Fuchs Overcame Costs to Increase Profit in 2022


Fuchs Overcame Costs to Increase Profit in 2022

Independent lubricants blender Fuchs Petrolub SE reported a 2% increase in profits after tax in 2022 and a 19% bump in sales revenue, stating that raising its selling prices helped offset jumps in costs for raw materials. Fourth-quarter profits climbed 9%.

Headquartered in Mannheim, Germany, Fuchs said that its profit after tax for the quarter ended Dec. 31 rose to €61 million euros (U.S. $65.4 million), compared to €56 million.

Sales in the fourth quarter climbed 17% to €870 million, from €742 million.  Fourth-quarter sales in Europe, the Middle East and Africa rose 21% to €525 million. Asia-Pacific sales increased 2% to €223 million, while sales in North and South America jumped 35% to €171 million.

For all of 2022, Fuchs reported that profits increased to €260 million, compared to €254 million in 2021.

The company reported €3.4 billion in sales in 2022, up from €2.9 billion. In its annual report, Fuchs explained that the increase in sales last year was a result of strong organic growth of around 15% or €417 million, “which was driven by the increase in selling prices to offset the massive price increases on the buying side.

In particular, the strength of the U.S. dollar and the Chinese renminbi resulted in positive exchange rate effects of 4%, which increased sales revenues by around 122 million.” Organic growth refers to growth attained by increasing output and improving sales internally, while external growth refers to growth through mergers and acquisitions. Fuchs noted that the level of external growth in 2022 was negligible.

Sales rose 19% to €2 billion in 2022 in the Europe, Middle East and Africa region. “In the face of massive price increases on the purchasing side and rising inflation over the course of the year, all companies in the EMEA region were forced to significantly increase their selling prices in 2022,” the company noted in its annual report.  The company said it achieved above-average gains in sales last year in currency-adjusted terms in South Africa, Poland and Sweden.

Asia-Pacific sales increased 6% to €929 million.

“The region’s growth engine of the past years, China, was thwarted in 2022 by its zero-COVID strategy, which was consistently enforced with numerous lockdowns,” Fuchs noted. “Business declines, especially in the automotive sector, had to be accommodated, but were offset by mainly price-and volume-driven growth in other sectors and from other countries in the region.”

The largest sales increase occurred in North and South America, where sales jumped 39% to €653 million last year, mainly due to business expansion, price increases and positive exchange rate effects that were significantly higher than in 2021, the company said. Fuchs noted that North and South America faced high increases in raw material prices in 2022, which the company offset through price increases on the sales side.

“In addition, in a difficult economic environment, North American managed to generate business growth,” the company said, adding that it was also noteworthy that Nye Lubricants – acquired by Fuchs in 2019 – was able to significantly increase its sales revenues in 2022, compared to the previous year. Fuchs also benefited from the strength of the U.S. dollar and Brazilian real, with the resulting positive exchange effects amounting to $63 million.

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