. And with that, I wish you all the best for this focus area.

The next focus area we want to discuss is New Mobility, and I invite Damian Weinzierl on stage. Damian is our Head of New Mobility. Welcome, Damian.

Thank you, Timo. My pleasure.

So before we go to the next slide, I want to do a little pulse check here in the audience. So who is driving an e-car? Okay. Who is driving a hybrid vehicle? I think there is still a little room for the enthusiasm to grow. But I think, nevertheless, Damian you're representing a very, very exciting focus area. And I want to ask you to explain to us what new mobility is about for Fuchs.

Thank you, Timo. The easy answer for us is new mobility covers lubrication and cooling solutions for new energy vehicles. Let me break that down for you. Basically, what are new energy vehicles, that is anything that goes beyond what I assume most of you are still driving pure combustion engines. So anything that is in my responsibility is all forms of hybrid vehicles, pure battery electric vehicles hydrogen applications and fuel cell applications. And the good stuff is that we cover the whole range of potential vehicles. So if you go from a city scooter, over a passenger car, commercial vehicle electric flying air taxis, both until mining trucks. In the end, it's always about the technology that the powertrain uses. And my colleague has lined out these types of vehicles already. but basically, that is the most important patent.

Last not least, we also serve whole life cycle of the vehicle. So from the manufacturing over the factory fill of fluid towards the service while on the road. And Also, we are very deeply involved in the manufacturing of battery cells and battery trays themselves. And that is another very important topic.

And last not least, we also serve an industry that is kind of new for us. That is everything around infrastructure, so charging infrastructure, battery energy storage systems and data center cooling.

Thank you very much, Damian. That means that's a very wide field. We talk about all kinds of different vehicles outside the traditional combustion engine, but also the infrastructure. We know there is a transformation going on and there's regional differences. So where do you see the growth opportunities for us in the coming years? So I think for NEV, new mobility, it always helps to kind of break down and structure the very big market. So I think it's most easy if we look, for example, at the passenger car segment, we have 2 spheres. One sphere is the production and sales figures of vehicles. In that case, if we look for passenger car, for example. And then also those vehicles that are on the road, again, we call that the vehicle pool. My colleague has outlined then already at length. For example, now if we look at the passenger car segment, roughly 100 million vehicles are built currently projection for 2026. Out of those 100 million between 35% and 40% are already new energy vehicles. So this is not a new technology or something that we are waiting for to appear. Sometimes it's here. It's happening right now, and we are involved in it. And this -- if we look now, of course, at the field of the aftermarket, the automotive, there, he says we have 1.4 billion vehicles out there that still await that transformation. And of course, you see that those very high potential growth areas for us. And that's also why we expect this mid-10 digit CAGR over the next years.

All right. I think that makes a lot of sense. So now we talked about passenger car, maybe changing the fastest, but electrification is also on the horizon in other areas like agriculture or heavy duty. So it will come sooner or later, right? Should we forget about that? Or are these markets also relevant for us?

All these markets are relevant, and it's very interesting to kind of lay down why the adoption of electric vehicles is taking a while. I think it is basically down to a set of tipping points. If you look at many of you who are not yet driving electric vehicle, that is potentially due to questions about range. That is something that is always out there then. Maybe it's also about cost vehicles. Right now, we see a lot of rather low and midsized segment vehicles coming to the market. And of course, it's about also charging speeds and reliability of an infrastructure out there.

And last, not least, of course, political and worldwide topics as we see these days who could also lead to switching to that technology. The cool stuff is what you see here, those are all the, let's say, pain points or topics the industry is working on these days. And the interesting step is we are working on exactly all that. So if you go from left to right, you have range and performance. An electric vehicle if it wants to be an alternative that is taken seriously then it has to have a good range. How do you achieve range through efficiency? How do you achieve efficiency through perfect setup in lubricants. Also, electric vehicles are fun. It's about performance. It's about cool aspect of this technology. So that's stuff that we are working on. Then of course, any electric vehicle needs to have the utmost safety. That is a nondisputable thing. And we are working on that, especially in temperature management with cooling technology for all types of powertrains, batteries and so on, but also reliability. If you are -- maybe you're aware of the term of NVH, noise, vibration and harshness that basically describes everything that in an electric vehicle, you could potentially hear in comparison to a combustion engine vehicle, where you have a basic sound level. So if you have -- this NVH topic is very much down to lubrication, especially also greases in a vehicle, and that, of course, helps with the reliability.

Last not least, we are looking at a new type of customers that so far, we were not so familiar with because they are not only interested in a onetime buy or a service of a product, but actually in running infrastructure. So customers who run charging infrastructure or better energy storage parts, they are interested in uptime and availability, getting the highest amount of availability of their systems to make money with them.

And sorry, and last not least, this all poses great opportunities to us. It's, of course, a lot of work, but this is exactly what for us as an R&D-driven company stands out to position ourselves against the competition, combined R&D strength with global availability, cost effectiveness and a very great team around the world that can help you and potential customers to scale this business.

Thank you very much, Damian. And I like the technology aspect a lot because we are a technology company, so demanding applications help us to grow our sales. But I also have to say, from a private perspective, there's also a nice technology aspect with an e-vehicle, even though the fear factor is still high in the room, I drive 1 since 3 years, and I enjoy it quite a bit. So you might try moving forward and join the club.

But now Damian, this is also a market that's interesting for others. And how do we differentiate ourselves and how do we take market share?

I would like to answer that with a threefold answer. Firstly, and I always say we are not alone in this transformation. Fuchs has for close to 100 years now been very strong in contact with its customers, help long-standing relationships. And all our customers but also our suppliers and partners all go through the same transformation from internal combustion engine vehicles gradually towards new energy vehicles. And this is really what we are really good at. Now in addition, while that has maybe in the last years, mainly been applicable for Europe and the U.S. Now we also have a really, really strong footprint in China. So if you look at Chinese OEMs and Chinese Tier 1s, Fuchs really is a name and we have a really strong foundation. And the good thing is these companies now can not only count on our domestic service, but actually, whenever they go abroad to my colleague laid it out, maybe Indonesia, Mexico, Brazil, Spain, they can count on the same service they are used to with Fuchs in China, and that is something that really, really helps us in the future and then also both extreme potential.

Secondly, we are well prepared. We have a full product range for all these applications. We have a brand umbrella called Fuchs Blue EV. Under Fuchs Blue EV, we have currently around dedicated products that serve dedicated applications within the NEV world. So we are well equipped to serve all potential customer requests.

And last not least, we are working very strongly on building our brand awareness. So we are very outspoken at fairs at conferences. We try to transport our knowledge, our level of trust into the world. And I think these 3 aspects really help us to stand out against the competition.

Thank you, Damian. I find 1 aspect you brought up very interesting. We went to China in the mid-80s as Fuchs, and this was early, but I think it was benefit we said we need to be present in that market. And for many years, it was a little bit a one-way street report European and American technology should China to serve our customers. And this is now changing. In particular, in the field of new mobility, we see our customers in China in a leading position, and we also learn with them, which helps us then later on in other markets that are right now 2 or 3 years behind, particular also in Europe. One strength of the food setup but also of the great R&D network we have put in place. And with that, we renewability is an exciting opportunity for us also an opportunity where technology matters, and that's always good for us.

And with that, I thank you, Damian, for your great presentation. And we move on to Ralph, who will now cover the focus area for [indiscernible]. Thank you very much.

Yes. Thanks, Timo. I think now we addressed a couple of focus areas. The first 1 was fascinating product group with performance squeezes, which basically serves both industrial and automotive applications. And then we touched on aftermarket, customer brand and now EV. I think that is good. Now we would like to switch over to rather the industrial and the specialty areas. I think here also, we have identified focus areas where we want to grow. And the first 1 is our focus area of rotary motion, and to deep dive into that, I have the pleasure of welcoming Romina on stage. Romina, she does not have a business or sales responsibility. She is part of our technical community. So for a very industrial -- for a very important product group, which is industrial oils. And her role is the Head of Product Management for industrial oils, welcome Romina.

Thank, Ralph.

Now before we move on, I think what is all about rotary motion, the name sounds somehow self-explaining. But before I hand over to Romina, that just said what is all about rotary motion. Basically, we talk about an industrial application in many industries. And what they have in common is that power is transferred by a rotating movement. So we talk about compressors, refrigeration systems or industrial gear boxes.

Yes, exactly. So on the next slide, I would like to show you some practical examples. This is just a small overview of different applications. for example, our Remisol refrigeration oils are specifically designed to vacate supermarket refrigeration systems or high-temperature pump applications, conveyor bars for transport systems and airports as well as gear motors in the food and beverage industry are using a broad variety of industrial gears. Long-life compressor oils are used in dedicated air and gas compressors. So again, this is just a very few examples of different applications we are serving in the market, but what they all have in common is that these applications are constantly turning and to require a good lubrication and related service to fulfill their job.

So similar to what Krisztian said, on the aftermarket, when you stay in the traffic term in the construction zone, think about Fuchs when you stand at the airport at the Frankfurt Airport waiting for half an hour for your luggage. There's a high likelihood there's Fuchs oil in the conveyor belt also due to the fact that we have a good answer for these type of applications. And talking about that and building on what Romina said, basically, we talk about applications, which have to -- which you meet on a daily basis, both in public and also manufacturing environment. And that, I think, is also like quite obvious where we do see the cost drivers. And the growth drivers are on a very high level. It's the ongoing industrialization we see, it's the growing world population. So you have more people, not only in acquiring food, but also that require access to mobility that require access to infrastructure. think about all the commercial shopping malls with modern heating and cooling devices. That's what we are talking about when we talk about rotary motion.

Yes, this means that rotary motion serve essential industrial applications that ask for low disruption risks. So to ensure this, the industrial OEMs not only ask for technical specifications and approvals, but also they require a fast trial support by experience tennis and engineers. So it's very technology-driven, and it's the data-backed validation approach. So this prevents commoditization and allows us to differentiate in the market. Industrial applications become more and more compact or simply operate under more severe conditions. So does they require high-performance lubricants, which serves to, for example, lower friction, prolong the lifetime of equipment and ensure reliable operation under high thermal or high mechanical stress as well. In addition, this focus area comprises not only first fill, but also aftermarket business with a genuine brand and private label approach. We already have a strong position in key countries like Germany that we can leverage to expand our business worldwide in all the regions.

And here you see 1 example. You know where we were talking about customer brands. So we are not only talking about customer brands, being the Mercedes of the world. So we also see potential in food or in poultry motion, also with customer brands. So then we have to make sure, looking at the focus areas that we don't double count that we don't do don't worry. But also here, we have a very interesting customer base who are working together like technological partnerships to develop the product range and they market it as a spare part via their aftermarket structure, and we provide the product.

Now having said this, I think what makes Fuchs different? I mean what is our competitive advantage compared to many other players who also offer products for rotary motion applications?

Yes. The general situation is that industrial customers in rotary motion have very specific requirements. So as I said, they expect a high degree of performance, but also reliability of the product. secured by demanding specifications and approvals. And even we see that specifications are becoming more complex and with higher requirements. They want to have a fast reaction time in case of the disruption, and they are looking for cost-effective solutions and local logistics. So what Fuchs can offer is that we have a broad product range with a full variety. We're a full lubricant supplier. We have proven formulations which are proven in practical experience applications, low production and with our customer-centric approach towards the industry OEMs, we are, I think, very well positioned to cater all these needs. So more specifically, we have a very strong backbone in R&D expertise. We've heard this before already. And when developing a product, we can draw on the full variety of raw materials. So not only limited to mineral oils, but also all groups of synthetics. We can build on deep application know-how, and by preserving our global core technology and tailoring the formulation to local cost-effective raw materials, we can optimize the regional portfolio. So this fully supports also our region-for-region strategy.

With our technology partners who are leading manufacturers and to see our lubricants not only as a byproduct, but really as a construction element, we can create individual solutions dedicated to their needs. Our customer proximity also to end customers in all the markets enables us to strengthen our position. And last but not least, we will exploit cross-selling and cross-segment opportunities.

Thanks, Romina. I think based on what Romina explained, I think it's a truly exciting focus area for us. So it combines R&D application know-how, customer proximity, local for local. I think there are many, many elements we can build on what we bring to the party, basically. And I think we have high ambition and obviously good luck achieving all the targets you have set yourself.

Thank you.

Now last but not least, there is a focus area, which we call Special Application Solutions, and I would like to welcome Julius Fuchs on stage. Julius Fuchs is the Head of Global Business segment for all our specialty division. So that's a pretty fascinating aspect. And before you ask the question, I answer it, Julius does not belong to the founder family, he belongs to the Fuchs family, but not to the Fuchs founders. So welcome, Julius, thank you for having you.

Now talking about special application solutions. I think what we did building our Fuchs 100 strategy, we have selected a number of market segments from our Specialty division. And this number of segments, they -- all of them, we expect them to grow over proportionately the market segment is expected to grow over proportionally. And that, I think, is the first element, how we selected the segments.

