Hey, good morning, everybody. We are at 10:00 A.M. and it's the 28th of June. We are having the capital markets day. Everyone welcome from my side. We're very happy to have you here. After having two years not having this event, we are more than happy to see you here today in person. We also host this event at our new office building in which we moved in April. We are happy to have you here. Before I go into the agenda, I want to quickly make some opening remarks or also some housekeeping remarks there. We have a live stream, so this is why we have the camera there.
This is why I'm speaking on the microphone and would ask you later within the Q&A session to raise your hand if you have questions, and I will then give you the microphone and you may ask any, all the questions you have. Having a quick look at the agenda of today. Stefan will take over in a second. He will come along with a few messages that we want to bring across today. We will also tell you something about the 2025 journey in which we are, and he will take on with the cultural part. We will then have a coffee break, and then all the other colleagues which are sitting over there, Timo, Ralph, and Lutz will, and Dagmar, of course, as well, will take over, and they will present you structure and strategy with regard to the 2025 program.
Dagmar will then continue with the long-term financial target at noon. I'm sure you are very interested in that topic. After that, we will have a lunch. It will take place in the cafeteria, which is close to the entrance. If the weather is good, we will have it here in the place close to my left-hand side, so we can sit outside. That will be great. After lunch, Dagmar is taking over to present sustainability, what we are doing with regard to that. It's a very important topic for us. I'm looking forward to that. After Lutz has finished, we will have another coffee break. As you see, lots of coffee you can have today. No worries, other beverages will be served as well.
This will be placed outside of this room where you have just been. Everything should be placed there. Then 2:00 P.M., Timo and Ralph will elucidate on the topic of mobility transition. I'm sure you're also very interested in that topic. Then there will be another coffee break. Again, possibilities to have a coffee and a chat. Finally, we will have a Q&A session. We decided to have that in the end to really, yeah, consolidate that in the end. We thought it was a good idea to bundle it a little bit because some of the questions you may have will be answered in later stages of the presentation. This is what we will have in the end. Then Stefan will close the Capital Markets Day roughly at 4:00 P.M.
This is the agenda for today. Having said that, I would like to hand over to Stefan, and he will continue.
Thank you very much, Lutz. A very warm welcome from my side as well. Also with regard to my board colleagues, the entire board is with you today here in the room, but also for you in your offices. I think it's very nice that we offer a high-quality version, you know, live stream on the internet. A very warm welcome from my side again. First of all, before we go in more of the content, as you know, we had a change in our supervisory board. We have the Chairman of the Supervisory Board, which consists of four members representing the shareholders and two members representing the employees. Dr. Manfred Fuchs gave us notice in October that he wants to step down from being the President of the Supervisory Board after three years.
We had a good handover until May this year. Christoph Loos, who was on the committee already since two years, he is now our new chairman. He was voted after the shareholder assembly in May this year. Christoph Loos is 54 years old. He is the CEO of Hilti. They do about EUR 5 billion in sales. They have 30,000 employees. I find it a very fascinating company because of their marketing expertise. They have great IT systems and really good HR works with regard to succession planning. We are happy to have him, you know, being our chair.
As you might have read in the news, he will step down as being the CEO of Hilti at the end of this year, and he will become the chairman of their, they call it Verwaltungsrat in Switzerland. It's a little bit more of an active supervisory board because they also get much more engaged in the strategy part. That is a really big deal to become the Verwaltungsrat president, especially with regards to the Hilti family, and he will have adequate time then also for our mandate. We knew we were one person less. We were actively looking for a chemist, and thank God it's Markus Steilemann. Many of you know him by covering Covestro. Covestro is one of the spinoffs alongside Lanxess, and he is 52 years old. He's a Ph.D. chemist.
It's his first mandate. He now took over, and he got elected in the May shareholder assembly. We will for the first time experience him next week when we have our July what we call the strategy meeting of the supervisory board. You know, my sister she represents also the family in the board. Ingeborg Neumann is very stable, our audit committee chairwoman. Then with Jens Schlieper, Cornelia Starzschmid, the nice thing is those are our employees, you know, so their heart is very close to the company. I think we don't have team meetings and things like this. We just discuss openly together. I think what you see here is really what we call in Germany the independent supervisory board. I think that's the big deal moving forward.
