In English. Okay. Perfect. So I start again. Good morning. Good , Mr. Fuchs. Good morning, ladies and gentlemen. Welcome to DMG MORI here in Pfronten. DMG MORI is a worldwide machine tool builder. DMG stands for Deckel, Maho, Gildemeister, three major German machine tool builders. And here is the original Maho site. Let's say in the 1980s, Deckel and Maho were Germany's biggest machine tool builders. And together with Gildemeister and Bielefeld, DMG was founded. And in 2014, we joined Mori Seiki in Japan. So this is a German-Japanese cooperation. So we say it's German engineering and Japanese quality. You cannot beat this. So that's our world here. So I would like to start with a short presentation to get you familiar with DMG MORI. So please start the video. We prepared a video to show you what we are.
At DMG MORI, Global One embodies our dedication to being the top-tier partner for our customers across the globe, driven by state-of-the-art technology. With 17 production sites worldwide, anchored by our production sites in Iga, Japan, and Pfronten, Germany, we have built a robust global network. Our team of 13,000 employees manufactures high-precision machines through process integration and automation. We produce key components like spindles and ball screws in-house, ensuring consistent quality, shorter delivery times, and a secure supply chain. Global One is about our dedicated teams who tirelessly work towards our shared goal: delivering excellence. And by entering the age of Machining Transformation, MX, we are driving process integration and revolutionizing the machining industry with our innovative technology. We specialize in five-axis and mill-turn centers, offering an extensive range of products designed for highly efficient process integration.
DMG MORI's technology cycles enable you to integrate complex machining into a single machine. And with our wide range of advanced automation solutions, we have answers to the challenges posed by skill shortage. We not only streamline processes, but also free up time for your employees to work productively on other tasks. Common problems like chips, coolant, and mist are tackled through our unique technologies, ensuring smooth and uninterrupted operation even during extended production cycles. Our commitment to sustainability is comprehensive. Our machines are manufactured in efficient factories powered by renewable energy. They have a green mode and are characterized by their energy efficiency. Embracing the digital era, we introduce solutions that facilitate the digital transformation in your production. Networked machines relieve employees, overcome barriers, and create efficient and pleasant working environments.
With DMQP, DMG MORI Qualified Products, we provide our customers certified, perfectly matching peripherals and accessories from a single source and delivered as a one-stop shop. But our commitment does not end with the sale. Our dedicated customer service has earned us the trust of customers worldwide. We ensure unwavering support for our customers at all times. With four spare parts centers and an inventory of 250,000 unique components, we provide the assistance our customers need without delay. Additionally, our digital solutions like My DMG MORI offer convenient service, fostering long-term trust. With our Global One philosophy, we are not just solving problems. We are bringing smiles to faces worldwide. DMG MORI, shaping the future through the best technology. Visit us and experience our cutting-edge technology in one of our factories.
Yeah, thank you. Well, DMG MORI, this is DMG MORI, like you saw in the video: 13,000 people, 59 nationalities, 17 production sites. This is one of it. Worldwide, so we are in the U.S., in China, Japan, Poland, Italy, Germany, yeah, so all over the world. We have 116 sales and service locations, so we do not sell via dealers, but with own sales organizations, sales and service organizations. So we are in 43 countries, and we do around about 8,000 machines a year. So what you see here in the middle, so this is kind of, this is our president, Dr. Mori, well known to Mr. Fuchs. Yeah, you meet regularly and discuss our cooperation. What are our industries? So it's automotive, medical, energy, Die & M old, aerospace, and semiconductor. All those industries are, let's say, of course, quite demanding, have their special needs.
We try to serve and to follow their requirements and what are the actual trends in the market today, in today's world? It is automation, the digitization, also the topic of reshoring that we quite see in the U.S. today, the demographic transition, and, well, the requirements on sustainability and climate change. What are our answers to that? How do we make our products to follow those requirements? It is, we call it MX transformation, standing for machining transformation, transformation of the machining process by automation, process integration, digitization, improve the accuracy, sustainability, and also reliability, so we have those major transformation topics of digitization, the green transformation, and the processes at the customers. This is an example. How does this work, machining transformation?
So if you look at a conventional process to doing such a camshaft consisting of a cam and a gear, in the traditional process, you would need six machines to do that. We say with our equipment, you can do it in one machine with integrated processes. So the machine is capable of turning, milling, grinding, gear cutting, do the part in one setup. Combined with automation, the machine has a high autonomous operation time, meaning no operator necessary to do that process. And we also offer the necessary digital tools needed to operate such machines. Those are CAD/CAM solutions, post-processors, and simulation modules to simulate those, let's say, complicated processes. So our aim is to use the digitization to help our customer operate our complicated machines that are necessary to have this automation working. Our products, so it's turning technology, milling technology, ultrasonic laser tech.
That's a special technology for hard and brittle materials needed in the semiconductor industry, like glass and similar materials. We have products for the additive manufacturing, the grinding technology, and boring technology. And on the right side, you see central parts that we do for those industries you have seen before. So this is from small to big. And you will see this in our factory tour that we planned after lunch. We planned one and a half hours that you get familiar with the products that we do here. But it's not only the machine. Today, we also have to serve the total shop floor of the customer. So it's not only machine. It's also, let's say, all the equipment around the machine. It starts with consulting and financing that we offer. Then you see DMQP, meaning DMG MORI Qualified Partners.
The company Fuchs is one of those qualified partners because I come to that the Fuchs products are qualified to be used in our equipment. That's the idea of it. Of course, it's maintenance and repair to keep the machines up and running, training and education, and also transforming manufacturing know-how. What we see today is that with the transformation also of people, machining know-how, manufacturing know-how gets lost in the industry. We have to serve that. Customers increasingly address us and ask us to do the total process, not only deliver the machine, but do the total manufacturing process and do the setups for them. Also what we have is refurbishment, reselling, and recycling of our equipment. This is an example, DMG MORI and Fuchs. In the next quarter, we will launch another campaign. This is working via our platform.
Our platform is called My DMG MORI. We have on that platform 30,000 customers, 40,000 contact persons, and 120,000 installed machines worldwide. And what we offer is that the customer online can order the Fuchs products qualified for their equipment and what they need over the total time of the usage of the machine. And that can be 10 years, 20 years, whatever. And that's the idea, how we work together, let's say, benefiting both sides. We standardize to the Fuchs products, have the Fuchs knowledge, what we need for our special applications. Yeah, and that is how we came together with company Fuchs and established this cooperation. So that's the end of my introduction. I would like to hand over to Ms. Adelt, which you will, yeah, present today's agenda, right?
Exactly.
Okay, so thank you. Yeah, Ms. Adelt, please. Thank you.
Smooth that over. Thanks to Alfred Geißler and the entire DMG MORI team, Mr. Ziegler, Ms. Handtrak, I think you are somewhere there for allowing us to be here. I think big honor for all of us as a Fuchs team to be in this fantastic location and really use the opportunity for all of you who are here to see some of our products in motion and really see what a fantastic partnership we have with DMG MORI.
So, I want to say enjoy your stay here and have, yeah, a successful day at DMG MORI Pfronten. And thank you.
Yeah, so warm welcome. We have the entire executive board here, and we will show you a little bit what happened since we had our last capital market day, two and a half years from now, two and a half years ago. So I think I will give you a little glimpse of what we will talk about. And a little bit, we'll talk about the agenda. So I think thanks to all of you for coming here, for making the way to Pfronten in the middle of December. I think really beautiful scenery. And I think warm welcome to everybody. We are live streaming this event. So we have quite some people who watch us remotely who couldn't make the way to Pfronten. And we are really excited to show you a little bit how we developed and why Fuchs is so successful in those unprecedented times.
So in a couple of minutes from now, I will hand over to Stefan and then to Ralph and Timo, who will talk you a little bit about our business model, where we play, and how we managed to be that successful in really challenging markets. So I think important message is automotive is still important, and Timo will give a little update on where we are with e-mobility, how the markets develop. But I think what is equally important, there's much more to Fuchs than just the automotive business. So Ralph will give you a little insight, Stefan too, into the applications, the markets we actually play in. After that, of course, it's a capital market day. We will give a little bit outlook on the numbers, where we currently are, what we plan to do. But I think biggest two topics. So first, a small glimpse on digitalization.
But at last, capital market day was more or less around e-mobility. You will get an update on this, but this one is about around sustainability. Because I think for us, it's really important that everybody understands lubricants are one of the major enablers for sustainability and for reducing emissions. And how that will look like, Sebastian will show you after the break. And then last but not least, Stefan and Timo will give you a little bit of insight where we are in terms of Fuchs 2025. And I think more importantly, where we are on our way towards Fuchs 100, Timo already talked about yesterday. So I think just a first glimpse of the agenda. You already saw the welcome to DMG MORI. We will now start with our first block and talk about the first three topics.
There will be room for questions at the end of each block because I think some questions will answer themselves during the presentation as the presentations go on. So Lutz, you're all familiar with, we'll coordinate a little bit. For everybody in the live stream, you can ask questions in the chat too, and our investor relations team will then read it out when convenient. After that, we will have a coffee break. When you came in, you already saw the nice coffee bar outside, so you can go out, you can take a little walk around in this area, have a look at basically the machines, all of those nice presentations that are being put up, and then we assemble here again for the second part, which is majorly the Sebastian show around sustainability, what we've done and how we are an enabler of sustainability.
After that, as already indicated, we will have lunch together in the beautiful canteen with a view on the German Alps. So I think this will be another highlight. And then part into groups, organizational details about that later, to do a factory tour. So you can really get a look and feel of the wonderful machines that are being produced here. But I think equally important to see some of our products in motion too. So you can really get a touch and feel of what our products do. And then last but not least, really a presentation much more in detail from our colleagues together with the DMG MORI colleagues, how our cooperation looks like, what we're doing together, and what we're planning to do together in future. Having said this, I think any questions so far?
Otherwise, I would hand over to you, Stefan, so we can start with the content part.
Thank you, Isabelle, and a very warm welcome from my side. I think we had a wonderful evening last night, and I also welcome all our remote visitors. You know, I always say the lubricants are the little heroes in the world. You don't see them, but they make an outstanding job at many applications, and we have just heard now from Alfred Geißler with DMG MORI, which is really for us a very emotional and a very powerful partnership we have all over the world because we are similar companies. And you have seen we lubricate their facilities. That's the one part. But also every manufacturer wants to participate in the resale of consumables. So they want to sell spare parts for their machines, which is a part of their revenue stream. And a part of the spare parts are spindle oils, greases, and even metalworking fluids.
And they get to customers we have no access to in very remote areas. So I think it's a beautiful partnership. They earn something with it. I think we get a better market reach. And the last part is if their customers encounter problems in their metalworking processes, very often water miscible products in harsh environments, and then they try to adjust somehow the process to the metalworking fluid, and it should be different. The metalworking fluid should be adjusted to the process. And when they call us, we can help them. And I think it's really a wonderful relationship we have. And last night, I was asked very often, how do you see us as analysts? And I say, I love you all. Still, some of you have not understood our resilient business model. And I think that's the big part, why we do so well.
We have in our supervisory board, we have Markus Steilemann, and he's a wonderful guy. He's the president of the German chemical industry. And he says, I'm amazed that all the chemical industry is suffering and you do so well. And I think we are not a heavy-duty chemical company, but we are really very, very diverse on a global basis with many, many different customers. I think, Sebastian, we've got no product greater than 3% of our sales. We have no customer greater than 10% of our sales. And that's spread all over the world. And I think that gives us stability. Our company purpose is moving your world, but we really keep daily life moving. And this is, I mean it as I said, because when you have a look today, I'm 56 years old.
When I was born, there were just short of four billion people on the planet. When my university was finished, there were six billion people. Today, we have eight billion people. And in a few years, we will have 10 billion people. And all the people travel to work. They use smartphones. They want to eat on a daily basis. They use all daily stuff. And for everything, you need a lubricant. You use a couple of our products today, and you didn't even realize it. Elevators, conveyor belts, you name it. And I think that's one part that the standard of living goes up. And global warming is a horrible thing, but I'm not astounded because we're going from four billion people to 10 billion people, and all the standard of living goes up. And therefore, our credo is to do more with less.
That's the part of the job of a lubricant, to do more with less, and I think that's the introduction of what will follow later from Sebastian, which is our highlight today, and our main emphasis is the sustainability part because really, as Isabelle said, our products enable our customers to work more sustainably, and that's the big deal behind. Because when you really look, it's a huge challenge for all the machines and equipment to supply all of us on a daily basis with what we consume and what we need, and lubricants play a critical role, and we help our customers to save lubricant volume. It might sound odd to you, but if you use less for the same application, normally you have fewer competitors being able to do that, and that's our big benefit, so I always say we have no refinery, no crackers.
We buy what we need, and then we make cool products for our customers, and that's it. If we can do the same purpose at the customer with significantly less volume of lubricants, I think we've done a good job, and I think that's really the name of the game of keeping daily life moving and to do more with less, and I want to lead you through just a few examples. Moving on, before I do that, very often we have to understand what is the function of a lubricant. Why are lubricants there, and I must say some of our customers would love to do without lubricants, and we have dry film lubrication, all kinds of those things, but there are four real jobs of a lubricant, so the first one is to protect surfaces from corrosion and wear, so that's a big part.
Some of our greases, some of our corrosion preventives, we protect the surface from corrosion. That can be to go from one plant of the customer to another, temporary corrosion prevention. When you go to wire rope cables in container loading terminals, they are all lubricated with a lifelong lubrication, so that's a very, very important part. The next one really goes towards that area of sustainability. That means reducing friction and wear in moving systems, so normally you have a thin lubricant as a lubrication film, and that one should not be destroyed, so whenever for a DMG MORI customer, it's important that they can use their machines as long as possible, so they don't want to change over tools in the machine. They want to have many shifts going. Some of them run the machines overnight and over the weekend.
And therefore, I think that's a very, very important part, reduce friction and wear. And Sebastian will explain to you later that this has an impact on the CO2 footprint of our customers. The next part is also metalworking fluids. Normally 95%-97% water and 3%-5% of our product in. They cool machines and they cool the tools when you're honing, drilling. Those are the jobs. But now we think about batteries and EVs. Cooling is a big deal. And if you think about those cooling fluids today for the data servers, we read about AI, it's all cool. But then you say you need almost a nuclear plant for one of those data centers. And the question is, how do you cool those data centers? So you can't cool rooms with air-conditioned air anymore.
So you have got the immersion fluid where actually the whole computer lies in the fluid. So that's a very, very important part. And last but not least is the transfer of energy. So lubricants are also there to transfer energy. And therefore today in EV cars, the big deal is, for example, copper corrosion. When you get copper cables and contacts into contact with a fluid or lubricant. So those are really the functions of a lubricant, why we are there. And then the question is, where are we? And without arrogance, I can say we are almost everywhere. So first of all, I'm not sure whether you are aware, but our tailor-made food-grade lubricants make sure that all the food is manufactured in a safe and hygienic manner.
If you think about from putting out the seeds on a farm to harvesting, you go to food processing, which means everything. Coca-Cola bottling plants, we have been to Gerolsteiner Brunnen, if you remember, Heineken or Anheuser-Busch, filling of millions of aluminum cans. Pizza manufacturing, you go to meat processing plants, dairies, industrial bakeries, all need food-grade lubricants. We have kosher and halal products. So we have really the full complexity. But also this whole circle around food gets bigger and bigger. So also tin manufacturing, glass manufacturing. So the tins for beer, tin, they also need to do with a food-grade lubricant, but also all the corrugated industry. So that's a very, very big market for us. We have grown significant over the last couple of years. Now I know you, analysts, you want to do your studies. So how big is that?
That's also a fraction of our sales. But we have many of those examples. And that's the cool part of it. The other thing is the whole wind energy. And the wind energy, you can just imagine very, very harsh conditions. Either extreme heat or cold or rain or on the sea, you've got all the salt part. So we also need to protect those things. Up in the housing, you've got a gearbox. It's a huge gearbox with a gear oil. And then you have various grease applications. And the one part for us is, I always say we are in China since 40 years. And we are now what I call the fourth chapter in China because today we develop products in China. We buy the raw materials in China and we manufacture in China for Chinese customers and we have their approvals.
So if you go to Goldwind, for example, a big manufacturer of windmills, we have their approvals. If they now go out of China and put their windmills in South America or India or Europe, we have the approved products. And I think that's for us a very cool application. The real heroes, I always say, are the ultra-clean lubricants for the chip industry. So we manufacture them in a clean room for the large chip makers. There's also metalworking products involved for the semiconductor industry where they manufacture their own machines at those large customers. So that's also a very cool example. The whole mobility part, I don't want to make a deep dive, but in an electric car today, you hear stuff you have not heard before because you don't have the engine anymore. So today we have noise-dampening greases.