The second element is, and that I think many, many specialty segments in common is, all of them, they have very specific customer requirements. And these customer requirements can be commercial, they can do regulatory and they also can be technical. And a prime example and you heard this quite often is the food industry. And we like these type of segments, because we do have a leading position in the food industry because they can address this very specific demands of the food industry and in the forefront in the food industry is the consumer protection, and that comes with changing requirements with regard to hygiene standards, different legislation. And I think we have a very broad product portfolio of food grade products, according to the NSS standard. And that's how we build under the Casita brand, a very strong market position.

Now Julius, I think, there are other segments which have -- is a similar fascinating like the food industry, tell us more about how we selected these segments and what they have in common.

Yes. So we already talked a lot about the food industry today, and you heard that the population growth is really driving this demand. If you think about this, the population is not only growing, it's also getting older. So therefore, the medical industry is a very promising 1 for us, where a lot of investments in a high innovation rate are still taking place. And if you think about applications in medical, there's a variety of applications. So just tomorrow, I will have an appointment at the dentist. If you think about dental handpieces, they need to be lubricated. They even need to be lubricated after every use. So this just shows 1 example how quickly these applications are. And to be able to sell products into the medical industry, you have to fulfill a lot of standards. Also here, I want to give you an example from the European Union. So the European Union, if you want to qualify a lubricant for the medical industry, have to fulfill the medical device regulation. So this means the lubricant is qualified like the device itself. Globally, you have also biocompatibility standards, patient safety standards, for instance, also very strict in the United States. And here, Fuchs is in the perfect situation that we acquired 6 years ago Nye lubricant, so this was an acquisition in the United States. And just recently, 1 year ago, BASF lubricants in Germany. These 2 companies, they have a great expertise in the medical industry, and they know how to qualify the products according to these requirements to be able to serve a real high-tech segment.

Another high-tech segment is the semiconductor industry. So you see a lot of laptops and also smartphones here in this room. If you think about how a chip is used on a wafer. This always happens under clean room conditions. So under work-home conditions means if you also apply a lubricant into these cell conditions, they have to serve low particle rates, lower out gassers because otherwise, they will not deal with this environment. So we have to select your materials very carefully. Fuchs is able to do this. Also due to acquisitions like, for instance, Nye, and here, there is still a lot of PPE based products. But even on PFAS and PV, we have an answer with the MAC technology. So we are well prepared for that. And this industry is driven by artificial intelligence, digitalization, and this would further drive the strict demand.

And at the end, I would like to highlight another industry, which is the railway market, the railway segment. So if we continue the story about the population, which is growing, which is getting older, the population also needs to be transported. And especially in huge countries like in China or India, the track systems, they are still evolving. And in the railway industry, reliability, safety are key. And so you have to perform long field has to be able to approve the product. And also sustainability plays a major role. If you think about, for instance, a switchblade, which is moving a train from 1 track on another directly in the environment. So therefore, the product needs to be biodegradable. And also here, we had an answer with products based and certified on the Ecolabel.

So therefore, you see a lot of opportunities in these markets, all alongside the automotive industry. But as I know you, you're not only interested in these opportunities in process, you like the financial attractiveness of the segments, right?

I like all of that. And I like that you are here and that I can hold you accountable how successful we will be. But based on what you said, I think this market segment, and I think this is quite -- that's our understanding. That's why we love it so much. We are so much passionate about these specialties. I think we talk about segments which have value orientation. So the risk to be commoditized is quite low. That's what we like apart from the other specific requirements which we already mentioned.

And the other part of the story is why we like these type of segments so much is the competitive landscape because all along with the specific requirements to succeed, there are entry barriers for other competitors. And they are the majors who might not like that because they don't bother because it's a niche or if they would be interested, they don't like the complexity. And there are other ones, the much smaller players on the lubricant market who might have technology in the one or the other area, but they cannot fulfill all the regulatory stuff or they cannot scale it globally.

So I think also here with our footprint, with our positioning in the lubricant market, we have a quite unique position. And I think that's worthwhile even having more insights on our differentiation on the market and what makes us different to grow in these segments.

Yes. So actually, our strength is that we really speak the language of our customers. And if you speak the language of your customers and specialty means you have to speak a lot of languages, different languages. So you need to know the requirements of your customers, but also the requirements of their customers. And here, we are able to help them with our R&D capabilities like we learned from Mathieu and Thomas, for instance, or from Romina with our test rigs around the world standardized on also our quality control, means we can combine the specialized knowledge in such a segment with global standards, with a global production network.

And this makes us unique. And therefore, we can focus on the product in use. So if the product is in use, it's all about the performance improvement. It can be an efficiency gain, the extension of an interval, even lifetime lubrication or material compatibility. And this technical consultation is the key because it involves us as also Romina described, even in the engineering process of our customers. So for instance, in medical or semicon, you define together with your customer, even the specification for your own product.

And this is really the added value. And then it's not only about the single product for the special application, FUCHS is also able to offer the whole portfolio. If you think about a semiconductor plant, there are also metalworking processes, cooling processes, we can offer this as well. But I don't only want to talk about the product because it's all about a common solution, and therefore, services are also very important.

Within FUCHS100, we put a lot of emphasis also on services. and FUCHS has a well-established FUCHS Smart service program. And here, we launched, for instance, in the Specialty division, a lubricant critical control point analysis. So it sounds very complex. At the end, it's a software tool in our service program where you can track all your different lubrication point of the plant, connect them with each other, connect it with the demand or stock management, but also with sensors or condition monitoring is possible. means here, we empower our customer to manage their own lubrication demand, of course, with our support. And therefore, the combination of the product performance and our technical consultation as well as the service really makes the value.

That is right. And listening to you, I think you heard to a large extent, what is all about the FUCHS DNA. We have the technology, we have the application know-how. We have -- we are close to the customer. We are globally present. I think that's what is FUCHS. You want to describe FUCHS and that makes us, I think, very strong. And we try to enforce that and increase this with our most recent acquisition. I think just to talk again about what did we do with NYE, what did we do with Boss? I think we even want to further expand our technological portfolio because we are able to take it to further develop it and to scale it. And I think that makes our world in the specialty arena so fascinating.

Now turning back to your role, Julius. I think you have very ambitious plans you put together with your team and the segment managers during the FUCHS100 process. Now it's about the -- how it's how to win and how are we going to achieve our FUCHS100 goals because I think there are plenty of opportunities, yes? We have to go for it.

Yes, this is true. So at the end, also in this focus area, we had global regional and local teams who defined a road map, a road map which overarching tasks, so this might be organizational tasks or the manufacturing footprint, which need to be optimized with all relocations to different regions, but also shared resources across these segments. But the nature of this segment is really that we have to treat them differently. They are all different. And therefore, for instance, the food or the packaging segment, you already heard about this, they are well established already.

So therefore, we have to bring them on the next level, the next food safety standard, new product innovations, new service innovations and also a lot of market research about what is coming next. Segments where we just had a regional focus so far or only targeted a certain part of the value chain, it's all about extension. So we heard already about a multiplication of success stories or approvals. This is the same here. So this can happen in existing accounts, but also across regions and countries. What also have all these segments in common is that they all need a market-specific portfolio. So they need to be defined globally and they need to be maintained and enriched.

So this is something we do together, of course, with our product management colleagues. And here, the acquisitions play also a major role because we are able with these acquisitions just recently to close technology gaps, integrate them and also enrich these market-specific portfolios.

At the end, it's also about key accounts and partnerships. So here, I would like to highlight the partnerships. For instance, if you take the railway industry, we have here partners since a couple of years, L.B. Foster, a U.S.-based company, and they offer trackside lubrication systems. So an applicator, so to say. And for this, you also need the right lubricant. So we offer together to the customer a common solution with dual branded products and these kind of partnerships is also something we want to extend.

And finally, I have to say with these global regional and local teams, with these experts, with these business development managers, product managers, application engineers, I'm very confident that we will reach these goals in this focus area until 2031 and even beyond because they have a great team spirit, now also a plan and the first time for FUCHS in this extent also a clear focus. And this makes me personally very confident.

Thanks, Julius, for that very exciting insights and deep dives into our specialty segments. And with that, I think we conclude the deep dive session in our 6 focus areas. I hope you enjoyed. You have seen a broad variety starting from aftermarket, customer brands via our most beloved customer product group of greases and then moving on to Industrial and Specialties.

I think that concludes the session. And I think thanks for your attention. I hand back the floor to Andreas. Thanks a lot.

Yes. I hope you enjoyed the deep dive sessions, and I would like to especially thank all our specialists for being here today. I think this is something that they usually don't do in front of such an audience. So please give them another hand for their performance today. Thank you very much.

Now as promised, we come to the next Q&A session. And for this, I invite the members of the Executive Board back on stage, please. So we start with Angelina.

Angelina Glazova from JPMorgan. I would like to ask on the automotive aftermarket and maybe touch a bit on customer brands. So you have talked about the need to increase the market share in the segment in the process to increase the brand awareness for FUCHS. Now we know from the past that this is a segment where you engage with distributors to sell your products. So my question is, in terms of increasing the market share, will you still partner with distributors? Or will you aim to take a bit more business in-house because that typically helps the brand awareness?

And then secondly, depending on the choice of the option here, what impact do you see for your margins? So what gives you the conviction that you can still deliver profitable growth while growing your market share?

Maybe I take this question. Customer brands, we usually have contracts with our customers directly, not with distributors. So usually, let's pick Mercedes-Benz. So they have that business with us. We have a contract with them. But sometimes we use distributor to do the last-mile delivery, where we ship our product to distributors and then they serve all the dealerships that are in the area. And what we have done is we have done a P&L-based business case where we say, okay, how much can we afford? Does it make sense for us or not?

And I think we take the liberty to focus on the business positions that make sense for us and then create the margins that we need to also drive our profitability targets up. And for us, the preferred model in general is we also have instances where OEMs have central warehouses. We ship the entire product there, and they distribute it in their value chain. So that's also an option that excludes distributors, and that can partly be beneficial on the margin side. But overall, I would say there is not one or the other. We look at it case by case. We evaluate the financials. We have our templates there. And whenever it makes sense, we go for it.

Regarding the brand awareness, very often, these businesses are shipped under the customer brand. So it's not -- if it's not a dual brand where the FUCHS brand is on the label as well, it's not strengthening our brand awareness. It's more capitalizing on the strong customer brand that's out there. Regarding Mercedes, we achieved something nice. It's a partnership where both is on the label. It's the Mercedes sign and FUCHS, where FUCHS is advertised as a technology partner, and that's for us a very high value because we feel that strong Mercedes-Benz brand benefits FUCHS and has created also a lot of customer attention and a lot of credibility in this market.

May we get first to Christian, then to Constantin and Sebastian.

[ Christian Bell ] from UBS. It's been really helpful. I just had 2 short questions, I think. So understanding that you're obviously in niche markets, I'm talking about automotive at the moment. But as the overall refill market for engine oil declines, how do you expect competition to evolve? Do you expect existing players in directly impacted markets to create stronger competition in the segments that you have strong positions in?

I think we touched on that before. So first of all, the engine oil volumes are not declining everywhere. It depends a little bit on the subsegment you are talking. There might be certain subsegments where this is the case and where there might be increased competition for the volumes that remain, but that's not across the board. In fact, we see in many cases, in particular, also what we discussed before, agriculture or commercial vehicle, that it's, in the end, a total package you need to offer. It's not just about the price for the engine oil. It's about you need to be able to monitor the tank systems of the customers. You need to be able to automize orders. You need to be able to deal with technical issues that appear in the field. So it's a manyfold customer -- set of customer needs that we serve. And with that, we feel there is more than enough room for us to profitably grow in this area.

If I may add, Timo, I think also we do see developments of our major competitors, the major oil, they rather exit markets. And they hand over markets also for the automotive aftermarket to what they call macro distributors or gold distributors. So they lose the direct customer contact because they believe it's good enough for them to serve the aftermarket business via a distributor. And that, I think we don't do. We stay very close to the customer. So there's also a competitive advantage to us. If we continue to deal directly in a market with the customers that makes us stronger and gives us more credibility than if other competitors would go indirect to a market.

Okay. That's really helpful. And then second question, and I understand you're probably not going to be able to answer this directly, but I understand that you are sort of under-indexed in the passenger car sort of market relative to where you're competing in other parts. But just -- I mean, it would be really useful to get a sense of, I guess, how much of your overall volumes are related to passenger cars? Like are we talking like sort of low double digit or is it sort of closer to 50%? Are you able to give any sort of sense of size for what that represents to the overall automotive segment?

Yes. I think intentionally, we don't provide you with volume data on subsegments and smaller categories. I also touched on that yesterday when we had the dinner conversations. Sometimes we get the feeling that people have the one application in their mind and they want to know, are you successful in that one application. And if yes, they feel we have a bright future. If not, they feel the future is behind us. Look at our product portfolio. We have 10,000 products. We don't have the one product that makes up 10% or 20%. It's highly diversified. And with that, we feel it would be rather misleading to provide you with volume information, and I think we don't disclose that.

Understood. Just I guess, just to push a little bit further on that. in the passenger car part of the market that you do currently compete in, just ignoring how big it is to the overall portfolio. Do you still expect sort of headwinds within that part of the portfolio relative to the other parts?

I don't think so. I think it also depends what customer you are talking, what kind of technology you are talking. But in general, one statement is clear and that we try to point out also when we explained the automotive market. Passenger car is not the main share in that.

