Fuchs Petrolub SE

Yes. Good afternoon, ladies and gentlemen.

This is Lutz Ackermann speaking. On behalf of Fuchs SE, I wish you a very warm welcome to today's conference call on the fiscal year release.

With me on the call today is Stefan Fuchs, CEO of Fuchs SE; and Isabelle Adelt, CFO of Fuchs SE. As always, Stefan and Isabelle will run you through the presentation.

And afterwards, we will have a Q&A session. All the documents for the call, you can find on the IR section of our home page since 7 a.m.

this morning. And yes, having said this, I would like to turn it over to Stefan.

Stefan, please go ahead.

Hi to all of you. Here is Stefan.

We can't see us, but I think I know all of you very well. I -- we are very happy to present you the 2024 numbers in all detail later.

Isabelle will do that. But I must say we had really a great year in very difficult times.

We have announced an outlook exactly 12 months ago, and we made that outlook. And if you look at the cash flow even succeeded what we anticipated because we had a very good conversion of net profit into cash flow.

And due to the share buyback and our increased EBIT, we have a 10% growth in earnings per share. I think that makes us happy.

And we also think in the current times that aiming for another record result in 2025 is also a pretty good outlook. I would like to go with you through mainly 3 parts of my presentation.

To start with, I want to go give you again one more time to the organizational changes. We have announced on March 7.

And you know about them. First of all, we have a Board with 5 Board members, and it will stay the same in the future.

You have a CEO then you have got 2 colleagues representing the regions and our sales divisions, that's Timo, he's also my Deputy and Ralph. And then we have 2 functional Board members, it's Isabelle as the CFO, including IT and is Sebastian as the CTO, and that will also remain in the future.

As we have announced on the 7th of March, Isabelle and Sebastian and the Supervisory Board together came to the conclusion not to prolong the contracts. And if you look in the German corporate law, we have normally a 5 years contract.

So we are not so-called employees, but we are appointed for a fixed share. And we have, as the first-time participant a 3-year contract and reviewing the 3 years and before heading into the plus 5 year contract, we all acknowledge that there is not a 100% fit, and I think that's what we expect moving forward.

We have prepared for that for quite a long time. If you look to date to the shareholders of our supervise Board Chairman then the Supervisory Board was involved since July of 2024.

I think there was a pretty good process. We had also a very good search firm.

Today is not the farewell well of Isabelle because she will be here also for the first quarter call and for the annual meeting with our shareholders, but I want to sincerely thank Isabelle and Sebastian for what they have come for the Fuchs. We wish them all the best moving forward.

And before I come to Esma Saglik, I will get involved in the next couple of months in the Investor Relations. I very much look forward to that.

You all know me very well over all the years. So we agree with Esma that in the first couple of months, she will focus on getting to know Fuchs and Fuchs Se getting to know Esma.

The team here in the holding and to give you adequate time I will make the visits and the conferences together with Fuchs. I must say, I really look forward to the time.

Coming to Esma, she will start in about 5 weeks' time. So on May 1.

And she has a lot of international experience coming from her previous companies. She also has IT experience, which is important to us and some of stays with [Helber], for example, it was in the automotive industry.

Rexnord is also a heavy duty industrial company from the U.S. involved in bearings and chains, but she was now with REHAU.

That's where she also lived at the moment in Ellingham. She will take an apartment here in Mannheim.

And she will have a 2-month handover with Isabelle. Isabelle has a new assignment starting in July.

So May and June will be the handover period, and I really think that's going to be a very good and smooth process moving forward. The second part is Matt Boulandet.

He is 42 years old, and he since 21 years in the lubricants industry. So he knows as being a chemist, lubricants in and out.

He spent his entire life with TOTAL ENERGIES or TOTAL ENERGIES today and with BP CASTROL. The good thing about that company is with changing jobs every 3 years is that he got to know many different countries, many different assignments, but his hard bids for the technology part for R&D, which is for us very important because we are very much into the technology, and we are involved in the processes of our customers.

So far to that part. And then I want to go really quickly with you through what we also presented at the Capital Market Day.

But I think it's very important because we get questions from many companies we know either customers or suppliers. Why do you so well in the really challenging and difficult times.

I think we see plenty of course, opportunities very often when we discuss with you and we give you an example of one application, you always say, wow, how big is that? We don't have the one blockbuster part.

So lubricants is a consumer, and we have a lot of small tile business pockets and it's a nice cash-generating business. But what we really see is when you look in the world and without any arrogancy, we say we keep daily life moving.

And if you really look at what is happening in the work, whether we have local or global or not. We have all the time more and more people on the planet.

As I said before, when I was born 57 years ago, there were like 4 billion University time, 6 billion to day 8, and we go to 10 billion in 2050. And at the same time, especially in China and India, but also in the future, I think, in Africa, A lot of people want to have a higher standard of living.

