Dear ladies and gentlemen, Welcome To The Analyst Conference Call of Fuchs Petrolub SE. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity for analysts of Fuchs to ask questions. If any participant has difficulties hearing the conference, please press star key, followed by zero on your telephone for operator assistance. May I now hand you over to Lutz Ackermann, who will start the meeting today. Please go ahead.
Yeah. Good afternoon, ladies and gentlemen. Lutz Ackermann speaking. On behalf of Fuchs Petrolub, I wish you a very warm welcome to today's conference call on the fiscal year 2021 figures. As always, all relevant documents have been uploaded at 7 A.M. this morning on the IR section on our homepage. With me on the call today is Stefan Fuchs, CEO, and Dagmar Steinert, CFO of Fuchs Petrolub. Stefan and Dagmar will run you through the presentation, which is then followed by a Q&A session. One last remark, as Stefan has a very tight schedule today, he may have to leave a bit earlier. Having said that, I would like to hand over to Dagmar. Dagmar, please go ahead.
Yeah. Thank you, Lutz, and a warm welcome from my side. Stefan Fuchs, as he has a tight time schedule today, will dial in a couple of minutes. Therefore, I will start and run you through the figures. Of course, Stefan Fuchs will make some comments on other topic. Therefore, I would like to start with chart number 5, our highlights for the year 2021. It was really a challenging environment in 2021. It was like the second year in a crisis and we completed it successfully. Compared with 2020, our sales increased significantly by 21% to EUR 2.9 billion. We also exceeded the level of the pre-crisis year, 2019, by 12%. Our EBIT improved by EUR 50 million and came in at EUR 366.3 million.
With all that, we exceeded our original forecast of the year 2021, and of course, also the results from the year 2019. Our sales growth 2021 was driven by a surge from sales price increases. It was a really challenging environment with all these price increases on the raw material side and of course, other inflationary cost increases. What we've seen as well is a strong net operating working capital build-up, and this is due to higher business volume and of course, the inflation in raw material prices. Overall, as already said, it was a successful year for us and the Executive Board and Supervisory Board are therefore proposing a 4% higher dividend for the year 2021. Now I would like to turn to chart number 6, our sales development.
There you can see our quarterly sales development for three years, starting with 2019, 2020, 2021. Of course, you see in the second quarter of the year 2020, the strong impact of COVID-19 and then the recovery of the economic environment. It started in the second half of 2020 and was continued in the first half of 2021. In the second half of 2021, we see more an increase in sales prices due to price increases to compensate for our raw material price increases. Looking at the next chart, number 7, our EBIT development, it's more somehow looking at the year 2019 or 2020, a similar development. What you see here on the earnings side, of course, as well, is in the year 2021, the impact of inflation.
Not only raw materials, but as well the impact of other cost inflation. Now I come to our next chart number 8, our group sales. As you can see, the strong year-on-year growth of 21% is based on organic growth of 20%. That is driven largely by an expansion in business volume. In addition, of course, as already said, increases in sales prices to compensate for the price rises on the procurement side became increasingly significant in the second half of the year. Acquisitions and exchange rate effects played no role. All regions contributed to the sales growth. I will come to the regions in a minute. Therefore, I would like to continue with our earnings summary for the full year 2021. Our sales are up 21% and, of course, we benefited from our increase in higher selling prices.
We managed to increase our gross profit only by 13%. That is due to the impact of higher raw material prices. Our gross profit margin of 33.6% is 2.3 percentage points down due to the strong increase in raw material prices. If you look at the other functions costs, they increase as well, but this increase is mainly driven by higher freight costs and they increase lower compared to the sales growth as well as to the gross profit. Our at-equity companies they provided EUR 9 million EBIT to our earnings, and overall, our EBIT came in by EUR 363 million compared to EUR 313 million in the year before. Our EBIT is up 16% year-on-year, and our EBIT margin is 12.6%.
Our CapEx is significantly lower and is now on the level of depreciation and amortization. Our net operating working capital increased quite a lot, and that reflects the higher business volume and of course, the price inflation. Therefore, our free cash flow before acquisitions came in at EUR 90 million compared with 2020 with EUR 238 million. Now I would like to come to chart number 10 to give you a slight overview about our region EMEA. In EMEA, our sales are up 18% year-on-year. That was mainly driven by organic growth. Compared to 2019, we achieved an 8% increase. We have seen negative currency effects of Eastern European countries, but they are slightly overcompensated by positive effects, mostly from South Africa and U.K.
