Fuchs Profits Up at Midyear


Fuchs Petrolub AG reported last week that its profit for the first half of 2003 was 10 percent higher than for the same period of 2002, thanks primarily to lower financing and tax costs.

The Mannheim, Germany, company – the worlds largest independent lubricant supplier – had net income of Euro 13.2 million (U.S. $14.35 million) for the six months ended June 30, up from Euro 12 million for the year-ago period. The company did not break out results for the second quarter. However, assuming there were no adjustments to first-quarter data reported in May, last weeks figures included net income of Euro 7.4 million for the three months ended June 30. This would represent a decline of 2.6 percent from the second quarter of 2002.

Fuchs income has been hampered by the appreciation of the Euro. First-half sales revenue was 4.2 percent higher before currency translation, with approximately one quarter of the increase stemming from acquisitions. Currency translation cost the company Euro 42.7 million, though, resulting in an overall drop in sales revenue of 3.7 percent, to Euro 522.5 million.

The company lowered costs for manufacturing, selling and administration, as well as research and development, so that its first-half operating results (before interest, taxes and other costs) dipped only slightly, to Euro 42.4 million. Lower financing costs and reduced taxes put earnings for this years first half ahead of 2002s.

Management said it was pleased with the results, especially in light of the weak state of the global lubricants industry. The company estimates that lube demand in the United States fell 9.5 percent during the first half of the year, compared with the same period of 2002. It said that demand in Japan was flat, while consumption in Western Europe slid 2.3 percent. It concluded, Notable growth only occurred in the developing countries and emerging nations of Asia, particularly China and India.

Fuchs predicted that its own sales for 2003 will top Euro 1 billion and that its earnings will approach last years results of Euro 24 million.

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