So want smartphones, they want to go to vacation, they want to use a car or they have an apartment, which means we need to produce all of those things in the world, and we have to achieve more with less. And the more with less, that's when we come into play.

And therefore, we continue to speak about lots of cost opportunities. I come to the segmentation part a little bit later.

One more time, moving your world is our company purpose. That's what drives us every day, and it's a very important purpose for us.

And if you really look again what a lubricant is doing, I don't want to be arrogant, but the lubricants are the small heroes, the invisible heroes in the world because a lot of things you use every day either need a lubricant to make them work or lubricant to manufacture them and basically, we protect services from corrosion and wear. We reduce friction and wear moving systems.

That's probably the biggest functional lubricant has to do. The cool machines and equipment, and we help to transfer energy.

And especially the lower part is a big part in the e-mobility because lubricants get in contact with equipment under high voltage. And there is copper corrosion and other things, so the electric conductivity is very, very important, and the cooling part is very important.

And without going through all the details, but we are used everywhere. A side of what you know, agriculture and mining and steel and transportation.

We are utilized in the cooling parts of the loading sockets. That's quite a big business in China, but also the cooling of a car.

You go to the entire food chain all of our key segments we want to grow. And the circle around the food processing gets bigger and bigger and if you go, for example, in a filling plant of a beer company in the U.S.

or to a Coca-Cola bottling plant in Europe, they have no interest in lubricants. All they want to make sure if we don't stop their machines and our lubricants are in line with all kind of regulations.

And we've also found out in the segmentation part that we don't want to sell only those specialties, but we want to service the customer in total. So also on standard-type lubricants and we -- I think that the market penetration gets bigger and bigger.

The other part for us, very important is wind. Wind is the biggest wind business we have in the food service in China.

It's a growing business. And in the wind turbine, you have a gear oil and you have grease.

And that's one part. We made a deep localization in China.

So we manufacture all of that over there and also a lot of Chinese equipment gets exported. And with our approvals out of China, we can sell them also in other parts of the world.

Semicon is a pretty new segment for us. Semicon, we have got 2 different applications.

The one part is in the metalworking to produce the machine. So you have trade 1 and trade 2 metalworking fluids for clean homes and really high-end applications.

But you also need a lubricant to run a Semicon producing machine. And I think that's where we also come in play.

You know we have about 30 different leases in each car. We also know that in the e-car, you hear nothing if you don't have the radio.

And in the past, you had an engine or you had a diesel but today, we need noise dampening increases. It's also something we learned from Nye.

We had some before, but we have got more now. And the noise dampening, I think, is a very cool application for us.

The other part, honestly, when I go back in my life, 15 years, the whole medical part was not such a big deal for us. Today, we see in the medical arena, we see 3 different fields.

We see number one, we see cutting and grinding fluids for titanium implants for knees and hips. We see coatings of the spring in 1x injections, either diabetes or to lose weight.

And also the equipment in the surgery room needs to be lubricated. So we have a lubricant, for example, in the Da Vinci post-head robot.

So I think it's a very interesting field for us to move forward and that was also one of the reasons to acquire POS. Last but not least, we also had one product in the mass [indiscernible] that's a nice marketing tool.

You don't get rich on that one, but it just shows that we are all over the world. What is the unique part of folks and no other competitor really has got all of those ingredients.

We are very close to our customers all over the world. So we have over 2,500 people in sales and application engineering.

We do 75% of our business direct, which is all our specialty industrial and mining business. We only sell automotive aftermarket through resellers.

We have the full product offering, which we have not really explored in all the markets. We have the best team in our industry, highly motivated, they walk the extra mile for our customers.

And I think especially today, in today's world, we are independent. We have a stable shareholder and we have no debt.

And I think that really helps for us moving forward to have that flexibility. Nevertheless, we have a balance sheet, and we are not obsessed in having no debt at all.

So we always look for acquisitions. And as most of you know, we don't see like the mega thing to be bought.

We don't see a EUR500 million or EUR1 billion acquisition. But if you look on our businesses we acquired over the last 15 years, larger acquisitions were for us in 2015 [pablo clutch] gear oil today, also the electric fluids come from that origin.

So we scaled that business through our organization, it was a German business, start oil with a regional part, which we acquired for Norway, Sweden and Denmark. Really cool was Nye because we were able to double within 5 years.

And Nye is really for us the hub for medical and Semicon applications. LUBCON is also a specialty part.

They go into the middle dense fiber board. If you look at your kitchen blades or IKEA shelf, all of that is a continuous process.

You've got big machines manufacturing those wooden fiberboard on a continuous process. They need high temperature chain oils.