Constantin Hesse with Jefferies. A couple of questions on my side. One of them is, can we just take a step back? I just want to get a better feel for these top 6 focus markets. If you could give us an idea of just relative size, what are the biggest opportunities within these 6 from both a growth perspective and a margin perspective, just so that we can have a rough idea of ranking on that one? That's the first question.

I think we -- I had one slide where I showed that the 6 focus areas roughly make up half of our sales. We don't provide you with the subcategories saying now focus area 1 is 30% or whatever. I think that we don't do. But I can tell you, they are called focus areas because we see substantial growth potential in all of them. And it's partly a little bit different. Some are more higher volume, some are higher margin. But in the end, you can also see with the financials that we put together that we want to keep a healthy balance. There's also 3 that have a stronger link to automotive compared to other 3 that are more industrial and specialty type. So with that, we feel we are in a good position to grow our portfolio in a healthy way and to also meet the financial targets that we have put out there.

Just to ask it differently then, I'm assuming all 6 are above group average margins?

No.

Okay. So maybe a question a follow-up on that one then. So focusing on a specific segment that will be negative to margin, is that because of...

Well let me try to add one thought for you. If talk about the EMEA region. Let's assume for a second, the EMEA region is enabled with its infrastructure to take on additional business. So now we always have 2 things in mind. The one is that you're asking for what is the margin of that type of business. But the other one is what we call the conversion rate. How much of that margin do we get down to the bottom line or to the EBIT. And if you have a given infrastructure, an additional business potential where you have perhaps a below average margin, but a far above average conversion rate, it's a very, very attractive business.

So what we perhaps are more hesitant to look at are, let's say, where we do such type of business, and we would have to build upfront a multimillion unit in order to support that type of business. That I think is then a different ball game and Timo was talking about templates to figure out how does the business case look. So it's the element -- both come together. Are we enable to support such a business or not? And then if the answer is yes, we don't need necessarily above-average margin to make a very good EBIT contribution to that.

Okay. Understood. Then last question from my side. I'd love to understand a little bit better what the switching costs are for customers in the aftermarket business or customer brand. So what would make Porsche, for example, and any other future brands switch to FUCHS, like, for example, Mercedes?

I think it's usually a combination of things. So first of all, these customers really strive for reliability. For them, the service business is an increasing share of their profit. So they want to make sure whoever they engage with also on the lubricant side can deliver. So delivery performance is very important. And that part usually beats all the other aspects. If you can show that you can deliver and that you can also offer the services they need to have transparency on their business, there is a higher chance to get the business.

The switchover cost for them is like -- so of course, it's some administrative work to like phase out one supplier and onboard another one. They also have to work through the inventory. Of course, also, if you win a new customer, you need to learn a little bit with the new customer. Who are the key decision-makers there? How reliable are their -- what are usually expected delivery times? Do they work with freight forward as you can count on. And this is -- it takes a while until you have the perfect setup in place. And that's maybe also what makes some customers hesitate to change.

But in general, we feel there is -- if you make a strong business case and if you can also show that you can help them grow their market share in that space, you have a good chance to get to it. As long as you have the approvals, that's another big aspect. For example, if you want to supply to Mercedes, you need approved products. And not all the players out there have these approvals for all the products they have in their portfolio, let's say, for ATFs, for others. So there's a limited number of players that can actually play in that field.

Okay. So the switchover would really mostly be bureaucracy instead of certification as a particular brand.

Plus the underlying risk. So if you have, for example, part manufacturers for the agriculture industry, they get orders from the large farming equipment, garages at 5:00 p.m. and they get the spare parts overnight, including lubricants. And if they have a supply chain issue, which we very often witness because most of those guys give it to 2 parties and sometimes we have to help out for the other party, that's the biggest risk for them. If you think about agricultural manufacturers' equipment, forestry equipment, even Mercedes, they sell most of their products through their own distributors. And if they have a supply chain interruption, that's the biggest changeover risk for them.

We go to Sebastian first and then to Martin.

Sebastian Bray of Berenberg Bank. I have 2, please. On the Consumer Brands and aftermarket push, FUCHS was historically quite cautious about these markets, particularly for automotive in the U.S. And I think since 2022, which was the last time there was a big update on this, the Global Products business of Valvoline, which did a lot of aftermarket business in the U.S. was sold. And this business was generally doing mid- to high single-digit EBIT percentage margins, if I remember. What is the differentiator or strategy for FUCHS here? And why is this market attractive? Is it there to basically fill capacity for the company in quite a sticky way such as the contribution margin is higher? Or what's the strategy then?

My second one is for Esma. We haven't talked about cost savings from last year in ERP system. But my understanding was that some of the savings made last year may be deferrals or temporary in nature. What is the company spending annually on ERP and related measures for the next 5 years? And what is the expected benefit from this?

Thank you, Sebastian. Maybe on the first part, I think what has changed really is we have learned a lot about that business. That's what we tried to explain before. We have success stories in some countries. Also, we have figured out a way of doing that business profitably. And now we want to make sure that we take advantage and move these successes to other geographies where we have been not so active in before with the [ Weverline ] business. I'm not so sure whether the comparison is accurate because they have like one business, which is the global products business, which is not the automotive aftermarket business with the oil change stores.

That was the other part of the business, which was way more profitable. But that's -- I'm not there to comment on Weverline, but I'm not sure whether this was a fair comparison. Also, what we have established is we have established a global team that is now working on a steering committee on solutions that we can roll out globally, and that also helps Christian to set the right priorities. And I think we feel we are more ready for this. And we also have the right people actually in the U.S. now to tackle these markets, which was maybe not the case before. So we invested also in people in education, in connecting them to the FUCHS Group and in being more well-rounded when it comes to our capabilities over there.

And especially, I think when you look into the U.S., I found 2 numbers from Timo intriguing in the morning. He said we only have a 2% market share in automotive. About 2/3 of automotive is aftermarket. And of the aftermarket, I think it's only 38%. So there's a lot of heavy-duty and agricultural and fleet. And in the U.S., you have a huge part of like Walmart type, AutoZone type. You have a huge part also for the instant oil change interval. This is all no-go area for us. But there is plenty of opportunities for us to double and triple our business there without touching any part of where you might get nervous.

And now let's come to the cost part. And you are right. I mean we were saying we are doing cost avoidance and question is if we need all the costs we are spending. I would say the bulk part of the savings we have realized is really to say, do we need that what we do. So it is a cautiousness, which came into the organization and avoiding actually to do that, what we were doing before. But there were also topics but we, of course, postponed. But with this thinking, we are convinced that we will hold a certain level also continuing forward from a cost spend perspective.

Now when you are asking IT, I mean, we have a certain base where we are having running IT costs. I have to say in the last years, especially with, of course, our T2G project, which is not all CapEx, there's also OpEx in it and also the digitalization initiatives, this is the area where we are increasing obviously. And I will not disclose the percentage if you are okay with that, let's say it this way. And on the other hand, I mean, the major initiatives, what we have in IT spend is right now our T2G project. It goes over 5 years. It will step-by-step being an invest mainly CapEx, but turning into OpEx partly in '26 and then '27 onwards. And we have a double million or triple million digit budget foreseen for it, which we believe we will get through with it a low triple million, let's say, this way, don't get by. And -- but we will need that for rolling out this project.

Martin Roediger from Kepler Cheuvreux. In the past, you have been very positive on growth markets such as for example, what was it, thermal fluids, electric driveline fluids, dedicated hybrid transmission fluids, immersion cooling fluids and so on. Can you provide an update where we stand right now and how you see the future is unchanged? Or do you gain market share in these activities? Certainly, yes, but maybe some more color would be helpful. And then also an update on your joint venture with E-Lyte, that would be also helpful.

So I can take the first question, Martin Roediger, on the electric driveline. So you saw and you heard from Damian on the new mobility. What we mean by new mobility is us watching what is happening on the marketplace when it comes to changes of technology from the ICE car to the EV car, there are plenty of different driveline possibilities in between. The update that you did receive before and the trends, technologically speaking, remain the same. So you see bradation, you see new fuels, e-fuels, you see hydrogen engines, you see multiple strategies for the driveline depending on which vehicle we are talking about.

So passenger cars, we have the tendency to reduce the conversation, especially out of Europe from the conversion to EV. But if you look at trucks, for instance, decarbonizing the truck vehicle is a complete different story. If we look at agriculture equipment or if we look at off-highway equipment, it's also a complete different trend. So to answer your questions on how do we see the market evolving. We are very well positioned, thanks to our connections to the OEM in that space.

So we have plenty of projects. We have, as per what you heard during the deep dive, a lot of businesses in EDS, in electric driveline businesses over time. And we see this business progressing over the cycle of FUCHS100 strategy. Now when you look at the car park or the vehicle park in every of these single categories, the transition pair region will not go at the same pace. And that is why we have the technical readiness, and we invest a lot of money with the OEM in Europe, in China, where these players are very big as well as in the U.S., but the adoption pair regions will differ broadly.

On E-Lyte, perhaps a short update. We are still a minority shareholder of the E-Lyte company. The founders, they continue to have the majority of E-Lyte. E-Lyte now is a company which is not any longer a baby company. So I think they have now industrialized. So we have now the -- I mean, E-Lyte, they have a manufacturing facility, which is in Kisan. And we have now reached a stage where I would say we have started the first industrial type of production and some serious customer delivery contracts. So I think the company is enabled.

Having said this, we also have to take into account that the transformation into full e-mobility type market is relevant also to E-Lyte. And therefore, I think the -- I should say, the future of E-Lyte will also very much depend how fast the overall market will transfer into full E-type markets.

I have 2 questions specifically for Krisztian on the automotive aftermarket, if I may. I mean, we've heard on sort of like being in the BEV world, the first fill being not a negative on, car-by-car base. How do you view the aftermarket for the BEV? And how does the refill differ in the aftermarket, both in volume, but also like in terms of go-to-market strategy because probably in terms of the -- yes, just to how to address the market is a lot different given the fuels are different and the refilling maybe is not that easy like with engine oil or drivetrain oil.

We get you a microphone quickly.

So from a technical perspective, you just open up the manual of an e-car and you can read it out, what is the demand of a car. So there is a period for the coolant to change. There's a period to reubricate the brake and so on. So this is different car type to car type. And we have to make sure that we have also the relevant lubricants for that.

Aftermarket business overall the same size if you look at cars are similar size and just the...

Yes, it's just the fact that combustion engine car needs regularly an engine oil change. If the car has no engine, then it's no need for engine oil. So it's typically coolants, what we are talking about and cruises.

Yes. And one for the industrial side. You showed up a couple of customers or end market group in the rotary equipment, you highlight where you see yourself -- your market position a bit more average, while in others, you see yourself as excellent and very good. Why -- where does that come from that in the rotary equipment market, you've lagged maybe a bit? And where is that going now to accelerate more?

I would not necessarily say that we have lagged because I think we always had the R&D expertise in that -- for this segment. And we have very, very good and very successful businesses and markets. I mean, Germany was mentioned is one of the markets where we have both. an established relation to the industrial OEMs and a very nice aftermarket position. And now I think we have rather identified that as a growth opportunity where we would like to focus on in order to, Krisztian would say, copy and paste what we have across the world, and that is both on the OEM side and the aftermarket side. And therefore, it's more identifying a growth opportunity than not lacking up to today. But I think you might add on that.

No, I think it's exactly in the scope of what Timo was describing. We might have been lacking the focus more than anything else. So technology-wise, we are there. Market access, we are there, too.

We have another question.

Just one question on the automotive segment and all the subsegments. Given the fact that some of the historical clients you are not necessarily the winner of today and tomorrow, and given the presence you have since a long time in China, what percentage of sales today is made with non-German client or with Chinese clients?

Well, we cannot give you a concrete percentage, but the one part is clear that our business with Chinese OEMs is growing. And we see that in China, in particular, they are more than successful in international companies in China. So if you want to stay successful in China, you need to succeed with local players. And it's not only in automotive. Take, for example, wind. Wind is a very strong specialty segment actually for us, and we are the global market leader there, and it's because of our strong setup in China. And for us, the key there is to work with Chinese OEMs and also make sure once equipment is moved and exported out of China that we can capture the service demand because we have the approvals.

And wind is one example where we are very successful with that. And Philip has mentioned it also for his business in automotive. Of course, we see Chinese OEMs going global, and we want to be their preferred party to go with. We also have adjusted our setup globally for that. We have established something called a Chinese LSO office. where we have a Chinese colleague, and he has just relocated to Manheim.

And he's leading a global team of counterparts in all world regions that make sure that we have a good communication between the Chinese customers there and our local teams. And usually, these are Chinese nationals or at least people that speak Chinese. And with that, we want to leverage our strength in China and grow our sales with also Chinese OEMs globally.

And in China today, what's the mix between Chinese client and non-Chinese?

As I said, the share of Chinese clients is growing, and it's growing rapidly. So it's a more balanced mix than it was in the past. Of course, when we went to China, first, we went with European and American OEMs, and now this is shifting. And it depends a little bit by segment. In some segments, like wind is already 95% Chinese. In others, we are maybe more at 20%, 30%. It just depends on where we are and what also the speed is in which these local players evolve.