The EBIT of the region EMEA was significantly impacted by increasing raw material prices and a considerable increase in transport and labor costs. Therefore, the EBIT for the region EMEA is EUR 166 million, which is EUR 2 million below previous year. If you look at Asia Pacific, there we can see that our sales, that's chart 11, our sales are up 22% year-on-year and as well, mainly driven by the organic growth in China. Compared to 2019, sales were up 19%. In addition to China, all other countries recorded organic increases in sales revenues except Malaysia. That was COVID-19 related. A strong Chinese renminbi and Australian dollar more than offset negative translation effects resulting from weakness in the rest of the region's currencies.
The EBIT of the region was EUR 122 million, as well as the sales 22% above previous year. Coming to the next chart, number 12, North and South America. There we see as well an increase in sales by 22% year-on-year. This is volume driven and we see a strong organic growth in North America, but we have also seen an uptick in South America. Compared to 2019, sales are up 13%. Of course, the region continued to benefit from our acquisition of Nye and PolySi Technologies in the last year and Nye as well increased profitability. We've seen negative currency effects from the weak U.S. dollar and of course of the South American currencies. We have a strong increase in earnings.
Our EBIT of the region is EUR 60 million in the year 2021, compared with EUR 42 million in the year 2020. The year 2020 in the region, North and South America was quite a very weak performance and a very weak year. Now I would like to draw your attention to the next chart to our net liquidity. As we've been able to exceed our forecast in terms of sales and EBIT. We missed it in our free cash flow before acquisitions. On this chart number 13, you can see the development of our net liquidity starting with December 2020. We get a cash in from our earnings after tax with our depreciation and CapEx. As we put our CapEx down on depreciation level, we have more or less no impact.
With a cash outflow of EUR 152 million, you can see that we significantly increased our net operating working capital. This is mainly based on an increase of inventory, which reflects the massive price increases. In addition to that, we have another cash outflow of other changes of EUR -18 million, and this is due to the tax payment and the tax effect. In the year 2020, we had less tax payment, and in the year 2021, we had to pay taxes from regarding the year 2020, as well as advance payments for the year 2021. In total, the difference or it was an amount of EUR 34 million above 2020. On the next chart, net operating working capital, you can see the development of our net operating working capital.
As already mentioned, it's significantly up and we are reporting 22.6% of sales. It's not the highest number. You can see in 2018 it was even higher. Of course, compared with 2020, it's a steep increase and that it's based not only on the increase of business volume, but as well on the price inflation. On the next chart 15, you just see some numbers of our strong solid balance sheet, and that reflects as well in the timeline our strong cash flow generation. In the first rows, you can see that we as we increased our business volume, of course we increased the number of total assets.
Looking at our equity, we report an equity ratio of 76%, compared with 75% the year before, and that's a very strong number. We have a net liquidity position, even if it's below last year. We reduced our CapEx back to depreciation amortization levels. In 2016, we already started our CapEx program and our free cash flow before acquisition.
Of course, in the years 2016 to 2020 has an impact of these CapEx program. In the year 2021, yes, it looks quite low with EUR 90 million, but I already commented on the strong net operating working capital increase. Coming to the next chart, 16, there you can just see what I already mentioned. We propose a higher dividend, 4% for the year 2021, and that is 20 consecutive years with dividend increases. With that, I would like to hand over to Stefan, who's going to take over for the outlook and some other remarks.
Hello to all of you. Here is Stefan Fuchs. I am now on slide 17, where you see our outlook. We have made that outlook prior to the Russia and Ukraine conflict. Therefore, I think there is a high uncertainty behind that, but I am not able to quantify it, and I'm sure we will have later an in-depth discussion on that. Our initial forecast suggested a sales growth starting from EUR 2.9 billion in 2021 to a range between EUR 3 billion and EUR 3.3 billion. This is mainly organic growth, but also some influenced by price increases. We have an EBIT range of EUR 360 million-EUR 390 million. We see the FBA on the prior year level.