They are also big in corrugated. So you know more and more Amazon stuff gets shipped to you know you need much more cartons.

So that's interesting. They are also in the railway industries or some really cool segments.

We acquired STRUB and that also looks and shows that we are always able and willing to do fast deals because STRUB was not such a good financial condition, and we could close a regional, not whole, but we were really not present in Switzerland other than through distributors. And now we have a little plant in Switzerland.

We have an R&D lab. And I think that's, for us, for the very cool part.

And then we acquired BOSS, it's rather small. They are in -- they are near the cluster where and those type of companies are home in tubing and we acquired them mainly for the medical part, but also for the high safety part like brakes and other things.

So we continue to look for acquisitions, but you see all on either strategy wise or from a regional standpoint. Then without going too deep into the exercise.

For us, Fuchs 2025 was a really cool journey. So we had a wonderful time from 2019 until today, and we were involved in culture structure strategy.

And towards the end of the year, this will be the end of FUCHS2025. And we are in the middle of fully preparing for FUCHS100 from 2026 to 2031 because we will be 100 years old in 2031.

And again, this will not be a revolution. It will rather be an evolution.

And if you look at the strategy also for you, it's mainly about segmentation. We are decentralized companies with a lot of local decision-making, high incentivation that allowed many of our MDs to either go for automotive aftermarket, food trade, metalworking and et cetera, et cetera.

And we get so excited about things that for us, focus and priority was important. So we defined about 50 segments all over the world, and we focus on 12 now.

But then we also don't allow a larger country not to focus on one of our key and core segments. I think that will allow us to grow in the future and you will see more in FUCHS100 once we approach the latter part of the second half of this year.

A few news what we published over the last couple of months in the Fuchs Group number 1 in South Africa. We did last year sales of EUR118 million.

So it's a sizable business for us. It's in South Africa, but also in South Africa, mainly around automotive, on mining specialty and also in industrial and over the last couple of years, not all in 2024.

We invested EUR26 million on the site, and we have now much more capacity to also go after larger types of businesses. So I think that was very good.

Many of the customers visiting us in South Africa are based about our setup because no other global lubricant company has such a setup like we have been and on nearby -- The other part was the acquisition of Boss. It's a smaller acquisition.

But on the left hand, you see Ralph Rheinboldt, my Board colleague, you see Mr. [indiscernible] were the founders.

So we are happy that both continue to work for us, focusing on the medical part. We want to make that to our European hub and then make like a second in Europe, of course, so that's very cool.

On the right side, you see the [indiscernible] our Managing Director in Germany. And last but not least, it's a small country, but very important for our international mining customers.

And with our today's distributor, we founded a joint venture. He owns 40%.

We own 60%. We sent over a young German colleague who is the Managing Director; and we have now a setup in Peru aside of Chile, Argentina and Brazil in South America.

And I think that's also very good for us moving forward. And my last slide is that we are happy and proud to have received the second time in a row, the Global Transition Award, which is from the renowned German newspaper from the Von Berg there is a whole jury behind and they look at us based on their catalog, we were state of art regard to reduction of Scope 1 and 2 emissions and also work in our Scope 3 emissions.

So I think that also shows that with regard to sustainability on the right way. Now, I hand over to Isabelle to go through all the numbers, and then later on, we look forward to your questions.

Thank you, and a warm welcome from my side as well. As already indicated by Stefan Fuchs beforehand, we ended 2024 with yet another record result.

Only outlined a few highlights on the fifth slide, and we'll then go into the details in the following 15 to 20 minutes. I think what we like about last year is that despite a very challenging and difficult economic environment, we managed to keep our sales flat the 0% year-over-year, you see here it's a little misleading because there's a lot of swings and roundabouts behind that number.

On the negative side, we saw price adjustments, especially driven by our price variation clauses and slight negative impact from frac exchange prevalent. But on the positive side, we saw volume growth.

So the first year with significant volume growth after rather flattish development in the last couple of years. And we saw external growth, especially contributed by the LUBCON acquisition, which we consolidated for the first time here we call in August 2024.

What we like even better was the growth we saw was highly profitable. So we managed to up our EBIT by 5% over flat sales, which means we took another step towards our midterm target of 15% EBIT margin and improved the margin compared to the year before by 0.6 percentage points.

Major positive impacts came from the mix effect so the growth we talked about earlier was majorly contributed by our specialty and automotive aftermarket segments, which are more profitable and by low raw material costs in total, but yet, our procurement department did an amazing job in renegotiating some of the contracts, which contributed nicely to our earnings, too. This resulted in a significantly higher earnings per share, 10% up year-over-year for both share classes.

Overproportionate EBIT growth since we ended our share buyback program last year, and the stock we bought back is now liquidated. Last but not least, stronger-than-expected cash conversion once again, so second T in row at 1.0 so that means our entire earnings could be converted into cash from last year.

