Fuchs Petrolub SE
Q1 2018 Earnings Call Transcript

Published: 30 Apr 2018

[Executives:]

Thomas Altmann - Head, IR Dagmar Steinert - CFO

[Analysts:]

Michael Schäfer - Commerzbank Ben Gorman - UBS Daniel Buchta - MainFirst Bank Knud Hinkel - Equinet Bank

[Operator:]

Ladies and gentlemen, thank you for standing by. I'm Yasmine [ph], your conference call operator. Welcome and thank you for joining the Fuchs Petrolub's Analyst Conference Call. [Operator Instructions] I would now like to turn the conference over to Thomas Altmann. Please go ahead.

[Thomas Altmann:]

Good morning, ladies and gentlemen and welcome to our Q1 2018 conference call. My name is Thomas Altmann, I'm Head of Investor Relations at Fuchs Petrolub. With me today, Dagmar Steinert, CFO of Fuchs Petrolub. As usual, we will go through a quick presentation and afterwards we will have the chance to ask some questions. Dagmar, please go ahead.

[Dagmar Steinert:]

Thank you, Thomas. Good morning from my side as well. So let's start with the presentation. We had a good start into the year 2018 and our sales grew by 4% to €643 million. We've seen a strong organic growth across all our regions and -- but was a bit negative if the currency impact which is affecting not only sales but earnings as well. Therefore our EBIT is down by 2% to €92 million compared to the previous year. Our outlook for the full year 2018 is unchanged and with their expected sales growth between 3% to 6% and EBIT growth between 2% to 4%. And what I want to point out as well is that we faced the highest investments in the year 2018 with €140 million we ever had in the Company's history. If you ever look at the quarterly sales development, you can see that these €643 million in the first quarter 2018 are despite the strong euro and the negative currency effect, it's a highest phased volume of a quarter. If we come now to the group phase of the first quarter in a bit more detail, you can see that we had 10% organic growth. And thus, if the strong organic growth is continuing, you might remember that we had 9% organic growth in the full year 2017. As you can see, the negative currency effect takes away more than half of this growth, so it's minus 6%. The slightly external negative growth is due to our small operations indoor model [ph] which we sold in the first quarter 2017. I'm coming now to the chart number 5; where you can see the regional sales growth in detail. And as you can see, on organic side we grew in every region. Starting with Europe it was a 9% organic growth, Asia Pacific, Africa a very strong growth with 18%, and in America we had 7% organic growth rate. The negative currency effect was very strong in the region Americas, it was minus 16% followed by Asia Pacific, Africa with minus 8%. And this negative currency impact is something which goes through every line in the income statement, so these currency impact does not only affect the sales line but as well the gross profit, the EBIT, so overall, our earnings. Before translation into the group currency euro, the gross profit and the EBIT would been above previous year. There is one line which might be -- maybe a bit of a surprise for you and that is our income from our companies at equity which is down by minus €2 million, so that's 40% down. That's due to the weak economic environment in Saudi Arabia where we had a big burden on our earnings. On the tax side, we had little bit of gain; so our tax rate decreased and therefore our earnings after-tax was €1 million above previous year. If you have to look at the quarterly EBIT development, you can see despite the strong euro which started more or less in the middle of the year 2017 that we see quite stable development and our earnings on a quarterly basis are always over €90 million. The earnings in the region; there is quite a mixed picture. Of course, we've got a very strong negative currency impact in Asia Pacific, Africa, as well as in Americas. In Europe, we see an increase of EBIT by €3 million and we had a strong growth, primarily in Germany. In the region Asia Pacific, Africa of course, we've got the impact of -- from debt equity companies, Saudi Arabia, therefore the EBIT is below previous year. But if you take that out it would have been above previous year. But of course, we've got these strong negative currency impact. And also South America, we report an EBIT below previous year, it's down by €3 million and we see very weak U.S. dollar compared to the strong euro and we faced increasing raw material prices in that region. So overall, our EBIT is down by €2 million from €94 million in the previous year to €92 million in the first quarter 2018. On the next slide you can see just the development of some selected currencies to give you a flavor how strong these currency impact are. For instance, the U.S. dollar is down more than 30% compared to Q1 '17 versus first quarter 2018. And China -- the Chinese renminbi is down by 6%, of Africa by 4%; so all these currencies got quite a strong development. If we have to look at our cash flow statement for the first quarter 2018, you can see that we buildup net operating working capital but that's due to our increasing business to our growth in sales. And what you will see on the next slide is that our net operating working capital as a percentage of sales is still on the same level as it was before. So these increase in net operating working capital is due to the increasing business. On the CapEx side, we are investing a bit more compared with the previous quarter but as I said before, we expect €140 million for the whole year 2018. Therefore, the free cash flow before acquisitions is below previous year's quarter or that was expected. So I'm coming now to -- I'd like to sum it up to a short earnings summary. We see a strong organic growth across all regions, mainly in Asia Pacific, Africa. The strong negative currency impact is seen in sales as well as in earnings, but we expect this effect to weaken over the course of the year if the currency stays as they are. Before currency translation, we see an increase in gross profit and in EBIT as well, that is a result of higher sales prices and other volume growth. We see a better tax rate due to the Trump tax reform, as well as lower result in taxes for dividends, and therefore we improved on that. And our CapEx increased according to plan. So therefore, as I turn now to our last chart; our outlook 2018 is unchanged and we expect as I said in the beginning, a sales growth between 3% and 6% for the full year, as well as an EBIT growth between 2% and 4% for the full year. The negative currency effect were weakened over the course of the year and we will invest around €140 million to continue the expansion of our capacities as planned. So that was a very short summary for the first quarter 2018, but it's not such a long time ago we had the last analyst call in March and now I would open the floor to your questions.

