Dear ladies and gentlemen, welcome to the analyst conference call of Fuchs Petrolub SE. At our customer's request, 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 to ask questions for analysts. If any participants have difficulty hearing the conference, please press star, then zero on your telephone for operator assistance. May I now hand you over to Lutz Ackermann, who will start the meeting today. Please go ahead. Yeah. Good afternoon, ladies and gentlemen. Lutz Ackermann speaking here. On behalf of Fuchs Petrolub SE, I wish you a very warm welcome to today's conference call on the half year figures. With me on the call today is Dagmar Steinert, CFO. As always, Dagmar will run you through the presentation in a second. All the documents have been uploaded on the IR section of our homepage at 7 A.M. this morning, so you can find everything there. Having said that, I would like to hand over to Fuchs Petrolub. Please go ahead. Thank you, Lutz. Good afternoon, ladies and gentlemen. I will lead you through our presentation and would like to start with chart number two. Here you have the highlights of our first half year. We had a solid first half in a really difficult market environment. Our sales are up 16% year-on-year, and that's mainly price driven. Our EBIT with EUR 180 million is down 6%, but the last year was really strong and had positive effects from the corona situation. Overall, the global crisis situation remains difficult, and it's very uncertain. Having a slight view at our outlook for the full year 2022, we upgraded somehow our sales outlook, where we said it will be now at the upper end of the range between EUR 3 billion and EUR 3.3 billion. Everything else is unchanged. I just would like to remind you of our long-term financial targets, which we published roughly four weeks ago when we had our Capital Markets Day and where we are still really confident that we are going to fulfill. I come now to chart number three, our sales development on a quarterly basis. As already said, our half year figures are up 16%. If you look at the quarterly development, Q2 2022 to the first quarter 2022, our sales are up 3%. Overall, you can see the massive impact of inflation and sales price increases. Year-over-year, the second quarter is up 16%-17%, which is in line with the full half year figures. Turning to the next page, number four, our EBIT development on a quarterly basis. Here, as already mentioned, we are below previous year figures, EUR 11 million. And on a quarterly basis, second quarter 2022 compared with the first quarter 2022, it's -6%. And quarter-over-quarter, Q2 2022 to Q2 2021, it's down 3%. I think we quite delivered. Coming to chart number five, our sales development, our sales split, first half 2021 to first half 2022. As you can see, overall, we have a strong organic growth, 12%. We have no significant external growth, and we have a tailwind from the currency side due to a weak euro. We gained 4% on the currency side. Overall, as already mentioned, our sales growth is price-driven, so we see, of course, less volume. On the next chart number six, which we have our earnings summary. With our increasing sales number, we managed that our gross profit could be increased by an absolute figure, EUR 27 million or 5% on a year-over-year basis. This 5%, of course, growth is below the sales growth, and that's due to the high price increases on the raw material side. The other functional costs are up 12%, and that's driven by especially higher freight costs, energy, and of course, significantly higher personnel costs. Overall, our earnings are down 6% year-on-year, and our EBIT margin is 11% compared with 13.5% in the previous half year. We have, compared with previous year, a lower CapEx figure. If you look at the number of our net operating working capital outflow, there you can see that this number increased. Our free cash flow before acquisition came in at EUR 0 compared to EUR 12 million in the previous year. We come later to a chart where you can see the net operating working capital development, which of course is the driver for our free cash flow. I just would like to remind you that in the last year, in the year 2021, for the full year, we reported a free cash flow before acquisition of EUR 90 million. Besides a high outflow for net operating working capital, we also had a significant one-off burden due to tax payments. Coming now to the regions, on chart seven our region EMEA. EMEA managed to increase sales by 16%, and that is again, as for the whole group, mainly price-driven. We see a strong organic growth of 15% and, of course, less currency effects as overall for the group currency is, due to the weak euro, but there are some positive currency effects from South Africa and Great Britain. We have negative effects from Poland and Sweden, but overall, it's a balanced number. We've seen within our countries in the region EMEA, most countries with double-digit growth rates. Anyhow, our EBIT is 10% lower than previous year's figure. That's especially the case in Germany, Southern Europe. Of course, we had a EUR 3 million write-off for equity stake in Africa. In our region, Asia-Pacific, on chart number eight, our sales are up 7%. That's now mainly driven by currency effects as, of course, China is a big portion of our region, Asia-Pacific, and due to the lockdowns in China as a result of the zero-COVID strategy, of course, sales are down in China. We