Fuchs Petrolub SE
Q3 2017 Earnings Call Transcript

Published: 28 Oct 2017

[Executives:]

Thomas Altmann – Head of Investor Relations Dagmar Steinert – Chief Financial Officer and Member of Executive Board

[Analysts:]

Daniel Buchta – MainFirst Bank Martin Roediger – Kepler Cheuvreux Markus Mayer – Baader-Helvea Michael Schäfer – Commerzbank Oliver Schwarz – Warburg Research Knud Hinkel – Equinet Bank Sebastian Bray – Berenberg

[Operator:]

Ladies and gentlemen, thank you for standing by. I am Yotai, your Chorus Call operator. Welcome, and thank you, for joining the FUCHS PETROLUB 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 from our side to our Q3 Conference Call. My name is Thomas Altmann, Head of Investor Relations at FUCHS. With me today is Dagmar Steinert, our CFO. As usual, Dagmar will give you a short presentation on the Q3 results, and after this, you will be able to ask some questions. Dagmar, please go ahead.

[Dagmar Steinert:]

Thank you. Good morning, ladies and gentlemen, and thank you for joining us. In the first 9 months, we increased sales by 9% to EUR1.8 billion. We’ve seen a strong organic growth, especially in Asia Pacific, Africa and in America, there in North America. We have still a slight external growth in North America that’s due to our small board-on acquisitions in the year before. On the currency side, we’ve seen an ongoing decreasing effect because the situation change in the middle of the year. Our earnings – our EBIT increased by 2%, and on Monday, as you all know, we revised our earnings forecast and downgraded it for the full year and we reaffirmed our sales outlook. I would like to give you a short overview about our quarterly sales development, where you can see in 2017, it’s all above previous year, and we’ve got a very strong fourth quarter in the last year in 2016, because usually our fourth quarter is not as strong as that. If I come now to chart No 4, we get a deeper insight into our group sales for the first 9 months, and as already mentioned, we see a growth of 9% that was, primarily, volume driven. The organic growth is 8%, and as mentioned before, Asia Pacific and North America is a driver for that. If we come now to the regions and to sales, we see bit of a mixed picture. Starting with Europe, we see a 6% increase in sales and we’ve got organic growth in all countries with the exception of Scandinavia. In Asia Pacific, Africa, we’ve got a very strong organic growth with over 20%, and that’s not only in China but as well in Australia and South Africa. Coming to North and South America, we see especially, organic growth in North America. Overall in this region, it’s 9%, and as mentioned before, we’ve got this external growth due to these acquisitions of the last year. If we come now to the income statement for the first 9 months, you can see that our gross profit is increased less proportional than our sales. Our gross profit went up by 4%, and that’s due to increase in raw material prices and we pass them on with the time lag. And of course we’ve got some mixed effect, we see an increasing share of business with bigger customers, with key account customers. Overall, at the end, we see some increasing other function costs, but that was expected and that’s due to growth and inflation. So EBIT went up by 1.6%. Coming now to chart No 7, where we’ve got the quarterly development of our EBIT figures. You can see that there is a slightly – that Q3 is below previous year slightly. And that there is a shift or change, but we’ve addressed that already with the half year figures between Q1 and Q2 in 2017 compared with 2016. The fourth quarter is usually not our strongest quarter, but in the previous year, in 2016, you can see that there the fourth quarter was even stronger than the first quarter. Turning now to the EBIT development by the regions. Starting with Europe, you can see that the EBIT in the region Europe is down by 2% compared with the previous year. On the one hand, we see a significant increase in earnings in our specialty business. On the other hand, we’ve got reduced earnings contribution from Scandinavia and from the U.K. as a result of the Brexit. And what – more or less in every region, we see a time lag passing on raw material price increases. In Asia Pacific, Africa, our EBIT increased by 9% and we’ve got a very strong development in China as well as in Australia and South Africa. In North and South America, we increased our EBIT by 6%, and that’s, of course, mainly the development in North America. Now I would like to turn to our cash flow – to our cash flow statement. And for the first 9 months, and as you can see, due to our increasing business, we see a higher level of cash invested in our net operating working capital. So there we needed EUR46 million more compared to the previous year figure, as well as on the same side, we invested or we spent more money in our CapEx for our growth initiative and there we invested EUR13 million more. At the end, our free cash flow before acquisitions is EUR89 million compared with EUR145 million in the previous year. And that reflects our growth strategy. On the next chart, you can see the development of the net operating working capital for some time. Coming from 2012 with 21% – okay, there was an improvement in 2013, but the level 21% is from – is for the time 2012 up to 2015 level. Then we had these acquisitions of Pentosin and Statoil, and we see an increasing working capital at end of September 2017 close to 23%. And that reflects our increasing shipments to China where our products are a long time on the road. So to sum it up, chart No 11. We met our sales and earnings target for the first 9 months. We see an increase in CapEx according to our plan. The higher raw material prices together with the strong euro and our planned cost increase lead to a less than proportional increase in earnings. The raw material price increases can only be passed on with the time lag and that time lag seems to be a bit longer than originally expected. We see higher inventories due to our stronger international business. And the free cash flow, therefore, is below previous year because we’ve seen significant business-related increases in net operating working capital, and that is, especially, a result of the strong sales growth in Asia Pacific, Africa. And at the end, therefore, our full year earnings guidance is downgraded. We expect sales to come in for the full year 2017 around EUR2.5 billion, because that’s in the range of 7% to 10%. Our EBIT will be at the previous year figure or slightly below, and our FUCHS value added, therefore, of course, will be below previous year, and we see the free cash flow before acquisitions not more than EUR150 million. And now, I’m happy to take your questions.