You know, Dagmar just mentioned the EUR 150 million NOWC increase through mainly due to inflation in the year 2021 should not be repeated to the full extent, and therefore we have forecasted prior to the Russia crisis free cash flow before acquisition of EUR 220 million. If you go to slide 18, you can see the raw material price tendency in the last couple of weeks. I think the red curve you know better than myself, so this is the crude oil increase. We have seen jumps or significant jumps directly after the war started. It went down again to a more normal level.
As you all know, our base oil prices have a much slower development, and therefore we have now got increase announcements of around 10% in the Americas and Asia, and just about 5% in Europe. I am sure there's probably more to come. I would now like to go back and sorry for that, and also sorry for my delay. I would like to go to slide number 4. On slide number 4, you have a summary of the Ukrainian and Russian business of Fuchs. I think we've been very successful in the last couple of years. I must say I'm absolutely shocked from what I see in the television, and we fully condemn the war.
We also praise the sanctions because I think it's the only way to get Mr. Putin back to a more rational thinking. I feel extremely sorry about our Ukrainian colleagues. I had a Teams call with them on Wednesday. They're all alive. They're all so far in good condition. Most of the men have to fight in war. We have now evacuated some of their families, so they've arrived in our Polish subsidiary in Gliwice. We try to get more people out. We have 55 employees in the Ukraine. It's for us a trading company. They normally buy their finished products in Poland, in Belgium, in Germany, and in the UK.
The office and warehouse is in Lviv in the west, but all our application engineer and sales people are spread all over the country. In 2021, we had sales of EUR 20 million. The business more or less came to a standstill on the 24th of February. Also, they have shipped out products in the last weeks to the agricultural companies there. From myself and from the company, they have a clear message. Look after yourself before you think about making money. I must say, watching the people there, they're extremely brave and motivated. We have to see how that continues to develop in the next couple of weeks and months in Russia.
I must say I also had a conference call yesterday with our leadership team, and they were crying on the Teams session. It's also terrible for them. Many of them are married to Ukrainians or have, you know, links into the population, and they also don't like the war. Obviously, they're all afraid to say something. In Russia, we have 122 employees. We have an office rented in Moscow, and we have the plant in Kaluga. We did EUR 67 million in sales in 2021, and we have made a bold step this week. We stopped all deliveries from intermediate products and finished goods, also from raw materials from any Fuchs subsidiary around the world into either Fuchs Russia or the country of Russia.
Since you know Russia you know for oil, but the chemical industry is not there. They have to import a lot from a raw material standpoint. We have more or less withdrawn their business model. We don't do any exports from Russia. It's via most of the countries worldwide, local for local. But we continue our plant and our operation on a very limited basis. I reassured them yesterday, we do not intend to shut down. We do not intend to sell. We already got offers, unsolicited offers from people wanting to buy the plant. We are there hopefully for the long term. But for the time being, we have cut all supplies. It's a really sad story, but I think this is all we can do, and we revisit the position on a daily basis.
Now, when we go back to page 2, you all know that Dr. Christoph Loos stepped down, or he announced he stepped down in October from our Supervisory Board. Once the shareholder assembly on May 3 is over, he continues to lead our Supervisory Board meetings. We had one yesterday, and we have one in December. On that side, it's business as usual. But he made his decision, and I think we catered for our future in a very good manner. Dr. Christoph Loos, who was in the Supervisory Board since about 2 years, he will be elected to be the Chairman, as that agreement was made within the participants once the shareholder assembly is over. For the new candidate, we have Dr. Markus Steilemann.
If you go to page number three, I can go a little bit into the detail with regard to Dr. Markus Steilemann. He is exactly the person we were looking for. He has a chemical background, which was important to us, so he studied chemistry in Aachen. He also has a business studies diploma. He's rather young, and he's an active CEO, so he's the CEO of Covestro. Fuchs is his first mandate, and he's really looking forward to it. We are very, very happy to have him. Dr. Christoph Loos, as you know, is the CEO of Hilti. At the end of this year, he will step down being the CEO, and he will move in what they call the which is a little bit more than the German supervisory board, but also a very young fellow from a very successful company.