Last year, you had this higher cost that came with the Mercedes contract. And now that the consumer brand business is a priority for you, do we have to expect something similar more regularly in the future? And then my second question was on -- in the last CMD, you spoke about smart lubrication. And I was wondering what role does this play in the next strategy cycle?

I think I can take the first question. So if we take on a new customer brand project, this doesn't have any incremental cost behind. This was a U.S. specific part because for them, the automotive aftermarket and that market is similar, was a whole new business. And there was some branding activities in the beginning. So that was a U.S.-only example, I think, where we had this. If we take on a large customer in Europe or in Asia, we don't have this.

And I may take the question in regards to digitalization towards our customers. I think you are referring to Fluids Connect last year. Yes. And this one, we were rolling out over our portfolio. Actually, we even improved the information in the Fluids Connect. And we have also further steps what we want to improve. We want to get more and more the R&D knowledge in. You hear that from some of the colleagues. We are getting product information in, which we are sharing with our customers. And I would say it's one of our value proposition where customers really want to do business with us because they have the visibility and the transparency of bit what they are buying and where the lubrication is actually placed.

I think it's also important, if I may add, what Esma said, we don't wait for all the digital stuff until Transform is finished. We also work on the customer experience platform where we harmonize our websites globally, where we combine them with our web shops to have one customer experience with FUCHS. We have done a lot of groundwork in the last 5 years with PIM for the product information, our marketing material. We have established a lot of web shops around the world for existing customers. In many countries, it's a closed shop where our B2B customers can order products. So all of that goes on parallel.

And is there -- because I saw that you have one partnership with like a predictive maintenance firm, I think. Is there more -- is this connected to the Fluids Connect project? Or is this a completely different topic?

We work together with a couple of companies when it comes to measuring devices in tanks at these distributors or it's all connected. We have a smart service team within FUCHS where Fluids Connect is our own software with our customers, but we do on a lot of partner solutions and maybe that's the one you referred to.

I think we have one more question here in the room, and then we take another question from the live stream.

I thought I'd take the opportunity while I can. So just thinking potentially a little bit -- obviously, a little bit further out, heavy-duty EVs, the technology is not there due to cost and range constraints. But they roll forward 5 years and the technology that has sort of caught up and you start to see more electrification of heavy-duty EVs -- heavy-duty vehicles. What's the strategy to start pushing against that sort of trend?

Well, again, as Damian explained, we have projects going on also in the heavy-duty space. As you rightfully point out, they are a little bit behind, but there's the first serial vehicles out there also on the roads. And again, what we want to do is we want to capitalize on our OEM relationships we have, and we want to be early on part of that game because we see a lot of benefits there, a high need for high-tech products in that space as well.

And as Damian pointed out, energy consumption even plays a bigger role there. So maybe it's even a little easier in that regard to illustrate the value of our products, certainly something that we have on our agenda and that we focus on. But it's not only EVs. It's like all kinds of different concepts. So we go through the entire portfolio of drivelines and have projects. We also have hydrogen projects and other projects for heavy duty. So we don't want to put all our money on one horse. We want to make sure that whatever technology evolves, we are there to support.

Then we come to the question from the live stream.

Yes. So Esma, it's a question for you. Coming back to efficiency. Where do you see the highest potential for efficiency gains within FUCHS? And can you tell us where the organization is already efficient and where it could become more efficient?

I might go out for a moment. I talk the same language. And if I standardized topics, I think we all know which -- what we are talking about and which direction we are working. And the main leverage what I see and the possibility to get more efficient is really the outcome of our T2G project. Number one, again, setting the stage, have talking the same language. The denominator will be the same. Secondly, we will work in a similar way, the same way. And that will definitely show us where we have inefficiencies where we can do better.

Secondly, it will help us actually also from a structural point of view to leverage over the globe, not only in our own country. And that's the area where I expect efficiency actually accelerating. Are we efficient today? I wouldn't say we aren't, but there is always space to improve.

Okay. I think that's a very good closing word for the Q&A. So thank you very much for all your questions. And now I think it's time for the closing remarks. Stefan, I would hand over to you.

Sure. Thank you very much. I enjoyed, I think, the last couple of hours very, very much. You have seen, I think, our FUCHS100 plan. I think we also went a little bit back and reviewed FUCHS 2025. First of all, a big thank you to Timo, Esma, Mathieu and Ralph. I think you have done a great job in rolling it all out and laying it all out. I think very important are the 6 focus areas, and I think you had the opportunity to talk to our experts and see them.

So a big thank you to Romina, to Damian, Julius, Thomas, Philip and Krisztian, I think they get a hand of applause. Also very, very big thank you to you, Andreas. I think you have done an outstanding job. We are very happy that we have you on board also together with Theresa and our latest addition, Maximilian. I think starting from Heidelberg last night for all the parts around the Capital Market Day, but also for today, I think we are in time. We have 2 minutes a little bit over the time, but a big hand of applause for you and your team.

To summarize everything, I think nothing new, but I think very important to go quickly through. We operate from a very strong and unique asset base. And we talk about asset base and asset base, obviously, our 67 subsidiaries, our 38 plants we have around the world. But I think the biggest asset we have is the team of 7,000 really committed people willing to walk the extra mile. And that's a big part of the FUCHS culture, which makes me the most proud. I think we have a team second to none.

I think there are many market dynamics going on, and we have a lot of FUCHS strength to create growth, and I think both of it comes very, very well together. I think we really win by customer-specific solutions. So we think in applications. We are there for our customers day and night, and we are technology driven. And I think we act global, but we execute local. And that's very, very important in today's world. So that decentral model comes very well.

I think you can do whatever you want. We have given you the bandwidth. So we envisage sales of EUR 4 billion to EUR 4.5 billion, and we envisage an EBIT of EUR 550 million to EUR 600 million. We will look at those targets on a year-by-year basis, but this is really what we would like to achieve to have a wonderful celebration of our 100th anniversary in the year 2031. And looking in the short term, you always have seen in the past, I think, over many, many decades that we were able to turn challenges into opportunities. And I think that's what we also will do in 2026.

So I say a big thank you for all of you for participation. We invite you for lunch now later. We have an optional plant tour. The entire Board will participate. So we will have more time to talk. So really, thanks again, and I look forward to the remaining program.

Thank you very much, Stefan, for the closing remarks. And this concludes our Capital Market Day. Thanks to everybody following on the streaming. And if you have any further questions, just let us know here at the Investor Relations team. And with that, we can now end the live stream.

Dear ladies and gentlemen, welcome to the Full Year Results 2025 Analyst Conference Call of FUCHS SE. This conference will be recorded. [Operator Instructions]

May I now hand over to Andreas Schaller, Head of Investor Relations at FUCHS SE, who will start the meeting today. Please go ahead.

Thank you, Nadia. Good afternoon, ladies and gentlemen. This is Andreas Schaller speaking. On behalf of FUCHS SE, I wish you a very warm welcome to today's conference call on the annual results of 2025 and the outlook for 2026.

With me on the call today is our CEO, Stefan Fuchs; and our CFO, Esma Saglik. As always, Esma and Stefan will run you through the presentation, which is then followed by a Q&A session. All the documents for this call are available on our homepage, and we assume that you have them in front of you. Please be also aware of our disclaimer on the last page of our presentation. And now it's my pleasure to hand over the call to Stefan for some introductory remarks. Please go ahead, Stefan.

Yes. Hello also from my side with the best regards from sunny Mannheim. So I don't know where you are, but we have a lovely day here. I think Esma and I will present you very solid figures for the year 2025, which are in line of the outlook from the end of July of last year. If you remember, 2024 was the all-time high. And I think we met that number. We even exceeded it a little bit. We had a strong cash flow.

And I think we have an interesting dividend proposal, the 24th increase in a row. And furthermore, we want to grow sales and earnings in the year 2026 and to learn more of that, I will hand over to my colleague, Esma.

Thank you, Stefan. And hello and also a very warm welcome from my side. Today, I will walk you through 2025 financial performance, starting with the key highlights. So for us, 2025 proved to be a very solid year, demonstrating financial strength, operational resilience and a well-balanced strategic positioning. After a challenging second quarter, we delivered a very strong third quarter, and this momentum continued into the fourth quarter as well, which allowed us to deliver on our revised full year target of 2025 and in some areas, as Stefan indicated, even outperformed them.

Sales reached EUR 3.6 billion, an increase of around 1% year-on-year and a new all-time high. This growth reflects both organic and external growth, and was achieved despite challenging market environment and significant currency headwinds we have faced. EBIT came in at EUR 435 million, a slight uptick EUR 1 million above last year, making another record level. This underlines the quality of our earnings and the effectiveness of our cost discipline, which we have put in place.

Free cash flow before acquisitions came in with EUR 316 million, up by 3% compared to last year with a very strong cash conversion of [ 1 ]. Earnings per share increased by 2% year-over-year and our FUCHS value-add reached EUR 249 million.

Now turning to the next slide, let me briefly comment on the quarterly sales development. As usual, the fourth quarter is seasonally the weakest due to the holidays. Nevertheless, compared to last year, we achieved a slight increase in revenue, which is a solid performance, again considering the significant negative currency headwinds we have faced.

Looking at the EBIT on a quarterly base, we see also the typical seasonal pattern. However, on a year-over-year basis, EBIT in Q4 improved by 9% supported by positive mix effect and lower cost effect. I also would like to highlight that our second half year 2025 was the strongest half year we ever had.

Now let's look at the main drivers of our sales development. Our sales for 2025 were EUR 3.6 billion, as mentioned. Both organic growth and acquisitions were contributing positive. Organic growth was mainly driven by Asia Pacific and the Americas reflecting successful business wins across multiple segments and underlining the strength of our local-to-local strategy.

On the external growth side, the key contributor were the acquisitions of LUBCON and STRUB as well as our new additions in 2025 BOSS and ASEOL. Currency headwinds were affecting our top line, unfortunately, negatively with 2%. Overall, we can say our underlying sales development was clearly positive.

Turning to our KPI assembly. I have already covered sales side. Moving over to our gross margin. Our gross margin improved to 34.9% in 2025, an increase of 40 basis points compared to last year. Functional costs rose by 4% year-on-year, mainly driven by additional costs from recent acquisitions, one-off expenses for large customer projects, IT investments we have put in place and inflation-related salary and wage increases.

And as you all will recall, we implemented a cost avoidance and efficiency measure program in the middle of last year to counteract higher cost bases. And what I can say, we are very satisfied with the results we have achieved. Our EBIT reached EUR 435 million, EUR 1 million above last year, with an EBIT margin of 12.2%. This also means we achieved our revised outlook from July and delivered another record result. Our capital expenditure increased year-on-year preliminary due to higher investments to our TRANSFORM2GROW project, which is the preparation of our S/4HANA rollout.

Net working capital improved to 21% of annual sales, it is below the prior year level and contributed positively to our cash. In 2025, free cash flow before acquisitions amounted to EUR 316 million, representing a year-over-year improvement of EUR 10 million.

So let's take a closer look to the regions, starting with EMEA. Sales increased slightly, mainly driven by acquisitions, which also compensated for the softer organic growth. The decline in organic sales was preliminary due to challenging market environment in Europe, especially driven by the weak automotive manufacturing sector.

At the same time, we saw positive development in Germany, South Africa and Sweden. And despite all market challenges, total profitability in EMEA remains strong and was slightly above the prior year's level, which also highlights the robustness of the region.

Moving to Asia Pacific. For the first time, sales in the region exceeded EUR 1 billion despite all significant negative currency effects. Organic growth was very strong with 7% mainly driven by China, Australia and India, but also the other countries contributed positively. This clearly reflects the benefit of our investment in local production, which continue to pay off. From a profitability perspective, Asia Pacific developed very positive. EBIT increased by 12% year-on-year with positive contributions from almost all countries underlining also the strong overall performance of the region.

Now turning to North and South America. Sales increased in the region by 2% year-on-year, supported by a very strong growth of 7% coming from several segments. On the other hand, the growth got largely offset by negative currency effects, a similar effect as we have seen in Asia Pacific. External growth was driven by the acquisition of our trading partner in Peru as well as IRMCO. But unfortunately, the EBIT declined by 18% year-over-year mainly due to negative mix effects and higher costs.

Now let's have a look to our net operating working capital. Overall, we see the usual seasonal pattern, an increase over the course of the year, followed by a reduction towards the year-end. Compared to the end of 2024, our net operating working capital improved both in absolute terms and also as a percentage of sales from 22.3% to 21%, which reflects a disciplined working capital management.

Moving over to our net liquidity. Our free cash flow before acquisitions developed very positively and strong, remaining or reaching EUR 316 million for the full year, driven by better earnings after tax, CapEx that remained below our depreciation level and the improvement in our working capital. Dividend payments and spend for acquisitions were the main cash outflow for 2025. And so as a result, our net liquidity improved year-over-year by EUR 110 million, reaching EUR 151 million for the full year.

And based on our solid earnings performance and strong cash generation, we will continue with our progressive dividend policy. For 2025, we will propose a dividend increase of EUR 0.06 per share resulting in a dividend of EUR 1.23 per preference and EUR 1.22 per ordinary share. This also represents our 24th consecutive dividend increase.