[Operator:]

[Operator Instructions] The first question comes from the line of Daniel Buchta with MainFirst Bank.

[Daniel Buchta:]

I actually have 3 ones. The first one, here on the margins, we can see that, of course, they are down year-over-year. But interestingly, compared to Q2, they came down even a bit more. And here the probably the peak of the raw material cost inflation has been – and why is this the case or was there even more inflation over the past months, so to say? And why haven’t you been – or it seems, that you haven’t been successful to pass-through higher sales prices yet? What can we expect here? And what does this mean for 2018? And last point on that, and you guided before that the raw material cost inflation could be 2% to 3%? Is this still valid or is it now even more? That’s the first one, then I have a second one. Probably, you started already with your budgeting process, internally, for 2018. If you could spend some words on what we can generally expect there. So is it likely to assume that the margins are improving in the coming year, again, and because you pass through the raw materials? And on the other side, is it likely to assume that the organic growth comes down a bit because the comparison base is much higher and the recovery in some struggling industries has occurred this year? And then the third question I have, what can we expect for 2018 from upcoming capacities, and now the plant in Chicago is up and running, so you just need the approvals? And so if you could quantify a bit of – in terms of your overall capacity, what might come on stream? And how this might affect the organic volume growth potential? That’s it from my side.

[Dagmar Steinert:]

Thank you for your questions. First of all, I am sorry, but I can’t give you any expectations or outlook for the year 2018. We will publish our expectations in March, when we present our full year figure, and we are, as always, in this time, preparing now our budget. But you asked some questions about our margin. That it, yes, came down in Q3 even more, and ask for the reasons for that. What we have seen in the first 9 months of 2017 is a steady, slightly increasing in raw material cost. And therefore, we – of course, we went out with price increases to our customers, but if you face the situation that the raw material prices go up even more, of course it might must be enough, and we go out for a second round. The other, like, overlapping effect is the mixed effect, what products – regarding our products. And there, as I just mentioned before, we see an increasing business with our key accounts and that has a slightly effect on the margin as well. And third, we’ve seen a strong – we see a strong euro and the currency will reflect as well shift in raw material prices. So overall, it’s a complex situation, but we are confident that we will see in the future, of course, recovering of a margin, but I can’t give you a time or a number. It’s just that we always managed to keep our margin or to come back to our margin level and to pass through raw material price increases.

[Daniel Buchta:]

Okay, just a quick follow-up on that. I mean, if you already seem to have had a first round of price increases, could you just give us feeling on how the organic growth is split between volume and price to get a feeling? And what is already in the books then?

[Dagmar Steinert:]

Well, it’s mainly volume driven because what’s in there from price increases goes out, again, through already known or through – yes, bigger contracts where we’ve passed on some price decreases to bigger customers. So what we see as a organic growth is mainly volume.

[Daniel Buchta:]

Okay, and the third one quickly on the capacity side. And what can we expect here for 2018 to come on stream? And how can this impact the organic growth?

[Dagmar Steinert:]

We don’t see any sort of incapacity level. So that’s not the question, really, for us.

[Operator:]

The next question comes from the line of Martin Roediger with Kepler Cheuvreux.