We admire him for their marketing, for their IT capabilities, and also for their succession planning with regard to HR. We are happy with him as the supervisory board chairman. We are very glad with Dr. Steilemann and all others will continue. My sister is the deputy chairwoman, Ingeborg Neumann. I think she is a really outstanding chairwoman of our audit committee, and we have got two employee representatives from our plant in Mannheim, Mr. Lehfeldt, and from Kaiserslautern, Mrs. Stahlschmidt. That's all Dagmar and I had for the time being, and now we really look forward to go to a discussion with you. Thanks a lot.
Thank you.
Yeah. Maybe one. Yeah.
Sorry.
Sorry. Maybe one last remark from my side. Before we open the Q&A, I
Thank you. We will now begin the question and answer session. If you have a question for our speakers, please dial 0 and 1 on your telephone keypad now to un-mute. Once your name has been announced, you can ask a question. If you find your question is answered before the agent speaks, you can dial 0 and 2 to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question is from Martin Roediger, Kepler Cheuvreux. The line is now open, please go ahead.
Good afternoon, Ms. Steinert, Mr. Fuchs and Lutz. I have three questions. Starting with the first one, your net earnings are up by 15% in the full year 2021, but the dividend proposal signals a 4% increase in dividend. Why do you lower your payout ratio? I can also continue with the other question, but I think it's better, I ask them one by one.
I take the question. Thank you for that, Martin. Well, last year, we had quite a decrease or a difficult year. You know, our stable dividend policy are stable, which means we pay at least the absolute amount of dividends we paid last year. It's always our intention to increase the dividend, and we don't look at the payout ratio. I mean, we increase our dividend for the year 2021 by 4%. Looking into the future or out of the window, we all don't know what's happening in the near future regarding Russia, Ukraine, direct, indirect impact. I think
Yeah.
It's our dividend is fine.
Second question is on your regional earnings splits. When it comes to the so-called holding and consolidation line, the EBIT was EUR 6 million in Q4, which is a quite high number compared to history. I understand this is due to a license income from subsidiaries. Is that this figure a sustainable figure or a one-time effect? And is that related to the Pentosin business or to any third-party business?
No, it's not a license impact. Of course, in the last month or closing, yeah, if you do the closing accounting, you have one or the other release of a provision. There we see one or the other impact. Of course, it's a question of intercompany profit elimination, and there sometimes it's just a swing. There is no, yeah, let me say, significant one-off figure in there.
It's a one-off?
No, it's, I mean, regarding intercompany elimination, that always, of course, depends not only on the volume of intercompany sales, but as well on the underlying margin. Therefore, there is no burn from that in the fourth quarter.
A good question. I understood on the full year basis that the 20% organic sales growth, it's more than half or the majority of that was volumes and less than half was pricing. Is that the right understanding? What would you say on the full year basis was more or less the split between volumes and pricing?
No, it's correct. The 21% growth in sales is dominated by volume.
Okay, thank you.
The next question is from Markus Mayer, Baader Bank. The line is now open. Please go ahead.
Yeah, good morning, Ms. Steinert, Mr. Fuchs and Lutz. I have two questions as well. The first one is also on the volume effect. In the fourth quarter, I see that the sales volume in particular in North and South America is up stronger than in the other regions, up 17% organically. To my question is this 'cause in the fourth quarter overall, I think that organic growth mainly comes from the price side. But here in the Americas region, was there also a volume effect? In particular, I'm asking this as I'm asking myself if you gain market share due to the Lubrizol fire at the grease plant. That's my first question.
I would say that it was mainly a base effect because in the year 2020, the Americas were hit the most with regard to COVID and the longest, and therefore it was a base effect. We had at the end of the day, a very good development in Mexico, in Nye and in South America. You can't relate it to the fire. Obviously, the business I think is gone for Lubrizol and then many companies took over parts of the business, but you won't recognize it in our overall numbers.
Okay, understood. My second question is again on this Russia-Ukraine thematic and the war. I understood correctly that you're not sourcing from Russia. Have you an idea how this looks like for competitors operating in Western Europe? I guess several of the smaller independent competitors are sourcing from Russia, and therefore might have difficulties. Can you shed some of your market insights there?
With regard to Russia, what they have got the regular Group I base oils which are not so difficult to be replaced. The whole question about Russia and the Ukraine for me is the secondary impact on our customers. For example, if you hear about cables from Leoni which won't come from the Ukraine for some time, and hearing about palladium out of Russia, which will have another impact on the chip industry. It's rather the question how our customers will be impacted and whether we get the secondary impact, which might be higher than the direct impact from our operations over there.