[Operator:]

[Operator Instructions] The first question comes from the line of [indiscernible].

[Unidentified Analyst:]

I have two questions; first, on the tax rate excluding the income from participation was 28% in Q1, do you change now your estimate for the tax rate in the full year which you have provided to us five weeks ago to be 29% to 30% in the current year? And can you explain to me why the withholding tax for dividends, so called [indiscernible] is lower in Q1 this year versus Q1 last year? And the second question is on working capital; our net working capital which is still at 22.3% compared to sales and you mentioned five weeks ago that this is the outcome from increased raw material costs and the problem of Pentosin to export stuff to China and thus requires high inventories. If we assume that the raw material prices stay where they are right now, and if we assume that you get approval by your customers for local production or Pentosin in China next year, how far could net working capital save issues? You mentioned five weeks ago that you want to go below 22% but former benchmark was 20%, so maybe you can shed some light where we can land at the end of the day with Pentosin and local production in China. Thanks.

[Dagmar Steinert:]

I will start with the more easy one, with the tax rate question. As you said, we've got a tax rate of 28% in Q1 2018 compared with 31% in first quarter 2017. And the expectation for the full year tax rate will be something between 29% or 30% because it's -- for the full year 2017 we had -- if I remember it right, 29.5% and we will see it more or less on that level. The question of withholding tax or balance [ph], that's a question of course of the timing -- at what time of the year you will get the dividend other than the first quarter or in the second quarter. Then of course, as we've got our big investment program, we might not get the same dividend from all over companies as we did last year, so it might be a bit lower but I can't give there reasonable number. Regarding net operating working capital; I said five weeks ago that of course that we are working on the localization of production and not only regarding the Pentosin product but as we need approval of our customer for that -- for production site. I said, it won't happen before two years' time, therefore you shouldn't expect in 2018 or 2019 a bigger reduction of net operating working capital. And you asked the question, what could be the after localization of product and what could be the new level of net operating working capital, because in the past there was -- like a target, a goal of 20%; that of course is a question not -- structure of the business, and of course of the underlying product mix because there are products with -- which needs higher working capital or inventories and other ones which don't. So I can't give you there at the moment a guidance.

[Unidentified Analyst:]

But we would follow-up on the tax rate answer. You had benefits from the U.S. tax reform in Q1 but you say for the full year the tax rate will be rather stable as you mentioned that it is partly related also with the dividends you received from your subsidiaries in the world. So there is no material benefit from the taxes reform in the next couple of quarters or at least this benefit will be compensated by any items from -- on the taxes from the dividends you receive from your subsidiaries. Is that a right understanding?

[Dagmar Steinert:]

Well, we had already the tax benefits from the U.S. tax reform in 2017, it was the -- like a recalculation of deferred taxes. Of course, in 2018 an ongoing restructure like a real effect but it would be -- what is in the same amount, then of course regarding the withholding tax, you have to pay it in the time where we take the dividend; and therefore of course, we don't get the dividend from all our companies in the first quarter. So the tax rate will be below 30% but it would vary at the end 29% or 29.5% -- I'm eager to get you that detailed calculation because as impact of currencies as well, if we have a lower tax rate in the U.S. and due to the strong euro the translation is less in our group sales, the less impact -- of course, it gets an effect on the tax rate again. I hope that answers your question a bit more precisely.

