Fuchs SE

Dear ladies and gentlemen, welcome to the half-year results 2026 analyst conference call of Fuchs SE. This conference call will be recorded. As a reminder, all participants will be in listen-only mode. After the presentation, there will be opportunity for the analysts 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, 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 pre-announced 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 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. Hello, and also a very warm welcome from myself. I will now walk you through our financial performance for the first half of 2026, starting with a key highlight. 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 2 billion euros. 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 a strong earnings. EBIT reached €260 million, which is €51 million above last year and an increase of 24%. Our free cash flow before acquisition came in at 61 million. This is below the prior year level of 81 million euros. The main reason is the inflation driven build up 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 needs. Now, turning to the next slide, let me briefly comment on the quarterly sales. In Q2, our sales were very strong and reached 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 one third of the growth came from growing our business. Another third came from pre-buying effects. And the remaining part came from customer turning to us because other suppliers were short on raw materials and not capable to deliver. So overall, this development shows two things. First, we have a robust market position and demand for our products as well. And second, our broad sourcing network helps us to supply our customers reliably in the difficult market. 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 200 million euros, or 12%. This growth was mainly volume-driven and came from all regions. In the first two 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 €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 €26 million, or minus 2%. Here, the main burden came from America and Asia Pacific. However, the negative ethics 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 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 our region. But we should also keep in mind that Q2 last year was relatively weak. especially in America, where the business was affected by uncertainties around the tariffs. 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 20 million euros. This was mainly driven by higher sales and R&D expenses, as well as one-off effects in other operating incomes and expenses. The positive one-time gain from the sale of land 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 139 million euros. reflecting the strong inflationary-driven build-up. As a result, free cash flow before acquisition 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 earning growth and delivered a solid free cash flow despite the headwind 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 have expanded sales. We saw particular strong contributions from Germany, South Africa, Poland, Italy, and the UK. 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 30 years. EBIT increased by 15 million or 14%. Almost all countries were above previous year EBIT level. The EBIT we see here includes an equity income of 3 million euros, 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 system. 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 earning. Now moving over to Asia Pacific, organic growth was strong at 14%, mainly driven by high customers. 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 six months and turned slightly positive in the second quarter. From an earnings perspective, Asia-Pacific developed very strong. EBIT increased by 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 €7 million one-off gain from the land sale in Australia, which we already recorded in July. So overall, we can see that Asia-Pacific recorded strong organic growth and a very good yield performance. Let us now turn to North and South America. Sales increased by 7% despite significant negative currency effects. 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 US dollar. However, the negative currency effects declined. Similar trend as we are seeing in Asia. EBIT in America 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 action. Now moving over to net operating working capital. Here we see a strong increase to 910 million euros, which is mainly driven by inflationary effects on inventory. As a percentage of annualized sales, net operating working capital was relatively stable at 21.36. 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 had 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 acquisition of €61 million. This was supported by strong earnings, but also reflects the inflationary build-up of Networking Capital. CapEx in the first half year was below our depreciation level. In the second quarter, we paid 160 million euros in dividends. In addition, we had the cash outflow for the full takeover of our former joint venture in Turkey. Overall, net liquidity declined from 151 million euros at the end of 2025 to €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 effects on net operating working capital. All in all, we once again proven our resilience in a volatile market environment and demonstrated We are following the developments in the Middle East closely. A few weeks ago, there seemed 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 material in the first half year. This allowed us to serve our existing customers 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 routes opened 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 extrapolated. Part of the volume growth was driven by pre-buying and this will likely revert 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 460 to 480 million euros. This is an increase compared to our previous guidance, which was around 450 million. As a consequence, for our SEA, we now expect a moderate improvement above the prior year. This reflects the higher earning expectations, even though capital employed is also increasing. For sales, we continue to expect a figure significantly above 3.7 billion This remains unchanged compared to our Q1 output. Free cash flow before acquisition is still expected to be significantly below €270 million. This is also unchanged compared with our Q1 output and mainly reflects the strong increase in net operating working capital due to raw material cost inflation and higher sales. 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 month, 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 adjustment. We are confident that we will manage the situation well as we did in 2021 and 2022. And with that, I am at the 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 three 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, you know, 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, you know, we can supply the whole range from standard products in high volumes to really my new volumes I think that's really cool and obviously you know many of our key customers also appreciate books for that and there you can see that with our customers John Deere you know for example which we follow through since many many decades we were winning the the third John Deere supplier award which made us very very you know proud and they see also benefit in in getting you know all they need from partners like Fuchs. If you move on you know on the people front we always say it is all about the people and then many of you remember you know 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 celebrate it 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 than 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 5W30, a 0W20 and on the far right you can see a 0W20ACT which is for us advanced circular technology so by using circular raw materials we can prove to our customers that we can say significant CO2. That brings us to the end of our presentation. and we are looking forward to the Q&A session.

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.

Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star 1 1 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 1 1 again. List and Bar will compile the Q&A role studies. We'll take a few moments. And now we're going to take our first question. And the first question comes from Michael Schafer, OdoBHF. Your line is open. Please ask your question.

Yeah, thanks for taking my question, Michael Schafer from OdoBHF. So I wonder who joined the HIROX event, by the way, on the Fuchs 100. On my questions, first one, coming back to the plant accident, which you 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. Do we have any kind of visibility when production restart and when the plant will be So what happened there? 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 a 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 if all would fall away, it is... Thank you very much. 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 Trump 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. 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. Okay, thank you.

Thank you. Now we're going to take our next question. And our next question comes from Angelina Glazova from JP Morgan. Your line is open. Please ask a question.

