Fuchs Q1 Earnings Call Highlights

Key Points

• Strong Q1 despite FX headwinds: Sales were EUR 934 million (+1% y/y, +5% organic) and EBIT set a new quarterly record at EUR 125 million (+16% y/y), though results included a EUR 7 million one‑off gain and about a 4% negative currency impact.
• Higher sales outlook but conservative profits/cash guidance: Management now expects revenue to rise to “significantly above EUR 3.7 billion” (double‑digit growth, including Opet Fuchs), while EBIT guidance remains around EUR 450 million and free cash flow forecasts were reduced due to working‑capital and inflation pressures.
• Input-cost and supply risks driving price action: Elevated base‑oil and logistics costs from conflict‑related disruption have prompted price increases (more to come), and management warns supply conditions may not normalize before year‑end or even 2027.

Fuchs ETR: FPE3 reported what management described as a “very good start” to 2026, with accelerating organic growth and a new quarterly EBIT record despite significant currency headwinds. On the company’s first-quarter results call, CFO Esma Saglik said sales rose 1% year-over-year to EUR 934 million, supported by 5% organic growth that was partially offset by a roughly 4% negative currency impact.

EBIT increased 16% year-over-year to EUR 125 million, which Saglik said marked “another new quarterly record.” Earnings per share rose 15% to EUR 0.68. Free cash flow before acquisitions improved to EUR 54 million, up EUR 37 million versus the prior year, even as the company saw its typical seasonal working-capital build in the first quarter.

Quarterly performance: organic growth and margin expansion

Saglik said underlying sales performance was stronger than the headline 1% increase suggests, citing “mid to high single digit” volume growth and contributions from all regions, including “successful business wins and especially the strong demand in March.” The 2025 acquisitions of Irmco and Aziol also contributed to sales, she said.

On profitability, Saglik attributed the EBIT increase to gross margin improvement, continued cost discipline, and a one-off gain. Gross margin rose to 35.1%, an 80 basis point improvement year-over-year. Functional costs declined by EUR 7 million, “mainly driven by the gain from the Australian land sale,” she said. The property sale in Australia created a EUR 7 million one-off gain that benefited first-quarter EBIT.

Net operating working capital was 21% of annualized sales, unchanged versus the end of 2025, while net liquidity rose EUR 52 million to EUR 250 million at the end of the quarter. Saglik noted there were “no major cash out” items in Q1, while Q2 will include the dividend payment and acquisition-related cash outflows for Opet Fuchs.

Regional results: EMEA strength, Asia-Pacific profitability, FX pressure in the Americas

In EMEA, Saglik said sales increased 5% driven by organic growth and stronger March demand, with notable growth in South Africa, Germany, Poland, Italy, and the U.K. She added that external growth in the region was supported by the acquisition of its former distribution partner Aziol in Switzerland. EBIT in EMEA improved “significantly,” driven by margin expansion and volume, with Germany, Sweden, and South Africa cited as key contributors.

In Asia-Pacific, organic growth was 6%, led by China and Australia, but “strong negative currency effects almost fully offset the growth,” leaving reported sales up 1% to EUR 266 million. EBIT in the region increased 38%, with China and Australia the main drivers, though Saglik emphasized the results included the EUR 7 million one-off gain from the Australian property sale.

In North and South America, sales declined 6%, which Saglik attributed mainly to the depreciation of the U.S. dollar over the last twelve months. Organic growth was 3%, reflecting new business growth “particularly in North America,” and Irmco contributed to external growth. EBIT declined by EUR 2 million due mainly to negative FX effects. Saglik also said business development in South America was positive and that FX effects there are expected to fade after Q2.

Supply chain inflation and pricing actions

Management spent much of the call discussing raw material inflation and supply constraints linked to Middle East conflict-related disruption. Saglik said high crude prices, longer transport routes, and rising logistics costs are pressuring input costs, “especially for base oil,” adding that raw material pricing is “increasing sharply.”