[Martin Roediger:]

I’ll start with a clarification question. As I start, do you mentioned that the organic growth was mainly volume driven? Did you refer to Q3? Or did you refer to the first 9 months, because that could make a big difference. So that would be helpful to get here a clarification on that. And then on raw materials, what is your best guess about how much of the inflation has passed on to customers. Is it half or even less, and in respect to raw materials, can you explain to which extents the major raw materials has increased? I mean on the base oil side and here maybe a differentiation on why the – is it base oil 1, 2, 3 or 5? Or the additives, if additives also have increased. That would be helpful. And the final question is on Scandinavia. You have been quite – or negative in your comments on Scandinavia. Maybe you can explain what’s going on there?

[Dagmar Steinert:]

Yes, thank you, Mr. Roediger, for your questions. Our organic growth is mainly volume driven, not only in the first 9 months, but as well in the third quarter. And what we pass through to our customers and the inflation to us, is it half or is it less? I would say it’s a bit more than half. Regarding raw material price increases, we’ve seen price increases in the base oils, that’s right. And we see slightly movement or increases in overall in some additives or chemicals, but it’s more a question of availability and not the overall price increase but slightly. On Scandinavia, your last question. In Scandinavia, we – we’ve got the situation that we have our – that we rented there our plant, or the plant we didn’t take over from the seller. And as you know, we’ve got there a 5-year contract, and we shifted production for the Eastern countries, like for Russia, for Poland what was originally all produced in Sweden and the Nordics, to these other countries. And therefore, we’ve got there in Scandinavia a higher cost base and earnings are not as good as they should be to cover all of these costs. And the entity, of course, in Scandinavia, lower or development weakness in Norway.

[Operator:]

Our next question comes from the line of Markus Mayer with Baader-Helvea.

[Markus Mayer:]

Two questions as of now. Sorry, again, coming to the raw materials. Can you exclude that the – this delayed passing on, on a lower-than-normal passing on is not coming from an increasing competition, in particular, in the low-quality products? That would be my first question. And then secondly, on cash flow and net from capital, you said basically that this higher net from capital level is coming from, mainly from the shipment to China, and of course, also from the higher prices. But this effect from the shipment to China, how long is it taking on? And from then on should we expect that your net from capital is coming down? And if then the sustainable net from capital level around 21%? Any kind of indication would be very helpful.

[Dagmar Steinert:]

Yes, thank you, Mr. Mayer. Regarding your question the delay in passing on raw material price increases, that is not – it’s got nothing to do with increasing competition in lower quality product or something like that. It’s got nothing to do with that. If I look at our net operating working capital or specially the situation in China, where we see increasing inventories. First of all, we’ve got a very strong organic growth in China, it’s – and that has to be, yes, delivered. So they have to secure the – to make sure that they are able to deliver the customer. Therefore, you need more – definitely more stocks. And one single of these is due to the Pentosin products, where we still got the production in Germany. And you asked how long that effect will be going on and we are working, of course, on trying to get the approvals and to, yes, localized production. But as you know, approvals take time and it’s nothing what is done in some months or in a couple of months, and I don’t want to make any comments for the year 2018. But that will be an effect what will be going on for 1 or, something around, 2 years.

[Operator:]

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

[Michael Schäfer:]

So I’m taking my 2 questions here. Sorry for coming back on the raw material side. You mentioned earlier that it takes a bit longer than you initially expected to pass on higher material costs basically. In the past you talked about 3 to 6 months’ time delay between raw materials, and then the pricing effects. So what has changed? And can you quantify, basically, what we are talking about now? Are we talking about 9 months here, you expect basically to take this to get through, is this also a kind of structural component included there due to this very strong growth showing there in APAC. And potentially related to this one, in the third quarter in your other consolidation line, you’re showing the minus EUR11 million EBIT number, which is standing out compared to historical standards, at least. I assume it has something to do with the shift growth and the regional mix in the growth pattern you’re showing there in APAC and where it has produced. But could you just walk us through, basically, what’s the driver behind this is? And what we should expect going forward with your high-growth area, APAC gaining share here on this one? This would be my first question, basically, one A, B. And the second is sticking to APAC. A strong organic growth, again, in the third quarter. Any kind of color where this is coming from basically? So what are the key industries behind this driving this – the strong growth are any major customer wins which we expect basically those effects then to fade as quarters are going forward? And what’s the major driver behind the strong organic growth here?