What does that mean in detail? We are now back to our normal return in terms of cyclicity.

So Q2 is stronger than Q1, Q3 stronger than Q2 and then a little softer Q4 due to the number of working days, yet we saw a slight increase year-over-year for Q4 in sales. And we managed to confirm our EBIT we generated last year in terms of profitability.

Why was it only on prior year level, very simple answer due to the lower number of working days, especially in December, given that Christmas was in the middle of the week and all of our big countries closed down for longer, especially our customers than what we saw the year before. What does that mean for our P&L?

I think 2 highlights to take out here for me is definitely the gross profit and thus gross margin development. As already said, we had a very positive impact from mix the entire volume growth we're looking at was contributed by specialty and automotive aftermarket, which as well means we managed our OEM and industry sales on volume, sorry, on a flat level in what was a more than challenging environment last year when you read the newspapers.

It's all of our sales teams did amazing job to bring in new contracts, bringing new customers up the volume, and that's in a very profitable way, supported by procurement that resulted in a gross profit step-up of more than 2 percentage points. Part of that was then converted into additional EBIT, not to the full extent since we still have to somehow bear with high increases in personnel expenses.

Thus, we are still very careful in adding new people. The head count increases you saw last year was majorly due to acquisitions and head count in source from formerly external providers.

We are still very careful in terms of adding heads, given the very challenging environment we face and a lot of the regions we operate them. Below EBIT, you see 2 numbers.

I'm very pleased with as well CapEx as already promised several times, set after the big invest program ended in 2020, CapEx will be on the level of depreciation, which is EUR80 million a year, which was spot on in 2024, only a very slight change in net working capital. And this is majorly due to the fact that we know we will see volume growth this year due to some contracts we won and we signed last year and the countries who need to deliver already stocked up end of the year.

So we're able to deliver January and February when those contracts came into effect. This is why we saw a small spike end of the year.

But I think this is good inventory. At the moment, we already have contracts and obligations on hand.

The third highlight now comes with a look into the region. I think the story we told the first 3 quarters continue.

In 2023, we saw all of the growth in terms of earnings coming from the EMEA region, which was good. But of course, we always said we wish for all regions to contribute to the nice numbers to those nice growth rates.

And this year, 2024, we really saw that all of the regions step-up. In EMEA, we have a lot of great performing countries.

Germany, once again, very strong. And then Eastern Europe, actually Poland to mention very strong South Africa.

We just saw the new factory which recently opened with very strong growth rates but then again, Southern Europe, Northern Europe, very good too. So very hard to just pick a few since all of the teams did an amazing job last year.

And then obviously, external growth as well for LUBCON, we consolidated first time in August and then STRUB who joined the group end of last year in Q4 but with no significant contributions for 2024 yet. This resulted in an EBIT step-up of 7% once again, which was really good, especially given the fact that this result includes the restructuring cost in France we already talked about in Q3.

What was very nice to see was a step-up in Asia Pacific, major contributor to that was China. So China found back to old strength, which was a huge effort by our Chinese colleagues.

They did really well and managed to win over new contracts to establish themselves as preferred supplier for a lot of Chinese companies and we now see really nice growth rates in China, but then as well in India and Australia, too. And last but not least, our colleagues in America.

The development in Americas was rather flattish in 2023. It was a challenging environment, especially due to the political fractions and uncertainty we saw in the U.S.

Nevertheless, the team managed to keep the volumes, keep the revenue but grow in a very profitable way, which is majorly a mix effect obviously. And if I have to mention one thing here is the development of the North American specialty business, namely Nye and the strong growth rates we saw in Mexico yet again.

Mexico now established itself amongst the 5 biggest countries very solidly in the Fuchs Group. I think really that concludes the view that Fuchs is in a very comfortable position from a geographical point of view, so we can stand on many more lacks than we anticipated at beginning of the year plus the exposure to so many different industries, different end markets who can balance each other out.

And this excellent performance in the regions and end markets resulted in a more than strong cash position, our free cash flow, as already said, with a cash conversion of a net profit of 1.0, so a little more than 100% was converted into cash due to very strict management of CapEx as well as inventory and despite the share buyback program plus EUR100 million spent on acquisitions, we ended the year on a net cash position, which is something we are very proud of so yet another year with a very strong balance sheet and no debt position by end of the year. One of the major contributors, the working capital in terms of percentage, slightly higher than the year before at year-end.

As already explained before, this was only due to the fact that we stopped up in some countries due to contracts, with higher volumes that were signed last year, and we knew that delivery obligations start early 2025. That was the only reason why we saw slightly higher inventory levels.

I think to conclude the operational review. Again, when you know we replaced the tide because they were rather flattish with boxes.