So, in all stuff you turn in the car or you turn on the turning light, we have noise-dampening greases aside of all the other greases you use in the car. All those greases don't go away whether you move from ICE to EV, and I think those are really cool applications and there are many, many more to be mentioned. Medical is something we have done all our life, but we've really learned much more from the Nye acquisition. Metalworking has got all metalworking. Medical has also two parts for us. It's metalworking. There are millions of knee and hip joints manufactured out of titanium. Johnson & Johnson, those type of customers. That's the one part also very, very clean, and then with Ny, we manufacture in clean rooms, actually the lubricant for all the equipment they use.
So if you know the Da Vinci robot for the prostate surgery, our lubricant is inside. We have also our lubricant in many other equipment in the medical part. And that's obviously a high-end business also in all the one-way injections. So that is something really cool. And at the very end, as you all know, we were very proud with the Mars Perseverance rover a few years ago. No person was on the Mars, but our product, we had a barrier fluid on the Mars Perseverance rover. And I think that was very cool. Unfortunately, I have a time limit. I could go on for many, many hours because that is the fascinating part. You have all heard Timo last night, and I had the same experience. I never wanted to join Fuchs, but I was three months with salespeople on the road back in 1994.
I said to my wife, "That's a gold mine, and since then, nothing else in my life." So that's really cool, and really today, when you look, what is the asset of Fuchs? That's really hard for somebody to get in with our global footprint: 35 manufacturing facilities. We have about almost 60 subsidiaries. Now we are happy to be also in Switzerland. We want to grow in Africa. We continue to grow in South America, and I think that's a global footprint no one else has, and we have much more grown together over the last couple of years, so that's important. And then last but not least, many people ask me, "What are the three most unique selling points about Fuchs? What are the three facts?" The biggest factor, our people. You know the board. You all know our IR colleagues. We have a wonderful team at Fuchs.
We have a very, very committed and loyal team who continue to walk the extra mile. We are very, very customer-centric. We do everything for the customer, but he also needs to pay us for that. We do it over weekends, over Christmas, no matter if they have a problem, we are there. The other part, I think, is we are broadly positioned with 10,000 different product formulations. That Sebastian was prior to some of our recent acquisitions. That's a growing number. We can handle the complexity. Very often we get questions, "How can you compete with major oil?" They don't want that complexity. They don't want to make a halal product or a kosher product or green or red or for specific things. I think that's a big deal for us. The other part is also we are a technology company.
We do deep dive technology. For all what we call our specialties, including greases, metalworking, we have single component recipes where we own the whole IP. We have a lot of patents running. We have 10% of our workforce in R&D. That's very important for us. Last but not least, the independence. I always say we take the best out of both worlds. On the one hand, we have the Fuchs family providing us with an independence not to be taken over because with our balance sheet and our cash generation, I think we would be a nice takeover candidate for some of the sharks out there, but that is safe. On the other hand, I think we fulfill all the corporate governance parts which are mandatory for a stock-listed company and especially with an independent supervisory board.
So that, I think, is very, very important. And now I'm happy to hand over to Ralph. So we go all through the first session. And later on, we are there for your questions and we are happy to answer them. So thanks a lot for that. And now I hand to Ralph for the success stories.
Thanks. Because I have a few memos here for you. So thanks, Stefan, for the introduction and the impressive illustration of our product and the application. I think it shows pretty in a nice way our fascinating world of lubricants. I would like to take you a bit more in a deep dive, how we do growth. Also last night, I was asked a couple of times, "How do you do that?
How do you grow year on year after the corona, the pandemic dip?" I think we have seen, again, being back on track, growing our top line. One key element of our Fuchs 2025 strategy to grow was we called that under the headline, market segmentation. Market segmentation, honestly speaking, is not the strategy. I mean, this is something we need more as an enabler in order to grow. Stefan mentioned it, that we have many, many products for many, many applications for all the customer industries you can imagine. For us, that's on the one side a big strength, but it's also a risk that we don't do the right things. Therefore, for us, key in our Fuchs 2025 strategy was always to do through market segmentation the right things in order to accelerate growth. That I think is a key message.
And I would like to take you with me for the next couple of minutes to show how we do that in order to grow our top line. I will explain the concept, and I will also show you a couple of examples in the next few slides. So talking about the key elements, I think there are four of it. So if Timo and I ask our people, our commercial VPs, "Show me the plan," and then we talk about market segmentation and how do we do that. And I think all starts with the first element, which is the market knowledge.
The market knowledge is that we would like to make sure that we do the right things, which seems to be an obvious statement, but it also means that we mitigate the risk, that we avoid, that we basically do everything at once, and then at the end, we don't focus on the right things. Therefore, it's a very important first step because we would like to understand the customer requirements, the market sizes, the type of applications we can serve. All of that, I think, is the first element of this market knowledge in order to avoid inefficiencies internally and to identify these segments which provide the biggest and the most, let's say, fascinating growth potentials for us. That is, I think, the first element.
And once we have identified the right market segments, there's a second phase, and that is also equally important, and that is we call alignment. And alignment above all means internal alignment. So what we need to make sure before we go out with the product and with the commercial strategy and with the segment strategy, we need to make sure internally with sales, product management, research and development, but also with supply chain that we have the right offering in place that we can deliver because we should not overpromise and we should do what we are able to do. And that, I think, is very important that we act as a united team.
That is, if I act as a unified team, I think that is a very important element for us because that also creates efficiency in order to talk to the customer in a way that we can also deliver what we say. The third element I would like to mention, and that is definitely a big strength of the Fuchs scope, is the scalability. You have seen from the chart Stefan has shown that we are everywhere. We are globally present. So once we have identified an interesting market segment, once we have internal alignment, I think the answer, "Can we scale that globally?" is very often, "Yes, we can." And this scalability, I think, is key really to grow overproportionately in the segments we are focusing on because it means that we can repeat success.
Repeating success means nothing else than start a commercial product, have the first commercial success locally, and then duplicate and repeat that success in a very similar way in many other locations, either by following the customer or by applying the same service strategy or by using the same software. So it's also very much based on the internal processes, the standards we follow in order to also grow without adding too much overheads in order to generate the growth. I think that is the third element. And the fourth element is about communication. Also, that one seems to be common sense. No, it's not. Why? Because the way how we talk to a mining customer underground is different than when we talk to a customer like DMG or to a food company or to a steel mill. It is different. It's not only using the customer's terminology.
It's also using perhaps software front-end stuff the customer would like to see, so now when we develop our service software, we call Fluids Connect, it looks different when we go with that software to a mining customer or to a food customer. We want to use the language of the customer, simple terms, make it understandable. And there's also a lot of internal effort behind that last statement in order to make sure that the customer understands what we want to say. Now, I think the examples I have with me always address one of these four elements, and I would like to start with a pretty new market, which is an example to the market knowledge and selecting the right segments. And that is an example coming from China, and the first example from China, and I have more from China, is about immersion cooling for energy storage.
It's only a couple of years back that in China, that industry was basically established. And one of these customers thought it's a good idea to use immersion cooling products for their energy storage facility. Now, what we did is a typical Fuchs way. We put a focus team together who were looking at the market. Does that market offer potential to grow? Does that market offer applications which are interesting to us? And does it offer basically to scale that market globally? Okay. The answers were yes. And then what we do is we develop a new product for these customers. We get the approval. I think it's very much all about also approvals in that context. And now, similar to DMG, we have also signed a strategic partnership with that customer. And now we supply a pretty impressive customer with significant volumes to us.
That is the foundation in order now to go to the next stage in order to also scale that business globally. That is a typical example where we identify a new market to us offering huge growth potential. I think that definitely has nothing to do with automotive because Stefan was mentioning we want to show a few examples being non-automotive. I mean, this is definitely non-automotive. I mentioned in that example the word approval. Approval, I think, is key to the second example because it's about the internal alignment. The example Stefan has mentioned that example quickly is about the wind industry. Talking about wind, I think you can only gain the customer trust if you have the approval, if you can obtain the approval both for the gear oil, but also for the grease applications for a windmill.
Talking about growth potential, I think we have to talk about China. China is by far the biggest market, but also now the biggest OEMs for the wind industry are sitting in China. This is not only about growth, it's about the alignment part because we have, together with Sebastian, Timo, myself, we identify first where to develop the product, where do we run the trials, who is going to pay for the approval cost, who is having the customer contact. That's also internal stuff we have to do. It took us for our Chinese OEMs, Goldwind and Envision, it took us, I think, five years, many, many years, basically to get the approval. This is not half a year. It's five years. Now we have the approvals. What happens now?
I mean, look in all the wind parks which are installed, the Chinese OEMs are big. And now it's alignment and scalability. So I think we have everything we need in order to follow China, what we call now China goes global. I think we are there. We can follow China, the Chinese OEM. And this is also a win-win situation, not only for us, but also for the Chinese OEM. I think that is a very great example because for many, many years, even decades, we have taken European and U.S. technology exporting or using in China to grow the business there. Now we are very much convinced that we have everything in place we need in order to reverse that, in order to benefit in the U.S. and in Europe from what we have and what we develop in China.
That is hopefully a growth engine for us over the next years. What is also nice, and that is basically that's our standard way of doing it. There was, luckily, a transaction that the Smurfit Kappa Group in the U.K., I mean, they have taken over WestRock, and now there's by far the biggest corrugated and paper mill group in the world. We do have nice business there in the U.K., both in corrugated plants, but also in paper mills. What we can do is scalability. That is always a good and important market to us. We can grow and exploit the new potentials due to that transaction. Moreover, the paper and the corrugated industry is a very good example to say it's not only our core product range.
It's now also the integration of the LUBCON portfolio after the acquisition because they have good products there. They have nice approvals for that industry, so we can now offer a more comprehensive product portfolio. And on top, this is the industry. They are very, very, very open also to accept our services, our digital services. So basically, what we want to do in such type of an industry, you would like to be the one-stop shop for such a group worldwide. And that, I think, is also a nice example I can share. And in the next example, it's not so much about the industry or the commonalities from a regional point of view. It's rather about a process, a standard process we apply. And that standard process, again, we can scale without adding too much cost.
This is due to the fact that to get business in the food industry, I think we use worldwide a similar approach. So we go to the food plants. We do a survey, like an audit. We use our software for that. And we go through the plant and go to every lubrication point. And you can imagine that in a food plant or in a food processing plant or in a bottling plant, there are many, many lubrication application points which are critical. So it's important to show and to demonstrate to the customer where there are risks, basically risk of contamination of a food-relevant element in that process. And what we do is we basically prepare and submit a report with a lot of documentation, with photos, with videos.
This report we present to the customer, and we have really a very, very high what we call conversion rate, that then this type of approach to convince, to take the customer with us, to convince him to take it serious, what we tell him, that at the end leads to a high conversion of these plants and these customers to our product. It's more about service and software we apply in order to scale our business. The business very much so is then with H1, Kosher, Halal type of products. Okay, but it's also showing, and that is the upselling we do, is that it might be better even in non-critical lubrication points to H1 products because at the end, it reduces big time their risk.
More and more customers, they basically convert entire plants to food-grade products and not only really the super critical points. We believe there's a high potential to us also in the future because the number of food or H1 related and plants around the world is really massive. Last but not least, I would like to go really to the old economy type thing. That is an example from the U.S. I mean, I think since Fuchs was founded, I mean, we do have business with the steel plants and the steel mills. We have for many years a pretty good track record in the U.S. where we supplied a lot of rust preventives and greases, while in Europe and China, we also had the cold rolling oils in the steel milling process applied.
In the U.S., it was always very tough to get into that market because there's a competitor over there who is pretty strong. It was rather like a monopolistic situation there. It was not easy to get into that market. Now we have for a couple of years now, we have a market segment called Basic Metals. I think it was a, let's say, act together. We put all the resources and the expertise we had from China, Europe, and the U.S., we put together. Finally, we succeeded to, based on one customer, to again establish a partnership to break into that monopolistic situation for the rolling oils. Now it seems that North America as a market, which is for decades our customer, the steel market, but now it opens up for a product group, the rolling oils, I think, great potentials.
This is now possible, coming back, because we focus on certain things where we believe there's strong growth. Steel mills will be there for many, many years. We are not afraid. That, I think, ends my presentation on a few examples on market segmentation. Just to summarize, it's all about focusing at the end. It might sound simple, but we have so many things that we have to set the right priorities. We have to spend our money. We can only spend the money once. We have to make sure to grow our top line, that we do the right things. We do it in a way which is repeatable, where we talk to the customer in the right way. We succeed exploiting our expertise globally.
And that, I think, offers so much growth potential in the future that we are confident that we can continue to grow our top line for many, many years. And that we can also do that in the mobility transformation. I think Timo will build on that. So thank you for your attention.
Thank you, Ralph. So Ralph just talked about many interesting applications. And actually, the majority of the applications we serve are outside automotive. Nevertheless, I noticed yesterday also during dinner that there is still a high curiosity about our approach to new mobility. We talked about that during the last Capital Market Day, and we felt, because the market is very dynamic and this is a big topic in your community, it's appropriate to provide you with an update. And the update is organized in the following way. We look at the market first, because that's also how we did it last time, and the market has changed a little bit. And then we'll dive into applications, success stories, and our approach to new mobility. So after that, you should have a pretty comprehensive picture on where the market is heading and what our plan is at Fuchs.
The first part is market data. The market data goes back to a study a company called FEV does for us on a regular basis. So that's a consulting firm closely associated to the University of Aachen, and they do a good job. They know us, and they know the market very well, and what we see here for Europe is that in the year 2023, there was a big change compared to before. We had 16% of battery electric vehicles that were sold in Europe, 50% were still ICE engines, and 34% were hybrids, so really a change, and due to the legislation in Europe, it's clear that internal combustion engines will be banned at some point. Whether it's 2035 or whether this will be moved to 2040 doesn't matter so much for this picture.
What's also clear is that the dominating concept for the future in Europe, at least battery electric vehicles, we see it here. We have a projection for the year 2035 where the study says that 86% of the vehicles sold will be battery electric vehicles. And that's unique to Europe. So really a very strong trend. If we now shift to the car population, which means the cars in operation, the picture looks a little different. 2023, 1% of the cars in operation are battery electric vehicles. And that share grows to 26% by the year 2040. But that also means that even in the year 2040, there will still be 180 million combustion engines on the roads in Europe. So for the aftermarket, that will remain a very relevant business. Last time when we talked about new mobility, we also touched on hydrogen and fuel cell concepts.
Latest studies show that these concepts don't really play a role for the passenger car market in Europe, and it'll stay like that. That's maybe more heavy-duty stationary engines, other concepts, but not for the passenger car market, so also fairly stable car population, not much growth, just over 240 million cars today, and it'll remain like that. How does the situation look like in China? It's a different picture. They are the fastest regarding the share of battery electric vehicles, 24% in 2023, and that share is expected to grow to just over 50% by the year 2035. What's different to Europe is that hybrids will have a much longer future in China. They are more open, and they are also pushing hybrid concepts. In a way, hybrids count as new energy vehicles, NEVs. That's the term, the specific term in China.
They will be there for the long term. So what you also see in China is that the car population is growing massively. So we are at 300 million cars in operation in 2023, and that will go up to 450 million cars. So a lot more cars will be on the road in China. And you also see that with a share of 82% of cars that still will have a combustion engine in the year 2040, we talk about 370 million cars with a combustion engine. So that's a massive growth in the combustion engine vehicles out there on the road for the next couple of decades. That's China. U.S., again, different. So we already see that the regions are drifting apart. U.S., the lowest share in battery electric vehicle sales in 2023 was 8%.
That share is also expected to grow to around 33% by the year 2035. But in the U.S., pure internal combustion engine cars will remain a valid concept also for the long term. And hybrids, again, will play a big role. In the U.S., if we look at the total car population, there's moderate growth coming from 290 million vehicles in 2023 to over 300 million vehicles the year 2040. And again, a large number of combustion engines that will remain on the road over there. What does that mean for us at Fuchs? For us at Fuchs, that means that our strategy to be active in all kinds of different technology concepts is the right strategy. It's not that there will be only one technology worldwide. There will be a mix of technologies out there regarding new vehicles sold, but also regarding cars in operation.