[Operator:]

The next question comes from the line of Michael Schäfer of Commerzbank.

[Michael Schäfer:]

If I may, operationally; first one, on the Americas business, looking at your profitability of the segment referring to 14.7% yield margin you have told us in the first quarter. I'm looking also and comparing this to the fourth quarter where you've posted something like 16.6%, so what happened -- I mean, my understanding was that you rather look for translational tax in the Americas? So your leverage is based on the high raw mats may have played a role here. So what has changed from the fourth quarter to the first quarter as we see such a significant drop here in profitability would be my first question. And the second one is on the organic growth you are showing in the APAC region, 18%, too impressive, congrats on this one. Just help me understand what are the key drivers there? You mentioned also Australia and they are picking up, so what are the kind of industries driving this primarily, and what kind of regions was in the APAC? Thank you.

[Dagmar Steinert:]

Well, your first question regarding the earnings level in the U.S.; if you look just on first quarter of course, that's impacted a bit by one-offs due to preparing the full annual report. So I don't want -- if you look in general on the first quarter, it might not be the best benchmark to compare it with another quarter but what we've seen in America in the first quarter 2018 were compared with 2017 is significantly increasing raw material, especially on the base oil [ph] side. And in the first quarter 2017 there was no increase in raw material prices seen or recognized. Then we've got a smaller amount in the first quarter 2018 as we -- in the U.S. paid our workforce a special bonus due to the benefits of the tax reform; so that of course is fully included in the first quarter and we had some more air freights we had to pay to be able to deliver in time to our customers. But the main reason for the margin decrease in the U.S., the increasing raw material prices.

[Michael Schäfer:]

Can I follow-up on this one?

[Dagmar Steinert:]

Yes, please.

[Michael Schäfer:]

So how do you see this unfolding basically as we walk through 2018? So you're already assuming basically that we don't see a further exploration of raw mats from today's level. Let's say, should we expect a significant recovery back to the '16 plus type of level in the course to come or how should we think about this one?

[Dagmar Steinert:]

Well, what we definitely see is that we will get following up the increase in our sales prices. So we will increase our profitability but it's a question how the raw material prices develop in 2018. So if they are still increasing, we will always be behind. And if you look just at the margin, it's a bitter question of math; if you pass through the increase in raw material prices and a lot more, then of course you dilute your margin if you get the same absolute profit. I'm sorry, I forgot your second question. What was it?

[Michael Schäfer:]

The second was more on the key drivers for the organic growth in APAC basically, what kind of industries, what kind of regions because we now see APAC growing organically close to 20% for quite a while, so I just wonder what are the pattern or the key drivers of change story is?

[Dagmar Steinert:]

It's like -- the ongoing development from 2017, there is no significant change; we see a very strong growth or we still see it varies from growth in China and we -- our growth in China as well as industrial lubricants as an automotive but stronger in automotive as we are stronger in that field in China, and we got really good increase in our -- like after-market business in China and the overall automotive lubricant business. And we got a continuing good development in software in South Africa. And that with all things we've seen in 2017 as well, so that's continuing.

[Michael Schäfer:]

Should we see kind industry recovering basically?

[Dagmar Steinert:]

It's already recovered in 2017 if I look at the volume and that's still ongoing, yes.

[Operator:]

The next question comes from the line of Ben Gorman of UBS.

[Ben Gorman:]

Just a few end-market questions. And specifically on Germany, you said particularly strong driver in Europe; can you give us anymore color in terms of where that's coming from end market-wise and also is this -- others in a bit more detail? And then, essentially same question actually on Asia; and is this still predominantly driven by the auto industry and that seems to the be commentary historically? And I was wondering of another very, very strong quarter against one of the toughest comps of the year. So just sort of wondering the sustainability of that, not only this year but sort of in the next few years. So how should we think about the layers of growth there? And why shouldn't we model a higher growth rate in that business going forward? Thanks.