But I think once again, raw material markets rather flattish. So nothing out of the ordinary we observed in Q4.

If anything, slightly lower prices on base oil, but I think nothing too serious. And this is what we expect to see into Q1 and beyond for base oils as well as additive packages and individual chemicals.

And this will result in the fact that we will propose the 23rd consecutive dividend increase to our general assembly which is a 5% increase, $0.06 per share plus and is paving the way to become a dividend aristocrat in 2 years' time from now. This is the promise we gave to the capital market, and we stand by, and we are proud that we were able to earn sufficient cash to yet again reach the dividend quite significantly in a more than challenging environment.

That brings me to my last slide, the outlook for next year. We are proud that we can make the next step towards our target and guide towards what our record sales and EBIT numbers of around EUR3.7 billion worth of sales and EUR460 million worth of EBIT.

If we reach those numbers, those will be the highest numbers recorded in Fuchs history ever. And then as guided before, the free cash flow is at an 80% cash conversion rate.

That brings me to the end of my presentation, and we open the floor for your questions.

Firstly, Isabelle, just wishing you good luck. Thanks very much for all your help the last couple of years and good luck with the future.

Stefan, I want to come back around your introductory remarks around segmentation. Clearly, in 2024, we can see the positive mix effect from those initiatives moving you into a higher-margin business.

But you also talked about segmentation, perhaps unveiling an opportunity to move into some more standard products which I guess would possibly at the expense of margin, but nevertheless good for your book value-added metric that I know is an important part of the valuation. Can you just help me think about mix, therefore, going forward and the margin trajectory?

Because those strike me as to kind of opposing forces of some things being incrementally good for margins and some things perhaps incrementally dilutive. Just how you're thinking about that would be interesting.

Thanks a lot for the question. I think that's an excellent question.

And you can have a discussion on that background. What we learned over time is that we should really focus on the EBIT margin.

And if you take, for example, a high-end specialty business, with very high margins, that is a good and healthy business, but you have normally small parcels of sales. When you go to a large OEM and you have a large volume private-label business or you go to a large mining house.

The contribution margin is normally lower but looking at the amount of sales you do, the underlying expenses in relative terms get lower. So the earnings you do is much better.

And the second part of it is also that you will see that by definition, if a standard type 3, standard hydraulic oil, there are some companies who might be able to do that cheaper enough. But if you go to our Australia mine like an open-pit mine and our driver delivers the crease into the mine means the license to enter the mine and he also needs a lot of training in Australia to lubricate the equipment while it's moving.

So not just per type of volume or per type of product group. You can say this is specialty and this is a commodity.

What Timo did is really because he is in charge of FUCHS100. And our problem a little bit is that we get excited about many things at the same time.

So we said we have 50 different segments, and we focus on 12. Now we acquired LUBCON and you have 2 new segments coming up like -- and the wooden fiber business.

But what we will see in FUCHS100 that we will have a few really distinct wear to play areas where we can grow. In Specialty will be one part of it but things like a genuine brand business or automotive market, it's the other part of it because we see a lot of cash-generating business at good margins.

And Isabelle said last year was automotive aftermarket and specialty running both very good. And both were also leading to that number.

And as you know, our long-term target is still at the 15% EBIT level. And all those businesses we focus on will pay on to that.

It's not just a pure or FDA number we look at. We also look at the relative returns.

Okay. And if I can ask a second question.

You mentioned, I think, Mexico as a top 5 country. Are you flagging that now as a potential risk if we see a breakdown of naphta and tariffs that, that part of the business becomes vulnerable to lower demand?

And how have you thought about potentially having to shift some of that volume north of the border over the coming years?

There would be no problem at all because our manufacturing capacities are much bigger in the U.S. than in Mexico.

And in the last 10 years, we did very well on all the businesses closing up in the U.S. to follow them to Mexico and to service them over there.

We in Mexico, we have a site in Querétaro. We are able to manufacture most of our metalworking fluids there.

But everything else, we are completely out of it. We have toll blenders in Mexico.

And therefore, we also bought a property in San Luis Potosi, which we will develop because the light will not go on or off at that time. But if tough moves back to the U.S.

for us, it's fine. Nevertheless, what we can influence is the consumption in the U.S., and that will suffer for some time and life will be more expensive in the U.S.

But from a pure manufacturing standpoint, we can manufacture in Canada, in the U.S. and in Mexico, that's not a problem for us.

I think if there's something somebody equipped for that circumstances is really us. Many of our customers, they have now 15 plants in Mexico and only 2 remaining in the U.S.

for them to build up their plants again is a much bigger problem. But for us, from a pure manufacturing and supplying strength not a problem.