For us, it's clear that we support mobility and we support new mobility. We have projects in all these categories. We will also have projects in all these categories for the next 10 and 20 years. That's not going to change. If we look at these concepts like hydrogen, that's right now less in passenger cars. It's more in construction equipment and in other heavy-duty applications, same for fuel cell. We are pretty much everywhere. That also sets us apart from parts suppliers. Very often, parts suppliers have to decide what they are going to do moving forward because they have to convert their plants.
For us, honestly, that doesn't matter so much because whether we manufacture an ATF in one of our plants that supports an internal combustion engine platform, or whether we manufacture an EDF, electric driveline fluid for battery electric vehicle, the fluid can basically come out of the same kettle. So we don't have to convert our plants. Yes, there is some new product development that needs to happen. And we have a higher number of R&D projects because there are so many different concepts. But we have found ways to deal with that. And one important part of that situation is that we have been working on our three hub concept for the last 15 years.
And really, we have invested a lot also in our hubs outside Europe, in the U.S., and in China to make sure we are close to the OEMs, where the developments and where the innovations are happening. What is our self-understanding? We see ourselves as the enabler of mobility. And we are ready to provide customized solutions. As Ralph said it, we look at the customer application and we see what the requirements are. And then we check whether we have a product available. And if not, we are willing to develop one for the customers. And here, what's in the focus right now, it's range and performance. It's safety and reliability, but also uptime and availability. And the key success factors in mobility are no different to what Stefan mentioned before for other areas. In the end, we are close to our customers worldwide. We have a unique setup.
And with also the regions drifting apart, it's very important that it's not just in Europe, but also on the other continents. We are very close to our customers, not only with our plants, but also with our R&D teams. So our local teams need to listen to our local customers and then ideally also help them to go global. What's true for the wind turbine manufacturers is also true for companies that build battery electric vehicles. Ideally, we want to work with them. And a lot of them, there's a lot of new players there also on the Chinese market. And they want to go global. And we want to be their preferred partner because their local suppliers don't have a global footprint. Their local suppliers don't have the R&D expertise we have. We have it all, and we want to help these customers to succeed.
Also, what we see, because we are active in all world regions, it doesn't matter for us which region is developing faster because we always have access to the latest technology, and that gives us a competitive advantage compared to others. And then also our holistic approach, we have a wide range of products. It's fluids, it's greases, it's metalworking products. And that makes a difference not only to customers like DMG MORI, but also to customers in the new mobility space. And we believe that will help us to further strengthen our position over there. Switching to the applications. Last time we gave you some market estimates for certain product categories, and we wanted to update these. You see here thermal fluids, they are ramping up. It's not as fast as we expected because obviously there is also short-term a little delay regarding sales of battery electric vehicles.
But what you see here is that in thermal fluids, water-based products are still dominating. Oil-based products are also growing, but that's roughly half the size of the water-based products. What are these thermal fluids for? Well, they are there to cool not only the engines, but also the batteries, power electronics, and also to keep the battery, for example, in a certain temperature window. So it's also heating. So it's quite some strict requirements for these kinds of fluids. A bigger market on the fluid side are electric driveline fluids and dedicated hybrid transmission fluids, both for battery electric vehicles and also for hybrid vehicles. And you see there, it's a bigger market and also a faster growth. And we are very well positioned in that market, which is an attractive market for us. And I also brought one customer example with me to illustrate what we are doing.
This is a driveline customer, a long-term driveline customer for us. We have been supplying more of the traditional technology. We have a good relationship with that customer, strong R&D partnership, similar to what we have with DMG MORI. We are active with this customer in all three world regions. What we are doing now is we are introducing new technology because they are also supporting now new platforms, also EDFs. Our goal is to make sure that we grow with the customer by increasing our share of wallet with the customer. In that instance, we are very successful and we believe independent from the driveline concept that we will be growing with that customer. That needs to be our goal with many customers in that field.
As we are seen as one of the technology leaders in mobility, we are in a good position to achieve this goal. Now we talked a lot about fluids and new mobility. But again, I want to stress at Fuchs, it's not just one or two applications that matter. It's in a car, it's 60, 70 applications that matter. You see it here, this is for a battery electric vehicle. You see all our BluEV products. It's from metalworking fluids, corrosion preventives, oils, greases, many, many applications. We want to tackle all of them because they are high-value applications. It's a big basket. There is a lot of experts that are on the case to make sure that we can satisfy the needs of the OEMs. Noise is a big topic, but also odor is a big topic.
Also, the chemical composition is a big topic, in particular for products that end up in the interior of a car. So the requirements are getting higher and higher and higher. Then we have REACH on top that's also drifting apart in different world regions, high complexity. So our customers need to rely on a player like Fuchs that can handle that complexity and that has a full product offer. Same picture here for a hybrid, a couple of more applications, different applications, but again, not one or two. We talk about 60 or 70, and that's really the number of projects we are having with these kinds of OEMs, Tier 1s, Tier 2s. And we feel very comfortable that we are in a good position. And I think that explains also the good results we have been generating in the last couple of months.
And with that, I hand over to Isabelle, who will talk a bit more about the numbers.
And thanks to Ralph and Stefan as well. Because I think this gave you a very comprehensive picture of why Fuchs is so successful in such a challenging environment, right? So if you ask me, what is the one unique selling proposition of Fuchs? We are close to our customers, no matter where they are or what they do and what industry they play in. And this is really what makes us so successful. We are decentralized, so our teams can react to whatever those customers need in a very fast way. They can take decisions. And I think just to manage expectations, I will not communicate a new target for Fuchs 100. And I will not talk about where we will end up at the end of this year.
I got those questions quite a bit yesterday. But I think what I can say, we are really well on track. As you can see, we did not change our guidance from the beginning of this year. And we are one of the only few companies who actually didn't. And with that, I'm very happy to confirm our financial targets we put out two and a half years back. So we are still striving towards the 500 next year. This is a stretch target for sure. And this will not be an easy one to achieve. But what I can guarantee you, this year will be yet another record year. As Michael always says from record to record, we're planning to do the same thing next year too. And we are very convinced we will clock yet another record year in 2025.
If it will be the 500 exactly or a little bit below, we need to see because this is not us only. We've done our homework. Ralph and Timo showed some really nice examples. I will talk a little bit about what we invested into and what the rationale behind that was in a minute. But I think we can confidently say we've done our homework. We are growing in a market that is very difficult to grow in. And we can assure you 2025 will be yet another record year. And the rest of the guidance you can see here, we'll shed some more light into that onto that in a minute, is still true. We're planning to keep on growing mid-single digit in what is a flat market, organically and inorganically. We're still striving to get back to the EBIT margin in the midterm.
This, again, is not a target for next year, but we'll take a little bit longer given that we are currently doing a huge transformation project. We have a very good cash conversion, and we increase the dividend each year. Looking into those four boxes in a little bit more detail, I think all of you know that chart. But I'm not getting tired of really pointing out how the lubricant market is developing and how we can constantly increase our share. You can see for the last 20 plus years now, the market in terms of volume has been flat. I think, I mean, somehow building towards the highlight, Sebastian's presentation later on, what is increasing is the demand for sustainable lubricants. So you can use them longer, you can reduce friction, you can use less of them.
For me, you know, the most interesting part is when you look at the share of the EMEA market, how that actually, the coloring is a little weird, how that's developed. You can see the market is down in terms of volume. Is that because production volume is down? No, it's not, not over this time horizon. But it's when you look at the, especially at the European market, it's the most homogeneous market we can look at. So the most mature market. You can really see how the trend towards sustainability, more specialized product is playing out. And this is why in the same time, we managed to more than triple our business. And this is something we believe we have our ducks in a row. Yeah, and this is something where we believe we can keep on taking market share from our competitors.
But I think that is a very important message. The lubricant market is not growing with the GDP, but we need to take market share. And this is why, because some people who don't know us that well always ask, well, couldn't you grow faster with all you're doing? You're positioned in a very great way. But growing for us means taking market share. And we are planning to do that organically with this segmentation approach, the three C concept, really positioning ourselves in the right way. But of course, we keep on doing really nice acquisitions too. I think you all know the names of the companies on the slide already. So I will not spend too much of the time discussing all of that. But you can see when we do acquisitions, we say it needs to be value accretive. One plus one is more than two.
So it's either adding technology like we did with N, with LUBCON on a global scale, or it's getting access to markets where we feel underrepresented in. What we just did with STRUB, but very similar, for example, with the Statoil acquisition back in 2015, which is one of our nicest growing regions by now. It developed fantastically. So LUBCON, we closed in August this year. Some very nice new markets that came in, some nice new segments. Historically, the business of LUBCON has been majorly in Europe, so to the greatest extent. And we are now very excited to scale that business globally too. So they're very strong when it comes to railway, when it comes to corrugated construction industry like MDF.
And I think another exciting news is the former managing director of LUBCON joined the Fuchs group, and he will now support us in scaling his business globally and really bring in all the knowledge, the customer access he has. Another one that was just signed and closed last week is a smaller company called STRUB, and I think for us a very exciting step too. Looking at the DMG MORI partnership too, we talked about that yesterday. We finally have a foothold in Switzerland again. So we now have STRUB, we have the LUBCON subsidiary in Switzerland, and this was always a little bit of a white spot on the map for us. And we are very happy we now have a representation here too. But of course, to keep on growing, I think you all know we need to invest.
I think you're all very familiar with that slide. But I think yet again, for us, very important because people always ask, why has your profitability been quite down quite a bit? Well, because we invested heavily. Yeah, we said to continue to grow and to continue to live up to our promise to the customers, especially talking about segmentation, serving customers globally. We need a different setup. This is why we did this huge investment program from 2016 to 2020 and invested in our infrastructure. We built new grease plants in the U.S. and in Yingkou, modernized our footprint, consolidated the footprint, and really made sure we can still grow in future. We have a scalable and a very modern setup. At the same time, we invested into our people too.
As you can see, we now have three R&D hubs in China and Germany and the U.S. to be close to our customers. And those go really nicely with those production setups we have. So we can be faster to the customer and we can be where the trends develop. You just heard Timo and Ralph. China is really strong when it comes to electric cars. China is really strong when it comes to wind energy. So we need to be there. We need people who can talk to them in Chinese and on eye level. And we now really see this is paying off big time. And what I would even add to that is the segmentation approach we invested into. We have a lot of very skilled business developers now who make sure we have the knowledge. It is written down.
And we have a very clear path on how we want to use the knowledge we have in the group on a global scale. But of course, this costs money. And this is why the margin went down a little bit. But I think good news is we are back to volume growth after a couple of difficult years with COVID lockdowns, with supply chain disruptions, with a war in Europe. And you can see the margin is recovering nicely because all of that is absorbed in our P&L already. So the new volume that is coming in comes in at a higher incremental margin. And I got the question yesterday, will Fuchs 100 include another program like that? Answer is no. Yeah, so I think we've done our homework and we are not planning to do another huge CapEx program like that in the next couple of years.
Because what we invested into, you can see our nice new locations here, the new grease plant in the US, in Jinkoo and in Kaiserslautern. I think that's Kiel, right? No? Okay. For one of our grease plants in Germany. I think this for us was a really important step to make sure we can produce all of those products that are relevant for the markets in the regions, in each of the regions themselves. I think last step we really invested into, you can see a look and feel of our new grease plant in Jinkoo. It was inaugurated and really taken live this year only, basically the second wave of that grease plant. We now really finished this new setup and believe we are set up really well for the future of the group.
All of that, so we have our ducks in a row when it comes to infrastructure, when it comes to setup, when it comes to growth, when it comes to margin recovery. But I think even equally important for you when it comes to cash too. And we've shown in a very impressive track record, we can generate an average cash conversion of 80% over net profit. Because we are very asset-light. We have done our investment program, you can see here, was a little lower. Of course, those two years, you're well aware were the two years of skyrocketing raw material costs where we invested EUR 350 million over those two years just in our inventories because prices were higher. The unwind followed this year and we managed our working capital down again. But I think we are very positive.
We can keep that very nice track record of 80% over net profit in terms of cash conversion. This is something we are very proud of and somehow unprecedented, especially in the chemical industry in Germany, and this is why we have the longest-standing history in terms of dividend payments. When you ask us about cash allocation, what are you doing? Well, there will be no revolution. We have a very nice slide in our investor relations deck where we show you the cumulated cash allocation of the last 10 years, where you can say roughly one-third M&A, two-thirds dividend share buyback taken together. I think this is a pretty accurate assumption to put into future development too.
I think to end the part, we have the longest-standing history in Germany and we are more than confident we will be the only dividend aristocrat in Germany in three years from now because this will be a very nice thing. I know we have a lot of those companies in the U.S. and Germany; we don't have any. So in three years from now, we strongly believe we will be the first company in Germany to get that status because the policy and the promise we have out to you has not changed. We are planning to increase our dividend each year. That brings me to the end of the financial part, but I will directly continue since we would like, before we go into our well-deserved coffee break and Q&A, give you a little bit glimpse on what did we do in terms of digitalization.
Because I think for all of you who have been at our last Capital Markets Day, I was in a very lucky position. I was there, but I was not officially with Fuchs, so I didn't have to answer any questions. Now I do, but when you ask me, hey, what do you stand for and what is your background? It's this, and we have done quite a bit. Of course, I cannot show you everything we have done in the last two years, but at least to give you some flavor of where we advance, what kind of new technology did we put in place, but then as well, what is our ambition? Where do we want to go? Because I think digitalization, getting the right strategy in place is a marathon rather than a sprint race.
So what we did a little more than two years back, we gave ourselves a digital strategy called Fuchs Goes Digital and defined a North Star together with all of our major countries and said, where do we actually want to go and what are the market requirements? Because we see, I mean, AI is now all over the place. There are fancy platforms, different requirements. So it's very difficult to get some kind of direction. Where do we want to go and what do we want to do? But what we said anonymously, we want to be the digital frontrunner in our industry by 2030. And was that okay to do this? We need to focus, just choose some very few projects. I will go into that in a minute.
Plus, we really need to do our homework in terms of cleaning up the basics, having harmonized processes, harmonized data structures, the same base to work on, because in the end, it's all about data. So what we said in a first step, we defined five different areas we want to improve in. First one, we want to be easy to do business with, have state-of-the-art digital interfaces with our customer. But I think then, more importantly, really those two be a partner to our customer in terms of providing easy-to-use solutions to manage their lubricant needs, to have a schedule, to have some kind of alerts, really manage the inventories and really know what is going on in my factory, how can I improve? What do I need to use? We can as well use that in our R&D departments.
Yeah, we talked about how difficult it is, especially in the mature countries, to find new people. With that, we can be faster to the market. We can develop new products much quicker than we historically could. Then last but not least, it can have a huge impact on our operations too. Sounds internal, but really isn't, given that the moment we can produce faster, we can schedule faster, we can deliver to our customers in a faster way as well. We cannot go into all the details, but happy to have some talks to you during the coffee breaks. I will just show examples for two of those, just some glimpses of what we've done. So this is the Fluids Connect, Ralph already mentioned.
I think very important, different customers, different requirements, but it's an app they can use to really individually track what kind of fluids do I need to use, how does my machine park look like, what are the lubrication points, how much do I need to use, how much do I still have in stock, and really assist in data-based decision-making. Because again, it's all about the data in the end. Just to give you a feeling, this is how it could look like, so our customers can really see for the products they have in use, how much did we use. They can add their machines, and I think most importantly for us, they can add basically lubrication points where they don't use our products yet.
So we are well aware of okay what could be sell-on potential, where can we maybe improve because our product is not where the customer would like it to be. So this is a very valuable tool for us. We use that ourselves too when we do the chemical process management, but we hand that over to our customers as well so they can really diligently and in a very structured way manage their machine park and manage how they use our products. The second one, I think it's a very simple example because all the ones Sebastian gave me, I was far from being able to explain that. So if you have questions, please go back to him. But I think with this one, it's very generic.
But usually, when you want to try to come up with a new product or want to test products, what do you do? I always say it's a little bit like at school with your chemistry lessons. You have to do trial and error and see what the result is, how it looks like. Sometimes very hard to tell, is there really a difference? With those chemical simulation models, you can see the difference because you have numbers behind. But it can as well help you to be faster to the product you actually want to do. Because in the past, when you need a new product, of course, our chemists are very experienced, but they need to do dozens and dozens of tests to somehow get close to the product they actually want to do.
With a chemical simulation, you can narrow that down and really focus on the solutions that are most likely to succeed. And I think in the long run, this can be a huge boost to our efficiency in how we do R&D. And especially looking at how hard it is to find good chemists to work in the R&D departments, we can use our people in a much wiser way. So this is what we already planned to do. But I think, I mean, when we did this strategy, AI, I mean, it was there, but it was not a huge thing. And this is where it showed us we need to be fast and we need to adapt. And this is why we are very proud we managed to get a strategic partnership with Microsoft. The question is always, how did you do that?