And before we talk about our outlook for 2026, let me briefly reflect on 2025. Last year was a challenging year with a lot of market volatility, FX headwinds and geopolitical uncertainty. And despite this, we were capable to deliver solid sales, good earnings and excellent free cash flow. And I think this performance clearly shows the resilience of our business model. And I also think we can be proud of that what we have achieved.

And let me start the outlook with the raw material, which is the key topic in the current environment. The year started with stable conditions, but the situation changed with the conflict in the Middle East, affecting oil and petrochemical supply chain. Our sourcing setup is globally diversified, which gives us actually flexibility. But nevertheless, visibility is currently poor and it's difficult to foresee all implications as changing or changes happen every day. So we are very closely monitoring the situation and have put countermeasures in place to address possible higher cost, which will occur actually.

Looking back into the past crisis, like the COVID time or the financial crisis, we, as FUCHS have proven record that we can manage challenging market conditions successfully. And also for this crisis, we are confident that we will navigate through the situation in a successful way as well. As of now, assuming there are no major disruptions in the global economy and supply chain, our outlook for 2026 is as follows: We expect sales to increase to around EUR 3.7 billion with growth partly offset by negative FX effect. This figure also includes the OPET FUCHS acquisition in Turkey, which we expect to close in the second quarter. It will at around 2/3 of its annual sales of roughly EUR 100 million. EBIT is expected to raise to around EUR 450 million, supported by growth and continued cost discipline. Also here, our acquisition of OPET FUCHS is already included, incorporating the related integration costs as well. FVA is expected at around EUR 250 million, reflecting higher earnings, but also increased capital employed. Free cash flow before acquisition is projected at around EUR 270 million.

Overall, I would say we entered 2026 with confidence and a clear focus on profitable growth and cash generation. But we also remain mindful of any macroeconomical, geopolitical and cost uncertainties, which are currently not foreseeable. And finally, a reminder, our Capital Market Day will take place on April 16 in Mannheim. So we are very much looking forward to welcoming you in person and having an open dialogue about our future steps.

And with that, I would like to hand back to Stefan. Thank you very much.

Thank you, Esma. Before we go into Q&A, I want to provide you with a little update on the FUCHS Group. So first of all, as the name said, our strategy program, FUCHS 2025 came to an end at the end of last year. And exactly around about now 7 years ago, we launched FUCHS 2025. This was, for us, a huge transformation program built on structure, strategy and culture. And if you look on the structure, I think forever and a day, we have been a decentral organization. So we really have fully flat legal entities all functions in the company report to the CEO, we pay incentives on those countries. And I think this is a business model and operating model we want to continue in the future and, especially now with more local for local, I think that's the right way forward. However, in the course of FUCHS 2025 created a lot of powerful networks, and especially not to reinvent the wheel and to go forward really in a more united manner. So networks can be in finance, IT, product management, procurement, you name it. And in such a network, normally, the large companies are represented on the table.

And therefore, we have a good buy-in and they define the basic strategies in their functions. Furthermore, we really push for entrepreneurship, not only in the countries but also in the function. So that is very, very important for us. All in all, I can tell you, we have an extremely committed workforce. We are really proud that we had our first global employee survey with about 73% participation and 87% of all the people said they are proud to work for FUCHS. I think that's something we can be proud of and something we can build on.

The strategy part was mainly focused around the 3 megatrends, new mobility, sustainability and digitalization. But we also had this thing with the profitable growth through segmentation. When you have this very decentral organization and we have the huge variety of potential applications, we have a couple of white spots, which is for us some growth potential behind and therefore, we segmented our business and we made clear plans moving forward.

And I think our people have done a really good job, and that's an excellent basis to build on in FUCHS 100 and obviously, we always include innovation and then for our own discipline more project management. Most important, and you know culture eats strategy for breakfast was the cultural journey. So very important for us was the growth mindset. Then very important, especially for us, Germans, the hierarchy free communication, which I really like a lot to know because this is more given in many other countries, but I think we have come a long way and then the open feedback culture. We always say feedback is a gift. Sometimes you personally don't experience it as a gift in the time it's spelled out, but it's only the expression of the perception of the people you talk to. And therefore, I think that's very important.

On all of that, we want to build on with FUCHS 100. And if we think about FUCHS 100, we said it before, it's really not a revolution, but it's an evolution. And many of the tasks we have done with FUCHS 2025, we don't have to repeat on. Therefore, when we look at FUCHS 100, it's really built around growth. So we can focus on growth, which is very, very important for us. I can't talk too much. It was a little bit of a difficult situation for us now today and also in the annual report and on Monday we have the global management meeting because the official launch of FUCHS 100 will be at our Capital Market Day, where we really hope that many of you come and obviously, that will be presented by Timo then, but we will have 6 global focus areas. And there is a huge commitment from our large markets and how it was built up, it was built up bottom up from the top 15 companies from our 70. And then we were working with the data, with the plans, we build up the strategy and now we scale it up through the 70 organizations. Sustainability will play a huge role as well but mainly we really want to measure the customer benefits because very often or most of the time, lubricants act very sustainably in the applications of our customers.

People, we always say, it's all about the people, and therefore, people will also play a huge role in that whole FUCHS 100 strategy. And we have our own organic growth plan, but we also always like to complement it with acquisitions. So we have announced to you that we will take over the other 50% of FUCHS Turkey and FUCHS Turkey has a history of about 20 years. Our partner, OPET in Turkey is like a mineral oil company. They have filing stations, they have refineries. And their focus on lubricants is not like our focus. So we are friends, and we will continue to be friends, but they will sell us their shares. We have signed a deal and the closing is for sure going to happen in the second quarter, because there are only formalities for the closing like antitrust and things like this.

And then we will be 100% owner. The company, we said does a sale of about EUR 100 million per year and has got 250 employees. Now you need to remember, so far, Turkey was at equity in our results. I think Esma has shown about EUR 10 million of equity result, of which FUCHS Turkey plays a role and that will change into a full consolidation. So with sales and cost profit and expenses, et cetera. So the outlook we have shown to you includes a portion of this full consolidation part, but we really look forward for us, Turkey is a key country for the future. And that was so far to our update.

And now I hand it back to you, Andreas, and we look forward to a nice discussion with you.

Yes. Thank you very much, Stefan, and Esma for the overview and the insights. And now we are ready to start with the Q&A session, please.

[Operator Instructions] And now we're going to take our first question. And it comes from the line of Martin Roediger from Kepler Cheuvreux.

Thanks for taking my three questions, please. Firstly, on the EMEA region. In the recent years, 2023, 2024, 2025, we see a strange kind of seasonality in EMEA. Sales in Q4 is always lower than the other quarters because of Christmas holiday. So this is no surprise, it is clear and fits to the group performance. However, earnings and margins in EMEA has been the highest in Q4 versus the other quarters. How comes?

Secondly, I know that you source locally, you produce locally, and you sell locally. And you can be flexible, if necessary. This is the strength of FUCHS we all know. But I have a question on the availability of raw materials in Asia. We know that Asian economies like China, India, Japan, highly depend on oil imports from Middle East. I heard about some force majeures in the petrochemical industry in Asia in recent days. Do you see the risk or did your suppliers already inform you about that force majeures? And I guess, it is more related to the base oils and not so much to the additives? Hopefully, that's correct.

And the third question in regards to pricing strategy, I understand that you already expect that raw material costs go up and you want to pass them on. Do you want to change your approach of passing on rising input costs to your customers when it comes to the clients who do not have the price variation clauses? I mean the small clients. In the past, you treated your clients gently by going to them several times in the year and raise selling prices in a step-by-step process. Will that change this year and you will become more aggressive by raising prices even more pronounced when also raw material costs go up strongly. These are my 3 questions.

Thanks a lot. Martin, maybe I start with the sourcing. And I think that's a very good question. And the name of the game is really availability. So first of all, we purchase. So we have good partnerships. We buy long term from our partners. And therefore, they always treat us very good to an extent they can. So that's the one part.

The other part, obviously, you can imagine, we have got orders like there would be no tomorrow. Now you need to check your orders, whether one customer just buys much more or tries to buy much more because they shift from competition to us or you have got all of a sudden new customers you never had before. And obviously, our priority is to service our existing customers. We have not yet a force majeure as to my knowledge, but displays the most important one.

Talking about 100-plus different base oils around the world and a few thousand chemicals, it's very hard to say this will be the impact. Nobody knows the impact today. If you look back, I'm now 22 years the CEO. We had the Lehman crisis. We had the corona part -- in the year 2022, we had a 17% raw material increase. So I think we have weathered all those storms in a very good manner. And all the time, we increased our dividend year-on-year. So I think we have really a good track record.

Now obviously, we have created a couple of committees in various countries to check availability, to check incoming orders, but to also look at the pricing. And even on price variation clauses in the year 2022, we canceled most of them because they -- for that high increase in such a short period of time, they didn't work. And now also, I mean, you should never be aggressive to our customers. But number one is availability. Number two is visibility for them and then pricing comes into play and we do whatever we have to do. And I think looking at our track record that was pretty good. So therefore, we are looking at the whole situation with concern, but we don't have any sleep right. And that's the most important when I now look back, for example, to the year 2022, which was almost an overnight explosion at that time.

We have got a lot of positive remarks from our customers, how we service them, how we were flying partly in certain key raw materials and how we did the exchanges in a transparent manner of certain materials, we did not have, but still supply in the water. So all in all, I think that is something we know how to do it. And certainly, we will not run behind 6 months on that...

Let me take over. The margin improvement question, especially in EMEA. And I can fully understand, actually, because it's towards the year-end and sometimes people think, okay, there are year-end effects. And I can assure you, it is -- of course, you will have always puts and takes towards the year-end. But it is no year-end effects. And I stated in my initial meeting in June, July, where I said we are not playing around with accrual. So these 2 are not the effects. What are the effects?

Number one, in EMEA, we had actually in the fourth quarter, a very good customer, driven by good pricing. And on the other hand, remember, we announced our cost measures, cost saving initiatives, cost avoidance initiatives somewhere in June, July. It takes the time until these are actually getting -- you see that in the P&L. And we saw them coming in, in end of Q3 and especially now hit in Q4. And considering EMEA is the strongest region we are having with a portion of 53%, that's weighing of course, pretty heavily when you push a bit to break in spending. And these are the main drivers by our margin and especially also the EBIT in EMEA was very positive.

Now we are going taking our next question and the question comes line of Michael Schaefer from ODDO BHF.

I'll start with the first one as a kind of follow-up on the raw material side. So can you just remind us maybe on the base oil side, whether first, we still talk about 60-40 type of split between chems and base oils. And within base oils, whether the 50-50 split between Group 1 and the higher groups are still valid and adjacent to that? Do you see any kind of pricing upward on the chemical side of the equation? So this would be my first question.

The second one is on EMEA. What happened there in the fourth quarter. So we have seen quite a slowdown in organic sales growth rather to 5% from 8% seen in the third quarter and also EBIT came down quarter-over-quarter. So any color what happened there in the fourth quarter? And how we should think about this into '26? And then last not least, on your working capital, you've squeezed quite a lot in the fourth quarter, also basically making it then on the free cash flow side. So obviously, this is something which is not -- can't be repeated all the time. So therefore, that's probably baked into your outlook '26. So my question is, what -- how should we think about the kind of working capital components evolving? How do you want to steer this in a certainly challenging market environment in '26?

Thanks a lot, Michael, for your questions. Coming back to the raw materials, is rough estimate on 60% base oil on volume and 40% chemicals. 40% base oil on value and 60% chemicals is still in place. Is 50-50, is difficult to say always depending on the mix. But there is definitely a shift towards more [ Co-free ] and PAO. How it normally goes. Everybody comes immediately and want something. So the first one you probably have to take is the base oil increase and then the chemical increase comes from a little bit of a time lag. But we go out immediately and have factored in a number now, and then we will see how it goes. But as you remember, I think in the year 2022, we did minimum handful, if not more, different price rounds and our people are ready to go.

In EMEA, I think, to your question, they have a good pipeline. And then we've really in EMEA, built our business over the year, and I think that was a very good fourth quarter for them, also from the mix what Esma said. And if you remember, EMEA for us also includes Africa, which is for us a little bit of a rising star, South Africa, where we invested in the plant and in the site over the last couple of years, they developed really, really nicely. So we see EMEA continuing to do well. And on the NOWC?

And Michael, on NOWC, yes, it is a good number, what we see with a 21% improvement percentage wise. But we have to be honest, actually, the main improvement came from our payables and we are aware, like you said, that's not always repeatable. Nevertheless, we believe that we -- and not believe we are convinced that we have potential in our net working capital, especially in the inventories. And frankly, I don't want to spoil it too early because we still have a Capital Markets Day coming up, but one of our biggest initiatives will be managing our capital much more efficient, and there will be a project or actually there is now already a project in place how we can reduce our inventory levels as well.

On the other hand, of course, we are looking also to the payment terms. But nevertheless, like Stefan mentioned before, currently, availability is key for us.

And while Esma say, I can happily confirm that finally, I believe we have a CFO who pushes the business. And that's the way how it should be. It's not only to make an annual report in the Investor Relations, but in the middle of last year, Esma started with a program of cost avoidance. Now she has her finance network with regard to our EBIT profitability, the NOWC percentage. Nothing will come overnight. But she questions a lot of things, and I think that's the way how it should be.