Good afternoon and thank you very much for taking my questions. 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're still confirming that that guidance range provided last week, even though the last year it was one and a half percent 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're aiming to continue servicing the customers more from other assets? And if you have at this stage any estimates 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 audiobooks that you have at this stage, I'm more curious to understand whether your comments as part of the guidance, which is that temporary effects such as pre-buying and where other competitors 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.

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 a joint venture and we are in the minority with 32% and in the adequacy results, what you are seeing for annualized, around two-thirds is coming from Saudi Arabia. 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 ones. So all in all, like we have written in our press release, it is the 1.5%. And we do not expect that this will have any implications for the bank.

I follow up on the current development and on the order books. you know 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 you know I only have the one or the other you know feedback from our colleagues but Let July be July, but then you still have 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 six months, I mean, we had an 11% sales growth, which we know was... was based on a significant volume growth in all three world regions. The one part which is taking business from competitors who were not able to supply and in certain parts we will definitely keep. Also I think customers will witness that Fuchs is A very transparent and B very much active in order to keep them going. but you will not keep all of that, but how much is difficult to say as of today.

Thank you very much.

Thank you. Now we're going to take our next question. And the next question comes from Lars von Kleff from Deutsche Bank. Your line is open. Please ask your question.

Yes, thank you very much. Good afternoon. 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 pre-ordering by customers in order to keep the materials 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 pre-ordering 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 you know comment Esma made earlier on with that type of a sales volume increase you know the cost increase was pretty limited so we are trying hard to make it all happen but it's not that we have you know Everything is rightfully available. Group Wall and Group 2 base oils have eased a little bit. On the Group 3 base oils, polyalcoholic beans, 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, thank you. And then maybe shifting to input prices from availability, you indicated, I think lastly on the Q1 call, that you're 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?

There's also the $3 million question, Lars. If you look back in 2021 and 2022, and I said this statement over and over again, there's always a running behind impact. When raw materials increase, especially when they jump, you run behind for a certain amount of time. And in 2021 and 2022, 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 there is a peace treaty. But as we all watch the news at the moment, there seems to be more and more parties involved in more countries. So I think it's not yet over, you know, from availability and from pricing actions. It's a very dynamic picture. That's all I can say.

Understood and fair enough. Thank you very much. I'll go back into the line. Thank you.

Thank you. Now we're going to take our next question. And the question comes line of Anil Shenoy from Buckley. If your line is open, please ask your question.

Yeah, hi. Good afternoon, everyone, and thanks so much for taking my questions. Just the two, 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, six 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 one-third from growing the business, one-third from pre-buying, and one-third 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 won from your competitors, they may continue. So if you could give us some color on that please. Thank you.

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 yet. 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. Therefore, you know, the year 2026 must be seen as a whole. The big question is, you know, how much from the volumes we have taken on additionally, you know, 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, the impact of the pre-buying is equalized with more volume in the first half, less volume in the second half. And therefore, my warning to all, my advice to all of you is don't take the second half. If you calculate 460 to 480 minus 260 and you come to 200 to 220 as the basis for future earnings, because that doesn't reflect the true picture. All 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. Thank you so much.

Thank you.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 1-1 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 1-1 again. And now we're going to take our next question. And the question comes from Julia Winckelmann from Bank of America. Your line is open. Please ask your question.

Hi, thank you for taking my question. So the first one is on the pricing mechanism, like structures. I wanted to ask if they are different across the site. So is there any difference across the three 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 and cooling fluids for EVs or even data centers or the medical and food grade application or potentially any benefits from the German industrial spending increase. That would be helpful. Thank you.

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, you know, very large industrial customers, very large OEM customers in the automotive side, very large mining houses. They are on price variation clauses in all three world regions. And we have different clauses based on different currencies, different import duty models, etc. And roundabout, I would say, 25 to 30 percent of our business is built on those price variation clauses. From the volume trends it's really across all world regions and that I think is very important and it's not only the three large countries but also our smaller companies. 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 it 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 tariffs 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 From a project timeline perspective, this year we plan to finalize our campus, set the system up, test it, and our first goal life 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 a plan for it. The majority of the cost of the global template is in the capitalization mode. From next year's perspective, 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 for six months, we will see the first benefits of the harvest in the region. But nevertheless, the whole project is set for four years. And the main implication and benefits of the project will be, of course, that everyone is on the global system. And yeah, that's the update I can give for now. Thank you.

Thank you. Now we're going to take our next question. And the question comes from Martin Rodiger from Kepler Chevro. Your line is open. Please ask your question.

Hello. Good afternoon. I have three 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? So, first one.

You want to answer, Martin?

I'll wait for your answer. Oh, okay. Okay. If I...

Positive. Next one, please, Martin.

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

Thank you. And the final question is on the coding 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 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 the business. but there's also heavy competition. I would say there are probably better opportunities and as many as we have. Look at our six focus areas. It's something we go after but it's not as big as many of you all sometimes might think. Okay, thank you very much.

Thank you. And now we're going to take our final question for today. And the question comes from Sebastian Brey from Berenberg. Your line is open. Please ask your question.

Hello.

Good afternoon, and thank you for taking my questions. I have two, 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 than 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? Thank you.

Okay, Sebastian, thank you for your question, and let me start actually with the runway and the profitability in regards to the OFT. 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, I mean, we have to integrate certain things as well in our group environment. So there will be smaller amounts of startup or actually integration costs still going on in the second half here, 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 that this is a high-inflation country, which is actually still accountable on a high-inflation basis. 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 world.

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, you know, it was on the organic side, it was... 17%, I think, 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. That's helpful. Thank you.

Thank you. Dear speakers, there are no further questions for today. I'm not allowed to hand the conference over to the management team for any closing remarks.

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. 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, you want to add something?

No, thank you very much for your attendance at 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 say we just have to watch the situation, but I think we are in good shape.

Thank you very much.

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

Thank you. Thank you.