You know, why does Microsoft want to work with Fuchs? I can say we were very persistent and we didn't leave until we got that, but I think for us, this is a really cool thing because Microsoft is currently at the forefront of this development in AI, how to use data models, how to use GenAI, and we can profit from their knowledge quite a bit. Here you see, basically this was in Munich in their EMEA headquarters where we signed the contract, and since then, we have done a lot of co-developments. Here you can see where we basically talked together, so that was me and the head of the chemical industry of Microsoft Europe. We talked together at the AI conference.
So for us, this is a really good input, a very good sparring partner to really look at where are we and how can we do a little bit more. I think the first project we worked on together is our lovely Ask Lucy. This is something we are currently creating for our sales team. Because we said, okay, right now we are decentralized. We have so much knowledge. If we can leverage this knowledge globally and give that to all of our sales teams and service teams, we would be unstoppable. This is where we said, let's try to do something with all the knowledge we have. Let's create Ask Lucy. This is an internal chatbot. And we started with two guinea pigs in China and Australia because they are very well advanced when it comes to data management already.
Really leveraged all of the knowledge, the experience Microsoft brought in, and then really put a lot of information in terms of product data sheets, test cases, problem reports, so by now, you can ask Lucy any question and she can answer almost as good as our specialists can, and this for us, we believe, will be a big game changer in the future once it evolves a little more, still in the baby shoes. We said this is just the beginning, but we want to continue to do, to leverage on partners like Microsoft and to really advance with those technologies. I think what we learned as well, especially during this project, it's all about structure, it's all about data, so it sounds fancy and we have AI and GenAI, it can give recommendations, but it's always garbage in, garbage out.
And this is why we said Fuchs Goes Digital. Of course, we have all of those nice customer-facing solutions. We can really focus on that a little bit. But the majority of the effort in the first years will go into fixing the basics, so called. So Stefan always says it's a little bit like cleaning up a 90-year-old basement. You need to take out every box, take a look what's inside, and somehow decide, do I still need it? Can I replace it with something else or can I just toss it? And this is why we do have this big program called Transform to Grow, to really be able to leverage data and processes in a much better way, become much more scalable and resilient in the future. We always like to use those two pictures. We say today, we are one big boat.
Every country has their own little room in here. They really know what they're doing. They understand what they are doing. For us, it's really difficult to leverage this because in the end, the MD not showing Thailand doesn't know if the product is available in Indonesia, for example. We said there we can really make a huge step up by somehow trying to harmonize all of this and especially focusing on the processes that are not directly customer-facing and do not really make a difference in the countries. We need to be mindful of what we harmonize and standardize, but we are well on track to define common processes, define common data structures, and put that into one common SAP S/4HANA system. Still a long journey. We're currently in the middle of defining the template and rollouts will still go on till 2028, 2029.
We really believe it's worth it because what we believe we can get is this one carrier rocket. So very lean team working on getting the basics right, but we have much more room, much more time, much more people to focus on what really matters. And that is making use of the data and focusing on the customer. I cannot spare you one, which has a really boring slide, but I think this for me is really the important one. This is our architecture we strive to implement to get here. Yeah, so we need processes, we need an ERP system, and still AI does not take that away from you. We need to do our homework. We know how to do it. We are more than willing to do this, and we are well on track with a great team.
But this is really where the value is added. To get here, it still takes a little bit of time because to conclude my presentation, I found a really nice quote and said data is the new oil. In the past, we never had refineries, never wanted to do that. When it comes to data, we want to, yeah, because we really want to make use of those data and want to leverage it. And this is why we gave ourselves a really comprehensive structure. We say we will have one ecosystem with SAP S/4HANA, common processes, common sets of data, a structured process for master data management. Equally important, cleaning up master data once, nice effort, but you need to continuously work on that so it doesn't get somehow distorted right away. On top of that, we are already working with Microsoft Fabric, which is our data lake.
So independent from what the underlying system is, all data can be in there, maybe product data, maybe leads from our CRM system, HR data, data from S4. So we can really use the full power of data. And we already use the Microsoft Power Platform too. Those two things are what this partnership really is about. So we can be quick in developing apps, developing our own chatbots, and really making use of what we have in here. And the good thing is the more we push in here, and this is a little bit independent from the S4, the more we can benefit from that right away. Because then in the end, we put the AI models on top, and the better the data quality, the knowledge below is, the better we can be.
And given we still have a couple of minutes, Lutz is already waiting with a microphone, if I see that right. Lights are very bright. So in case you still have questions.
Thanks a lot to Isabelle for the great update. I texted with Lutz while you were speaking. We make a 15-minute Q&A, and we do a 15-minute break from 10 to 11 until 5 past 11, and then we only are stealing five minutes of the next session.
Perfect.
Thank you for all the presentations. Isha Sharma from Stifel. The first question is, you've showed us many growth opportunities in end markets, also outside of automotive. So related to that, what is a realistic expectation on growth in the next five to ten years for Fuchs? And also the volume and price split, because you said it should come at incrementally higher margins.
Then the second part of the question is obviously, should we expect a different split of your end markets if we think of next five to ten years? Thank you.
I think that's a very cool question on the technical part, you know, the volume and the pricing. Since I'm so deeply in our business, I give the question to Isabelle to answer to you.
Very, very simple answer. We still believe the mid-single digit growth, where we say this is organic growth. The moment we do big acquisitions, you can take that out. But we say on average, we talk about one-third price, two-thirds volume. But of course, I mean, you know about the volatility in our pricing. This is why we say average, because of course, the moment prices are up, we increase our prices, prices are down, our prices go down too.
But on average, we say two-thirds volume, one-third price.
And on the consistency of the business, you know, I think Ralph explained it well. We have defined segments for our business, but we don't report on them because we sit a little bit in the glasshouse with our competitors around. In the segments, you see overproportionate growth compared to the non-segmented business. We still have also what we call opportunistic business or not business assigned to a segment in the countries. We continue to grow in both, but the segments with the focus grow faster. I don't know whether you will see in the next five years a change in the annual report because with the industrial and automotive, that's a product group definition where we don't really live in. And sometimes some analysts think automotive is all passenger car engine oil, first fill Volkswagen.
It is not because there is agriculture in. There's mining in. There's a lot of specialty grease inside. So you don't really realize it, but we continue to bring examples. In the segments, we measure every month now, you know, that we walk the talk with the Fuchs 2025 and the Fuchs 100 in the future. I'm sure, you know, Ralph and Timo can add a little bit.
I would like to add, you know, also referring to Timo's presentation on the mobility change by world region, that mirrors somehow perhaps a bit to, without answering your question, to give you a hint, yeah, that in some world regions, I think the focus on industrial and specialty applications might be very, very high, yeah, because we would not expect to grow for certain, let's say, automotive type of application growth, while in other world regions, we still see great growth potential in all areas of our activity.
This is Martin Rödiger from Kepler Cheuvreux. One question to Mr. Fuchs. A few years ago at a former Capital Markets Day, you talked about your strategy to expand your activities towards Africa as a promising region. Can you provide an update how you stand with this process of expanding to Africa? And the second question is for Dr.
Reister about the mobility. You talked about primarily regions where also a lot of production is taking place. But there are also many regions where there are cars exported, like to Latin America, to Africa, to other countries in Southeast Asia, excluding China, where these cars stay. And also these cars, which exist there in these markets, also need refill lubricants and so on. Can you provide also, let's say, some information about the prospects in these regions?
Thanks for the Africa question. It normally belongs to Ralph, but I can give you a little hint. I think we grow significantly in South Africa, where we have a big plant in Isando. And Ralph and his team have done, I think, an excellent job in buying a neighbor property.
You know, we have a nice office building, a LEED building now, and we increase our manufacturing, which was all part over the last couple of years, and today we have really a powerhouse. They grow significantly also this year, and we go from South Africa into Southern Africa, where we have three joint ventures, and then we work our way up, so Africa continues to go well, Ralph, and you can add if you want, but if you ask me, I didn't want to delegate a second question, so
I think looking at the world map, you see less dots in Africa, and for good reason, so we are prepared to continue to invest in Southern Africa, also in equity.
We are prepared to spend there our own money, but we are, let's say, less aggressive in spending equity interests in Western and Eastern Africa because of the risk profile there. So I think we develop these markets already today in all, in northern part, in east, west, and in the southern part of Africa as Stefan was referring to. But it might take a bit longer because we start rather with a distribution partner, also with local toll blending. So that means we do not invest our own money to manufacture the product local for local, but we use also partners there. And then we might enter into joint ventures, and then we might think, do we want to take the majority stake? So this is at the moment our approach towards Africa.
Depending on the region, we are in different phases, but we very much believe in the continent, in the growth potential, also because of all the investment from Chinese companies into Africa. There's big business out there on the mining side and on off-road. I think we have a lot of opportunities over there, but we also have to mitigate the risk connected to Africa. Coming to your second question about mobility and the markets we didn't show in our presentation, we focused more on our hubs and also on markets where technology is generated. You are right. First of all, we didn't cover all the markets because, for example, Japan and Korea remain important technology markets that we didn't cover.
Of course, there are markets where, like, Kazan operation or where tier ones, tier twos sit, could be Southeast Asia, could be South America, also partly now Northern Africa. The message is we are tackling all these markets, but these other markets are supported by our hubs. It's not that we exclude markets and say, hey, here we are not interested in the demand that's associated with mobility. We go for it and we make sure that whatever we need in a market to have the technical competence to support the growth in that field, we'll provide that. We have a lot of markets that are big with tier ones, tier twos that have not been on the slide, but also that are big in the aftermarket. One example is also, for example, Australia. Australia, they don't have any car manufacturing anymore.
Ford and GM moved out a couple of years ago. So now we are heavily focusing on the aftermarket, where we have a nice and big business there, where we also did an acquisition a couple of years ago. So yeah, we are going for all of it and we make sure that we have the technology available to support these markets.
Thank you. Sebastian Bray Berenberg Bank. I have two questions, please. The first is on the 15% EBIT margin target. It's been a long-standing feature of the Fuchs equity story that the company wants to work towards this. Why is it the right number? Why not 14%, 16%, and so on? And related to that, let's say we finish and this year we get somewhere close to 13%. What are the building blocks required to get to 15%?
Then the second part of the question is on your slides, Isabelle. You talked about the investments that have gone into AI and IT, and the initial results seem to be quite promising. What is the cost of doing this? Is it put in OpEx or CapEx? And when does the ERP roll out, the implementation of AI conclude, if at all? Thank you. I think that's a very good question on the 15%. I like to keep it simple. I would like to run a 15% EBIT company with a 20% NOWC. I think that's a doable target. And when you look in our past, we had years with 16% or 16.5%. The part is always also on the raw material side. And when Isabelle mentioned today the CapEx projects, that is important.
But equally important is that the years 2021 and 2022 were years we have not seen in our 90 years history. Because normally I'm now almost 30 years with Fuchs and raw materials go up and they go down. When they go up, we run behind. When they go down, we get a little tailwind. Last in 2021 and 2022, including the availability, we had a 70% raw material increase. And I would say out of the hip, you know, Sebastian, maybe 10 points came back. That is very unusual. And in those times, to hold 15% is a nice dream. But we also have customers and competition. So I think we have done our pricing very, very smart. But the 15% was not in reach. Now we try to fight back. That's the one part. The other part, what we have also noticed is the general inflation.
When you look at our P&L aside of raw material cost, personnel is our biggest expense item. I don't want to talk about an expense item because it's our global team, but we see significant increases all over the world, and therefore, when I look on a year, I look on additional contribution margin, and then I would like to convert more than 50% in profit. You know, that conversion is less than 50% because all our expenses are inflated, and those are my two answers to the 15%. It's not that we go wild or stupid about something. We still want to do it in a smart manner, and therefore, we kept the goal up, but not with a year behind because we don't see the raw material going down the way they went up.
Towards the Transform to Grow program, I mean, AI journey will hopefully never be finished, but we need to set ourselves up to be able to adapt to new trends and to react flexibly. This big Transform to Grow program is currently foreseen to finish 2029. Cost will be in OpEx and in CapEx, we'll see in the years to come, depending on the phase. Of course, when you start to build the system more towards CapEx, once you roll out in the countries, more towards OpEx. But I think adding to what Stefan said, this will be one of our building blocks to becoming more resilient and becoming more scalable too. We don't only do that to harmonize processes and data, but we, of course, do that to work in a very different way compared to today.
We say relatively we will see huge savings with this program too. I think this for me would be the two big building blocks towards the 15% to model that. Point one, really working in a more efficient, more resilient way. Just saying we have one additional ton of volume, we don't need to add as many people as we did in the past. This is not only transform to grow, but a lot that is taking place in Sebastian's team too around operational excellence, around procurement, bundling volumes, all of that stuff. Very promising results here. Then as said, the additional volume coming in now, the factories are there, the R&D centers are there. It comes in at a relatively speaking higher incremental margin. Those would be the two big building blocks.
Maybe one last question.
If there's any.
Okay, there's one question from the stream, and that's maybe not so much on the content we discussed, but maybe it's a good question. On the share classes, there's a difference in liquidity and in valuation between the share classes. You know, how far it would be an option for us to merge those two share classes in order to eliminate that gap?
So currently, I mean, there is of course a difference in liquidity. This is kind of natural because when you look at the preference shares, they're traded in the MDAX and they have 100% free float. And of course, the family owns, I think it's 59%, 57% now after we did the share buyback of the ordinary shares. And this, I think, is really the gap in the price we're looking at due to the lower liquidity.
But currently, there are not any plans to change that.
Okay, now we go to the break, and I would ask you to be back at 11:05 A.M. That would be great. So 15-minute break.
Cool. Thank you.
So, welcome back from the coffee break. Now, like mentioned by my colleagues before, it's about sustainability. And what I want to do is I'm going to talk about different aspects of sustainability. So, on the one hand side, like mentioned before, I want to give you an insight into concrete applications and how our solutions help our customers to perform more sustainably. And then in the second part, I want to talk about the sustainability strategy and measures we have taken to achieve our targets and also where we want to go.
It was mentioned before, but as it's such an important point, I want to reiterate two things that we already mentioned. On the one hand side, like I said, the inherent purpose of a lubricant is to improve the sustainability of the system it's applied in. And the reason why this is possible is because, as it was highlighted, the lubricant is an integral part of the overall setup of the system. It was mentioned before that in many, many cases, the lubricant gets tailor-made to the system and the process it's being used in to actually perform at the peak together with the machine so that both together perform most sustainably and efficiently. Stefan mentioned it, but also here I want to reiterate that. And the reason why the lubricant can do it is because of four attributes it basically brings.
On the one hand side, like I said, it protects surfaces from wear and corrosion. It helps reduce the friction and wear in moving systems. It cools machine and equipment and transfers energy. So far, so good. This you have heard before. What I will do now, I will share a couple of examples per attribute to try to make it a bit more tangible of what does it actually mean and what do our solutions bring to the table in the different applications. So, let's start with protect surfaces from corrosion and wear. And Stefan mentioned it, let's say, in his speech a little bit, copper corrosion. But before we get into the details, let's talk about why that is important. Battery electric vehicles that we already talked about, at the end of the day, are about to convert electrical energy into motion.
The way how that happens is with different components working together in the electric car to convert that energy. There's many different components, and one of it is the so-called electric drivetrain. Within that electric drivetrain, in contrast to the traditional car, the electric motor is one component being, let's say, immersed into the fluid. As it's about electricity, the motor needs to have components that have a high electrical conductivity, which in this case is copper. Unfortunately, copper can corrode under certain circumstances. Now it gets technical. When copper converts itself from copper to copper oxide, the electrical conductivity dramatically decreases. What that then means basically is that when you're in the machine, if you then, if the current flows through, that there's much more resistance, and as there's much more resistance, much more heat is generated.
That heat then, in turn, of course, leads to the fact that the mechanical integrity of the whole copper winding decreases, and that then reduces the lifetime of that electric motor, so therefore, it's of importance to shield that copper from the corrosion. We have developed a fluid, and you can see it here, the 4101, that can help the copper to stay in its original shape and prevent corrosion from happening. What you can see on the chart, and that's what it illustrates, is you see copper stripes, and these copper stripes, they're being immersed in the fluid. The fluid is then heated up very high to 150-160 degrees Celsius, so much higher than you would find it in any type of real-life application. Then you basically keep it in that stage, in that experiment, for multiple hours.