May I have a follow-up on this one. Maybe she can share also the number you have plugged in, in terms of pricing for '26 in your outlook and basically on the...

When you look on our outlook, and I really feel sorry with the auditor. The day before yesterday, we had a Supervisory Board. It was on -- or yesterday, the Supervisory Board meeting and on Wednesday, we have the Audit Committee meeting. So we had to close the outlook and the results and nobody knows what is the case in the Middle East. Nobody knows if the first round good enough of price increases? Does there come a second, third or fourth round? And therefore, we cannot answer your question sitting here.

Especially to the working capital, again, what Stefan says, we don't know what happens in the raw material. We're now saying the working capital will do this and that is actually -- yes, it would be guessing because it's not foreseeable. I mean we faced that in 2022 with a high inflation. If we are facing such a situation, again, let's be honest, that will have an implication to our net working capital, and we should be honest on that one.

If you look on Andreas long-term free cash flow analysis. The good thing is about FUCHS 0.8 cash conversion is a number we had for the last 10 years. Now if you remember in the chart, in 2022, it was a horrible year for free cash flow because all of that inflation cost of over EUR 300 million in NOWC, but then the following 2 years, we have a massive cash flow. So therefore, in average, I think we're always dealing with that in a responsible way.

Now we're going to take our next question. And the question comes from the line of Anil Shenoy from Barclays.

Just the two, please. The first one is more of a follow-up on the raw materials question. Did I understand it right when you answered the question that this time, the lag between the raw material inflation and the pricing increase would be less than 6 months because in 2022, when the raw material inflation was 70%, you said that it took about 3 to 6 months to pass on the prices. Is there any reason to believe that this time it's going to be less than that? So that's first.

And the second is on the sales outlook, what kind of a volume growth have you baked into the 2026 sales growth? And may I ask where is this volume growth going to come from? I mean what are the key contributors? Are these -- is it the new wins, new contract wins or new products? Or is it the underlying demand. To frame the question other way, if the macro recovers and if there is a better macro -- better demand environment than what you had anticipated, could it be that you can actually -- actual 2026 sales could be ahead of your estimates? So basically, what are the swing factors for your 2026 sales?

Thanks, Anil, for your question. Maybe I'll take the last one first from the swing factors. So I think that the one part was when you remember, 2022, the high inflation. Normally, the whole time I feel FUCHS prices went up and then down and up and down. And this time, they went up and stayed up. What we saw a little bit is a softening of raw materials a little bit in '24, a little bit in '25 and also subsequently of the selling price. And therefore, in '24, we had a volume increase of a low single-digit percentage number.

In 2025, we had a volume increase of a mid-digit number, but there was a little bit of M&A involved. But still, our sales were in '24 down in '25, they were only up by 1%. So a side of the currency also that sales price played a role. Now going into '26, we have, I think, planned all things being equal. What happens now with the price increases I can't really, really tell you. So this year will be organic sales growth, but obviously, we also have some Turkish volumes in for the months as we planned for.

And then on the raw materials, I can't promise you, but we are much firmer internally also in our discussions, also with all our managing directors to push them through the earlier impact, but also, we don't know how quickly and how steep the raw material pricing increases come and how long the whole situation lasts. So therefore, I can't really tell you, but my strong feeling is we are more firm this time than we have been before.

Maybe let me add just one thing because you asked for the swing. It is a mid-single-digit growth, what we are still planning year-over-year, but with a significant headwind. Don't forget the FX raised actually, especially towards euros, dollar, Chinese renminbi and Australian dollar, which are the main currencies affecting us mid of last year, and we will have a carryover effect, even there was a slight down trending, but it is not going really back. We will have higher -- an impact, especially in the first half year.

Secondly, no price assumptions right now are underlying in our numbers, what we have seen. From a pricing perspective, we kept it actually equally towards last year. But of course, like Stefan said, now the circumstances, they are bringing, yes, other topics on the table, and we have to deal with it. Right now, it's difficult to tell how and what.

Again, also on the pricing, once availability is there, availability issues, normally, the pricing goes through more smoothly. To be seen, the one plant you have seen yesterday being bombarded in Qatar, the GTL plant. This was the liquid gas plant plus a huge base oil plant on GTL. We have no GTL base oils. This is mainly one large competitor and many customers have a single sourcing problem with that competitor now because that is out for a couple of years. But okay, we can't take over those customers at the moment. But we watch those things carefully and actually we deal with our existing customers in a partnership...

[Operator Instructions] And now we're going to take our next question. And the question comes from the line of Angelina Glazova from JPMorgan.

I have two, please. Firstly, if you could provide a bit more details on developments that you have seen so far in the first quarter. You have given some comments already in the opening remarks, but I'd be interested if you have any highlights maybe more for January, February of what kind of end market performance you saw in different regions? And then secondly, in March since the start of the conflict, have you been noticing any material changes in your order books so far?

And second, just a quick question. In your current free cash flow outlook, what kind of CapEx development you have assumed in '26 versus 2025?

Thank you, Angelina. Obviously, with the March conflict, I was dreaming about such an order book last year. The order book is full -- as full can be. The question is we will not serve all of those orders, which creates double work internally because very often, no large customers have dual sourcing. And we have competitors where we know they are in problems at the moment with availability. So the customer wants to buy more from us. We need to be careful not to fulfill that part. And we have got a couple of customers that never bought from us, and we probably will not supply them either because now we really make sure we get the availability, right? You can't be greedy on that end.

So you can't take it all and then can't supply your existing customers. If I look back in 2022, our customers were highly appreciative of how we dealt. So we went in various steps, and we always kept the availability up. The first quarter started according to our outlook, and we were pretty happy. So we saw continued growth in Asia. Europe was developing well in America. The order book was okay. I have to say, okay, because in January was very, very cold, and we have a lot of water-based products in the U.S., whether it's either for metalworking or for the coal mining industry and we couldn't ship any of those for, I think, minimum 5 working days. But all in all, we were satisfied.

And maybe let me add in regards to the CapEx question. So for 2025, we had a level of EUR 90 million. This level will continue also for 2026. So there are no special uplift plant. And in general, if you look to our CapEx development over the course of the years, it is around 2%, it is around 2% of sales, so plus/minus.

Now we're going to take our next question. And the question comes from the line of Matthew Yates from Bank of America.

I just got a couple left. The first one, just going back to this idea of raw material availability. I guess this is a bit unusual as a cycle because as you said, Stefan, there has been some physical damage to infrastructure that may take time to come back. As it pertains to base oils, am I right in thinking that the Middle East isn't necessarily a big direct supplier to you on base oils. So is the risk here on availability that we see refineries reconfigure their product slate to produce more, I don't know, gasoline, distillate, fuel oil, et cetera, at the expense of base oil. Is that where you get nervous about availability?

And the second question, last year, your Americas profit EBIT was down 18%, I think you said. And we know from the earlier calls that there was some impact or distortion there from the aftermarket contract with Mercedes. Not to preempt your Capital Markets Day, but your press release today does say that you'll enter into additional global commitments with key customers. Does that mean we need to think about margins, if it's America or any other region being structurally lower because there will be other large contracts that will be dilutive to profitability, at least in the first instance?

Thanks a lot, Matthew, for those questions. First of all, America was the weak point last year. So I think that's a very fair comment. When you say or rightfully say the minus 18%, that is the number, but there's also a huge currency impact in. And if I look at local currencies and our -- the operating profits before license fees, let's say, they were down significantly, I think over 25% at the beginning of the year, they have come out better towards the end of the year.

But there is still work to do in the Americas. Definitely, when you go later through our annual report, you will see we had last year 2 new Board members, Esma and Matt, but we also had properly succession planning in both China and in the U.S. So with Dr. Megan Omer, we have a new CEO and President for North America. She's also part of our group management committee and she has a clear way forward.

She doesn't make any business. And I really look forward to that part. And let's wait and see. But for us, still America, especially the U.S. and Mexico and Canada is a huge growth area. We have good business in the pipeline in all aspects, whether it's the under proportionate margin business and high-end business. So due to new business or sales growth, there shouldn't be any deterioration in margins.

But this is all true before the first missiles were dropped on Iran. So now we need to see moving forward. But nothing is in the pipeline where I would say we have startup problems or any issues.

Okay. And on the base oil availability?

Sorry for that. Base oil availability, if you look, for example, the one good thing for us in the last 10 years, we localized a lot of products in China, and there are base oils available in China. So that is okay. What I normally don't know how much crude comes from out of China. That whole supply chain, I can't explain to you. If you go to Group 3 base oils, normally, the countries are, if you go from -- in our thinking from West to East, Canada, Finland, Korea and partly also Middle East. The other question is when something from Korea comes, does it now go around the Strait of Hormuz to around of Africa. So to be seen so far, we are not aware, but there will be also for us shortages and how we dealt with in 2022 because on some of our very technical high-end products, we have to declare to the customer any changes. But before they run dry, they tick them all off. And -- but we were always transparent with them.

So we said, okay, that's Group 3 base oil coming from [ Korea ] can be exchanged it against Finland or from Canada. And I think we were always able to do that in the worst case, we are also flying a critical chemical for a short period of time. So as I said before, availability is important. On the pricing side, it's not only that you necessarily have to do what they have to do, but you can also cater for some of the upheaval in your company at that time. So we see that also as an opportunity.

[Operator Instructions] And now we're going to take our next question and the question comes line of Sebastian Bray from Berenberg.

My first one is on the raw material price side, and it's twofold. Back in 2022, FUCHS had mid-teen or seemingly low teens pricing growth and flat EBIT. Is there any reason to assume that this time is going to be different in '26 aside from the company being a bit more upfront with price increases, the FX is a bit less favorable. On a secondary point, have any of the competitors of FUCHS indicated that they are, let's say, going to declare force majeure or be unable to deliver products at this stage? And my last question is on the Asian OEMs. China volume growth highlight of '25, BYD and a few others appear to be being a bit more cautious more recently. Is this slowdown factored into FUCHS guidance? What does it make of how Asian OEMs are going to do moving over the course of '26?

Thank you, Sebastian. Great question. If you go back to the year 2022, on average, and you can't calculate that number, but on average, roughly, we have increased all overall our selling price by 25% in the 1 year, which I find remarkable. We also had a little bit of a volume decline in that year, and therefore, the profit was the same, which I found for such a year pretty good. To answer you that question. Competitors, I don't want to really comment on. I mean we get -- I get daily e-mails from suppliers and from competitors, but I think we deal with our task and our competition should deal with their task. At the moment, it's really to make sure you have availability for your existing customers to work on the pipeline. We have the contracts in to get the pricing through. And then it's not the time to take large volumes from competition because there's only limited availability in the market.

Sebastian, any further questions.

I had the question on the Asian OEMs as well, that's helpful firstly. And the second one is how BYD and so on looking and how FUCHS' Asian OEM business might behave?

Yes. Sorry for that. I missed that one. As we also discussed beforehand Sebastian, for us, I find that the cool tendency moving forward is that we develop in China for China. So we have a lot of business and always is mentioned BYD and NEO, those type of companies. But if you think the leading company on wind energy is China, we have -- we are the leading supplier in China. We have got all the approvals and a lot of the wind mills and wind equipment directed in India, Africa or South America comes from China. We have the approvals. We have blending plants in those countries. So we can take the Chinese approvals and supply the customers in the different countries. And therefore, we have now also what we call liaison officers out of China, sitting in the large regions, which we have to support doing business with those Chinese customers outside of China.

Dear speakers, there are no further questions for today. I would now like to hand the conference over to Andreas Schaller for any closing remarks.

Yes. Thank you very much, Nadia, and thanks to all of you for the very good questions. If you have maybe further questions later on, please do not hesitate to contact the Investor Relations team or myself. And then please be reminded of our Capital Market Day. I think we still have a couple of places left that we could allocate.

So if you're interested to come, there's a dinner on the evening of the 15th and the presentations on the 16th, please let us know, and we make sure that you get to registered for the event. And with that, I would like to wish you a nice weekend and hope to hear from you soon.

Thanks for the lively discussion and for your questions.

Thank you.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Good day ladies and gentlemen, welcome to the third quarter results 2025 analyst conference call of FUCHS SE. This conference will be recorded. [Operator Instructions]

May I now hand over to Andreas Schaller, Head of Investor Relations at FUCHS SE, who will start the meeting today. Please go ahead.

Yes. Thank you, Sharon. Good afternoon, ladies and gentlemen. This is Andreas Schaller speaking. On behalf of FUCHS SE, I wish you a very warm welcome to today's conference call on the 9 months earnings.

Before we start, maybe let me quickly introduce myself. I'm the successor of Lutz Ackermann as new Head of Investor Relations at FUCHS SE. I have almost 25 years of experience, having worked in various sectors like semiconductors, building materials and also machine building. And now I'm at the company that supplies all these sectors with very innovative lubricants. So I'm very happy to be here and look forward to discuss the FUCHS equity story with you and support you together with my team whenever you have questions.

With me on the call today are our CEO, Stefan Fuchs; and our CFO, Esma Saglik. As always, Esma and Stefan will lead you through the presentation, followed by a Q&A session. We also have the Investor Relations team here with us. So Theresa Landau; and Niclas Neff. And actually, it's Niclas's birthday today. So happy birthday, Niclas.