My first question is more related to the latest development in politics has now proved the targeted debt or by the upcoming German government. To which extent can Fuchs benefit from the special funds, especially from the EUR500 billion extra budget for infrastructure?

I think both your activities in construction in the cement industry, in the metal treatment industry and so on. Secondly is regarding the digitalization costs, you mentioned in your press release this morning, can you quantify what you fear about the burn from these digitalization costs in 2025 and maybe beyond.

And finally, how do you see the current business environment in your individual regions? I guess there is a difference regarding the demand patterns when we compare, for example, China, Europe and the U.S., maybe some words on the patterns you see right now at the beginning of this year.

Thanks a lot, Martin Roediger. I think really good questions.

I'll start with the last one on the business environment. What you see that within Europe, our industrial business related to automotive manufacturing, but the entire industrial business and also the first fill part of OEM is not running at full steam.

And we see that since a couple of months. Good is in Europe, specialty and automotive aftermarket.

Also, when you look at our so-called OEM business, the larger part of that business is what we call genuine brand, and it's not first fill, but rather aftermarket by the OEM, when they sell branded lubricants in their bottles and in their marketing. When you go in China, second half of last year was good, the beginning of this year, we were satisfied.

So China is okay. India is okay.

Australia continues to run South Africa runs well in -- within Europe, also one of the top 5 companies for us is Poland. So we did very well over there last year.

Also, Southern European countries were running okay. The U.S.

had a good second half year. In the beginning of this year, I think this consumption part and high inventories of new cars, we have to see how that develops.

And that also leads me on what you asked about Germany. On the one hand, I think it's good that they made a decision now to spend more money in a German taxpayer, I would also really like to see some savings and not only what we call I hate to say when you make new debt and you called it [indiscernible] as well, and that is a problem.

But I think it's good, but I still would like to see that they finance one part of that through bureaucracy winding down and through savings. But if you look at it where it goes to into military manufacturing, but mainly in roads and in bridges and in railways that will all help us.

But the question is, once the decision is made, whether the companies have the capacity to really do all of that within the next 2 to 3 years, I really doubt. So I don't see that as a major boost for this year, but definitely it will help with regard to the transform to grow, Isabelle can answer much better, but transform to grow is for us not a money hole, but it's really for me and before Isabelle starts a onetime opportunity to really clean up the path of the Fuchs Group, and we look forward because that will be our basis for our future digitalization because we will have one core system.

And therefore, I don't like the burden part of the question, but Isabelle can answer better.

And there's, of course, 2 sides to that matter too. So Martin, you mentioned digitalization.

And of course, this is far beyond the system. And we have this AI partnership that come all across the board.

And I think what we generally expect is a significant increase in digitalization costs, not only due to the T2G but sustainably since the way we work will change dramatically in the years to come regarding the T2G you were referring to, as Stefan said, we started to build the template, but we will then, on the other hand side, see the impact, the positive impact from that by becoming more efficient, more productive, more resilient as well. So for 2025, this is all baked-in, in the guidance majority of which will go into CapEx.

You will see later this year. This is part of our more CapEx budget.

So the cost we will see this year is a rather small number, and then it will be distributed over the next couple of years. In every country, we roll in, we will see costs, but we will see benefits on the other hand side --.

Yes. Three quick ones, if I may.

First, Isabelle, you said that 2024 saw significant volume growth. I mean, net-net, deducting the price effect, it was flat.

Just for me to get a feeling, what significant means mid-single-digit percentage figure?

Yes, above that ballpark, yes.

Okay. Perfect.

And then I mean you build up net working capital in order to generate revenues in Q1. So I assume Q1 so far has started relatively good and successful for you, correct?

So we still satisfying staff into the New Year. I mean I think there's light and shadow when you look at what's happening, not only for folks, but I think in the world as well, right?

So we had a very strong start in January. But of course, what you see a lot of uncertainty in the market, especially in the U.S.

market, but with some kind of risk loss effects globally due to the uncertainty what the new -- call the new office in the U.S., next -- so I think this is something to watch carefully. We see a nice development in terms of volume, in terms of sales.

Of course, a lot of uncertainty, a lot of hesitation on our customer say, too. So this will, for sure, be something to watch.

Perfect. And then the last one also for you as long as I still can ask questions and get you on your nerves.

SAP, the integration is and was a key project for you. Could you update us on the status call and who will take that over from you, Isabelle?

Will it be Esma?

Yes. I mean, we are perfectly on track with the project.

We're about to close what we call the templete. So we have more than 80 colleagues, full time globally working on the templete.

They defined our processes. And we now really start to build and test the templete and we are well on track towards bringing the Northern Americas entity life during 2026.

So far, all according to plan, and that will be part of the handover I will do with Esma in May and June as well.