[Dagmar Steinert:]

Your first question regarding Germany, what are the drivers we've seen in Europe, 7% organic growth and I've said that Germany was very strong and while Germany of course got the biggest portion of Europe, but one of the reasons why Germany has such a good performance is the Pentosin business for our customers in China that is a part or portion of that -- or driver of that growth. But besides that, we had a good growth for our overall business in Germany. Coming to China, yes, the strong driver in China is the automotive industry and your question was how sustainable is that. We've seen it now for longer time and we see big growth potential, not only in China but in Asia of course as well because we've got still very low market here. And as you might know, we are building a new production in China which will be even a bit bigger as one which is replaced in Shanghai and they are already expanding our production in the north of China in Gingko [ph] because this organic growth and this volume growth of course has to be produced.

[Operator:]

The next question comes from the line of [indiscernible].

[Unidentified Analyst:]

Two questions as well from my side. Firstly, on the organic growth; there was a clearance [ph] compared to the full year, [indiscernible] that the debt that came from the press side and not so much from the volumes. And I understood that likely that the majority of the organic growth was volume driven. When should we see an acceleration of the price effect? That is my first question. And second question is on the raw material impact which mainly started to kick in the second part of last year. In the first quarter as far as I saw it, the raw material based in the country flat, maybe you can update us on the development in the first quarter? Thank you.

[Dagmar Steinert:]

If I look at our organic growth and the splits between volume and price, it was more volume than price but of course we see the price effect in there compared to 2017 where our organic growth was more or less volume. So there is a bit of a change but of course you have to keep in mind that it's not always the question of a percentage of growth but as well a question what and what kind of basis, so if you see the growth in 2017, we've got a higher basis. And then of course, you still get significant or the same growth in an absolute number but it might look less as a percentage. So much to that question. And to raw materials, other raw material development; we've seen an increase I 2017 and if I look just at the base oil for instance for the first quarter 2018, the development in the first quarter, if I look at the actual prices, of course it's a currency question as well because in U.S. dollar they are compared with a first quarter 2017 but unchanged, but of course it always come in the latter -- obviously time like to us. Compared with Europe for instance due to the currency development, the strong euro, raw material prices, or base oil prices in Europe are a bit below the first quarter in 2017.

[Unidentified Analyst:]

So if we look at this acceleration, it's most impressive [ph]; and is this fair to assume that you should see a further acceleration than us in Q2 and also and maybe going at the second half as you announced crude price increases in particular end of the certain and beginning of the first quarter? Is this the right way of saying the presence that should be this year?

[Dagmar Steinert:]

It seems to be very reasonable what you expect.

[Operator:]

The next question comes from the line of Daniel Buchta of MainFirst Bank.

[Daniel Buchta:]

Thank you very much for taking my two questions and the first one is on what you have mentioned or touched a bit on Saudi Arabia before; can you clarify a bit more on what the problem there is? And is there a risk for a write-down of the joint venture stake you have in there? That's the first one. And the second one, the quick one again on raw materials, I mean you mentioned that in Europe the prices are even down, now quite recently, the euro has weakened again; and can you kind of provide a bit of a sensitivity on what the €0.01 change might need on your raw material cost if nothing else changes than that, so just to get a feeling a bit how that might benefit you or put a disadvantage on you if the euro is moving? Thank you very much.

[Dagmar Steinert:]

Regarding Saudi Arabia, our joint venture, the decrease in earnings, that's just due to the overall economic situation in Saudi Arabia and they suffer somehow of course from the crude oil price development and there is nothing special; and we don't face any risk today regarding write-off of the effort, that's not the case.

[Daniel Buchta:]

What that means -- if I can quickly follow-up, you assume and the profits in Asia Pacific from this joint venture to recover step-by-step as well over the course of the year?

[Dagmar Steinert:]

Well, we still have the equity consolidation means that you just get your portion of net profit into our own P&L and they are still making a profit. So compared with last year so profit is less but it's still a profit. So yes, we are missing…

[Daniel Buchta:]

But you expected to improve again going forward, if you say it's just the crude oil prices that went up so much so that it's not this terrific situation?

[Dagmar Steinert:]

Well, I think looking at the Middle East it's quite a difficult political situation and personally I think it will stay difficult for quite a while. Then you had a question regarding raw material prices and asked for sensitivity off like a change and I can't give you that and even not if nothing edge [ph] was trained because that's what never ever happened. If there is a change in currencies, we see an outcome in our raw material prices, if there is a change in raw material prices before currency of course, it has an impact. So as we've got lot of presence in lots of countries, in different countries and we have to get our supply locker [ph], therefore it's very mixed or complex picture and there is no possibility at all to give somehow sensitivity. On the other hand, of course it's a question; if you look at base oil or base oil supply, we buy it of course in a larger volume, so you don't have to buy it every two or every three days, so it's a question on when you order it, what's the price at that time and the price might change some days later and -- but you can deliver it two or three weeks later. So -- sorry, I can't give you there anymore insights.