In this case, up to 216 is what we show here. And then you look at, did the copper corrode, yes or no? And how much copper can I find in traces in the oil, which then is a sign for how much copper basically dissolved? And what our fluid can do in comparison to others that have a little bit more problems with that is we can avoid more or less the copper corrosion from happening and also avoid the dissolution of the copper in the oil. So that basically means that with our solution, we help our customers who produce the electric motor and then want to apply it in the car to extend the lifetime of the motor and thereby extend efficiency and, let's say, the sustainability of the car itself. Next, I want to talk about three cases of reduced friction in moving systems.
And some of the examples that I will talk about were mentioned before by my colleagues, but I'll go a little bit deeper into them. So let's start with an example from the grease side. We talked about before that we have applications that no matter whether it's battery electric vehicles or traditional vehicles, for us, it doesn't matter. That is one of those applications. So a wheel hub bearing is a bearing that basically helps that the wheel can turn with as little friction as possible, and therefore the energy generated by the motor goes as efficiently as possible onto the road. And that doesn't matter whether it's a battery electric vehicle, a traditional vehicle, or a truck. In all cases, that has to happen.
In the case of a battery electric vehicle, of course, the lower the friction is, the further you can drive with the battery charge. In the case of a traditional vehicle, the less the friction appears, the further you can drive and have less emissions per kilometer. At the end of the day, it's the same thing. It's about having as little energy as possible to move forward. What you can see on this chart is that we developed a grease, actually two, but I'm going to talk about the red line only, that we have tested in the standardized test. It's a so-called mini traction machine, which helps you to understand how much traction and friction actually appears under real-life conditions, because this machine can do many things.
You can vary, you can change the difference of the speed, you can put loads, you can change the temperature, and so on and so forth. What the red line basically tells you is that our grease that we developed for that application in the wheel hub bearing leads to 30% less friction than the current market reference. That, of course, means that then the car, first of all, requires less energy, but also, secondly, as there's less friction within the bearing, the bearing itself also has an extended life cycle because there's less wear and less attrition in the bearing itself. That, again, is another example where by making a small perceived change, exchanging one grease against another grease can have a quite huge impact on the system of the customer and thereby perform, let's say, increase the sustainability of the system.
Next, I want to come back to the 4101 that I mentioned before, but focus on a different aspect. Timo mentioned that in the battery electric vehicles, the electric driveline is an integral part of the car and is very important. What we have done is we've taken our fluid and we put it into a real car of one of our customers, and then we put that car into the WLTC and CLTC, which is the China test cycle, into the test cycles and ran the test cycles and looked at the efficiency of the car and how much did our fluid either increase or decrease the efficiency of the car. What we found is just by replacing the currently used fluid that's on the market against our fluid, the efficiency increased by 0.2%.
That means that if a car drives 300,000 kilometers and has a consumption of around 17.9 kilowatt-hours per 100 kilometers, that means that the car requires 107 kilowatt-hours less or can drive 600 kilometers more. That doesn't sound like a lot if you look at a single car. However, if you consider that that means that per one million battery electric vehicles on the road, that's 107 million kilowatt-hours of electricity saved and so on and so forth, that then again is a nice sign. Small change, exchange one fluid against the other, has a big impact on the sustainability of our customer's application. Stefan talked about windmills, and he mentioned that wind turbines work under very harsh conditions because there's very low temperatures, there's very high temperatures, there's rain, there's wind, there's storms, there's ice.
Nevertheless, it's one of the topics, let's say, a lot of people focus on in regards to renewable energy. Currently, there's around 1,000 gigawatts of capacity installed around the globe when it comes to wind energy. 117 gigawatts have been installed last year. Then there's two types of wind turbines, basically onshore, which have a capacity of roughly six megawatts, and then offshore. Their capacity is 13-50 megawatts or up to 20 if it's the newest generation. Therefore, we can assume, if you just do the math, that there's by far more than 100,000 wind turbines installed around the globe currently that all need to be lubricated, as Stefan also mentioned.
What I want to focus on this chart is the main bearing, because the main bearing is an essential part to basically help to transfer the energy that comes from the rotation of the wind turbine into the gearbox and then later into the electricity-producing unit. I think while it's quite obvious that when the wind turbine is rotating, that there's a lot of load and stress coming onto the bearing, I think for the people not so much involved in the industry, it might not be so clear that the same is true when the wind blades are not rotating. And the reason is simple, because the wind turbine is not rotating, nevertheless, the wind still blows. So therefore, a lot of vibration basically starts to form within the system, and that vibration also comes into the bearing.
So now the metal parts of the bearing are separated by the grease, but the small vibrations over time can lead to the fact that the bearing is getting pushed out, but there is no rotation happening that pulls the bearing back into the metal parts and helps to lubricate. So that can then lead over time to the formation of so-called standstill marks. And once a certain level of standstill marks is reached, you have to exchange the bearing because the wind turbine cannot run smoothly anymore and efficiently. And that, of course, is what nobody wants because it's long downtime, it's very expensive, and also somehow you have to exchange the part, which is also not very sustainable.
So therefore, we focused on that topic, and we're able to develop a product that helps under these conditions to, for five times longer, not have the standstill marks appear at all. So therefore, with a change of that grease against our grease, again, small perceived change, big impact on the overall sustainability of the application, in this case, of our customer. Now, next, cooling of machines and equipment. Data centers were mentioned before. According to the estimation of the International Energy Agency, currently, data centers around the world consume anything between 240-340 terawatt-hours of electricity per year. So AI was a topic you asked about and we talked about. Average AI search consumes about 4-10 times the energy that a traditional web search does.
Based on these two facts, it is assumed that the energy required for the data centers to come and the increase of AI, that that energy required by the data centers will increase by 2-3 times until 2030. And that's why you then read in the newspaper, this company wants to build an atomic power plant to basically power their AI centers. This company wants to do it because they just don't know where the energy should come from. What you see on the lower part of the chart is the relative energy consumption of a data center. And what you can see is that in the air-conditioned form, which is represented by the so-called traditional air, as we call it here on the chart, 50% of the energy that is being used by the data center goes into cooling. 50% goes into the server.
If you then do not have cooled air, but you just have regular ambient air that you basically push through the room, of course, the energy required goes down dramatically. However, the efficiency of the cooling goes almost to zero. So you have no cooling, and consequently, the data center cannot operate at the temperature it needs to. Over time, of course, let's say the server farms will go down because of too much heat in the system. Then there's a theoretical example on the chart: water. Water is a very good cooling medium, but I think it's very obvious that water and electricity together is not a very good idea. Therefore, it's more for illustration purposes on the chart. What it's actually about is the last pillar. It's the immersion cooling pillar. Stefan mentioned it.
We developed the fluid for that application where you basically merge the data center into the cooling fluid. And by doing so, you can save 95% of the energy you had before for the cooling while still having a better efficiency of the cooling. So that is, again, an example where we help our customers to perform, in this case, very significantly more sustainable, but still, their systems perform the way they want them to do. Last but not least, transfer of energy. The transfer of energy through fluid is a hundreds of years old thing. So if you think about presses, for example, that is one of the applications. Or like we have used here in this case, excavators. So what we did is we took an excavator and we ran two times the same test for 8,000 hours.
In the first case, we had a standard fluid in the excavator. That excavator performed the standardized work set. We measured everything you can measure from temperatures to oil status to emissions being emitted by the excavator. And then we exchanged the fluid against one of our premium fluids, the so-called RENOLIN Xtreme Temp. And we did exactly the same thing again for 8,000 hours. And what we could show in the life cycle assessment afterwards is that even though the first fluid had a slightly higher so-called product carbon footprint, which is a measurement for how much carbon comes with a product, the overall impact of that premium fluid was a reduction of 31 tons of CO2 by the excavator in that standardized test. And therefore, by far over and above, of course, compensated the slightly increased product carbon footprint of the product.
Another example where a small perceived change made a big impact on the customer. After having gone through that more tangible examples, I now would like to focus on the sustainability strategy. When we talk about sustainability, we basically talk about three things. These three pillars all have an equal weight within our consideration. It's economical, that's what Isabelle talked about, and it's social and ecological. As Isabelle talked about the economic part, I want to focus on the social and the ecological one and start with the social part. Last year, 94% of our affiliates participated in local or regional social projects. That means that somebody from Fuchs invested his personal time to support a project in the vicinity of, let's say, our operations to improve the community there. That basically sums up to almost 300 projects we supported last year globally.
Of course, we always ask ourselves, how is it in line with the 17 Sustainable Development Goals of the United Nations? If you then look at other projects and you sum it up, what you will see is that the four displayed here in terms of no poverty, better health, better education, and more sustainable cities and developments are the ones that showed up the most. I brought two examples with me later that will illustrate what does it actually mean and what have we actually done. Before I get there, I would like to switch from social to ecological and talk a little bit about our sustainability journey that we have been doing for the last couple of years.
When we started with that topic, we had a first very intense focus on the so-called Gate-to-gate, which means what happens from the moment the product enters our vicinity to the moment it leaves the facility again. And once we had a clear idea, we started to compensate for that by purchasing climate project certificates using the Gold Standard or one of the Verra standards, so very high standard. But that, of course, was only the first step. The next step for us was to say, okay, now we go from Gate-to-gate to cradle-to-grave net zero neutrality going forward. But what we also realized is that within the industry, the normal nomenclature, so to speak, everybody talks about Scope 1, Scope 2, Scope 3.
So we decided going forward, even though we focus on the whole value chain, we will report our emissions only following that methodology in terms of Scope 1 is our direct emissions, Scope 2 is the indirect energy-related emissions, and Scope 3 is then indirect upstream or downstream emissions. Over the last couple of years, it was mentioned before, we had quite some focus on that topic. And let me share with you what we have achieved. So when we look at our emissions, we separate them basically into two buckets. On the one hand side, our operational emissions, which with 80,000 tons represent 3% of our corporate carbon footprint.
And then, on the other hand side, on the value chain emissions that come with the raw materials and basically go on to the customers, which is the so-called Scope 3, and represent around 2 million tons, 97% of actually the whole corporate carbon footprint. What you can see is that on the things we have under our own control because it's our own operational emissions, how do we produce, which energy do we use, how much energy do we use, which type of systems do we apply? We were able to reduce this by 30% over the last couple of years. And the way how we did this is we on the one hand side worked on our processes and made them more efficient. We also replaced traditional fossil-based sources with renewable sources.
In alignment with the CSRD methodology, we also had to shift the participation of the joint ventures into Scope 3, although that part is the smallest part of that 30%. On the other hand side, we had to realize that our Scope 3 emissions, of course, we also wanted to reduce, they increased. I want to talk about why. One of the reasons is that last year, the so-called emission factors, which represent how much CO2 comes with a product per kilogram, they were reevaluated and they increased. That is one of the reasons. The other reason is that we had to realize that the surroundings and the value chain around us did not so far support the goals that we set ourselves the way we want it to be.
The reason is that the transformation towards a green industry or circular economy, whatever you want to call it, has very different speeds within different industries and different regions. As we operate globally, we, of course, have to deal with that when a supplier comes from a different region and his, let's say, net zero is not 2050, but it's 2060 because in his legislative regime, this is what the government is targeting for. That, of course, then impacts the speed with which he will do the transformation. The second point is that the technologies to make that happen for the defossilization have not yet reached a maturity level that they're broadly applicable to all the different situations, and they're also not cost competitive yet. I think regulation is a topic that everybody is aware that regulation becomes more and more complex.
Unfortunately, the approval processes required to get things done are not the fastest. So that does also not necessarily support the transformation in an agile fashion. These three points together lead to the fact that availability of the raw materials we require are very limited in the high quality we need them in. That means that if we have a sustainable product, in many, many cases, it is more expensive than the traditional version. This fact then meets the low willingness of the market to pay for that.
All these things together then lead to the fact, what I said before, that we were not able to reduce the product carbon footprint for the Scope 3 emissions than we wanted to because the raw materials were not there or more expensive, and the market was not willing to pay for the solutions that were available, but did, so to speak, not fit into the cost regime that they currently worked under. As a consequence of that, we updated our sustainability strategy, and that's what I want to show you here. Our target is to be in line with the European Union net zero by 2050. That means reduction by 90%. In accordance with the SBTi approach and the logic behind, that is considered net zero because there's always a certain amount of emissions you will never be able to, let's say, eliminate.
And for that small share, you're then allowed to compensate for. The way how we're planning to do this is twofold. On the one hand side, our operational emissions will reduce by 42% in comparison to the base year by 2030. That's the stuff we have under our own control. And then go down to net zero until 2040. The value chain emissions, so meaning from our suppliers through to the customers, they're planning to reduce that by 25% until 2035. And then, as I said before, down to 90%. And the levers are basically for Scope 1 and Scope 2, the stuff we already started, making our processes more efficient and replacing energy. And in case of value chain, of course, replacing raw materials, fossil-based raw materials against renewable raw materials.
As I showed you before, which constraints we faced in the initial attempt, I now want to also share with you the requirements that have to be met so that we can make that transition happen. I think one thing is obvious. We need to have the green energy available in all countries we operate in so that we're able to replace the fossil-based energy with renewable sources. That is not an easy undertaking. To give you an example, I recently visited a supplier in a European country, and they have a big operation. They produce hydrogen in their facility. Now they're planning to convert that gray hydrogen first to blue hydrogen. So that means they don't emit the CO2, but they take the CO2 and they pump it underground into a now an empty reservoir, former gas reservoir. That is so-called blue hydrogen.
Now, if they want to convert this blue hydrogen into green hydrogen, what they would need to do in addition is use renewable energy for that process. Just that one plant would require 20% of the renewable energy available in the country to make that change happen. So therefore, while it sounds trivial, the first point, it is actually not. Because if everybody's trying to make that change, we need much more green energy available to make that happen. Secondly, the technologies I talked about in terms of defossilization, so-called CCS or CCU as examples, they of course need to be cost competitive, and they need to be on a technology maturity level that they can be applied in a broad variety of processes, which is not the case today.
Because if they're not competitive, then the companies who are supposed to invest into it don't have an incentive, and then they will most likely not do it. So therefore, some technological advancement is required to make that happen. Regulation, I mean, everybody talks about it, needs to become more technology open, not so single focused, and needs to become much faster so that that transformation can happen within the timeline that we set out for ourselves. That then all leads to the availability of raw materials. And last but not least, the customers then have to be willing to make the change. Because we talked about Ralph said approval for a wind turbine can take five years. Why is that?
Because you first have to develop the product, then you test it in the lab, then there are some bigger tests, and then that grease, for example, runs for three years in multiple wind turbines and has to show its performance. So that takes a long time and costs a lot of money. So if you now want to exchange a product, that requires time and money of the customer, and the customer needs to be willing to do it. So that's why that last point is there, even though it might seem obvious. So now I talked about the strategy. Next, what I would like to share with you a little bit is how are we perceived externally, either from an external view perspective and also from a recognition perspective. So I brought four things with me: the rating of MSCI, Carbon Disclosure Project, EcoVadis, and ISS ESG.
What you will see on the chart, that in three out of four cases, we made significant improvements over the last couple of years. So starting with MSCI, when we started in 2020, our rating was a double B in April 2020. Now, as of this year, March, our rating increased from that basically to A. And that means that within our peer group of the chemicals, there's only 14% in there that have a better rating than us, which means a double A or triple A. So I think it's quite a nice achievement. In terms of Carbon Disclosure Project, a little bit similar story. We started in 2018, and since then, we continuously improved the rating to today, the second highest rating, which in two of the three questionnaires means that we are better than the chemical industry.
EcoVadis is, as you might know, a common scheme used in the chemical industry by many, many companies to basically get a feeling for how well do the suppliers perform based on assessments and audits. In our case, these assessments or audits are being performed locally, so by the plants that are being audited or assessed, and all the plants that you see on the chart, it's 12 in this case, they have either received good to very good results so also here that basically constitutes our efforts. In case of ISS, our current rating is a C minus with a very high transparency level, and we're now working actually with them because that's two years old to basically get the new assessment going.
For sure, we strive for the same thing as we have done with the other three cases to make a significant step forward in terms of rating by acknowledging all the things we have been doing and basically we believe have been quite successful in. Next, one thing we're very proud of, we received last year the Global Transition Award from the German newspaper Handelsblatt together with its industrial and scientific partners. The reason why we achieved that is because the panel basically constituted that Fuchs is one of the leading companies when it comes to implementing a strategy that's in alignment with the Paris goals. For this year, we are striving to get again a Global Transition Award.