We very much look forward as the board, you know, because I like to be challenged and I think it's gonna be a really good working relationship. The executive board, you know all my colleagues. You know we have a change coming up in the CFO part. Dagmar informed me in October of last year that she wants to go back to Rheinmetall, where she I think 10 years ago came to us, and she wants to move to Düsseldorf. We took the opportunity and had an independent headhunter. We noted down what we were looking for. We were looking for someone with international experience, being really good in performance management and digitalization. We are very glad that she took a day off today and she's here with us. It's Isabelle Adelt, and she will introduce herself to you.
Okay. Now better? Perfect. Could you hear me loud and clear or should I start over again? Okay, perfect. I stayed in Poznań in Poland for two years. It was a very rewarding experience. We built up the center from scratch. When I went there first thing we did, we looked for offices. We went to IKEA to buy some furniture. After I left, after the last two years, we were 150 people. This was honestly one of really my heartfelt projects, one of the best experience I had in my professional career so far, to really start something from scratch and then see how it develops hire one person after the other and make it work.
Once this little baby was done, I moved back to headquarters for Germany and took over the executive board office as the CFO. The next two years I worked very intensely on topics all around performance management, digitalization and working capital management. We introduced a new group reporting and consolidation system, very strict focus on performance management and increasing transparency, compliance and speed of when we can deliver data and how we steer the business. We set up a very big working capital management program, where we could free up more than EUR 100 million of cash during that program. Then during that part of the journey, my baby was setting up ZEISS Digital Innovation. Very interesting company.
It's an incubator inside of ZEISS where we said we deliberately rent, you know, some really large, nice new offices in Munich, and as a service for all of the business groups, we offered digital innovation to take completely new paths down and try to come up with new business models and take digitalization to the next stage. After 2-3 years, we started to discuss what could be the next step, and directly I was offered to move to Shanghai in China and take over as their CFO for the Greater China business. I stayed in Shanghai a couple of years. During that time, ZEISS Greater China became the biggest part of the group, accounting for roughly 1/5 of the EBIT of the group, more than 6,000 people. Very rewarding. We set up ZEISS in Taiwan.
We really moved ZEISS to the next level, worked closely with the government. During that time my former boss at ZEISS, Thomas Spitzenpfeil, moved on to a new company called Traton. This is where I currently work. A little detour into the wonderful world of private equity for the last three years. We prepared Traton to go public, which was the initial plan. During the last three years, I spent most of my time establishing governance structures, building up risk management systems, building up quarterly reportings, best laid plans. Blackstone, our investor, decided to go down a different path beginning of this year, so we are not doing an IPO, so the company is currently for sale. It's being pulled apart, as you can see in the news, so it's split into three different parts right now.
That's why plans for becoming CFO of that company is no longer an option. This is why I'm happy to be here, join the Fuchs family in a couple of weeks from now. Thanks for having me today.
Thank you, Isabelle. Isabelle will join us on November 1, and there will be a four-week handover with Dagmar. I think then we will be good. Thanks again. Lutz mentioned it before. We will have key messages at the beginning of the meeting, and then at the end of the meeting, and you will find all the key messages during the meeting again. I want to run you quickly through our top six key messages for today is lubricants. This is our core business. Then I want to run you through, you know, what jobs a lubricant is doing and why a lubricant is ideally equipped for the technical transformation. The second key messages is that we believe we are an innovation enabler for our customers.
The third part comes together with the mobility change, with an emphasis on the e-mobility part. Fourth part will be sustainability. Number five is digitalization, and number six is growth. You see already a number on the screen, but I come back to that number in a moment. First of all, lubricants. We really love lubricants, and I want to run you through what lubricants, what type of a function they have, and you will find out ultimately that they are a functional fluid. Yeah? They have different jobs to perform, and I think all those jobs, you know, play quite a nice role in all of the three large mega trends, digitalization, sustainability, and e-mobility. First of all, lubricants reduce friction between, you know, moving systems, and there are many, many moving systems in the world.