Mm-hmm. Okay, understood. Thank you so much.
What I would like to add also is all the people look at Russia and the Ukraine, but we also face another significant part. Number one, the world with regard to material flows was not yet fully established, and that's another hit to the material flows what is happening due to Ukraine and Russia. The other big impact also is the new COVID outbreak in China. With the lockdowns in some couple big million cities means also there we see a number of manufacturing plants shutting down at the moment. That's also something which will have an impact on the world economy.
Mm-hmm. Yeah. Thank you so much.
The next question is from Sebastian Bray, Berenberg Bank. The line is now open. Please go ahead.
Hello, good morning, and thank you for taking my questions. I'll ask them one by one. The first is on the guidance as it stands, not incorporating Russia and Ukraine. Is there a chance that there is an offsetting impact from the weakening of the euro versus the US dollar here? Because I look at this and I think one of the consequences of what's happened seems to be a flight to safety and appreciation of US dollar. Could you just let us know what your assumed EUR/USD rate is for the year 2022?
I have to look it up. Give me one second, please. Ask your second question. I give it to you in a minute.
Of course. My second question is on the price, and I believe it builds on what Martin was alluding to earlier. We've got a 21% increase year-on-year in sales driven by volume. My understanding was that Fuchs put through three rounds of price increases in 2021, and yet implicitly the group-wide price only seems to have gone up by a mid-single-digit percentage over that period.
Can you give us an idea of how much room to the upside there is to the EUR 3 billion-EUR 3.3 billion sales number that is being guided for 2022, if it turns out to be necessary to put through further price increases. If I were to say, well, even if I annualize the impact from the price increases in 2021, it looks like you basically get to the 5%. You get quite close to the guided 5% or so 2022 price increases. What I'm basically asking is implicit in the Fuchs guidance no further price increases for the year 2022?
In our initial guidance, which is prior to the Russia-Ukraine war, definitely.
Yeah.
We had a top line growth targeted and an impact from, you know, the full year effect of the price increases. Be careful when you say we made three price increases. As you know, we live in a very heterogeneous world. Some countries made five price increases, others made two. It always depends also on the currency rate. The RMB appreciated in China compared to the euro, so their need for price increases was not as big as in Western Europe. Each country does it on their own perspective, more or less. You have seen our percentage margin deteriorating. We have at the end of the year had a good grip on the raw material pricing.
We are now out again for price increases, mainly for general inflation, trade costs and personnel expense increases. However, what we expect now coming from the Russia crisis, we believe there is more increases necessary and our entire organization is on a high alert with regard to canceling price agreements with customers and go out again.
That-
And-
Understood. Sorry, please go ahead, Dagmar. Apologies.
No, I just wanted to give you the answer for our budget exchange rate in US dollars. It's close to 1.16. As it is today, it's close to 1.11. So there's quite an exchange rate effect.
That's understood. If I may come to the topic again of electric vehicles, I suspect given Lutz's earlier words, we'll hear more about this at the capital markets day. Am I right in broadly saying that Fuchs grew in the automotive area within Europe in line with its end markets? Or in other words, electric vehicles were not a substantial headwind to the company in the year 2021.
We do not anticipate this entire development to be a major headwind for us. Obviously, when you look on the car registration numbers, it's still not a huge deal. Also, the percentage goes up from the car registrations, but it's mainly, at least in Germany, it's mainly hybrid cars. The impact is not there. We have also on the thermal fluids and on other applications made some inroads on the e-mobility market. We do not see this as a major concern for us. There's equally more opportunities than threats.
Understood. Thank you for taking my questions. Dagmar, apologies for being a bit specific on the FX. Yeah, the answer is appreciated.
You're welcome.
The next question is from Lars Vom Cleff of Deutsche Bank. Your line is open. Please go ahead.
Yeah, thank you very much for taking my questions. Just a quick follow-up, if I may. If I'm thinking about your EBIT margin or possible EBIT margins for the running fiscal year and the quarterly development, and if I take into account that you tend to show a certain time lag when it comes to passing on your input price inflation, is it fair to assume then that the margins during the first half of 2022 should be significantly lower than hopefully in the second part of 2022?