Let's see whether we can materialize this, yes or no, and we'll find out end of January 2025 when the award then will basically be given to the winners. So let's see and stay tuned for hopefully more to come. So in summary, that means that we stay fully committed to our sustainability approach by doing two things. On the one hand side, empowering our customers, like I've tried to explain with a couple of examples, and the communities around us to perform more sustainable. And at the same point in time, investing a lot of time and money into engineering our own change and making the change possible that we can do in our plants to meet our own goals in terms of operational goals and work together with the suppliers to basically work on the value chain emissions as well.
Now, I said that I will share with you a couple of things we have done to try and give you a flavor of what does it actually mean. What has Fuchs done? Let's start with two examples from the social side. The first one is from Fuchs India. For many, many years, Fuchs India has been supporting the Anugrah Vidya Mandir School, which is a school that helps to teach marginalized and low-income kids from the surroundings of Mumbai, for example, English. There's 300 students at that school, and the school has very nice stories like, for example, as it says here, one of the former pupils of that school went on to do a further education and then came later back to the school to help, so to speak, the next generation of kids to basically go the same way.
What we do here is we support 100 of these kids with the school fees and provide food and so on and so forth for them, and in addition, we also supported three children that decided to go on for further education. We basically supported them in getting this done and following their aspirations, so I think a quite nice example from India on what that actually means when I say we try to help the communities right around our vicinity to make that a better place. The next example comes from Fuchs in Mannheim, where for almost 25 years, we have been giving out the so-called Fuchs Sponsorship Award. Last year, we increased the funding to EUR 75,000 for the projects, but that's not the important part. The important part is that these projects have a stage where they can present themselves and they also receive a secondary recognition.
Because what we do is we have an awarding ceremony in our office in Mannheim, but not just Fuchs people come, but the local community and politicians also come. And then the projects that have been selected present their projects, and they get the recognition they deserve for all the efforts they're doing and all the hard work they put in. And we support a variety of projects. You can see it here. So it's about children, it's about senior citizens, it's about people with disabilities, and many more. And then the projects can apply for the funding and for the award in different categories, be it education or innovation, strong community, and so on and so forth. Then we go through a selection process. And then, as I said, they are being invited, they are coming, and we make a nice event out of it.
That's definitely one of the highlights, let's say, on most people's schedule because it's really nice to see what people are doing and how they basically give back to the community and try to make it better. Now, from the social part to the ecological part. I want to start with two examples from Scope 1. In our site in Castellbisbal in Spain, we had a yearly energy consumption of 4,000 megawatt hours. Then we wanted to make a change. What we did is we implemented a so-called lean program. For those of you not so familiar with operations, that's basically a methodology that helps you to identify waste from a processual perspective and also helps you to reduce the energy required to make your processes more efficient. We implemented that program.
After we had implemented the measures we identified, we were able to reduce the energy consumption by 38%, which then translates into saving just with this one measure of 350 tons of CO2 a year. Next example comes from Sweden. A couple of years ago, we built a new plant in Sweden. So that's part of the investment program that Isabelle and Stefan talked about. When we designed that plant, we conscientiously decided to go with electric heating systems for the thermal oil tanks, use green energy, and also go for geothermal heating. As a consequence of that, by building that new plant, we saved 800 tons of CO2 compared to the previous plant, which was basically using traditional conventional systems with natural gas. With that change, so to speak, the newer technology, we brought the Scope 1 emissions down.
Next, I want to go to Scope 2, and here's an example where an economical benefit and a sustainability benefit come nicely together in one project. In South Africa, we executed a power purchase agreement based on photovoltaic systems, and the advantage is that, of course, on the one hand side, we save 900 tons of CO2 per year compared to before. Very nice, but also nice is that we basically increase the security of our electricity supply. Because you might or might not be familiar in South Africa, the local grid is coal-based, and in many, many months of the year, there's so-called load shedding, where there's not enough electricity around, so they basically reduce the energy. That means you cannot produce, and with that measure, we are able to overcome that obstacle.
So therefore, it's a very nice project showing how an economical benefit can go together with a sustainability benefit if you do it right. Second example comes from China. We talked about the plant before. There we also invested in a photovoltaic system. It covers an area of 5,600 square meters and has a peak power of almost 1,200 kilowatt peak. So it's a quite big system. And by doing so, on the one hand side, we increased our own solar peak power and our own facilities by 46%. But more importantly, as a consequence, the share of green electricity we use went above 75% globally now. And we have a clear target to increase that to 100% in the very near future. So also there, I think, a nice example of what you can do if you really focus on it. Last but not least, Scope 3.
Scope 3, as I said, is a little bit more challenging because for the majority, we are dependent on our suppliers and we have to move with the market. However, there are things you can do. And I want to show you two things we have done. One, we use a lot of steel drums to supply our fluids to our customers. And there is, of course, a CO2 footprint that comes with a steel drum, and that depends on the amount of steel required to produce the drum. So the more steel, meaning the thicker the wall, the more CO2 footprint. So what we did is we undertook an exercise within the whole region of Europe where we looked at how low can we go with that steel thickness without compromising on the quality and, of course, stability because there's also a safety aspect coming with it.
We found a steel thickness that was lower than the previously one used. We implemented it within Europe. With that measure, supplying the same amount of drums, doing nothing else than changing the wall thickness, we reduced 600 tons of CO2 per year for that purchase of that packaging material. Second example also comes from packaging. In this case, bottles we're using for automotive products. A couple of years ago, actually in 2021, we started to introduce a bottle that was using 30% post-consumer recycled materials as a first step into reducing less single-use plastics and also giving a sign to the market that we want to go into a circular packaging approach. That obviously was only the first step because 30% is a good start, but obviously not 100%. What we did this year, we made another step change.
Now the bottles within Europe that are going for the automotive product in the small bottles are 100% based on post-consumer recycled materials. And the important part is they're also 100% recyclable themselves, which in many cases is not the case because what happens sometimes people combine different materials. So yes, they're recycled, they use recycled materials, but they're not recyclable themselves because you have to separate those materials for recyclability. And we basically made an approach where that can go really into the cycle and be a circular product. And by doing so, reduce around 900 tons in addition to what we had reduced before with that measure on the packaging side. Last but not least, what does it all mean? So I brought an example from China where we have done all the things I showed you before.
So we switched to green electricity, we optimized our processes, we basically focused on the topic of waste generation, so how can we reuse our flushing oils? How can we reduce our hazardous waste, and when you put all of this together, we have reduced over the last two, three years in our plants in China, so in the Yingkou plant and the Wujiang plant, the Scope-related specific emissions, meaning how much CO2 do we emit per kilogram produced, by around 40%-75%. So I think that's quite a steep decline, and we're actually very proud of that, and I think it shows how committed we are to that topic, so before I hand it over to Timo and Stefan, who will now talk about the strategy, let me summarize again, so I hope I could show you three things.
First, why are lubricants inherently sustainable, and how do we help our customers to perform more sustainably? Secondly, what are our targets, and where do we want to go? And thirdly, why do we say we are committed, and how did we prove that we are by implementing the measures we have implemented, and we will continue to implement it to meet our targets? With that, I would say thank you very much, and I will hand it to Stefan and to Timo.
Thank you very much. I think the applause was very well earned because that was the most important part of today's presentation. And if you remember, in the beginning, I said, "We are moving daily life, and we want to do more with less." And that comes all back to those examples and what Sebastian demonstrated. So thanks a lot to you.
I want to go with Timo quickly over the Fuchs 2025 strategy. And as the name says, we come to the end of the lollipop, and Timo will then later go on to the Fuchs 100 part. So first of all, we had three elements. And there's a big saying, you all know that, that culture eats strategy for breakfast. So I think culture is important, and we have a very, very good culture within Fuchs. Strategy is obviously equally important. But I must say from our culture, the growth mindset, the part of open feedback culture and hierarchy-free communication is very, very important to us. And as Timo already said, we will keep the triangle. On the structure side, I will come up in a minute.
On the whole strategy part, I don't want to go through the last two hours because it's mainly about digitalization, about sustainability, and the mobility change, but it did very well to us to make a bottom-up strategy and really execute it over a number of years to have a long-term financial goal as the North Star, and I think we made significant progress going there, so we were really happy, and we execute those parts, and we will continue to do so until December 31, 2025. Timo will explain to you later what we learned from the 2025 strategy and what we want to do better on the Fuchs 100 strategy, and then I look forward to that.
The one part I wanted to show you, because the whole journey, we call it the Fuchs 2025 journey, we worked with posters and scribblings and also what Isabelle showed you earlier on on the transform to grow part with the tanker and the rocket. Here we made something, and maybe we fell a little bit short of explaining our own people, the operating model at Fuchs. We are a decentralized company. But with all transformation going on, we want also to not repeat mistakes and learn from each other by powerful networks. So what do I mean with that? We have 55 subsidiaries where I always say three gorillas, Germany, US, and China, and then let's say 10 following companies. But we also like the Czech Republics, the Austrias, bringing 2-3 million euros of capital. So we like them all. But how do we really bring it together?
So the one part is all the countries are on a standalone basis responsible for their business, manufacturing, purchasing, admin. They all report to the CEO in the country, and they get all uncapped incentives, all on the Fuchs Value Added of their country, and I think that's really something where we are proud of. That's the backbone of the Fuchs group, and it also will carry us in Fuchs 100 and whatever the name is after Fuchs 100 because we are close to our customers with local teams, and they participate in the earnings. On the other side, we also learned there are certain things we want to work with each other and learn from each other, and we said we have global networks, so we have R&D network, purchasing network, HR network. I happened to be at our HR network yesterday.
We had 40 people together, all the HR leaders from the countries, so every country which has a dedicated HR department gets an invite. What they do yesterday, they went through all the topics, and they defined their agenda for 2025. Then they give certain packages to the U.S., to China, to Poland to work them out and to roll them out in the Fuchs group. Performance management, talent acquisition, succession planning, you name it. There we want to learn from each other. The other part is also the role of the holding company changed. In the past, we had bare essentials, legal, finance, those type of things. Today, we also do certain things on a central manner. We buy all Microsoft licenses. We buy all our SAP licenses, Fluids Connect, what Isabelle showed you. Then we send invoices to the subsidiaries.
Those are the last letters. So we have incentive-relevant invoices, which go above the line. Very important because we don't want to sink those costs in the holding they need to pay for. And we needed all of that, and therefore that poster, and that is what I call the pillar of structure. And therefore, it's one important part. The other part on the whole cultural part, we want to have fun with each other. And the amazing thing is when we get new people applying for a job or new customers or new investors, many of them come with the perception we are an ugly little oil company. Whenever they come and see what we can offer, talk about applications, they meet our people, they're all fascinated. And we need to bring that message outside of the company.
And here you see what we did is in COVID, because we couldn't meet, we started Fuchs 2025 roadshows. And we continue to have them. So each year we have a three-day Fuchs 2025 roadshow where we invite 7,000 employees. Everybody can participate. Now they started to make celebrations in the countries. So they do a barbecue in Argentina. They make a cooking event in India. We as a board have the opening message. And then during the three days, they can post questions. And on the last day, we have a Q&A session as the board with all our employees. And you get the message across really powerful. And I think that's the one part of the culture where we have fun, and I think that will also continue. The other part is we wanted to get Fuchs more known by many people.
The one part is our global advertising campaign on the airports. I don't know whether you saw them, but we are in Munich, we are in Vienna, Warsaw, Bangkok, Düsseldorf, Johannesburg, Atlanta, Detroit, Ho Chi Minh City, Monterrey. So about 15 airports. Thanks a lot. 15 airports, including a social media campaign. We can target an engineer in the vicinity of 50 km around the airport by LinkedIn and Instagram campaigns. That is a powerful tool. That is the one of Munich, which we like very much. Obviously, it depends where you are. Other parts, I think what is very, very important for us are our relationships with large customer groups. This is the one flagship partnership we have with DMG MORI. Therefore, we are very happy to be here. Thanks again to our DMG MORI colleagues and friends.
You see the left picture that is in that room, so for the second time, we got the Team Q Partner Award, and you see here Mr. Geißler and Mori. But you also see Jens Tempel and Mr. Ziegler there outside in the showroom where we go in a minute. We are also proud that we signed a significant contract for Mercedes-Benz aftermarket business, so we got more or less half of the world from them, and they agreed that we put a Fuchs logo on them as a technology partner, so you can imagine millions of bottles going out in the aftermarket for Mercedes. For us, it's a booster, especially in North America, so we are really happy about that example, and then we come from Fuchs 2025 to Fuchs 100.
I got a lot of questions last night, and I can tell you I continue to have fun, so I'm not tired. I'm not sick of nothing, but I'm really proud of Timo. Yesterday, when he introduced himself, I think he did an outstanding job, and the good thing is you need a long-term succession planning, but I can also have an accident today, so I think you have got the peace of mind that Fuchs, the show will continue, and that is the important part. And Timo, I think, will also demonstrate now he can do it tomorrow morning, but we have also an agreement with our supervisory board. We made an announcement early on that nobody is waiting for someone, but also for Timo himself and our employees. I think that was very important.
I love to work with Timo as I love to work with our entire board. Now I'm happy to hand over to him, and we go through the next chapter in our life to the Fuchs 100 strategy. Thanks a lot.
Thank you, Stefan. As you remember, Fuchs 2025 was our first long-term strategy cycle. We started that in 2018, 2019. Before, we worked with one-year plans, also one to three-year plans in our subsidiaries. But this was the first big one. And back then, we said, "Okay, there's pretty much two options. Either we can bring in one of these big strategy consulting firms and do it with them, or we do it the Fuchs way.
We form working groups, and we do it with our own resources because we know our business best," and we decided to go down the first path, and we put together Fuchs 2025. Honestly, what helped us a little bit during that time was COVID because there was some downtime. There was less activity with customers. People could not travel. Some projects got put on hold, and we used this time to work on Fuchs 2025. We used the entire organization, all our subsidiaries, all our functions, and we started to work on Fuchs 2025. Then we started to communicate the outcome of these work packages. To be honest, as we taught ourselves a little bit how to do a strategy, we maybe communicated too much details to our organization. We learned that not everyone needs to know everything.
We want people to get the overall message, and then we need to do a communication that's more target group specific, so that's one of the learnings we took out of Fuchs 2025. Also, we want to make sure that we use the remaining 12 months in Fuchs 2025 to bring home some of the action items we have defined, so we don't want to start with Fuchs 100 tomorrow. We have one year left with Fuchs 2025, and that's going to be a very, very important year. Nevertheless, we also want to be ready to execute on Fuchs 100 in January 2026, and based on our experiences that we collected through Fuchs 2025, we know that takes some time, and that's why we started in April and May this year with the first working groups to do some work on Fuchs 100.
Fuchs 100, the name, I think by now pretty much clear to everyone. We turn 100 years in the year 2031. So Fuchs 100 is a very important strategy cycle for us. These long-term strategy cycles will not go away. To have that North Star, as Stefan calls it, and to work over many years on some of the topics we defined, that's the right way for us. So we'll keep that. But the next one will be Fuchs 100. What is Fuchs 100 about? It's about defining a game plan for the years after 25 till the year 2031. We want to define where we want to play. But equally important, we want to define how to win. So what does it take to win? In the fields, we give high priority. So what are our advantages? How can we utilize these advantages?
Where do we still need to create advantages? And how do we do that? Also, we learned in Fuchs 2025 that it's very important to have KPIs, not only the big KPIs, but also broken down on a project level and in areas that require action, so Fuchs 100 will put an emphasis on that. We'll make sure that we have these Fuchs 100 related KPIs available from day one in January 2026 so we can follow through over the entire strategy cycle. Our Fuchs 2025 strategy can be summarized on one page, and you have seen that slide before. We are a lubricants company. We are really good at lubricants, and we have a global market share of less than 3%. It's a highly profitable market, and we want to stay in lubricants. Innovation enabler.
We are a technology leader, and we want to help our customers to succeed with their technological transformation. The three megatrends: e-mobility, sustainability, digitalization. We want to be a front runner in our industry in all of these megatrends. And with that, we want to set the foundation for growth. This is still valid. And it's not that you will see in Fuchs 100 that we will totally change the picture. We will remain a lubricants company. So that part will not change. But what we will do, we will look into more detail on where we set priorities. And we'll also make sure that the strategies we have on the three megatrends are incorporated in our corporate strategy. So they will be an integral part. Before, we did Fuchs 2025, and then we did separate strategies for the megatrends. Moving forward, it will be all in one.