You use our lubricants on a daily basis. You see many of our applications. The second part is we separate surfaces by a film, and we protect from wear. We cool machinery and equipment, and that comes back later when Timo and Ralph cover the e-mobility part. We protect surfaces from corrosion. We always say paint is the ultimate protection. Our products are like intermediate protections for a certain period of time, and our products transfer energy. If you look at those jobs, you think about the technical transformation, you will clearly find out that lubricants are very decisive helps on a daily basis for our customers. You know, last night I was asked about manufacturing capacities. We lead in applications.
When we go to our customers, we understand their processes and their applications. Lutz hates people saying that, but we have great chemists, but our customers don't want to get taught in chemistry. They have a process and a company to run, and they want, and our products help them. Very often, our products are a small expense for them, but a great impact. That's the big deal of a lubricant being a functional fluid. I think therefore we are very much application driven. We have lots of dedicated people who talk the language of the customer. It's different language from a food plant to a mining plant or to a wind park. Therefore it's very important to just establish that lubricant for us is a great El Dorado moving forward. The other part is being an innovation enabler.
Many, you know, of you think about engines, steel mills, mining, but there are so many fascinating applications we serve. If you look on the lower left, that was part what we acquired from Nye. If you take a diabetes injection, you know, there is a spring inside that injection, which is decisive of how quickly, you know, the injection goes in the skin and out. There's our lubricant coating on the spring. It's a huge business for us, and it's growing. You can just imagine, you know, what kind of an impact such a lubricant has in a diabetes injection. It's nothing you normally think about when you talk about lubricants, and you go to Nye. It's also why we keep their location. We manufacture those products in clean rooms.
It's not like a major blending plant with cooling tanks and things like this. Therefore, we keep the Nye side in Fairhaven. SP has the Kaiserslautern side. Many of you who know us longer, for the small type of products, you know, where very often we take intermediate out of the group. We manufacture to end product. That's what we do out in Fairhaven, and that is just one of the examples. All of their business in Nye is around medical semiconductors and car interior. They are responsible for, you know, if you turn the windshield wiper on that it doesn't make a noise and things like this. If you go to the upper right, you see robots. They also need lubrication, and there are plenty of robots today in plants.
We also have changed our filling lines, you know, from going from hand packing to a robot machinery. Lower left is a huge business for us. It was growing over the last years and will continue to grow. We talk about the casing and the gear oils in the windmills. We talk to the OEMs, the original manufacturer of the windmills. We also talk to the wind park operator. You see, offshore and onshore, there are a few very large wind countries in the world. I come back to that later during the segmentation part. It's very important to follow such a niche on a global basis. If you go to the lower right, you see a cooling device.
Many of you might not know, but you know, when we went to school or university, you go in a server room, and it was nice in summer because it was cold. Today, air conditioning doesn't cut it anymore for the compact server rooms. In most cases, large servers today are immersed in a liquid, and they transport the heat out of the liquid. We call it immersion cooling. If you think about the cloud computing, there are many clouds, but the data still sits somewhere. There are huge data centers today built, and that immersion cooling is a nice concept. You can take the know-how you've got there also to cooling batteries. It's the cooling part of lubricant.
To have a computer sitting in a liquid, which was for me, totally strange, but that's one part of it. Just to show you a little bit when I talk about an enabler for innovation and, very often, you know, I get asked what happens if like a commodity product dries off, you know, because the equation changes. The more you go to the niches and the more you have high-tech involved, the less competition you've got. Normally, your normal commodity competitors can disappear, and you have got totally different companies you compete with. That was my second part. The third part is the whole e-mobility part. On the mobility part, this is on a fast track. My personal opinion that ultimately, nothing is black and white in life, but ultimately it will be threefold.
You will have a battery, you will have a fuel cell, and you will have a clean fuel. You will have a combustion engine, a battery car, and a fuel cell, but the mobility change is coming on. We see for our world, we see roughly a market of $3 billion for the e-batteries and the EV cars. We said on a conservative basis for us, around about 50% is a relevant market for us. You know, when it comes to e-axle fluids, cooling, electrolytes, those type of things, and Ralph will cover the E-Lyte later. It's a very interesting part. For us, the entire mobility change is good news because it gets high-tech again. You know, you need all the greases in the car. You need cooling fluids. You need e-axle fluids.
