Fuchs SE

Ladies and gentlemen, welcome to the First Quarter Results 2026 Analyst Conference Call for Fuchs SE. This conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity for the analyst of Fuchs to ask questions. 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 on the results of the first quarter 2026. With me on the call today is our CEO, Stefan Fuchs, and our CFO, Esmal Zaglik, and the IR team with Teresa Landau and Maximilian Seidel. Maximilian is the successor of Niklas and is with us since two 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 two 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. We 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 $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 hedging. Our EBIT came in at $125 million, up by $17 million, or 16% versus last year, which marks another new quarterly record. Additionally, it also underlines the quality of our earning and the effectiveness of our cost. Pre-cash flow before acquisition was very solid at $54 million, an improvement of $37 million year-on-year, and this despite usual seasonal build-up in net operating working capital during Q1. Earnings per share increased by 15% to 68 cents per share. Now, turning to the next slide, let me briefly comment on quarterly sales. As usual, you see a seasonal increase quarter on quarter, which is fully in line with prior years. Nevertheless, sequential sales grow by 8%, and at the same time, sales year over year increase, by 1%. Let me have a closer look at the main drivers behind our sales development. Sales in Q1 reached $934 million at that 1% up year over year. At the first glance, this looks rather modest. But the underlying performance was much stronger. Organic growth continued, organic growth contributed 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 Azurlin 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 quarterly basis, we see the same seasonal pattern. However, what stands out is the strong EBIT improvement by over 15% both year over year at quarter over quarter. With 125 million, EBIT marked a 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 $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 two quarters. Functional cost declined by $7 million. This was mainly driven by the gain from the Australian land sale. As a result, EBIT reached $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 it's 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 remains stable and unchanged compared to the end of last year or last quarter. Finally, free cash flow before acquisitions was very solid with $54 million, an increase of $37 million year-on-year. Then 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 came from South Africa, Germany, Poland, Italy, and the UK. External growth was supported by the acquisition from our former distribution partner, Asiol, 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 remains 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 266 million. From a profitability perspective, the region developed very well. EBIT increased by 38%, with China and Australia being the main drivers. That said, the Asia-Pacific results include the 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 US 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 Irmkul. EBIT declined by 2 million, and that mainly due to negative ethics effects. We also saw positive business development in South America. Overall, the operational performance of the region It's more solid, and we expect FX effects in South America to fade after Q2. In summary, America's delivered a solid operational performance, which unfortunately was offset by currency headings. 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 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 52 million to 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 OPEX Foods. 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 development. As mentioned during our capital market day, since the conflict in the Middle East, oil and petrochemical supply chains have come under pressure. High crude prices, longer transport routes, and rising logistic costs are putting pressure on input costs, 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 global economy or supply chains, we update our outlook as follows. We now expect sales to increase significantly above $3.7 billion driven by price increases. 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 OPAT books acquisition, which we expect to close this week. And we have considered two-thirds of their annualized sales of $100 million. Our EBIT guidance remains unchanged at around $450 million. We expect to offset raw material inflation by pricing. With 125 million EBIT in Q1, we have laid a solid foundation. However, this figure should please not be annualized as Q1 includes the 7 million one-off gains. In Q2, we expect further one-offs related to OPEC folks, which will broadly offset the positive effect from Q1 in the P&L, but without cash assets. Please take into account when you are modeling your 2026 full-year numbers. FBA is now expected at slightly below $250 million, reflecting higher capital employed costs. Free cash flow before acquisition is expected to be significantly below $217 million, mainly due to inflation-driven working capitalism. For cash, the reduction should be modeled consistently with our sales price reduction. 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 six volatile years. With our FOX 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.