To respond, Saglik said Fuchs has implemented price increases and expects further increases in Q2. She said that even if the conflict were to ease, supply conditions are “unlikely to normalize before year-end or even 2027.” While the company’s sourcing is “globally diversified,” she said Fuchs is prioritizing securing volume for existing customers and “remain[s] cautious by taking new businesses.”

CEO Stefan Fuchs told analysts the kind of panic-driven pre-buying seen at some large chemical companies is less relevant for Fuchs due to its broad product portfolio and customer base. “On over 100,000 customers and over 10,000 different products, I can’t tell you whether there was no impact,” he said, but added that building large inventories “is for us not a big deal.” He also said the company’s priority is customer supply security, and suggested Fuchs may have gained some deliveries as competitors faced constraints.

On pricing mechanisms, Stefan Fuchs said the company does not have a single standardized price variation clause, but a portion of the business uses formula-based adjustments, particularly with large mining customers and OEM or industrial customers. Andreas Schaller, Head of Investor Relations, was referenced as giving the typical estimate “around about a quarter or so” of total business under such clauses. Stefan Fuchs said the company has “significantly shortened” pricing cycle times compared to 2021 and 2022.

Updated sales outlook; EBIT guidance unchanged

Based on current market and pricing dynamics, Saglik updated the company’s sales outlook, saying Fuchs now expects revenue to increase “significantly above EUR 3.7 billion,” driven by price increases. She defined “significant” as double-digit growth, but said the company is refraining from a precise sales target because the extent of price adjustments remains uncertain.

The updated sales outlook includes the Opet Fuchs transaction, which the company expects to close imminently. Saglik said the sales figure assumes two-thirds of Opet Fuchs’ annualized EUR 100 million sales.

Despite the strong first quarter, Saglik reiterated the company’s EBIT guidance of around EUR 450 million. She cautioned that Q1 EBIT should not be annualized given the EUR 7 million one-off gain. She also said Q2 will include further one-offs related to Opet Fuchs that are expected to “broadly offset the positive effect from Q1 in the P&L,” without a cash effect.

In response to analyst questions about conservatism in the guidance, Stefan Fuchs said he would be cautious about extrapolating a record quarter due to seasonality and limited visibility on how pricing and the broader economy evolve. He discussed risks including potential demand slowdown if inflation and interest rates weigh on the economy, and a scenario where raw material prices could fall sharply after customers stock up—similar to the 2008–2009 period—while noting that in 2021–2022 raw material prices rose significantly and did not materially reverse.

Saglik also updated cash-related expectations. FVA is now expected to come in slightly below EUR 250 million due to higher capital employed costs. Free cash flow before acquisitions is expected to be “significantly below EUR 217 million,” which she attributed mainly to inflation-driven working capital risk, and she advised that cash modeling should reflect the dynamics of higher sales prices on working capital.

On strategy and corporate developments, Stefan Fuchs said the company expects to close its purchase of the remaining 50% stake in its Turkish joint venture “tomorrow,” which would move the business from equity accounting to full consolidation. He also said the company recently held a “FUCHS100 kickoff,” describing it as an evolution of the prior strategy rather than a revolution, with focus on growth as well as people and sustainability.

About Fuchs ETR: FPE3

Fuchs SE develops, produces, and sells lubricants and related specialties in Europe, the Middle East, Africa, the Asia Pacific, and North and South America. The company offers automotive lubricants, such as biodegradable lubricants, central and mobile hydraulic oils, dry coatings, engine and gear oils, motorcycle/two wheelers, and service fluids, as well as various oils for agriculture sector. It also provides industrial lubricants, including chain lubricants, dry coatings, gear and hydraulic oils, machine oils, open gear lubricants, rapidly biodegradable lubricants, compressor and refrigeration oils, release agents, slideways oils, fluids and industrial oils, textile machine oils, and turbine oils.

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