Fuchs Petrolub AG on Friday reported that its profit for the first quarter of 2005 increased 42.4 percent from the same period of 2004, an improvement attributed to increased sales, cost cutting and a new accounting practice.
The worlds largest independent lubricant producer, Fuchs recorded 275 million (U.S. $348 million) in sales revenue for the three months ended March 31, up 3 percent from the first three months of 2004. Internal growth – mostly in the Americas – accounted for a 2.6 percent gain, while external growth, primarily the acquisition of Ovoline, contributed 1.4 percent. Fluctuations in currency exchange rates reduced revenues by 1 percent.
Net profit was 13.1 million, up from 9.2 million in the year-ago period. The bottom line for the first quarter of 2004, however, included 2.2 million in goodwill amortization, which ceased in 2005 due to a change in international accounting standards. Had amortization not been claimed in 2004, the net profit for the first quarter of 2005 would have increased by 14.9 percent.
The company, which is based in Mannheim, Germany, said it expects raw materials costs to rise significantly this year. But management predicted the company will nevertheless increase its profit this year by raising its own prices, by further cutting costs and because of the elimination of regular goodwill amortization.