In 2019, FUCHS continued its investment program started in 2016 for the fourth year. As planned, investments, primarily in property, plant and equipment, rose to the record level of EUR 154 million in the reporting year.
The region Europe, Middle East and Africa (EMEA) was the focus of the expansion and modernization measures, accounting for around 60% of the expenditure. The largest single investment in the region was in Sweden where the construction of a new plant is well underway. In Kaiserslautern, the construction of a new high-bay warehouse, new production and office space was completed, and work continued on a new polyurea specialty grease plant, with which Kaiserslautern will further expand its position as a location for specialty lubricants. At the Mannheim site, work continued on optimizing internal processes in various ways and the tank farm was modernized and expanded. The UK continued the construction of its new raw material warehouse, while in Russia, construction work began on the plant expansion.
Investments of EUR 31 million were carried out in Asia-Pacific. FUCHS opened one of its most modern production plants with an automated high-bay warehouse and fully automated production in Wujiang, China. It replaces the previous plant in Shanghai and has almost twice the capacity. The administration and research and development laboratories remaining in Shanghai were expanded in 2019.
Around EUR 22 million was invested in the region North and South America. In the US, work at the Harvey site continued on a plant for the production of lubricants for OEM customers as well as the modernization of the metalworking fluids plant, and investments were made in additional office space. In Kansas City the modernization of the site
FUCHS expected growth in sales revenues of between +0% and +4% for the year 2020 when the 2019 annual financial statements were prepared on March 4. This is based both on organic volume growth and external growth. The latter is mainly due to the acquisition of NYE, a manufacturer of synthetic high-performance lubricants in the US, which was completed at the end of January 2020. FUCHS also expected a slight increase in EBIT of between +0% and +4%. The strict cost management will continue, and new hires will be kept to a minimum. The negative effects of the coronavirus on the global economy and the FUCHS Group cannot be estimated at present. However, they will at least temporarily lead to significant declines in sales and earnings.
The extensive investments in production plants and IT infrastructure will continue as part of our growth strategy, and research and development activities will also be strengthened. One of the objectives is to actively shape the increasingly complex requirements of the future. Given the profitability and financial strength of the Group, this process, which temporarily involves higher cost increase than earnings increase, will continue despite the slowdown in the global economy. FUCHS plans to invest EUR 120 million, particularly in Germany, the US, China, South Africa, Russia and Sweden. Capital employed will continue to increase and the net working capital required for the growing volume of business will also rise. For the 2020 financial year, FUCHS therefore anticipated a free cash flow before acquisitions of EUR 130 million when the annual financial statements were prepared. This expectation also does not take into account the negative effects of the coronavirus on the global economy.
FUCHS Group says it will continue with planned investments in 2020