How are we going to do that? So I'm the sponsor of Fuchs 100, and we have our strategy department in the lead. But in contrast to other companies, our strategy department is not 25 people. Our strategy department is rather two or three people in the holding that work on that topic. And the rest of the team is allocated in our subsidiaries. So again, we will activate the organization, and we'll make sure that the functions, the regions, and the countries have a fair representation. It's really about developing a growth strategy for the years to come. Segmentation is the approach that we selected, and it's a good approach for us. But we have selected many segments, and we need to evaluate. Do we focus on the right segments? Do we put enough resources in the right segments? And how are we going to do it moving forward?
Also, we want to drive efficiency. Sebastian mentioned it in his sustainability presentation. There's a lot of room for efficiency gains also in supply chain. We want to use digitalization also to drive efficiency. Integral part of Fuchs 100. Responses to the megatrends. Very important. And if you look at all of that, as always at Fuchs, it's not going to be a revolution. It's an evolution. So it will build on what we have created, and we'll make sure that we take all the learnings and that Fuchs 100 is one further step in becoming a better company. Less is more. We have a tendency at Fuchs to do too much. Also regarding projects. Sometimes we start with more projects than we can handle. The result is that projects are delayed, or we are not 100% happy with the outcome.
There we want to be stricter, and we also want to define what we don't want to do. Culture and structure remain critical elements. Yesterday, there were a lot of discussions about what's unique at Fuchs. I think there's competitors that can copy or find counterparts for individual products that we have. There's no doubt about it. Also, the structures we have, that's already a little more difficult with the global setup and the network structure, but that can also be copied. But the culture, the passion our colleagues have for the business, the low turnover rates in our teams around the world, this is something which you need to further cultivate. We have come a long way with open feedback, hierarchy-free communication, growth mindset.
The performance aspect is very important moving forward, and we'll continue to work with our HR teams around the world to further cultivate our great culture. As there is now no COVID, and we are extremely busy with all the changes that are happening in the world, also from a geopolitical perspective, we have decided in phase one to not include the entire Fuchs organization, but start with only 17 countries, the biggest one, but also some of strategic relevance, and the business-facing functions to do a status quo analysis on where we are, and the rest of the organization will follow next year. How does the strategy process for Fuchs 100 look like? There's three phases, and we are right now at the end of phase one. The headline of phase one is discovery. What does discovery mean?
One strength of Fuchs is that we are a fast-learning organization and that we also self-reflect on how things are going, that we give open feedback. The discovery phase, one important element was that we asked all the countries involved, the 17 and also the functions that were involved, what went well with Fuchs 2025 out of your perspective and what didn't go well? What did we miss? What should we stress more? Really doing a full 360 analysis on Fuchs 2025. Then we also gave them as a task to look at the markets and the competitors and the external environment. What has changed? Where are we today? Where do we want to go? Then we asked them if it was up to you, where do you want to play in the next strategy cycle? And how do you want to win?
And then we also asked them what kind of resources would you need to get there based on also stretch targets we assigned to countries. And we collected all that data. Then we also worked with the functions. We did, for example, a technology benchmarking by segment where we said, "Okay, this is the Fuchs technology today. How do we do against our main competitors? Where are we good? Where are we better? Where do we need to put in more R&D efforts?" We looked at supply chain. How does our global supply chain network look like? Where can we improve? And what kind of elements are missing? And where do we need to fine-tune? So we went through all of these areas, also in the digital front regarding customer experience. That's a new thing, maybe almost as important as product performance.
You need to be a company customers can easily deal with. How do we improve there, and how do we enter the next phase with our digital interfaces, so a lot of good work went in. Now we have all this data, and now we are analyzing this data, and we are looking for patterns, and that will be then the basis for the phase two, which is the selection process where we want to take these patterns and work on focus areas, then we have international working groups to challenge the information we collected. We include all kinds of different hierarchy levels, including our talents, to make sure we get different views, and that will then ultimately lead to the corporate strategy, and after phase two, we go to the strategy formulations for the regions, the countries, and the functions.
These strategies will be derived from the corporate strategy. That's also a little bit of difference to Fuchs 2025, where we did country strategies and the corporate strategy more in parallel. Now we'll do one after the other to make sure they fit together. This will be one strategy, one name worldwide, and then concerted effort to drive the strategic goals home that we'll set in Fuchs 100. Overall, what I can tell you is when we started with Fuchs 2025, we had to take some time to convince our teams that they need to take time off their day-to-day business and focus on strategy. There were discussions: is that really needed and how much? Is that not more top-level management task and not a task for regular employees? Then they did it, and everyone was super proud about Fuchs 2025.
During COVID, there were countries that struggled big time. For example, our colleagues in Brazil that had a hard time, family members died. What kept them positive was the light at the end of the tunnel, and that was Fuchs 2025, that we work on something big for the company and that we improve and that we take market share from competitors. Now, for Fuchs 100, we had to do less convincing. We had a lot of volunteers that said, "Hey, the next strategy cycle is coming. How can we help?" Phase one was a confirmation that people are very serious about it, and the quality of the information that we collected is much higher than what we had in Fuchs 2025.
With that, we are convinced that we are in a good way with Fuchs 100 and that we will be ready also to talk about a long-term financial target end of 2025 or beginning of 2026. So not today. That's the sad message for you, but we are working on it, and we'll make sure that we'll feel comfortable with what we will be communicating to all of you. And with that, I think we have a couple of minutes for Q&A before we head to lunch. So I'd like to ask my board colleagues to join me here. Thank you.
Thank you, Sebastian Bray from Berenberg Bank. Sebastian, if I could touch on your presentation on the Scope 1, 2, and 3 reduction targets.
And I think Fuchs has this in common with many corporates, but Scope 1 and 2 are the almost slightly easier bits, and then Scope 3 is dependent upon quite a bit of change and investment at the suppliers. Do you have a figure in your mind for 2035, 2040, 2045 time on how much product could come from, or input, I should say, on the base oil side could come from recycled or bio-based product? And can you give us any idea of what the baseline is today? Thank you.
So like you rightly said, we cannot move faster than the market. So we have to move with the market, and we will be depending on our suppliers. We're working with them extensively. So what does that mean? Every conversation we're having is about sustainability and what are your plans to make it happen? Give us details.
What are the measures by when and so on and so forth? The reason why it's difficult to answer the question is because a lot of our suppliers are U.S.-based, and as you might be aware, let's say in the U.S., companies are very hesitant to give out numbers that they can be sued for, either because the number seems to be not accurate enough or because they have not achieved the number, so therefore, let's say to now give you exactly this is the amount, let's say, that we will have is challenging. What I can tell you is that we decided in the board two things. On the one hand side, we reserve an amount of CapEx for sustainable investments within the own company. So to speak, we ring-fenced a certain amount to say, "This is what we do for sustainability.
What are the measures?" So that's number one. Number two, we gave ourselves a budget to be able to invest, even if the customer does not yet pay for it, to secure ourselves access to strategic raw materials. And part of that is what you mentioned. There's bio-based raw materials we have access to that not so many other companies have access to. We have access to high-quality re-refined base oils where other companies are struggling because we were very early on and secured a certain stake strategically on that raw materials. So what I can tell you is whatever is available on the high-quality side, we have access, and we will use as much as we can from an economical, but also from an ecological perspective and with the customer side. That's what I meant before. So that's the cycle, basically. But I cannot give you a number today.
Sorry for that.
And if I may add, because I think it's a very important question, the bottom line of sustainability is that life will get more expensive. Our, let's say, more CO2-neutral products are significantly more expensive. And I was at a supplier day recently with one colleague, and they said in the speech of the CEO, "Oh, we need more sustainable products." And then we went to the workshop later on, and then my colleague, he asked, "Okay, are you willing to pay more?" He said, "No." So that's the $3 million question because people must understand that re-refined and alternative sources are just more expensive than today's. There are solutions, but you can't spread it out. We reserve them as we reserve some volume behind, as Sebastian explained, but it's also a question what the market is willing to pay for. More questions?
Thank you for the presentation again. On the KPIs that you mentioned that you want to be a bit different than Fuchs 25 and want to have KPIs, if you could give us a bit of color on that because we love KPIs as well. How do you plan to track them over time? Because it's obviously a five-year strategy. Are you going to have smaller benchmarks and cadence that we should think about? Thank you.
Yeah, I think there's two different dimensions to KPIs. One is the internal side, and one is the external side. I think what we will do internally is for sure, we'll work with clearer KPIs, maybe with less KPIs, and we'll also make sure that we have KPIs over time. For the outside communication, I don't see that.
I think it will be rather high level with a North Star. I think we made a very good experience with that, and we'll keep it that way. So unfortunately, you'll not get access to all our KPIs we'll use internally, but what you can be sure is that the internal KPIs that we will be using will be supporting the external long-term goal that we put out. And we'll also put mechanisms in place to check whether this is really the case or whether we need to fine-tune the KPIs. So there will be regular review processes. Thank you. And just to follow up, do you think there has to be some change in the incentivization as well in the organization at different levels? Well, I think Stefan mentioned it. In fact, we think that our incentive schemes work quite well.
I think what we don't want to do is put everyone on a global FVA incentive so the individual contribution doesn't matter anymore. So that's not Fuchs. Fuchs is you need to have an impact on your own incentive, and if you do good things, you will be rewarded. And that's what we will keep. So there will be still very country-specific incentives. For sure, in our performance goals, we also have global goals or regional goals, but the incentive system as it is, we believe, a big driver of our success. And we also want to leave the incentive systems uncapped.
Thanks. Markus Odebichov. Sebastian, coming back to what you presented, quite very interesting examples of where you contributed to significant savings, take the data center as an example. So my question is, how do you price those products?
I mean, we talked a lot about raw materials, personnel cost inflation, logistics, energy, cost inflation, etc. Is there also a kind of change in mindset from your side that you price differently those products where you contribute significantly to those savings? Is there an opportunity as well?
I mean, Stefan and I alluded to it on the first question. The hard reality today is that, let's say, the companies have an alternative. If you look at where the server farms are placed, in many instances, they're placed in low energy cost countries. People put them in a country where the energy cost is not high. Then you basically, of course, compete with the current cost with your new solution. Yes, you have a benefit.
The question is then how much is the company interested in basically getting that benefit, so to speak, on the CO2 side, sustainability side, and how much they're willing to maybe or maybe not pay more. Like Stefan mentioned, and I said before, currently, the situation is still that the interest in paying more is limited. So therefore, let's say we price our products in a way as high as possible from our perspective, but there is an alternative. It's worse, yes, but it's used today. And therefore, we have to take that into consideration by trying to find what I would call sweet spot between what we want to charge and what the customer is willing to pay and kind of, so to speak, meet a bit in the middle. I hope that answers a bit the question.
Martin Rödiger, Kepler Cheuvreux.
I would like to come back to your advertising at 15 airports. Will you further roll that out, and what will be the budget for further advertising in the years to come? And secondly, as you are primarily a B2B company, not a B2C company, I would like to understand the purpose of that advertising because you mentioned that in the context of culture. Create culture. So maybe it can help you to better understand the background of that.
I think the airport campaign we do for a number of years because if you do that for one year only, that doesn't help, so it's all contracted through next year and the year after. The other part is more of a general perception type of marketing, what we do at the moment.
But then, on the social media side, we make a deep dive on targeting people because also, if you have a corporate engineer of a large supplier of an OEM, you also want to be known. And not all of those guys know us as well. And then we do what the Chinese colleagues say: go into Fuchs, but we also do that in Germany, in the US. We bring a lot of customers to our sites and go through our technical centers and manufacturing and meet our local people. And the other part is just point-of-sales marketing. So if you talk about our automotive aftermarket business, that's more of the B2C type of marketing where we go to racetracks and those types of things.
Okay. Now we have the lunch break, and we will escort you to the canteen because we have to walk a few meters.
We will be back here at 1:00 P.M. for the factory tour. Thank you.
But before we go, one final message from the CFO. Not working anymore.
We wanted to share some safety guidelines. Long story short, I think you can all read what's written here. I think two most important things. When you have your badges, please wear that at all times. I think filming photography is not permitted when we do the factory tour. Please refrain from taking any photography. Most importantly, do not stick your fingers into the machines. Do not touch any moving parts. Pretty much self-explanatory. Do not walk behind the machines because there's high voltage electricity. We have very skilled guides guiding us around after lunch. We will meet here again.
Please just do what they say, and you will be safe. But you've seen the machines. They are big. They are heavy. So please don't touch anything unless you're explicitly allowed to. I think the rest pretty much self-explanatory. So,
Are we ready to go? I hope everyone had a great experience during our factory tour, and everyone is back to get now some information provided about our cooperation. So, yeah, a warm welcome from my side. I would like to take you on a journey of our cooperation together with Fuchs. My name is Michael Ziegler. I'm responsible on the DMG MORI side for the cooperation on a global level, so I'm the counterpart to Jens Tempel on Fuchs' side. Yeah, first of all, I would like to explain why the DMG MORI decided to cooperate and partner with Fuchs. There were several reasons to do so. First of all, our aim was that high-tech machines need high-tech lubricants. This was our starting point.
And based on that, and based on the figures we have seen today in other presentations, and which is special for Fuchs, first of all, the size of Fuchs was one decision for us to cooperate with because Fuchs has almost the same similar global footprint as we have, means that Fuchs is available in the same important markets as we are. And with the production sites, Fuchs has, there's also a good opportunity for us to locally source the products which are used in our machines. Another topic is about sustainability. So we have seen today the Strategy of 2050, which is a perfect fit also to our green transformation, which was presented by Mr. Geißler this morning. And this gives us the possibility also, with the products we use from Fuchs, to also take care of the carbon footprint of our machines, which has a direct impact on that.
The product portfolio and the flexibility. Even Fuchs is such a big company, they're very flexible, and with this flexibility, they're covering our needs. We'll come to that later. We are able to get some tailor-made products which are required for our machines to make them more, to give more performance to our machines and make them more reliable for our customers. And with a big product portfolio of more than 10,000 products, Fuchs is able to cover all areas where we need lubricants. And last but not least, another decision was about the analytics we have. So it was mentioned that one point of entry for Fuchs and our customers is about service cases, so issues our customers have on our machines.
With the analytics and the labs Fuchs has globally, we are able to very quickly react and get some detailed root cause analysis of issues, and Fuchs can directly help our customers. Yeah, and for sure, also the manpower because such a corporation is not easy and only be driven by two people. There are many more behind, but we'll come to that later as well. Yeah, and all these facts are at the end leading to the point that Fuchs is the best partner for us because they are providing the perfect fit to our global availability as well as sustainability, quality, and flexibility we need. That's why the decision was made Fuchs having as a strong and reliable partner. A little bit about the history. Everything started in January 2014 in China.
We were focused on some turnkey projects where Fuchs was providing necessary lubricants to offer the customers most efficient process solutions. After that, very soon, first approvals of Fuchs coolants were given based on the DMG MORI standard we have. DMG MORI has a very specific standard defined what a coolant has to fulfill to run in our machines, not to harm the machine. We immediately start then also to approve Fuchs products against our standard. Next big step and major milestone then was in 2017 during EMO. This was the announcement of the cooperation for the European market, which was covering also the European factories. Immediately after that, we installed CPM services of Fuchs in all major factories in Europe. CPM services means we have people from Fuchs in our factories on a steady basis.
They're doing regular maintenance and analysis of the used lubricants in our factories and ensure that we always have the highest quality and the best standard of products in use and that we are not running in any issues in this case, then the idea started to develop tailor-made products. The idea behind was to have products available which are exclusively to be used in DMG MORI machines, and these products are indicated in their naming. They're ending all with IDM at the end. This stands for Initiated by DMG MORI. I have another slide where this explains more details, and yeah, in 2019, we started to implement the first products in that way, then later this year, 2019, Fuchs was officially announced as a DMQP partner, so this is our sales channel at the end to get these products provided to our customers also after the machine is delivered.
Lubricants as such are consumables. Via the DMQP sales channel, we are able to offer these products to our customers at its best. Sorry. Next big milestone was in 2020 when we extended the cooperation in Japan. We immediately started also to implement first products to be used as a DMQP product. We are still implementing the products in the facilities in Japan so that Fuchs products are used in our machines there as well. In 2021, it was also mentioned on the slide of, I think, Mr. Fuchs. Fuchs was honored at our Supplier Day with the DMQP award in the category of performance and innovation the first time. Next milestone then was to extend the product portfolio of IDM products. Further tailor-made products have been implemented.