I can't give you an answer because I don't know. Normally prior to Ukraine and Russia, I would have said, you're right, but now I really can't answer that question.
Okay. Thanks.
The next question is from Matthew Yates of BofA Securities. Your line is now open. Please go ahead.
Hey, good afternoon, everyone. Maybe just a strategic question around M&A. As you just said, the balance sheet remains incredibly strong and gives you a lot of optionality. Is there any reason to think that as the world begins to somewhat normalize for the most part, that now you can travel more, do due diligence, have negotiations outside of Europe, that you might have opportunities over the coming year or so, to step up the M&A activity?
We are constantly looking for targets based on our strategic outline. I would not say that COVID hindered us. We continue to pursue different companies. I'm sure we will be able to do the one or the other smaller type, but I don't see a larger M&A project coming this year. It is just because of availabilities, not that we don't want it, but the question is really there are no targets out at the moment.
I don't wanna preclude what you're planning to talk about at the capital markets day. Can I put a conceptual question around your margin targets? In an environment where you do have raw material inflation and significant price increases to pass that through, is the intention to also recover the margin, or do we anticipate just a mechanical dilution from that, and we need to think about revising that midterm margin target just to reflect that?
That's the $3 million question. We normally, for us, the percentage margin is very important. Over the last 20, 30 years, what we have seen is that after a period of raw material price increases, they always came down again. Now we see since 24 months or let's say 18 months an upward trend and therefore I can't answer the questions. We have captured the absolute amount more or less by year end. We will now take on a route to go back to bolster the percentage margin. But I can't really predict what's gonna happen now because then again, as you know from our track record, we always run behind a couple of months and therefore I can't predict where we go this year.
Thanks.
It's a number one priority of ours.
Thank you.
There are no further questions at this time. As a reminder, to ask a question, you have to press zero and one on your telephone keypad. Next question is from Michael Schaefer of BHF. The line is now open. Please go ahead.
Yeah, thanks for taking my question. Good afternoon to all of you. Well, two, if I may. The first one coming back to your underlying raw material inflation assumption. So we talked a lot about the Ukrainian and Russian effect. Maybe you can shed some more light on what you think the impact is on the European refinery availability here, because it looks like it's basically also what you show on slide 18.
There's some loosening correlation between crude on the one hand and base oil on the other. So this would be one A, if you like. Related to this one, you said that you have been pretty much covered with the raw mat inflation. Right. Could you shed some more light on how you see additive pricing evolving, additive costs into 2022? Should we expect another inflation scenario there as well, or is this primarily related to base chemicals, sort of second round effect here? Those are the first questions.
If you look on page 18, this is a prime example what the difference is between pricing on crude and base oils. Because crude jumps up and down, base oil is more flat development. You see this peak in the red line is more speculation. Base oils will go up because the refinery margins are not there where the refineries want them to be. I think you have to expect that the entire value chain goes up because on the additive package you have certain base oils in. I personally assume that all three components go up, the feed additives, the additive package and the base oils.
Okay. Second question is probably more to Dagmar. On trade payables in 2021, I recognize there's a decline even compared to 2020, despite all the inflationary scenarios. It's a kind of pressure from your suppliers basically on that end? How should we think about this evolving into 2022?
Well, if you look at the trade payables there, we have. Hold on. It was an increase compared to 2020. Of course, they went up due to the price increases as well. But not as much, not in line with. I was trying to see if they increased more.
Okay, then perhaps we can look on this one. Okay, we'll do this afterwards on the call. Thanks.
Next question is from Andrew Stott, UBS. Your line is now open. Please go ahead.
Yeah, good afternoon. Thank you for taking a couple of questions. Firstly, I just wonder if you could just talk a bit more broadly around what you're seeing. Thank you for the comments, by the way, on Russia, Ukraine and the comments you made on China, all very useful. I just wonder if you could talk around the regions, what order books look like.
We may have lost.
Still there.
Yes, just a moment please.
Andrew?
We lost the line of Andrew.
Maybe we can go ahead with the next one, and we can let Andrew ask a question later.
Andrew should be able to ask his question now.
Okay. Can you hear me now?
Yes.
Yeah.
Okay. I don't know what happened there. Sorry about that. Yeah, I don't know how much you heard the first question. It just basically on order books, momentum, what you're seeing around the regions.