[Operator:]

The next question comes from the line of Knud Hinkel of Equinet Bank.

[Knud Hinkel:]

Just one question left from my side. So I would be interested if there have been already any contributions from year-on-year grease factories in Q1 and if not, when do you expect them to occur? Thank you very much.

[Dagmar Steinert:]

Well, as we ramped up the production of our new grease factory in Harvard in the U.S. in 2017 and we finished more or less by the end of last year. We are already producing their greases and therefore of course, we have a contribution but we still got there plenty of capacity and -- but that was all expected and it will take some time to get the market shares and to fill in these orders, but on the other hand as we said last year as well, with our German special grease factory in Kia [ph], we are running under full capacity and therefore of course, it's for us -- very essential to have the opportunity to serve maybe the one or the other production from Kia [ph] to our West facility and can have it better levered out production.

[Operator:]

The next question comes from the line of [indiscernible].

[Unidentified Analyst:]

Firstly, SG&A costs have already moved year-on-year, is that the results of preparation cuts for the new plans having reached their top. And is that a level that might the unclaimed for -- let's say the remainder of this year or is that just a breather before you take a new personal, especially in regard to the sales when regarding your strong volume trends here? I guess taking on new people to work the markets and gain market shares for example in the U.S. is on the cards, so could you for us in that regard? That would be my first question. Secondly, the D&A, it's the €14 million we are currently seeing in quarter one, if that's something we could use as a run rate for the remainder of this year or is due to the high investments significantly ahead of depreciation. Is there a constant rise in the costs, especially looking at numbers of 2017 which has to -- which were a bit lumpy especially, when it came to the end due to some special effects there? And lastly, perhaps -- sorry to lever that point again on your joint ventures in Saudi Arabia, I'm still a bit puzzled on what's going on there. When we hit the low mark in the crude oil price in 2015, the profitability and that -- in the joint ventures was higher than it is today, and now we're back to 2017. So how does this connection between the crude oil price and performance of that joint venture -- how does that work because we had higher -- significantly higher income from that joint venture in 2015-2016 when the prices were back on the rise and now they are rising or having risen even more to $70 per barrel and now all of a sudden the profitability has obviously dropped, so I don't really get the connection between crude oil prices and the performance of the joint venture here. Can you please fill us on that part?

[Dagmar Steinert:]

I'll start with your last one regarding Saudi Arabia. I mean, if you look at that region it's a very difficult economic environment and the government took something like -- let me put it in this way, out of the reserves and it's not only the question of the development of the crude oil price, so I think more or less, every industry at the moment is a bit tougher in that area. And as I've said before, I don't expect our portion of earnings to come back to old levels in this year but we have to see what's going on there. Your first question was regarding our cost base, overall cost, maybe a bit pointing out acumen [ph] cost and so on. Well, as we invest in our -- in the improvement of our processes, as we invest in IT and that more or less are shown in that line. And as we increase our R&D expenses, that's all expected and planned. Regarding our depreciation and amortization, the €14 million we had in the first quarter that's not -- I wouldn't take it as a run rate because as we invest more, as we invested a lot last year and as we invest even more this year, we will see of course -- if we finish projects higher depreciation and I expected more going into the direction of €60 million than to stay at like €56 million, what would be adjusted calculation if you multiply it by four; so something between €56 million and €60 million.

[Unidentified Analyst:]

I have just checked bip numbers from Saudi Arabia starting January 2015 to end of 2017 and it seems like there wasn't much of a change in this period of time. So rather anemic [ph] growth as you already stated, around about 1% to 1.5% but rather consistent over the last two years and still the result from the joint venture dropped only in Q1 by 40%. And hence, it's still very hard to understand but I think we can take your answer for granted that there won't be much relief in the very -- let's say next future or near future on that. In regard to D&A €60 million, that would be without any special effects, right. That would be the expected rate without any funnies [ph] for the full year, right?

[Dagmar Steinert:]

Yes, but better don't get me wrong, I don't expect exactly €60 million depreciation, it's something between €56 million and €60 million and that's just normal scattered depreciation. And I don't expect any impairment or write-off this year as we had these €6 million impairment for -- as been last year but one last remark to Saudi Arabia and big development and so on; of course in the big development there is also services in, and if you look at our equity earnings, it's not only Saudi Arabia, yes, that's a big portion of it but we've got at Turkey in it with a bigger amount and therefore -- okay, you don't have the details out of that but of course, it's not only Saudi Arabia. I'd say we would like that.