If you look at our -- it is the one part is the ERP part ongoing from our fleet to -- and we have a co-CEO on that, and we have regional CEOs in Australia, China, the U.S. and in Germany.

But I would say more important is the preparation for the rollout. So the one part is process, process formulization, and we have a global business partner for the processes supporting today to Isabelle to more over to Esma.

And he has a team of 24 houses people in the regions and we have 24 shadows of them on the IT side. So that's a heavy team.

And then we have another string on the data side for cleaning up path data, building up data structures being a decentralized company. We have got very strong teams in the large countries and in the holding.

So I think we have a very stable team together but the retention is pretty high because that's a huge undertaking.

First one is on your top line outlook. So you look for 5% sales growth and you basically indicated this should be primarily volume-driven.

I wonder whether you can be a bit more -- let's say explicit where the pockets of growth in '25 in the regions, maybe end markets you're looking into. The second one is more on your cost base.

I mean you also I think you mentioned it on one of the slides. You closed down French production capacity last year provisioned a bit on that.

So I wonder what's basically the outlook for the cost base, the fixed cost base you can share with us heading into ‘25. And then last not least, you indicated that China is at old strength.

I wonder what this really means to you because looking at profitability level, APAC certainly not yet back where it used to be. So I don't know whether you can a bit more -- shed a bit more light how you see the Chinese market evolving throughout '25.

Thanks a lot, Michael, for those questions. First of all, because one can always remember the last question, the best coming to China.

You said that it's back to all strengths. I said it went much better in the second half and in the beginning of this year.

But as we all know China is not at the own strength as a country, but we were happy with the development in China, and they have good plans together. So I think they are not at full steam, but much better than in 2023 and in the first half of 2024.

When I look at our P&L, and it's clear what I say about our P&L is top line margins and expenses. That is decisive for us, coupled with the cash, how much NOWC do we need on the margin concern of this year.

So it looks pretty good. I've seen -- as you have seen, the gross margin was a little down in the fourth quarter, that was not a tendency.

So I'm not so concerned about the margins this year on the gross margin level. Top line, we have got good plans because we made a couple of contracts already.

So the one you know about is the Mercedes aftermarket business, which we also advertise it because it's being a private label or genuine plant business, they also put our logo on it and especially since one part is the U.S. and in Canada.

We have millions of [indiscernible], and we want to go automotive aftermarket there. That's one part we also build up our mining business last year.

We are on a good ride with the Nye business, and we did further acquisitions on the specialty part. The question on the sales side is really what is going to happen now in North America, how is Europe going to go in the next couple of months.

And I must say, unfortunately, 2025 is the sixth consecutive year where we have got almost 0 visibility in '21, -- '22 and '23, we had a 70% raw material increase. And I appreciate you pushing up on the 15% EBIT level as long as those raw materials don't come down and they stayed on that high level that will take some time, but also '24 with the wars going on now in '25 with all the tables.

It's going to be a year where we have to see month-by-month, we are confident. I mean, today, we published an outlook we believe in but we are always conscious about our cost base.

I mean the one part, what Isabelle mentioned is that we have pretty high increases in our personnel cost. And then that is one part because we always look on conversion rates, how much of incremental contribution profit to be converted into profit.

The other part is also from acquisitions. So first of all, I buy a company with everything they have.

Over time, obviously, we will have some scaling impacts because we will cater for some of the stuff from our own organization. Nevertheless, LUBCON is a cash acquisition for us as Switzerland is a case acquisition.

Therefore, that's the one part. You mentioned France.

And yes, we closed a smaller site in Germany 2 years ago in [indiscernible] France is a larger site. And also Isabelle rightfully said, we recorded for the social severance part of that announcement last year all the transition will be done this year.

So this year, we have almost double expenses in the books because the receiving plants in Germany, Italy, Spain, Poland and the U.K. have built up a small amount of personnel.

And we still have got the entire team in France for the full year. So therefore, you will see savings from that part coming.

But all in all, we continue to micromanage our costs and are also pretty diligent on new procedures with the exception of our digitalization part, where we've really increased the team, but that's my answer to your cost question.

Yes. And also Isabelle from -- I said already also, it's not the last call, but thanks for the work together already.

And I hope that we see each other in Switzerland then as you basically come closer to me. On the question side, maybe 2 remaining from my side.

The first one is on -- maybe, again, I understand that you have a regional setup and therefore, should see limited impact from the tariffs on the sales directly. But given the deteriorating GDP growth that we've seen basically in the outlook over the last weeks.

How has that impacted your outlook then maybe compared to what you were expecting 2 or 3 months ago and the second question, just a standard one going back on the pricing. I think in the first quarter, you mentioned that your customers are -- or the environment is generally becoming more receptive for small price increases again.