[Dagmar Steinert:]

Yes, thank you for your question. Regarding the raw material passing through, yes, it takes longer than originally expected. And – but generally nothing changed. It’s still usually in general 3 to 6 months, but what we’ve seen so far in the last 9 months is a very slight increase, and the increase like it didn’t stop. So our passing through is leveled out by higher increases as well. So therefore, as I said just said, we need another round. And regarding the contract with price variation clauses, they locked in a bit later than originally expected, because the prices or the relevant of price baskets only went up slightly. And they have to reach a certain level and then it takes another at least, 3 months, sometimes even longer, until the price increase comes into effect. Then, you ask a question about the lines – EBIT line consolidation and others. There we’ve seen an increase in number. There are 2 effects. One effect is regarding the increase in the company sales. That number went up, and therefore, of course, the elimination of earnings has to go up as well. And the second effect is that we’ve got R&D cost, which we take out of the region Europe into our holding. We do that more or less every year and we had these in the last year as well.

[Michael Schäfer:]

Just something on the follow-up on this one, the EUR11 million. Where should we allocate this basically? Is this – it’s the kind of Europe between your M&A and Asia Pacific kind of elimination? So basically, so where should we allocate this?

[Dagmar Steinert:]

Yes. That’s between – mainly between Europe and Asia Pacific, yes.

[Michael Schäfer:]

Growth driver is APAC, sorry?

[Dagmar Steinert:]

Yes. Then you asked question about the key industries growing in Asia Pacific, there it’s across more or less all industries, but we are very strong growing in the aftermarket. We’ve got good growth in our Pentosin business, in our OEM business, but we see as well significant growth rate in the industrial business.

[Operator:]

The next question comes from the line of Oliver Schwarz with Warburg Research

[Oliver Schwarz:]

I’m currently not with FUCHS PETROLUB, but gladly ask some questions. A few questions or observations from my side. Firstly, you said that growth was mainly driven by volume, but about more than 50% of raw material price increases have been passed on to customers, and which were offset, basically, by lower contract prices with key accounts. So that would indicate a huge discount on that key account prices. Could you elaborate why that is – that’s the case? Is that more price pressure, for example, from the automotive part of your business? Is that something that is sticky? So is that more a structural problem that will remain with FUCHS, even if you are able to pass on the remaining 40-plus percent of raw material price increases? Or is that something that is bound to change in the future as well? That would be my first question. Secondly, an observation on what Michael Schäfer just asked in relation to the holding and consolation. You alluded to unallocated R&D cost, looking at the P&L, R&D cost, they seem to be rather steadier. However, in the holding part of this segmental reporting, the development of that holding seems to be rather choppy over time. Can you flesh that out, why is that the case? And why did we see that spike in that, that is rather – that was, let’s say, historically rather uncommon in Q3 2017. Because, yes, we also saw a higher impact on the sales side, but that was more than significantly, let’s say, enhanced in regards to the EBIT impact that was more double the value of what we saw in 2016 Q3 was, if my math is correct, EUR4.9 million minus. And now we see a number of EUR11 million minus here. So I have not yet grasped why that impact was so big? And especially, what is to expect in Q4, and perhaps in the midterms in that regard? Yes, that was my two questions.

[Dagmar Steinert:]

Okay. Yes, thank you for your questions. Coming back to the passing through of raw material price increases. Just to clarify, we see slightly increasing raw material prices during the full 9 months. So of course, we tried to pass through with a time lag, so the increases of the last month, of course, are not pass-through. So just to clarify that.

[Oliver Schwarz:]

Yes, – but you also said that more than 50% of the overall price increases have been passed on. That’s still standing, right? For the year, price increases in raw material cost that we saw, over the last 9 months.

[Dagmar Steinert:]

Maybe. I wasn’t – good that you asked that question. It wasn’t that correctly pointed out for me, because, of course, we are not able to pass through raw material price increases of the month of September or August because you don’t even have funds when you get so popular. So the last month, of course, not all the increase of the last month, of course, is not in there.

[Oliver Schwarz:]

So how much, in effect, did you pass on effectively? If that is not – if more than 50% is basically not what you did pass on?