see positive organic growth in Southeast Asia and Australia. The earnings, or the EBIT of the region with EUR 55 million is 13% lower than the very strong first half of the year 2021. There we had a lot of like catch-up effects from Corona. Of course, we have a significant lower contribution from China, but on the other hand, Southeast Asia and Australia have earnings growth. On chart number nine, North and South America, we see a strong sales growth, 34%, and of course, a very high currency effect with 13%. That's mainly North America. Here again, in this region, the organic growth is price-driven. Looking at the earn- Dear participants, please hold the line. We have some technical issues. Speakers, please, follow your presentation. You will be hearable now. Okay. Thank you. I hope you didn't miss a lot. I would now jump in at chart 10, our net operating working capital development. There you can see a significant increase in the second quarter. Here we have now in absolute numbers EUR 845 million compared with EUR 671 million by year-end 2021. These growth or increase is due to inflation, due to the price increases, which on the one hand, of course, are reflected due to our sales price increases in those figures. On the other hand, of course, on inventory, and there we not only have the inflation effect, the price, but as well, we build up some safety stocks with regard to the uncertain supply situation we're seeing. This increase of net operating working capital, of course, was a burden to our free cash flow during the quarter. Coming to page 11, just some geopolitical overall remarks, what might be uncertainties for the rest of the year. We still have the war in Ukraine. We have the developments playing out in other countries with the raw material price. We have the potential reduction of gas supply, which of course might drive the demand side. We have China's zero-COVID strategy. We have overall the uncertainty in supply chain situation, problems with raw material availability, and of course, supply chain disruptions on the customer side, of course, affect demand. Going to page 12 to give you a high-level overview about the price development on the raw material side. The red line is the crude oil, but we don't buy crude oil. Anyhow, as you can see, crude oil, the dates are as of July 19, there it went up. What does that mean for our like, base oil supply? That are the like, blue lines, where you can follow the development. Of course, you see significant increases from the beginning of the year and, on the other hand, looking at SN 150 in Europe, slightly came down by the, yeah, mid of July. On the other hand, Asia, SN 150 is still way up, and in the US it somehow leveled out. Overall, what do we expect for the, yeah, time to come for the rest of the year? We still see the possibility of more increases, like increases from base oil as well as on development. Next, I would like to turn to page number 13 to our outlook for the rest of the year. As already mentioned, looking at the sales, we see this high inflation. Of course, that is the reason why we now see our sales at the upper end of the range of EUR 3 billion-EUR 3.3 billion. All the other outlook figures are unchanged. We stick to our earnings outlook of at least the EPS of EUR 3.11, which is the lower end of the range between 360-399. Of course, will be below prior year according to our EBITDA outlook. As we, of course, increase our capital employed and therefore our cost of capital due to the increase of net operating working capital. Our free cash flow before acquisition will be free cash flow in the first half of the year. We managed as well in the previous year, in 2021, to generate quite a lot of cash flow in that second half. With that, I would like to finish my short presentation, and I'm, you know, happy to answer all your questions. Go ahead. Ladies and gentlemen, if you have a question for our speaker, please dial a zero and two on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. The first question is from Markus Meyer, Baader Bank. Your line is now open. Yeah. Good afternoon, Lutz Ackermann. I have two questions, if I may. The first one is on Asia-Pacific. You said that, of course, there was a significant positive currency effect. But can you shed some light on the volume effect as due to the lockdowns, there should have been several negative effects. And also here, how these developments have been normalized over the second quarter and also going into the third quarter. Second question is, in general on price increases. As you said, for most of the regions, the organic growth is mainly price-driven. How does it look like for the second half or for the third quarter in particular? Also, how was the start of July, or the start of the third quarter in the different kind of regions from the one you said? Thank you. Yeah. Thank you, Markus, for your question. I will start with the last one, how our start of July was in the third quarter. As it is, the month is not finished, it's really impossible to mention something to that. Overall, looking at the second quarter, at the development, the beginning of the second quarter was much weaker than the end of the second quarter. Price increases, your question regarding price increases in the second half, of course, we increased our prices in several, yeah, countries, overall already several times. There will be more price increases in the second half