We have got actually very high order books in the United States, very high order books. Unfortunately, we can't ship all the orders because we still face significant raw material shortages, maybe the most in the States. Also in Europe, we face shortages, so we can't supply to the full extent. In China it's more balanced. I would say the order books, especially in North America, we are full so far, but also in Europe, we could sell more if we would have all the raw materials.
Okay, that's clear. Thank you. The follow-up question I had was on your energy and CO2 side of things. You seemed to do a pretty amazing job last year. Looking at your report and accounts, you've seen a 20% reduction in your CO2 emissions. You've also seen an absolute reduction in your energy consumption, despite the fact your sales are up 21%. Can you talk me through what you've done in the last 12 months, and then can you talk as well about the energy bill, and to what extent, if any, you'll be impacted by energy prices? Thank you.
You know, it's a good question, and this will be one of the key topics in the capital market day in the summer. Also with regard to e-mobility, you know, to give you more insight. Our energy costs are just below 1% of sales, so we are not very energy intensive. If you look at the CO2 bill of a lubricant, most happens prior to our gate, so the raw material generation or after our gate in the usage. We are impacted now by freight and by the raw material costs. But we have made a lot of efforts in our plants with regard to energy savings, LED lights, solar panels and insulation mainly.
How much of your energy is now renewable, please?
In Europe, everything. We switch wherever we are able to do so to green power all over the world.
Okay, super. Thank you for taking the questions.
I have to say sorry for that, but I must leave you now. It's really brutal time, so I have at 1 o'clock an appointment. Thank you very much, and sorry, but I look very much forward to seeing you hopefully all physically in the Capital Markets Day. We had today the first physical press conference since two years, so I have to apologize.
Thank you so much.
Do you still want to carry on with the Q&A session, the rest of you?
Of course.
Absolutely, yeah. If there are questions, we can continue.
Yes. The next question is from Martin Roediger, Kepler Cheuvreux . Your line is open. Please go ahead.
Just two follow-up questions. You mentioned you run your Russia business at a very low level, but you certainly continue to pay your 122 employees. Is it right to say that this business will be loss-making going forward? Is it right that this topic is not part of your guidance?
Well, of course, our guidance is not influenced by the Russia-Ukraine conflict. We don't expect now Russia to make a loss. I mean, yes, the business is significantly going down, and we already have some people in Russia on, like, a short-time working and so on. They are still doing the local business. We will have an impact, of course, not only on sales, as well as on our earnings from that conflict. Today we can't say to what extent.
The second question: Your plant in Kaluga is, I think, quite sizable. Can you quantify the amount of assets there? I just want to know what could be the write-offs in case the Russian government will nationalize your plant.
We don't expect to have that happen because we are still continuing our local business. We comply with all the sanctions and therefore we don't see that. Overall, if we would have to write off all the assets and everything in Russia, which I absolutely do not expect, there we would talk about around EUR 25 million.
Okay. Thank you very much.
The next question is from Markus Meyer, Baader Bank. Your line is open. Please go ahead.
Yeah, only one question, maybe not anymore that relevant in this Russian-Ukraine war. Nevertheless, I wanted to ask how the first quarter has started volume-wise and also from the different kind of end market segments and the regions that would be helpful.
Yeah. Well, if you compare it with the first quarter 2021, of course, it's much weaker as we had very strong first quarter in 2021. On the other hand, the start of the year, we don't see, at least not in January, February, an impact of the crisis, Ukraine and Russia. As Stefan mentioned before, our order books are full. The impact of again, increasing raw material prices is not seen in the beginning of the year.
Okay, I see. Maybe a follow-up follow-on question on this. Looks like in the fourth quarter, there was also kind of maybe not destocking, but at least not restocking as base prices come down. As such, maybe some customers, in particular in Asia, might have thought that also lubricant prices go down. Do you see now in Asia certain restocking tendencies?
No, we haven't any signs of that.
Okay. Thank you.
We haven't received any further questions. I have actually.
No further questions, we've come to the end. Maybe one last chance if there is one. Does it seem to be the case?
Thank you. I see. Yes, to ask a question, you would have to press zero and one.
If there are no further questions, I think we call it a day. Thank you very much. Thank you very much for your interest, your questions, and yeah. Goodbye and enjoy your weekend.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.