Yes, in those passenger cars running in the city, they might disappear, so you don't have that engine oil part. We also made a large statement where Lutz and Ralph and Timo will go through later. When you look at the entire car population with all the ambitions from all the countries, there will be a change in Europe coming up. They discuss this as 2035 or 2030. We see for the next 10-15 years the number of cars on combustion engines increasing. Despite you know looking at Europe, we have got the Chinese market growing. We have got Africa growing. In a summary for us, e-mobility is a net opportunity because what is falling away is also more the commodity you know condensed price pressure part.
Therefore, I think that will be an interesting section for today. The second part is also, for us, very interesting: the whole sustainability area. When you take the whole CO2 balance of a lubricant, the least is happening between our gates because fundamentally we steer products at engine temperatures. The most is happening on the raw material side or at our customers. It's very important for us to go along the entire value chain. Our lubricants help our customers to lower their CO2 footprint. I think that's the big deal, to have lubricants helping them, you know, to run their processes more efficient, coming back from the application side. That's something where Lutz will run you through later today, through life cycle analysis and things like this. New requirements, life will be more difficult.
Good news for us. You know, we are the only one who is doing lubricants for all the product application portfolio on a worldwide basis. You know, EU taxonomy is a tough one. You know, everything which comes is tough, but it's much more tougher for the small ones than for us. Again, for us, we see sustainability as quite a nice opportunity for the future. We go to digitalization. Digitalization, quickly, you know, you think about the journey to S/4HANA. You think about global processes, and you think about global data. All of that is very relevant for us. When we think about digitalization, we really think about, you know, how does the customer experience doing business with Fuchs? That's for us, the main part, and Dagmar will lead you later through.
We had one project, we called it FUCHS goes digital. We had an outside consulting company involved. We had our entire GMC, our operating committee involved. We have various models. For example, if we talk about in-line sensors, we run metalworking fluids. They are most of the time, 95% oil, 5% of chemistry. We have got people going there, our colleagues, they take samples, send it to our labs, and we email the test results back to the supplier, FedEx to our labs, the physical sample. We send the test results to the customer. We have today in many systems, sensors equipped where we have the know-how, and the sensors measure pH, temperature, concentration, and nitrites. We have got online sensors all the time.
You can tell the customer either, you know, do nothing, or you have to add one additive tank side, or the system has a problem on its own. Yeah? We have got constant monitoring, and you collect a lot of data. You know, we have a great relationship with DMG MORI, the worldwide machine tool manufacturer. We have a marketing deal with them. We have access to all their customers. Those customers are very much intimidated by metalworking fluids, so they rather adjust the process than a good running product. If you can send them online data on an ongoing basis, it's really good. If you talk about our large customers, like OEM and mining, where we supply not drums and small packs, but we supply bulk oil in trucks. They have holding tanks.
Some of them hold, you know, their product for four weeks, some of them hold it for one week. We have got sensors in those tanks to measure the tank filling. If it goes below, let's say, one quarter or one-third, there can be an automatic reordering point or an alert price. Those are types of services we look into. Obviously, the ultimate goal we have is with the data to think about business model innovation, you know, where we have also people involved in our company. It's really nice. Last week, we had our what we call Fuchs 2025 roadshow. We started that during COVID. We have a live roadshow for our 6,000 people, where all of them can participate.
The board has an opening town hall meeting, and a couple of presentations during the week, and there is a Q&A session. Last week we had for the first time the Fuchs Innovation Award. We asked our 60 companies, a voluntary program. You can come up with innovation ideas, you know, around the area of digitalization and sustainability, and they brought really cool ideas. We elected three ideas from the 25. All our employees elected them, and they'll get a so-called scholarship at UnternehmerTUM. You know, it is UnternehmerTUM. It's close to the Technical University of Munich. That is really something where we look forward to foster on those ideas, and that's where this whole area is all about around digitalization. Last but not least is the growth.
