Despite a challenging 2021, sales revenues at FUCHS rise 21%

Despite a challenging 2021, Germany’s FUCHS Group reported a 21% increase in sales revenues compared to the “pandemic-dominated 2020”, even exceeding the 2019 pre-pandemic level by 12%.

The world’s largest independent manufacturer  generated sales revenues of EUR2.9 billion (USD3.2 billion) in 2021.

“We thus exceeded our original forecast for 2021 and also the result from 2019. Steep increases in raw material prices tied up a lot of funds and thus led to a free cash flow before acquisitions of EUR90 million (99.4 million).”

The reporting year was characterized by disruptions which resulted in an unprecedented shortage of raw materials (base oils and additives) and packaging materials, accompanied by sharply rising purchase prices. In addition, the shortage of semiconductors impacted on the production of its automotive customers worldwide, which potentially reduced OEM factory fill requirements.

“When seen against the backdrop of all these adversities, the gains in sales revenues and earnings achieved are gratifying,” the company said.

Despite the challenging environment, FUCHS significantly increased its sales revenues across all regions. The EMEA region saw its sales revenues climb to EUR1,710 million (USD1,889 million) in 2021, 18% higher than 2020. The region experienced significant increases in raw material prices and faced a considerable rise in transport and labor costs but fell short of the previous year’s results by just EUR2 million (USD2.2 million), reaching EBIT of EUR166 million (USD183 million). Earnings before interest and taxes (EBIT) is an indicator of a company’s profitability. 

The Asia-Pacific region, driven by China, improved its sales revenues year-on-year by EUR157 million (USD173 million), or 22%, posting EUR855 million (USD944 million). EBIT improved by 22%, or EUR22 million (USD24 million), rising to EUR122 million (USD134 million).

The North and South American region was particularly affected by the Covid-19 pandemic in 2020 and recorded declines in sales revenues, despite strong external growth. Sales revenues were further affected by currency translation losses. Nonetheless, sales revenues increased by 22% in 2021 to EUR471 million (USD520 million). With a rise of 43% compared to 2020, the increase in earnings to EUR60 million (USD66 million). FUCHS said its acquisition of U.S.-based specialty manufacturer Nye Lubricants the previous year contributed to growth in its sales revenues.

With regards to capital expenditures, FUCHS reduced its investments to EUR80 million (USD88 million) in 2021, which is 34% below the previous year. The largest individual investment was made by its parent, with the construction of a new company headquarters in Mannheim, Germany. The company said it expects to move to the new building during the first half of 2022.

Prior to the Russia-Ukraine war, the FUCHS Group projected organic growth in sales revenues from EUR3.0 billion (USD3.3 billion to EUR3.3 billion (USD3.6 billion) for 2022. This growth is premised mainly on a further rise in business volume, taking into account further increases in sales prices. As a result, FUCHS expected an EBIT of between EUR360 million (USD397 million) and EUR390 million (USD431 million). This will be achieved through “continued rigorous cost management and a sharp limitation on new hires,” the company said.

The war in the Ukraine and the sanctions already imposed on Russia, as well as a potentially worsening situation in the supply chains and the raw materials market, had not been factored into the outlook at the beginning of the year.

“We are shocked by the events in Ukraine these days. Our first concern is for the Ukrainian population and in particular our 55 Ukrainian colleagues. We condemn the Russian invasion into the Ukraine. The direct economic impact of the war in the Ukraine and the sanctions against Russia on our Ukrainian and our Russian subsidiary as well as their indirect effects on the rest of the world cannot yet be estimated,” said Stefan Fuchs, chairman of the Executive Board at FUCHS.