How has that evolved over the last month given basically that we see at least a weaker automotive production in Europe and North America. But on the other hand side, how maybe the path on tariff-based, raw material price inflation?

Is that maybe something that should or could lead to price increases nonetheless?

I think on the tariffs, if you look on them, we would rather go for a surcharge for the time being, but also our suppliers come to with surcharges so we have to just wait and wait and see a little bit. But definitely, we are not going to eat those.

When you look on the general market, and I think it's a really good question because pricing is the most important part of us and we have learned to also do pricing leases just to cater for our cost increases. But we do the one or the other price increase in markets, but you also have a tremendous pressure from the car manufacturing industry from component manufacturers and from those type of customers.

So I think there are pluses and minuses, but I can only repeat my statement. Margins is not of material for this year with regard to a contribution margin or, let's say, gross margin.

And the other part is the different emotions we went through coming up with our outlook. I leave to Isabelle.

No, I think regarding the outlook, of course, we just quite lengthily. But so far, I think it's still too early to give a real estimation of impact U.S.

tariffs might have on our results this year. As already indicated, we won over new contracts, and we are confident we can grow.

But of course, not everything is in our hands. So we watch the macroeconomic circumstances, what the political parties are doing quite closely and then react accordingly.

But I do not expect a big impact yet. But of course, to be seen and we considered once the packages and the actual effects become more visible.

It's just one that's remaining. Mr.

Fuchs, I heard you talk a lot about the success of, let's say, the lubricant products also more traditional products that Fuchs has in its portfolio. I haven't been hearing something about, let's say, the new products, the products that you promoted to make inroads into the EV market like cooling agents fluids that go into -- specifically go into the EV car type, except for the noise reduction greases you mentioned.

I guess, with demand for EVs, having cooled down a bit in 2024. Perhaps it's now the perfect time if you want to make more inroads into that business via acquisitions I guess it would be better to do it now than wait for the EV business being hyped again in 1 or 2 years' time when demand comes back.

Are there any plans to make specifically acquisitions or additional inroads organically into that market? Have you made any, let's say, new customer wins that you can share with us anything in that connection might help?

Thanks, Oliver. I think it's also a very good question.

Once at the end of this year, you will see the whole FUCHS100 roll out, you will see that one of the where-to-play areas is the new mobility part. So we were full shuttle on that.

If you go through the various markets, listening to Donald Trump and also Elon Musk is with [indiscernible] but EV is not on the front end in the U.S. market.

And I don't see it in the next couple of years. In Europe, since the subsidies are away, you see a significant decline in the EV part we have called our electrolyte joint venture, and we wait for some customer conclusions, but you see it also -- a little bit.

. But if you look to China, that's really moving there.

We work with the Chinese OEMs together. We have really cool inroads.

Our main product is the electric thai foods in easy language, I would say, the gear oil of the car. And this is all based around the dependency in technology.

We bought in the table flash technology. So that is for us very important.

You won't make large imports in acquisitions because most of it is new business. On the cooling side, it's also interesting.

I can repeat my statement. I think cooling side, you need to be careful.

There are some specialties and the stuff you can earn margins. But there's also some commodity type business for us.

It's very important, but the main thing is China. And in China, I always say we are in our fourth cycle in China.

We started initially German products manufactured in Germany, we sold in China and we manufactured of German products in China then we manufactured in China products for the Chinese OEMs. And now in the fourth phase, we go with the Chinese OEMs outside of China.

So soon, we will have [Leon] offices from China in our companies in Hungary, Thailand, South Africa and Mexico to go with the China OEMs, especially on the EV part into those countries but also there for the wind market or the unaccounted coal mining equipment. So for us, it's a big deal and -- but the market is not growing as the hype was there 2 years ago.

Thank you. And very sorry, but I have to make a little sad announcement to the end of our call.

And also, I'm happy for him. It's with tears in my eyes, That Lutz informed me about a month ago that he will leave us end of September.

Lutz is here about 4.5 years. He did an outstanding job for us.

I'm sure you all like him. We would have loved to continue to work with him, but there was no way we could hold him because there's also a private life behind and he will also move.

And therefore, we said we will go with that very transparent. On Monday, we are out on a search on Monday, you will also see it on our homepage and we thought it's adequate to inform you today about it.

And I'm sure that one or the other will call a little later. We are very set but I look forward because the next couple of months, I will travel a lot with Lutz seeing you and seeing investors and then we have to see, but life will continue, but we wish Lutz all the best, but it's not a farewell today, but I only want to inform you today.

Yes. Thank you, Stefan, for the work.

And you should not be worried. I'm still around, and we will be in touch soon.

So as the first quarter comes to an end and reporting of the first quarter will be end of April, we will be in touch to. And yes, so until then, you may now disconnect.

We have come to the end of the call and see you all soon. Bye-bye.