[Dagmar Steinert:]

Well we haven’t passed on enough, or not as much as we expected. But we passed on quite something, and we already, yes, had a second round. And we just see there a delay due to still increasing raw material prices. Your second question about the line-holding consolidation. We’ve got, like, a technique that we allocate our R&D expenses we’ve seen in the region Europe. We allocated to the holdings, because we own the know-how in everything. And we’ve got that every year, it might be sometimes in the fourth quarter or in the third quarter. It’s, yes, so that’s a normal thing. And what we’ve seen as well, due to these increasing in the company business, it’s about around EUR3 million more elimination of in the company profit. And of course, even in our holdings, we’ve got increase in costs. So overall that explains the gap.

[Operator:]

And next question comes from the line of Knud Hinkel with equinet Bank.

[Knud Hinkel:]

Follow-up on the question of Mr. Schwarz. You – on the industry, which are affected, so you say that the mix has changed towards larger accounts, so first question are larger accounts, in general, less profitable for FUCHS? And which industries are these? And second question would be on Scandinavia, again. You made a big acquisition in Scandinavia as far as I remember, Statoil. So would you say, given the numbers you published today, and your statement that this acquisition is still on track? That was the second question. And the third question on net working capital. I mean, you grow much – have a much higher rate in China than the other regions. So question for me is, how far can this quota go? It’s now around 23%. Can it go to, let’s say, 25%, 26%. What’s your feeling on that?

[Dagmar Steinert:]

Okay. Our business is our larger accounts, key accounts or bigger customers. Overall, the EBIT level is not less profitable. But it’s like in – regarding the gross profit, the margins, that’s a bit lower. Therefore, if you look at the development of our gross profit margin, there we see an impact. And who are we talking about? We are talking about our OEM customers. All these bigger accounts for us, higher volume, but still, of course, high-end products, and got nothing to do with commodities. Our Scandinavian acquisition, overall, it’s definitely on track. And if you remember, the Statoil Fuel & Retail exhibition was not only in Scandinavia, but it was as well business in Poland and in Russia. And if you have a look at these overall development, the acquisition, definitely, is on track and it’s a positive acquisition. But just looking at Scandinavia, there, the business is on the sales side, slightly a bit below expectations. But on the other hand, they are running well. But we’ve got these cost base in Scandinavia which is for the whole business. So it was this cost base due to these service agreement, which we will finish when we get our new plant, was made for the whole business, including these business in Poland and Russia and the Baltic state. Therefore, it’s overall not isolated. It doesn’t look as nice as it, yes, somehow is. Our net operating working capital, where we are today, close to 23%. As the business in China, we expected, of course, still due to grow. But I don’t see level of net operating working capital of 25% or something like that. I am convinced that we are at the upper end at the moment. But it will take time to come down, and I won’t promise you to see in the short time a significant lower number.

[Operator:]

The next question comes from the line of Sebastian Bray with Berenberg.

[Sebastian Bray:]

I would have 3, please. The first is on raw materials. Are there any particular kinds of additives for which your prices have risen most markedly. I’m thinking of things like (inaudible) . The second is, has anything, over the last 3 to 4 months changed your view in terms of business mix or indeed pricing power about the longer-term margin profile at FUCHS? Do you see 2016 level of about 16.4% EBIT as a normal level? Or has that changed? And finally, owing to the impressive growth in China, in particular, are there – and moving into 2018, are there likely to be any volume or capacity constraints in your plants in this area?

[Dagmar Steinert:]

Regarding the raw material side, especially the additive, we don’t see there a significant increases in special additives. No, that’s not – it’s just some are slightly up. There is a bit of movement and it’s a question of availability. Our view, or my view, on the long-term business mix or for the next 3 to 4 months, no, we don’t see there a change. And your question regarding volume and capacity in China, due to these significant growth, we don’t face a problem in production or capacity. As we are producing in – just from backside, but what we see, of course, is that the portion of product, which has to be imported, is increasing.

[Operator:]

We have a follow-up question from the line of Daniel Buchta with MainFirst Bank.

[Daniel Buchta:]

And the first one I have is on Europe. I mean, heavy organic growth was significantly up compared to the first half level. I assume a large share of that acceleration is coming from the intercompany sales to Asia. And can you give us a flavor of what the underlined organic growth rate here would be if you exclude the intercompany sales from Asia – from Europe to Asia. And then just to clarify on the free cash flow guidance. I mean obviously, you have cut off your announcement this week. Just to know the CapEx year-to-date or year-over-year slightly by EUR10 million. Is the guidance of roughly EUR100 million CapEx this year valid or does the lower free cash flow expectation also contain a significant amount of higher CapEx, not only the EUR10 million we have seen so far. These are the two.