As last region, in the beginning of 2022, we started to work together in the Americas market, means North and South America, including Canada. At the AMB in 2022, we started a new concept of highlighting our partners during exhibitions. This is a so-called booth-in-booth concept, means that we are offering Fuchs-specific quantity of square meters in our booth where they can use their corporate identity and are visible for our and their customers. This was started at the AMB in 2022. Beginning of 2023, then further products have been introduced, and we developed together coolants specifically for the semiconductor industry. We'll have a specific part in our presentation also then later from my colleague, what's behind and why it's so important to have specific coolants used in the semiconductor supply chain. Highlight in 2023, EMO.
Yeah, again, DMG MORI was there with their own hall, Hall Number 10. Fuchs was joining us in the same way as they did at the AMB, so they had their own booth area. Yeah, as always, during such big events, there was a CEO meeting in between. Dr. Mori, Stefan Fuchs, Mr. Geißler met together and discussed about how to proceed with the cooperation. Beginning of this year, we celebrated, and we are still celebrating 10th year anniversary. We are cooperating since 10 years. During our open house at the end of January, Fuchs was again honored with our supplier award in the category of DMQP. One highlight I would like to mention this year was in August. This was the grand opening of our showroom in the production facility of Fuchs in Vietnam. What is so special about that?
DMG MORI does not have any showroom in Vietnam, and Fuchs built there a new production plant, and they offered us the possibility to use about 100-150 sq m where we can now exhibit machines to our customers. We can come with our customers to Fuchs. We can use the infrastructure as well, seminar rooms, offices, and so on. And this shows how deep the partnership goes. Yeah, and one teaser for the upcoming years. We are just preparing the cooperation documentation to extend the cooperation for further five years from a global point of view. So all regions are to be extended by further five years. So at the end to say, yeah, sorry to be continued. Yeah, how does this look like from a global point of view? Some of you already have heard about it yesterday evening.
With the cooperation, we are active in currently 41 countries. Means that in this case, Jens and myself, we always had a kickoff on site. We brought DMG MORI members, Fuchs members together. We explained the cooperation, what's behind, what's the idea, what are the next steps, what they have to do in the markets. And then they started to implement it and ramp up the activities and sales activities with our customers. And yeah, there's still a little bit of space to grow. And so I think maybe next time when you will be back in Pfronten and hopefully I can show you some more countries where we have activities ongoing. But such a big cooperation is not possible without any people. And for me, it's important also to highlight the people behind.
Meanwhile, and this is by the end of November, more than 400 people on both sides working as part of the cooperation. I just added a few of the pictures from the different countries where you can see who is involved and who is supporting this kind of partnership from a global point of view. What can we achieve with this cooperation? At the end, we try to create some benefits for our customers. I would like to explain that a little bit because this benefit is based on a lubricant standardization we started by implementing Fuchs in our factories. Let's have a look at these two beautiful machines. The one on the left side is a product produced in Pfronten. On the right side, we have a product which is produced in our factory in Bielefeld, so turning and milling machine.
When we're talking about standardization, what's behind? First of all, we try to use similar products in similar components. Yeah, and this is all around the machine, so we have spindle oil in the motor spindle used. We have in the chiller units the antifreeze products, and hydraulic units are filled with hydraulic oils and so on, so all around the machine, we try to get it covered with Fuchs products. Yeah, and we try to use the same products throughout our factories, and the idea behind is that we are reaching really a standardization of high-performance lubricants, which are then adding a maximum of value to our customers at the end. Why? In the past, we had a huge complexity of products in use.
This is historically related because every production plant was responsible for their own machines, and they could decide what kind of lubricants to be used. So every production plant decided what kind of brand they want to use, which kind of product they want to use. And with Fuchs as a partner, we started to clean that up. We wanted to summarize products to reduce complexity. And the result of it at the end is, you can see just three examples at greases, antifreeze, and oils. So coming from five products out of two manufacturers, we have now one product in use. At the antifreeze product, we had six different products in use out of four manufacturers, also reduced to one product.
Two of them are named because one is the concentrate, the lower one, and the already ready-to-use mix is the other product, but at the end, it's the same product behind, and at the end, also the oil we are using in our tool changers. What kind of benefit do we create for our customers? First of all, they are having then a standard in place, means that they can reduce their variety on stock of lubricants they use. On the other hand, we can ensure that we always have state-of-the-art lubricants in use because there we get the support from Fuchs that always latest technology is used. As these products are out of one manufacturer, we can ensure that their products are not harming each other. This is what we are taking care of before implementing the products.
And due to that, we can also reduce maintenance activities and service activities on the customer side, reduce storage costs on the customer side. I already mentioned that. And due to the global footprint of Fuchs, we can also ensure local procurement of these products for our customers. In the past, lubricants have been provided from our spare parts hubs, which are located in Japan, China, Germany, and U.S. And they were sent by plane, by ship, however. And today, our customers can source it directly in their own market. And therefore, then we have shorter delivery times and optimized prices. So this is the current setup for new produced machines. But as we have many thousands of machines already in place, we ensured with the decision what kind of product we want to use that all the products we are now implementing in our machines are backwards compatible.
It means that they are miscible and compatible with the already used products in the past, which gives us a great possibility to change all the machines also to the new state-of-the-art lubricants. To know a little bit more about that in detail, I would like to hand over to Jens. He will give you a little bit more insights about these products and how we get it to the customer.
Thank you. I want to show you how we at Fuchs developed lubricants for DMG MORI. It looks very simple. The lubricants have to perform here in the production site, for example, in Pfronten. Very important is the shipment process. As you saw, the machines are pretty expensive. If they are rusty at the customer side, it's not a good sign.
The lubricants have to perform at the customer side during the machine setup and then during the operation by the customer. This is all a cycle. We see this as a cycle. We want to be one partner for all lubricant needs for DMG MORI and their customers. The tricky thing is this has to happen globally. Every country has different requirements from the chemical point of view. They have to be efficient from production to operation by customer. Our goal is always to increase the productivity. As Michael said, it also has to be compatible and harmonized, the whole system. On top, it always has to be a sustainable approach. The setup where the lubricants have to perform is very simple. To develop them, it's not that easy. I think we've managed it in a very good way.
Now, I hand over back to Michael.
Yeah, well, thank you for that. Yeah, the products we talked about before are the products we use as part of our machine, which are the consumables which we deliver with our machine together to customer. Now, let's talk a little bit about metalworking fluids, which are part of the process at the customer, which has a big influence on the process of the customer. And our goal in this case was to enable our customers to achieve best possible performances. Yeah, and fluids for sure have a big impact on that. And we wanted to ensure that with our DMQP products, we are providing an offering to our customers. And I already told you that we are developing together tailor-made products in a very wide range.
It's just an example of the latest ones we have in the portfolio for different industries, for different segments, for different kinds of materials to be processed, and again, what I mentioned before, how to make these products unique. It's about the ending and in the name, it's IDM. IDM products are globally available, initiated by DMG MORI, specially developed on our needs and exclusively available for our customers, and we also have domestic ones, DMJ in this case, which stands for DMG MORI Japan. They developed together, meanwhile, four different products, which they offered to the special requirements to the Japanese market. Where I would like to mention these tailor-made metalworking fluids. Also, there, the focus was always on customer benefits and what's possible to achieve with such a product.
Just to give you an example, when we developed an ECOCOOL IDM product, we did some test run exactly outside in the showroom with a specific machine and a defined test cut, and at the end, these tests were compared with standard products, and we were able to achieve a reduction of a corner wear out on the tool by more than minus 80%. Means that with this result and achievement, we can reduce costs on customer side tremendously, and this is how we act also with our customers. We explain to them, "Take care of your metalworking fluid you are going to use for your process because it has a big impact on your overall process and results," and then normally we hand over to our experts on Fuchs side, and they're recommending then the right product, in ideal case, out of the IDM portfolio to our customers.
To give you a little bit of some information on how this looks like, so you have here microscopic pictures of the cutting edge, and you can see on the standard product side, it's broken, there's some wear detectable, and with the IDM product, it's almost nothing. So it was an excellent achievement. How to bring that to specific industries? As you have heard this morning, DMG MORI is covering almost all the important industries. And today, I would like to show you, or my colleague is showing you an example out of the semiconductor industry and how these tailor-made coolants and metalworking fluids, specifically for semiconductor, are impacting the process and the ramp-up phase for a customer out of this industry segment. So I would like to hand over to Cheng Yan Zhou, and thank you very much.
Thank you. So good afternoon, ladies and gentlemen.
My name is Cheng Yan Zhou. I'm working together with my colleague, Mr. Düter, who's in charge of the semiconductor industry at DMG MORI Pfronten. Just a quick look at the picture in the middle, you'll see one octagon housing. This workpiece is also placed beside me on the table. Make a quick imagine how you machine this part with its actual accuracy and form. Whether in the traditional machining or the new technology, we have machined this part with short time, with high accuracy. Of course, with a knife, it's impossible to make it quickly. Normally, we turn the part at first. We can scratch the raw material very quickly inside. And also with the milling, you can make a surface very bent. With straightening, you can do the sealing slot with a quite good form.
Some places, such as the holes beside the wall, you'll need usually an angular head, which is a special tool. To achieve the accuracy, you have to measure the part within its machining process. Of course, grinding will make the surface pretty good. In traditional machining, it takes place on different machines. That means the manufacturer has to unclamp the workpiece, set it on another machine, whether turning to a milling machine, and then to a special machine, and then to a measuring machine. So it takes a lot of time and even also many manpower to align the workpiece again. Now, on our DMG MORI machine, we can do it with only one machine. That means our machine can turn the part, mill the part, measure the part, and even with special technology with an angular head and grinding.
All these processes can be done on one machine without clamping, save the time, save the money. With this video, you can see how we can do it. We have a special clamping system. It's called easycenterSET , set on the table. We can align the turning center very quickly. With the measuring probe, with the probe touch the workpiece surface and measure the center, then turn the part. This is a special high-gloss milling tool. Make the surface very bright, shiny. This shaping cycle is our know-how. After the inspection, you'll see the surface quality. It's much more better than a part worked on different machines. In the semiconductor, there are very key players such like TSMC, Samsung, Intel, and these foundries make the chips.
We work together normally with the wafer fabrication equipment such as ASML, TEL, LAM, and also the sub-supplier who makes the part of this machine. We supply the high-tech machine to our customer. To finish the part, we build high-tech lithography machines. Semiconductor is a word that we imagine in a nanometer. The nanometer is one thing we cannot see with our eye. Just let me imagine a chip. The chip has many transistors. How big is the transistor? Now, the transistor has the gate, has the fin, has the source, and we have used a lithography machine to do the transistor. One transistor up to 80 nanometers, and the smallest is a 3 nanometer. Three nanometers, you can imagine how big it is. It's not like a paper. A paper has 100,000 nanometers. Glass, in one second, 30 nanometers. The coronavirus, 80 nanometers.
These things we never see with our eye. Even the Apple chips, they have 19 billion transistors built in. You can imagine this industry. One micro world never controlled with our eye. That means the workpiece used in the semiconductor needs to have a very high purity. The purity means you have control of the particles inside the workpiece. Inside the housing, you are not allowed to have zinc, manganese, and such elements here listed. Now we are working with grade one. That means 1% at maximum. That means on the surface, you have to control such like with the visual or the ultraviolet to control the surface, whether the particle on the surface, so more than 1%. Just imagine in one room, operating room, in one cubic foot area, it's not allowed more than one particle. This is similar like grade one.
So 1% particle of the elements is maximum on the surface. It's a very high requirement. It requires also our supplier to make a lubrication coolant with a higher quality. In this case, Jens will introduce some more.
To meet these requirements of cleanliness in the semiconductor industry, we divided this segment into two sections from the lubricant point of view. First is the machining of the parts like the chamber housing. We developed together with DMG MORI special lubricants or metalworking fluids for that. The most important thing is to meet the cleanliness requirements and not losing the performance. And on the second side, we have specialties and special greases to run the ASML machines at the Intel Fabs, for example. And all in all, combined, from my point of view, this is very unique for Fuchs, and no other of our competitors can meet this.
We can supply lubricants for the whole supply chain or the chain of the semiconductor industry. In 2022, we started development here in Pfronten, a very high cleanliness metalworking fluid in combination with the DMG MORI machines to meet ASML and also Carl Zeiss requirements with a very high performance to machine, for example, large seven-meter aluminum frames, which are going to the ultra-high vacuum machines of ASML. Together with the ultrasonic division of DMG MORI, we developed a special metalworking fluid for grinding ultra brittle and hard-to-machine materials like technical glass. This project we started this year, and we are also offering here to the market a very clean and high-performing solution. To let a customer configure the machine very quickly, we make some packages. The first package is on the machine. This is a special design only for the semiconductor customer.
In this package, we will use the yellow metal components, such as pipes, steel cover, and some components which also use a special stainless steel to reduce these components to keep the impurity components away from the machining process. Then, before the machine delivery, we can do the 48-hour water test here in Pfronten. The customer could see his machine is filled with a special coolant, SCE coolant, and we will keep the machine running without interruption for 48 hours. That makes all the coolants inside the machine pipes in the cycle. Every area in the machine is with this special coolant. We have the special cleaning and preservation on the machine before the delivery. We need to clean the machine, of course, for the delivery and against the rust on the material.
The third package is the starter package and with the special coolant, with the special cleaner, what customer can use in his factory, and we offer also six times lab test. It will be done in the Fuchs labs, as whatever. Which time what customer wants, he can call Fuchs to come to his factory and select the probe to test it in the lab. Six times free of charge is included in this package, and also, our Fuchs will keep permanent consulting on site. Yeah, the big benefit of this package is that the customer can immediately earn money. If you are not going into this grade one packaging, the machines are coming relatively dirty to the customer side. An actual way of cleaning the machines is machining up to four, six months aluminum blocks to clean the machine.
If you buy the clean one package from DMG MORI combined with our fluids, you can immediately earn money. The German-speaking group saw the machine for Mogema out in the production. This is the first project where this concept or this idea was sold. Mogema is a very unique company. They set up the first grade one machining site in Europe and maybe also in the world. How they work, you see on the picture here. It's a kind of a clean room environment, but in a production facility, which is very unique. We have been chosen from Fuchs as the partner for all lu bricant needs they have now and in the future. Thank you very much.
Questions? Anyone? Yeah. Any questions? No questions? Okay. Then thank you very much.
Thank you very much.
Okay.
That must have been a very convincing end to the whole day, so thanks to the three of them. I must really say I'm always that part fascinates me, thinking about our business. I find that really a good example of being really deep into the process of your customer. That applies to DMG MORI and us when you think about this Mogema company. I think we can conclude a wonderful day. The first really colleagues I want to thank, and I think we really get a big hand of applause to Lutz Ackermann, Theresa Landau, and Niklas Neff. Well done. Thank you very much. Our DMG MORI team deserves one applause. We get to Michael Ziegler and Cheng Yan Zhou, and also to our colleague Jens Tempel.
I think this was an outstanding event here at DMG MORI, and we got real insights. Thanks to all three of you. Then last but not least, Mr. Geißler is not here, but for all the DMG colleagues, they worked hard and a lot for us, to Jana Handrak. I think we really felt like home, and you showed great hospitality to us. Thank you very much. We really hope that we got the message across today. We keep the daily life moving, and I hope you got a good feeling about all those different examples we are in. The big thing is always to be good in the scouting of new applications. I think we have wonderful colleagues who are deep in the markets with being really a decentralized company.
That is a big benefit to us to be close to our customers when you go through the entire day. I think we got wonderful success stories from Ralph. You got some EV background from Timo where we are. I think Isabelle showed our financial strengths from the cash side, from the P&L side. I think we are in a difficult time. Reading German newspapers at the moment is no fun, but I must say we have kept the outlook for the entire year. We had also the good cash flow at the end of September, so we want to deliver this year, and we want to put something on top for next year. So we continue to be confident of our future, and I think we continue to be, what I say, a cash machine and a very reliable dividend partner. Digitalization is, for us, a big deal.
I think we got some good insights from Isabelle. For me, a cool part today was the sustainability story, really to see keep daily life moving and to do more with less. I think that's when you go towards 10 billion people. I think all the presentation of Sebastian hit the nail on the head. I think that's worth a special applause because that was our focus theme this time. Then you got to know Timo a bit better, and I think we got an insight to Fuchs. And I think by the end of next year, I also look forward to the new North Star. And I think this is it. Thanks a lot for coming. Thanks for your interest. We hope for good reports. We hope for share prices after the meeting. I wish you a safe return.
Go home safely towards Munich or Frankfurt or London, wherever you go. And thanks for coming on behalf of Isabelle, Sebastian, Ralph, Timo, and I. And this is it for the day. Thank you very much.