[Operator:]

The next question comes from the line of [indiscernible].

[Unidentified Analyst:]

I have two, please. The first is the potential for capacity constraints and your growth rate development. I'm wondering given the years I've imagined with the year basically nearing production limits in several of your facilities, how quickly are you likely to be able to expand capacity? And could you perhaps give us some guidance on the achievable volume growth rate for the group as a whole for 2019 if things continue to develop as they have done on the macroeconomic side? And secondly, I have a question on pricing. It looks as if the pricing increase across the group for Q1 was fair low single-digit; and I'm just asking the question well if base oil price is maybe not so much in Europe but in other parts of the world have continued to rally into Q1 to Q2. How much scope is there for further increase in prices over the course of 2018? And do you feel comfortable returning to an underlying margin at some stage at the EBIT level of around 15%? Thank you.

[Dagmar Steinert:]

Of course we expect a further increase in pricing in the running year and -- well, but what happens to the margin of course depends as well on the development of the -- or the further development of the raw material prices. You asked about our capacity and how easy or fast we are able to expand capacity, and there I can give you like two answers or two kind of answers. On the one hand of course, if I look at our more reasons on production sides, for instance, the one in Gingko [ph], the north of China, the one is Russia, even the one in [indiscernible], there we have in general, more space. So quite easily we are able to add more times to add more cattle's and more piping and that's something what's possible to do it quite fast. If I have looked for instance at our site in Mannheim, there of course it's much more difficult because it's a modern production but it's grown historically. So it's -- if you would build as new one a Greenfield, it would look different. So it's more difficult to add capacity because that ends up at the end like an operation unlike in a surgery on an open heart; so that's more complicated. Then of course, if we are talking about new places, new production sites where we build a new one to replace an old one, then of course it's quite easy to add capacity or to build up more capacity from the beginning on. And -- yes, that was the answer to that. And I can't give you like growth rate because our market shares overall are still small, we see in every region a good growth potential, we are working on it and it's not only the question of production capacity, it's as well as a question of technology of R&D and of the overall development. But we are very confident that we will fill in these new capacities as well and if we ever look at our organic growth and we've got €2.5 billion saved in 2017. And then looking at our growth rate then you would need a new plant every two or three years, middle sized plant to produce these organic growth.

[Unidentified Analyst:]

Understood. There is nothing that would speak against if the demand is there, Fuchs continuing to do underlying volume growth of over 5% per year.

[Dagmar Steinert:]

That's a hard question. Could be, could not be; I mean -- that's a very hard question because I don't want to be -- I don't want to read that, I said Fuchs would grow 5% year-by-year and…

[Unidentified Analyst:]

But if it's not so much, if it would but is it physically possible based on…

[Dagmar Steinert:]

Yes, it is possible.

[Operator:]

The next question comes from the line of [indiscernible].

[Unidentified Analyst:]

Thanks and I apologize for my follow-up question but I have to come back to the raw materials issue. You mentioned base oil is an FTA [ph] but I remember that the majority of your raw materials value is additives and you didn't mention anything about additives. So is it right to understand that in Q1 there was no price increase from additives and your additive suppliers did not announce any price hikes for the second quarter. Is that the right understanding?

[Dagmar Steinert:]

As far as I know, I'm not aware of any significant price increases on the additive side, as well as big key supplier didn't give us a notice of significant price increases. There might be a small one, possible yes, but in general, there is no significant movement on that side.

[Operator:]

The next question comes from the line of [indiscernible].

[Unidentified Analyst:]

I was interested in an add-on question or a clarification question. So far is that guidance unchanged but I only confirmed than the revenue and EBIT guidance. So it was valid for the free cash flow guidance I assume?

[Dagmar Steinert:]

Yes, of course. As well as for this year free cash flow, as well as for the Fuchs value added, it's all unchanged and confirmed.

[Operator:]

[Operator Instructions] If there are no further questions at this time, I'd like to hand to Thomas Altmann for closing comments.

[Thomas Altmann:]

Thank you very much for joining our conference call today. Our next conference call will be on the half year financial results on July 31. Until then, I wish you a good time and a good weekend. Bye.

[Operator:]

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Good bye.