Yes, all the documents to this call, you can find on our web pages, and you've seen that you have them in front of you. Please be also aware of our disclaimer on the last page of the presentation.

And now it's my pleasure to hand over to Esma. Please go ahead.

Thank you, Andreas. And first of all, happy birthday to you, Niclas. And secondly, Andreas, great to have you here and welcome you on board actually. We are really looking forward to work with you.

So -- but let's go and talk about our financial highlights for the third quarter. After a tough second quarter, we saw a strong recovery in Q3. But still, the environment is challenging, especially in Europe, where the demand remains weak. Mainly uncertainty in the market overall continues. Despite all the volatility, we managed to grow our business, both organically and through acquisitions.

Sales rose by 1% to EUR 2.7 billion. Currency effects had a negative impact of EUR 51 million, mainly due to the stronger euro versus the U.S. and Australian dollar and the Chinese renminbi.

EBIT also developed positively in Q3, even exceeding last year's Q3 results. After 9 months, we reached a profitability of EUR 326 million, which is EUR 8 million or 2% below the prior year. So what were the key drivers? It was a strong business mix, especially in North America, continued growth in Asia, here to mention China and the first effects from our cost measure initiatives we have initiated a quarter ago.

Our free cash flow came in at EUR 181 million, which is a solid result. So all in all, we are on track, and that's why we confirm our 2025 outlook as communicated in July.

On the next slide, you can see the sales development by quarter. Compared to the previous quarter, sales increased by around 2% to EUR 869 million (sic) [ EUR 896 million ]. The growth came from all regions. However, if we compare it to Q3 last year, sales are down by EUR 6 million. This decline is mainly due to negative currency effects impacting the quarter by EUR 32 million. As we all know, the euro continued to get stronger in Q3, which led to a higher FX impact than in the first half of the year. Looking ahead, we expect Q4 revenues to remain broadly in line with our prior year.

Let's move to the next slide and take a look at EBIT on a quarterly basis. The picture has changed compared to the last quarter, which is actually a good signal. We can see an improvement of 16% in EBIT sequentially, and we are even slightly above our strong third quarter of last year.

For the last quarter, we expect EBIT to develop in line with our expectations, which would bring profitability to almost the same level as last year. Having a look to our group sales development, we are actually happy to see sales growing year-over-year and this both organically and through acquisitions, despite the tough market conditions we are facing right now.

As of September, sales reached EUR 2.7 billion. That's a year-over-year increase, as mentioned, of 1% or EUR 34 million in absolute terms. Both organic growth and acquisitions were contributing equally to this positive development. The organic growth came mainly from Asia Pacific and the Americas, which is underlining the strength of our local-to-local strategy and the strategic investments we have made over the past years. The growth of these 2 regions was even being able to offset the moderate organic decline we have seen in EMEA.

On the external growth side, our acquisitions, especially LUBCON and STRUB, now FUCHS SWISS LUBRICANTS made a strong contribution. Further additions came from BOSS and IRMCO, both being a part of FUCHS since beginning of this year.

As you possibly read in the news, early October, we expanded our presence in Switzerland by acquiring our long-standing distribution partner, ASEOL SUISSE AG. This company will be merged into FUCHS SWISS LUBRICANTS by the end of the year. Despite all the good development at the top-line, unfortunately, a part of the growth got offset by negative currency effects.

Taking a closer look at some of our KPIs about sales and EBIT, we have talked already. Looking to our gross margin, we see a steady improvement. Year-to-date, our gross margin stands at 34.9%, which is above last year. On the other hand, our functional costs increased also, mainly due to recent acquisitions we made, inflationary cost increases and onetime investments we did for new customer projects.

Some of these costs are one-off costs or pre-investments, which will be -- which will normalize throughout the year. However, the rising cost base due to inflation still needs to be taken or needs to get closer attention. To manage this development, we have introduced cost control measures as we have announced also in our last call, of which we could see positive effects in Q3. So far, EBIT is down 2% year-over-year. But towards the year-end, we expect to reach prior year levels.

Our key balance sheet indicators are on track. As of September, free cash flow reached EUR 181 million and both CapEx and the change in net working capital are almost in line with last year. So looking into the regions, in EMEA, the main growth driver are our acquisitions, which successfully offset the organic decline. The decline in organic sales is mainly due to the challenging economic situation in Europe, here, especially the weak automotive manufacturing sector.

On the positive side, the acquisitions supported not only on the sales growth, but also contributed positively to earnings. I think it's also worth to mention that by the end of Q3, total profitability in EMEA was slightly above the prior year's level. I think that's a good sign despite all the difficult market environment we are facing in Europe.

Moving over to Asia. The main growth driver in the region was clearly China, which showed an excellent result. Our decision to invest in local production is really paying off. India also gained momentum and grew faster, while Australia continued its positive trend, especially supported by solid growth in the automotive aftermarket segment. All of this together led to a profitability increase of 17% year-over-year. So in summary, the development in Asia Pacific is very positive and clearly confirms the strength and the potential of our regional strategy.

Now coming to North and South America. As we all know, the region has been a bit volatile in recent months, mainly due to ramp-up activities and the unfavorable product. After a challenging Q2, we saw positive momentum in Q3. Sales increased compared to the previous quarter and EBIT improved, reaching its strongest level so far in 2025. The main drivers are a better product mix and the improved cost base we are seeing in the U.S. The one-off costs related to the Mercedes business are largely behind us and volumes are ramping up, which is a positive sign. So in summary, year-to-date, sales are up 2% and profitability is recovering.

Now turning to the development to our net liquidity. Earnings after tax were close to last year's level. CapEx was in line with our expectations and the contribution from net operating working capital was also roughly on prior year level. As a result, free cash flow before acquisitions reached EUR 181 million by the end of September. However, despite the solid operating cash flow, dividend payments and acquisitions led to a cash outflow, which reduced net liquidity to EUR 30 million.

On the next slide, we take a closer look at the quarterly development of our working capital. Overall, we see the usual seasonal pattern, an increase over the course of the year, followed by a reduction towards the year-end. The increase in Q3 is actually cutoff related. Inventory increased to prepare for a stronger sales month like October and November.

Positive to note is that we managed to improve net working capital compared to last year, both in absolute terms and also as a percentage of sales. For the fourth quarter, we expect a typical seasonal decline in working capital as we move towards the year-end.

Now a quick look at raw materials. For base oil, we saw only minor price movements in the past quarter. Euro-dollar currency effects are positively contributing. Looking ahead, base oil prices are expected to soften slightly.

When it comes to the additive packages, prices remained broadly stable during Q3. But here as well, we expect a slight softening in the near future. However, developments around tariffs and current exchange rates remain uncertain and should be monitored closely as they could still have an impact on the material prices.

As you know, in July, we have adjusted our outlook, which we confirm now again. We expect sales to remain at the same level as last year, slightly higher in volume, but balanced out by currency headwinds. For EBIT and our FVA, we expect 2025 to close at a strong level as 2024. When it comes to the free cash flow before acquisitions, we assume a normalization after last year's exceptional results and expect to land at around EUR 260 million.

So in summary, 2025 is expected to end at a similar level as last year, which is a solid result, especially considering the high uncertainty in today's market. We are confident about our future because we have a strong business foundation, resilient structures and above all, very committed and motivated teams. But at the same time, the market environment remains uncertain. So therefore, we have to watch closely the market developments and be prepared to any potential headwinds.

With that being said, I come to the end of my financial presentation, and I would like to hand over to Stefan.

Thank you very much, Esma. Before we enter your questions, and we will answer a few slides about news from the FUCHS world since we met the last time. And I think the first part, Esma already mentioned, with 70 subsidiaries across the world, we were blank in Switzerland. So we had no subsidiary. We had a distributor there and Switzerland is a high-tech country. And it was very nice that when we took over LUBCON, they had a subsidiary in Switzerland, and then we acquired STRUB at the end of the year. And we have now a facility in Reiden in between Rudesheim and Basel. It's a modern facility. The building you see here on the picture is like an old, abandoned part of the property, which we will demolish moving forward. But now we have merged the 2 companies, LUBCON and STRUB and have renamed them in SWISS LUBRICANTS, and we have now also acquired the ASEOL distributorship. And all in all, we have now about 50 people on the ground, and we have revenues of CHF 20 million, which are nowadays EUR 22 million. And I think that's a good basis to grow in the future. So that was for us a really nice development.

And then in the next slide, as you all know, sustainability is very important to us. It's at the bottom of our heart. And the economic part, Esma went through, I think the third quarter was on the good old track record you know. So on the economic side, I think we do well in the current circumstances. But I want to go into the other 2 parts.

And if you go on the ecological part, the one part is lubricants themselves have a positive impact on the CO2 balance of our customers because they hinder wear and tear, but they also prohibit corrosion and many other things. They cool the electric -- they help the electric productivity. But our customers also want to know in the sheer chemistry, how much CO2 footprint is in each kilogram of the products we deliver. And we have an automated system now built in our recipes in SAP. But obviously, we need to make a couple of assumptions. And to be clear, we have them certified by the TUV Rheinland. I think we are front runner in the lubricants business that we can now tell our customers with a click on the mouse pad what the CO2 balance per kilogram is. I think that was very important for many of our customers.

And then on the social side, we have a lot of social projects around the world. So our people are there not only for making money and succession planning in the countries, but also to be a good citizen. So we have a lot of social projects in the south side of Chicago, outside of Johannesburg, in Mumbai, wherever our plants are or in Sao Paulo, and we have scholarships and things like this.

And in Germany, our flagship part is our FUCHS [indiscernible], how we call it. We do that since 26 years. And we started humble and now we have increased the amount to EUR 75,000 last year because it was the 25th Jubilee of that sponsorship award. But now, as Esma said, with the cost the volumes, we turn around each euro on marketing, on traveling, on consulting. But that part, we wanted to keep because it's very important for us and the region. And it's not only spending EUR 75,000, but it's also to provide a platform to all the people who do that and sacrifice private hours in doing social work. And as it functions, we have 50 applicants for projects, and they go through the city of Mannheim through their social welfare department. And then we actually celebrate 16 projects. There are 100 people here, the mayor of Mannheim is here, and we spend 2 hours with them, and they give us feedback what they do with the money. So it's a very emotional part, and I just wanted to share that with you. It was 2 days ago, and it's always a very nice ceremony.

Now I hand back to Esma for a last slide for an announcement, and then we are happy to enter the discussion.

Yes. And we are happy to announce our next Capital Markets Day which will take place on Thursday, April 16 next year at our headquarters here in Mannheim. This event will be a special one for us as we will officially launch our new strategic program, FUCHS 100. You all may heard already, this strategy is led by our Deputy CEO, Timo Reister, which will guide us from 2026 to 2031, the year where FUCHS will celebrate the 100 years of anniversary.

So we are very much looking forward to welcoming you here in Mannheim and sharing our vision for the future with you in person. A formal invitation will follow in the coming weeks. And I think with that being said, looking forward to see you here in Mannheim next year latest.

Okay. Now we can start with the Q&A session, please.

[Operator Instructions] And the first question today comes from the line of Sebastian Bray from Berenberg.

My first one is on the associates income line at FUCHS. So this seems to be one of the reasons why the margins have held up reasonably well year-to-date. And notably, there was quite an improvement year-on-year in Q3 results. Could you talk a little about what has improved in the equity income associates and if this could be expected to continue into Q4 and 2026?

My second question is on the organic volume growth in the Asian market. If you were to just come up with one cause that is driving this versus, let's say, 2, 3 years ago, is it that FUCHS has signed good deals with Chinese automotive manufacturers or other reasons at play?

Okay, Sebastian, thanks a lot for the question. I will start with the Chinese question, which is very important. As you know, a good part of FUCHS in Asia is China, followed by Australia, India and some other important countries. We are in China since 40 years, and we have spent the last 10 years to really make deep localization in China. So we have built our formulas based on our IP around the world. In China, WE have increased our capabilities with testing products, with developing products and our Chinese colleagues are very fast. You know the terminology of China speed, and that is also true for our colleagues, and they have developed really cool products. And then what we now do, we go with our Chinese OEM customers. And if I talk about OEM customers, they are not only in cars and trucks and construction equipment, but they are also in the machine industry, in the windmill manufacturers in all mining equipment part, we go with them internationally.

And I think that's the difference of us to many other German Middle Eastern companies because we very early on said the know-how cannot only sit in Mannheim. And we wanted to really push as one part of our FUCHS 2025 strategy, U.S. and China and the Chinese colleagues have been much faster than the U.S. colleagues. They have also done a good job, but that's the main reason.

Okay. And in regards, Sebastian, to your question of our development of the at equity it's actually coming to good business partnering, let's say from Middle East, especially. And yes, we expect here also going forward an improve.

Your next question comes from the line of Constantin Hesse from Jefferies.

First of all, Niclas, happy birthday. And turning over to the questions. Look, number one would be visibility in '25, right? I think that it goes without saying that you did surprise us with the guidance cut back in July because of a very weak June despite previously having been talked about that momentum remained relatively okay. So I'm just wondering, as we move into the end of the year, how comfortable are you that with the visibility that you have from today that we could potentially not see a worsening situation again and could potentially have to see an adjustment to the guidance or anything like that. So just in terms of visibility, how does it look like until the end of '25 as of today? That's the first question.