of the year. Of course, if you negotiate a price increase, it always takes some time until you see it in your P&L. Of course, we will see a higher effect of price increases in the second half, maybe compared to the first half, but we are still like running behind. Looking at the region Asia-Pacific, your question regarding volume, I mean, sales in Asia-Pacific went up 7%, and that was yeah, currency driven. There, due to China, of course, where we had really dropped yeah in the beginning of the second quarter. The volume figure or the negative volume figure is even a bit more than the sales growth. Okay. Thank you so much. The next question is from Michael Schaefer, Oddo BHF. Your line is now open. Yeah. Thanks for taking my question. Good afternoon to all of you. Sticking to the APAC question, maybe some clarification on that one. Looking isolated in the second quarter, you reported APAC down -5%. Did I got you correctly, basically, this was the only region where we've seen negative volume effects. If I take basically the negative volume you've reported on a group basis, this indicates something like a 17% volume decline in the second quarter in APAC on a standalone basis. Just a clarification whether or not this is about right. The second question is basically on the raw materials outlook. Well, looking at what you presented as kind of base oil prices, this looks like at least that currently it has seen some sort of tapering. I wonder whether you can shed some more light on how you see basically the various raw materials components evolving, maybe splitting into base oil on the one hand and maybe chemicals, what you see there, what's coming. As a follow-up, third, last but not least, on your price increase initiatives. I recall a couple of quarters ago you were very busy with implementing, let's say, new contractual structures primarily with the European client base in order to account for, let's say, diverging price trends and raw material price trends, which you haven't accounted for beforehand with your indexation. I wonder whether you can shed some more light on the progress you've made in between and how we think such thing going forward, in, you know, tracking the prices, tracking basically, the raw materials evolution more correctly. Any kind of hint would be helpful. Thank you. Mm-hmm. Yeah. Thank you, Michael, for your question. Regarding the question, volume or negative volume in the region Asia-Pacific, yes, that's the only, well, region where we have, like, negative sales or more than the increase of the currency, the favorable of the currency. Our outlook for the raw material development, to split that between base oils and additives is not that easy because, we see a different development in the different regions or in the different countries. It's of course a mixed effect. It's a question of currency and the question of availability. We expect chemical additives to still slightly increase and base oils of course. It all follows somehow supply and demand, and of course, all the geopolitical situation plays a big role. We made a lot of progress with our programs to manage and to increase prices and manage formulae. There we are on a really good way, and where we might or we still have to follow up somehow might be more the region Asia-Pacific, but there's a different price development due to different currency effects and so on. It's a different situation. It's a complex situation over the whole group, but I can assure you that our management is highly aware of that. We follow up that regularly, not only on a monthly basis, but on a weekly basis, and we make progress. Thank you very much. The next question is from Martin Roediger, Kepler Cheuvreux. Your line is now open. Yeah. Hello, good afternoon, Dagmar Steinert, Lutz Ackermann. I have three questions, and actually they are all follow-up questions from the previous two. Sorry that I have not fully understood you. On Europe, it seems to me that you have still difficulties to pass on higher raw material costs to your customers on time. Is it fair to assume that roughly three-quarters of the cost inflation has been passed on to your customers and there is still one quarter to come in Q3, or is the ratio more towards fifty-fifty? That's the first question. Well, Martin, Europe or Germany of course is more impacted by the automotive industry or automotive business. There of course it's not only the question of contracted price variation clauses where the yeah increasing base prices come in a bit later. On the other hand, there still of course is quite a weak, we note or we still see quite a weak automotive business, and therefore the earnings side in the region, EMEA, is affected by that. The second question is on the situation in China. Are the lockdowns now over? Is the business back to pre-COVID level? To which extent did the lockdowns impact your EBIT in Q2? Well, A rough indication. Yeah. Well, in China, we didn't have to shut down our own plant, but due to the lockdowns of these mega cities of course, demand was affected, and logistics was difficult and, therefore we had a significant drop in the business and we are still not back on pre-crisis level. We recover, but we are still not back on pre-crisis level. Even not in June? Pardon? No. Even not at the end of the second quarter? No, not at the end of the second quarter. Okay. Finally, on the 11% organic sales growth in the second quarter, I