In the face of challenges presented by rising costs of petroleum products, Fuchs Petrolub AG reported a 34-percent jump in its profit for the first half of 2005, compared to the same period of 2004. The Mannheim, Germany, company attributed the performance to a combination of growth, cost-cutting and lower financing costs, as well as increases in its own prices.
One of the worlds two largest independent lubricant firms, Fuchs said Aug. 11 that it earned 31.1 million (U.S. $37.9 million) during the first six months of this year, up from 23.2 million during the year-ago period.
Part of the improvement was due to growth, both internal and external. Acquisition of the Ovoline business in England boosted sales revenue by 6.8 million. Sales from continuing operations rose 24.8 million thanks to increases of Fuchs prices and a shift in sales toward higher-margin products. Management said the biggest chunk of internal growth came from the Americas. Altogether, sales revenues increased 4.9 percent to 575.7 million, despite a loss of 4.8 million to less favorable exchange rates.
Management said the company also benefited from more efficient cost structures and a reduction in financial liabilities, although it did not provide details. It reported capital expenditures of 11.8 million for the first half, an increase from 9.3 million during the first half of 2004. Most of this years investments were made at facilities in Mannheim, Stoke-on-Trent, U.K., and Chicago.
Fuchs said it remains optimistic about its outlook, despite expectations that raw material costs will keep rising. It said it plans to counter the latter trend by specializing in higher-margin products, raising prices and managing costs. Moreover, it expects to benefit from falling expenses for restructuring and financing, cessation of goodwill amortization and property sales that should yield approximately 6 million.