[Dagmar Steinert:]

Yes, of course, you are right. The organic growth in Europe is of quite some important due to increases intercompany sales to Asia. But even if you would take that out, we would see a nice organic growth in Europe. But I can’t give you there a number.

[Daniel Buchta:]

So H1 is roughly relative for Q3 then, if you exclude that. Or just roughly?

[Dagmar Steinert:]

I can’t answer you that question, really.

[Daniel Buchta:]

Okay.

[Dagmar Steinert:]

Regarding the free cash flow, as we’ve got our growth initiative, and we are investing in our new plants and buildings. And for this year, one of the main topics is in our new plant in Australia, which we will open in the first quarter next year. And there are other bigger things as expansion of our specialty business in Germany in Kaiserslautern. And as we expect the CapEx to be around EUR100 million, it might be EUR10 million more, it might be EUR15 million more, but I don’t see more than that.

[Operator:]

We have another follow-up question from the line of Oliver Schwarz with MM Warburg.

[Oliver Schwarz:]

Again, and observation net operating working capital increase by more than EUR80 million and you said that most of that was related to the, very nice, increase in sales in the APEC region, which was EUR90 million. So am I right to assume that next to all of the increased sales were originated in Europe ,because that would explain a lot of more products being on shipment from Europe to China, and so on. And are you willing to mull expanding your capacities in China to fill the needs of what’s the Chinese markets seems to want to buy from FUCHS in the meantime. Because I’ve got the feeling that growth in China was much higher than expected and hence, FUCHS might be willing to drive down its net operating working capital, again, to go for more production in China to get that problem addressed. And second question is, adjusting from the reporting of additive producers. They are also not yet where they want to be in regard to passing on prices to customers, which is, basically, companies like FUCHS. So if I was to assume that your suppliers, of the editor’s side, would go for increased selling prices in Q4 and beyond, would I be right to assume that the situation of raw material price creep would also be, let’s say, a topic that we have to face in Q1 and Q2 next year? I know it’s a very hypothetical question, but just want to make sure of that. That was my 2 questions.

[Dagmar Steinert:]

And I will start with the last question, the passing on of price increases. Yes, we’ve got there a time lag, and it’s not as, yes, as fast as usual and we are a bit behind and, therefore, of course, we will see some effects in the upcoming quarters, that’s for sure. But I am very confident that we are able to manage these situations as we did in the past. Our production, our capacity in China, we’ve got there our plant in Jinghu and the one in Shanghai, what we are going to move in 2018, to Sejong where we are building up a new one; In Jinghu, we are talking about expanding capacity. We can get there additional pieces of land. But that’s all not a big issue, so but we don’t face there and capacity problems and, of course, a new plant in Guiyang, will be even more modern. And a bit bigger, of course, than the one in Shanghai. So to shift production, there won’t be a capacity problem, at the end, in China.

[Oliver Schwarz:]

Especially with the inauguration of your new plant in China in 2018, that might solve most of the problem of the inflated net operating working capital, which was basically triggered by higher sales to China.

[Dagmar Steinert:]

Not necessarily, because it’s not a question of having the possibility to produce it in China. Even today, we could produce additional products in China. But that’s a question of getting the approvals from our customers.

[Operator:]

And as a follow-up question from the line of Martin Roediger with Kepler Cheuvreux.

[Martin Roediger:]

It is related to America’s, and here the organic sales growth in Q3, which is obviously accelerated. And is that solely related to the new capacity from your new factory in Chicago? Is it coming from your increased efforts for your salesforce to capture market share in new areas? Or is it the recovery of the old industry in the U.S.? That would be helpful.

[Dagmar Steinert:]

Yes, thank you Mr. Roediger for your follow-up question. Our growth in North America is not related yet to our new factory in Chicago. And it’s more – or it’s a combination between recovery of existing customers. And of course, we are also able to get to gain some market share, so it’s a mixture between recovery and gaining new market share.

[Operator:]

[Operator Instructions] There are no further questions at this time. I hand back to Thomas Altmann for closing comments.

[Thomas Altmann:]

Thank you, Yota. Since there are no further questions anymore, this is it from our site. Thank you very much for your interest in FUCHS and joining us today. If you have any further questions, please don’t hesitate to contact me later. All the upcoming financial events, you can find at the end of the presentation and/or on our home page. Thank you very much. Have a good weekend, and goodbye.

[Operator:]

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