Thank you, Constantin. I'm very happy, especially for Jefferies because we were glad when you took over the coverage and then just you took over and made a recommendation, we had to lower our earnings outlook. So I was a little bit concerned about your mood. But honestly, we don't have yet a good visibility in 2025 moving forward. We were caught by surprise in the second quarter. My reading on that is really that we have just lost a few quarters in North America with regard to local consumption being down on the uncertainty of the tariff for the consumers of white lines, cars, barbecues, whatever we supply there. And that was the one part.

Each month is a little bit different. So we had a wonderful July. We had a terrible August. We had a very good September and trading has not changed yet, but you read the newspaper with chip shortages and other things. You never know whatever comes up in the next morning. But we are confident with our outlook. We know that we have to do a little bit better in the fourth quarter compared to last year, which we see it doable. But for us, mainly it was to hit the third quarter. That was very important. And the third quarter last year was extraordinarily high. And I think we made it this year again. And honestly, we didn't have to take the silverware out of the cupboard to show you that number.

Sounds good. So October remains a good momentum so far.

So far, but honestly, only early January, I can tell you how we close on December. But I mean, from our -- just from a normal bookkeeping, we don't expect surprises.

Sounds good. Sounds great. Look, I just want to have a bit of a conversation. And as we go, a couple of questions on -- one on Capital Markets Day, one on '26. I mean you haven't grown in '24, haven't grown in '25. If I look at '26 overall macro, right, I look at the IMF estimates, there's been some slight tiny upgrades for 2026 numbers. I think the VDMA expects a very small recovery in industrial activity going into next year. So just thinking about the building blocks into next year, without guiding, just speaking qualitative really, is there anything that from an underlying perspective, but also potentially from acquisitions that you've done this year where you could potentially see an accelerated growth profile in '26 compared to '25?

I think it's an excellent question. And if the one correction I want to make when we say we were not growing. Actually, in '25, we see a volume growth, which we have not seen for a number of years, and that's not 1% or 2%. So we are happy with it. We have -- when we saw the huge raw material increase in '21 and '22, we saw a little bit of softening in late '24, early '25 that is reflected in the selling prices. So when Esma showed you the organic growth, you have the volume growth, you have the selling price in existing business and you have the mix part of it and gaining the Mercedes contract then it's rather on the lower side. So volume growth was there this year.

The guidance for '26 was quite a battle internally. And honestly, we have very much push for rather a modest budget. For us, it was important because when we relooked in 2019, we saw the U.S.-China conflict. And then in '20 and '21, we had COVID '21, '22, we had a raw material increase of almost 70%, then we had the Russia war. So each year had something new, then Donald Trump election, then tariffs. And we have not made our internal volume budget for a number of years.

we confronted our people in the middle of this year, and we told them we have to learn to make our budget again. So we made sure that we don't have wild dreams on the volume. So each one of them was very modest on the volume internally. Esma provided us with in a positive manner, a very mean allowance for fixed cost increase, and they have all budgeted accordingly. And for me, that's a much better budget because to allow for more spending is an easy exercise. So I think for us internally, it was important really not to allow for dreaming on the top-line, but to make sure we are realistic. I think for FUCHS 2025, we have a number of initiatives going on where we have the business model, but you never know what is happening on the other side. So the volatility is out in the market, but that's a little bit on the basis. I have seen a first time for last night at [indiscernible], but I can't share anything more than that.

Fair enough. That makes sense. Then maybe just on the Capital Markets Day, talking about the target format, right? I mean historically, you've typically given an EBIT target. I'm just wondering going into this one, is there going to be a roughly -- is this the idea to be basically a similar target? Or are you expecting to provide the market with something different?

I think we will have a target, but the one thing is we will condition the target, what we have not done the last time. And then we will review the target most likely each year and discuss it with you and then correct it down or up, however we are going. But it will be very much conditioned because the last time we just put a number out. And yes, I think what we have delivered last year and hopefully delivered this year is on the current circumstances, not a bad result. It doesn't fulfill our own aspirations, and it didn't fulfill what we were looking forward with FUCHS 2025. But let us discuss it internally, put it to paper. We discussed it also with our Supervisory Board and with our government [indiscernible] we have a whole time line behind and then in the middle of April, we will share and discuss.

Your next question comes from the line of Michael Schaefer from ODDO BHF.

My 3 questions. And so the first one, I want to come back to APAC growth, which you have shown in Q3 and give a bit more -- maybe a bit more color basically what you really understand on specialties being the key growth components. And maybe looking into '26, so is there -- so what's the kind of growth pattern we should expect, which you have maybe already in the books in terms of OEM model wins and things like that? Any color on the kind of sustainability of the growth trends, which we have strongly seen in '25, which I think is rather triple the growth which you have shown in '24 so far. Any color would be helpful on that one.

And the second one is you elaborated on the U.S. market showing a nice catch-up in Q3 compared to a rather challenging Q2. So where are we there now? Is this kind of normal run rate which you have now achieved? Or how should we think about this one going into the fourth quarter?

And lastly, third question, on the raw materials outlook, Esma, you flagged basically your expectations for also a decline in the lube additives space and then also on top of the base oil slight decline. So where does this come from this view on lower additive costs? Is this something which you have already signed and in your books? Or just a bit of knowledge on that one.

I can maybe comment a little bit on the raw material thing. We don't see a material decline coming up on base oils or additives. I would be a little bit careful. And as I've explained to you before, we do half of our stuff more or less related to the dollar, most likely, but half is foreign currencies. And if your currency weakens in South Africa, Australia or China, your raw material costs increase in those numbers. And that more than offtakes if you have a dollar nominated decrease in base oils in Europe. And all in all, if I have to make it a [indiscernible] little softer than a little higher, but we don't see such a material change. So -- and if you look at our gross margin, I mean, we have increased that again now a little bit in the third quarter, but in our comfort zone, knowing the mix of business. But on APAC and then North America [indiscernible].

Let me start first with North America because that was actually in Q2 a bit of pain point. If you recall it right, in July, I was saying, first of all, we have the inflated results in North America for the first half. We had a ramp-up of the Mercedes business. We had one-off topics. And now we are seeing actually that they are phasing out.

And if you say, is it -- is that now the run rate? No. On the other hand, what we are seeing right now that our specialty business sequentially is picking up. It's not on the level where we have been last year, but the market is slowly picking up on that end as well. So for Q4, our expectation would be at least Americas being on the run rate of Q3, maybe even slightly higher. And that would be actually the average run rate what we would expect for Americas going forward.

If it comes to APAC and the growth components, I mean, we mentioned specialty segments, as we all know one of our main growth drivers we are having in China is the wind business. And as of a fact, that one is growing locally, but with the OEMs on site and also in the automotive, we are expecting actually to grow with the OEMs and the producers outsource outside of China. And that's the growth path we are seeing in China going forward.

[Operator Instructions] And your next question today comes from the line of Martin Roediger from Kepler Cheuvreux.

My 2 questions. The first is a clarification question to Esma Saglik. You said in your speech about the outlook that you expect profitability to be almost at last year's level. And then you said EBIT in 2025 will be on a similar level as of 2025. Do you want to convey that EBIT might be slightly below last year's level of EUR 434 million -- that's my first one.

The second question is to Stefan Fuchs. You have significant exposure to the automotive industry, and you mentioned already the supply shortage of chips from Nexperia. And we hear some car producers implementing short-time work because of these supply issues. Do you think this could become a concern for you?

Let me maybe first start, Stefan, in regards of the similar and maybe and might be. Frankly speaking, Martin, it can be also slightly above instead of being below. And so it's difficult to say -- we say -- let me say it this way. We say we will be on the level of last year. And it was a wording which I was using because I can never say if the dot and comma will actually -- we will achieve. And that was the reason why I phrased this accordingly.

On the car exposure, as you know, 25% of our business is with trade and automotive aftermarket, which has nothing to do with any car manufacturing. All the chips which are of those cars needing an oil change are already in those cars. When it comes to a major shutdown of the German car industry, obviously, we will also have a dampening impact. But we don't see that at the moment because we supply a lot of grease in those cars, we supply a lot of [indiscernible] in those cars. But I don't see a shutdown coming up like we have seen during COVID. But obviously, there are many other risks you can name, which could still derail our outlook, which are not known yet, but so far, no impact.

We will now take the next question, and the question comes from the line of Anil Shenoy from Barclays.

I've got 2, please. The first one is on cost-cutting measures, which you spoke of. So you said that you've seen the initial impact of the cost-cutting measures in Q3. So does that mean that we will see the full impact in Q4, which in turn would imply that there will probably be a higher contribution of cost -- from these cost-cutting measures in Q4? And also, if you could give some color on the nature of this cost...

Apologies, Anil, your line is very quiet.

Sorry, can you hear me now?

You're still a little bit quiet.

Sorry, any chance you can hear me now?

Okay. Yes, yes.

Right. Sorry. So I had 2 questions. One on -- the first one was on cost-cutting measures. You spoke of seeing the initial impact of these cost-cutting measures in Q3. So does that mean we'll see the full impact in Q4, which in turn would imply that there will be a higher contribution from cost cuts in Q4 compared to that of Q3? And also, if you could give us some color on the nature of these cost-cutting measures, please. I'm just trying to understand if these costs are expected to come back in 2026? Or is there any chance that there are more scopes for more cost cutting if macro conditions do not improve in 2026? So that's my first question.

And secondly, and I'm sorry if I missed this, have you lowered the bonus provisions for 2025, given that you had to cut your guidance in Q2? And if you have, then have that by any chance benefited the Q3 results? And could that benefit Q4 results as well? So that's all I have for now.

Anil, maybe let me start with your first question. So the last time when we got the question, we said actually the nature of our cost measure program is around lower double digit. We do not -- we started this package or actually, we started about talking cost measures and reducing it already in May, June. So we are seeing a quite significant impact already in Q3. And I would expect, and that's actually how we face it, more or less balancing or having the same amount also in Q4.

Coming to your second question, initially, I think it was last quarter, I also stated that we are not doing results by reversing bonuses, et cetera. So far, our KPIs are on the level as last year, and that's actually how our bonus is driven. And we have, as we are normally usually doing our bonuses for 9 months in. So year-over-year, you should not expect actually any pluses or minuses a big impact coming from any bonuses. And the same relates to Q4 as we are targeting or heading up achieving the 2024.

We will now take our final question for today. And the final question comes from the line of Lars Vom-Cleff from Deutsche Bank.

Well, first of all, I'm glad that you specified your Q4 EBIT outlook because when I first saw the Bloomberg headline saying that you expect profitability to be on the previous year's level for Q4 I was scratching my head how that could then work with reaching our guidance, but that is clearly understood now.

Looking at Q3 and EMEA, profitability was nicely up. Revenue were flat. I guess some of these positive effects were also already coming from the cost avoidance measures, especially in EMEA, correct?

Yes, that's correct.

But you also noted in EMEA, all the equity results where you get EMEA [indiscernible] yes, correct.

Okay. Perfect. And then looking at the split of the EBIT by division, I saw that holding and consolidation EBIT for the first 9 months was EUR 3 million, and I know it was a EUR 3 million positive contribution in H1. So holding and consolidation must have been minus EUR 6 million in Q3. Is this cost for the implementation of these measures? Or am I missing anything?

Lars, you gave the answer already. It is actually related to our transform to grow project and which is sitting there right now.

And that was it? Or is there anything additional to come in Q4 or maybe early '26?

You mean from the cost base there?

From the cost side, yes, yes, not...

We are running this project, but it's on budget. And yes, it will be actually a project for the next years, which -- and the cost will evolve accordingly.

The cost for the implementation or the reduction of your production costs?

No, the cost of the implementation.

Okay. Okay. Understood. And yes, I mean, you call it targeted cost avoidance measures, but I guess you already gave the answer. To a certain extent, I was afraid or I was worried that this could also be partly a postponement of costs into the next years, but you're more or less not only avoiding the costs, but also taking them out as I take it or cancel these costs.

Yes. Lars, I mean, what are we doing is of course, being a bit more cautious if everything what we are spending right now is really needed to be spent. And if you look at travel, if you look to consulting fees, et cetera, that will not bounce back again. It's just not the spend we are doing right now.

Understood. And then last one, net working -- or net operating working capital to annualized sales revenues, you guided for a range or had a target range of 21% to 22% in the past. Is that still valid? Because you haven't achieved that for the last 2 years now?

That's a fair question. And I'll see it the same way as you from a CFO perspective, and that will be also our guidance going forward. Of course, we have to see our setups, et cetera. But nevertheless, that should be actually what we should target for.

That was our final question for today. I will now hand the call back to Andreas for closing remarks.

Yes. Thank you very much, Sharon, and thank you very much to all of you for your interest in our company and the earnings and for your questions. We look forward very much to seeing hopefully all of you then at our Capital Markets Day next year. And the next earnings publication will be on March 20 when we publish the full year results. So thank you once again for your interest. If you have further questions, don't hesitate to contact the Investor Relations team, and you may now disconnect. Thank you very much.

Thank you. This concludes today's conference call. Thank you for participating. You may all now disconnect.