understood that volumes were down, so all of this 11% or more than 11% of that organic growth was price driven. Do I understand it correctly that your volumes on the group level is down by low single digit or by mid-single digit percentage rate? Well, it's mid-single digit. Okay. -percentage.t Thanks a lot. Thank you. Thank you. The next question from Riya Kotecha, Bank of America. Your line is now open. Ms. Kotecha. Hi, good afternoon. Thank you so much for taking my questions today. My first one is on your free cash flow guidance. You've maintained that versus your April 29th guidance. Can you walk us through what the moving parts are into the second half? I know you mentioned that the European base oil prices slightly dipped, but it seems like the Asian one is still ticking upwards. Do you expect that to reverse going forward? In turn, what does that mean for, say, your margin progression into the second half? That's my first question. Well, to our free cash flow guidance, I know it might be a bit annoying, but it's not very concrete. As we said, it's significantly below the original expected EUR 220 million. I mean, what we see in the first half is the massive increase in Okay. A lot is pricing, it's just inflation. Of course that is something which everybody faces. On the other hand, we increased the volume of our inventory and build up more safety stocks. To be able to produce, to deliver and with my expectation on the cash flow for regarding the second half of the year, there shouldn't be again such a massive increase in net operating working capital. It's uncertain, so I can't promise you that there will be no increase, no further increase, but definitely not the increase we've seen in the first half of the year. Of course, that something which really drives cash or our cash generation. But it's a high uncertainty. Okay, thanks. Yeah. Your question regarding the margin. Well, every margin is affected by inflation and we try to somehow make clear when we published our long-term financial targets, at this time, we look rather at absolute figures and not at a margin. Of course, margin is important, but in times of inflation, it's just mathematics that margins are squeezed. Okay, thanks. That's clear. Just another quick one on the raw materials, and the development of base oil price. If you know, they don't seem to be tracking the crude oil price one on one, what are indications that you use or follow that give you the confidence that these will sort of stabilize at the two key levels? Well, it's not a coincidence. It's just if you look at the curves, it seems like it. I mean, nobody knows what's going to happen the next weeks or months. I mean, if, for instance, Russia would like stop gas delivery, I guess it's very certain that it will somehow affect even base oil prices. It's just looking at the Sorry, I'm not sure I can hear you. Yeah, sorry, there seems to be an issue with the line. We got the speakers lost, just one moment, please. Please continue with the question and the answering of the question again. Yeah. First of all, I would like to apologize that we somehow have technical problems today. Really sorry for that. The last question was regarding from material price development to base oil price development and our expectations. It's all very uncertain, unsure. Looking at the graphs of the development in the last, you know, weeks, it almost seems they're stabilized. Having in mind the geopolitical crisis, if Russia would stop gas delivery, I'm sure it would impact somehow even base oil prices. It's just like having a spot on the raw material prices as they are. We will see how it's going on. Any additional questions from your side? Yeah, I just have one last one. Sorry, the line cut a bit, crackly, but maybe I can hear you a bit better now. My last one is with the North American division. I wanna know how the organic growth looks like versus your expectations, particularly in terms of volumes. Are you seeing sort of new orders come in? Are you successful with securing new contracts as you sort of ramp up your new capacity there? Well, we still overall have a situation in the group that we have more orders than we are able to deliver. What we noted as well is that demand overall comes simply down. Sorry, to confirm, you said that you have more orders than you expected to deliver, but you see demand coming down? Sorry, your line broke up a bit there. Well, as I said for the whole group, overall, that we still are in the situation that we are, a bit behind with our delivery, but that we as well notice that the demand is slightly coming down. Okay. Right. In North America, it's better than expected. Oh. Well, North America is the same situation. What I just mentioned, it counts for the whole group. Okay. That's clear. Thank you. So far we have no further questions. As a short reminder, if you would like to ask a question, please press zero and one on your telephone keypad. We have no further questions coming in. I hand back to you. I would like again to apologize for the technical problems. Anyhow, I hope you somehow got the information, and if not, please reach out to us, reach out to our IR team, and I wish you a great weekend. Yeah, thanks. If there's anything unclear, please don't hesitate to contact us, and looking forward to the next time. Bye-bye. Ladies and gentlemen, thank you for your attendance. This conference has been concluded. You may disconnect.