On the growth part, I think you have told us for many years, you don't give us a long-term view. Very often, you know, we were sitting with you and with some of you, I had the impression we only work on your models and on your systems. Fundamentally, you know, when we started FUCHS 2025 at the beginning of 2019 was the first year of four years volatility. You know, 2019 was the year of the Chinese-U.S. trade conflict. 2020, we had COVID coming up. Then we told you, "Well, we strive for 15%." Then we had all kind of things happening in the external market, and we never provided you with a figure.
We have worked very, very hard with our entire team on the 2025 strategy. We have an entire bottom-up planning around our large regions and around our divisions and segmentations. They come to an easy target we have set internally, but also with you now of EUR 500 million in the year 2025. Obviously, the 15% is still a goal. With the current inflation, we're not gonna hit that goal this year or next year or the year after because we have last year a raw material increase of 30%. There is another increase coming up in the same magnitude this year. If you have an inflation of 40%-50%, you can't dream about making 15%. We need to cover the raw material increase. We need to cover our fixed cost increase.
If you can get a topping on top, it's nice. 15% is our long-term goal. At the moment, there are times I have never experienced in my life, I must say. We had our OEM meeting today. Lutz and I made a presentation at 9:00 A.M. I gave them a little P&L lecture because most of the price variation process, you know, they have raw material cost paid in, but not paid, not personnel, not the capital employed. You know, I told them about APA. You know, we had last year EUR 150 million hooked up in inflated inventories, inflated receivables. Those type of things, therefore the 15% remains a long-term goal. The 500 million is a number we strive for.
What you'll find out in the afternoon is that we expect the largest growth for us coming from existing products in existing markets. We have a system of a decentralized company. We have very, very strong countries in all the regions all over the world, and we keep them and we incentivize them. To 99%, that's cool. The 1% is some of them did cherry-picking. You know, the one sold more automotive aftermarket, the other one more OEM, the next one more metal working. We have some white spots in our map, and that's part of the segmentation. Where we hired about 12 dedicated segment managers, and they follow a segment, you know, throughout the world. Let's say you go for an example, you go to India. India might be the fifth-largest wind market in the world.
The MD is not entitled to say, "I have no interest in wind at the moment because I do trees and metal working and aftermarket." This is part where we hug him and say, "Listen, wind is big for you, and there's no way around," but we get no pushback. You know, our MDs, they like when we help them to grow their, you know, top and bottom line. Therefore you will hear much more about our entire segmentation. I think that's part. We still look for the electrolytes and other things, but only from that segmented part we have an enormous potential ahead of us in growing our sales.
Our AP targets you also see, like we have told you before, EMEA is continuing to develop nicely, but we'll expect an overproportionate profit growth out of Asia and out of the Americas. So that's fundamentally that slide. Now, I mentioned it before. You know, we started with Fuchs 2025 back in 2019, and it's a great program. We call it it's a journey, but it's also a transformation program. You know, on the cultural side, we say we always say, well, we want to have an open feedback culture and a hierarchy-free communication. We made progress, but it is a journey where I want to run this through. High performance is a big deal for us. On the structural part, we have organizational setup.
This whole segmentation idea is quite a change for us from a segmentation. We have on the structural side also more people in the holding. We don't want to become a waterhead. Let's say, for example, 10 years ago, we had finance and legal and tax and HR admin, that was fundamentally our holding. Today, we have sustainability, we have R&D, we have product management, but they are asked to work in networks. Our holding functions work, let's say if you go to purchasing, they work with purchasing in China, in the USA, in Brazil, in Germany, and we come up with group standards and with group processes. That's the name of the game behind the system. It's quite a structural change.
When you do that through the networks, always depending on the function head, then you have a great result because there's an automatic buy-in from the countries because they've been involved in the standard setting. That's the basic idea behind. On the strategy part, that's Dagmar Steinert runs us through the numbers later. Obviously, strategy plays a role in many other areas, sustainability, mobility change, et cetera. You go to the cultural part. We have a vision which means being first choice for employees, for our stakeholders, for our customers. You know, when they think about lubrication, we want them to think about us. Many of you ask me whether you make acquisitions. You know, your customers are very loyal, they don't change. All the customers in the B2B technical area, they know us without arrogance here.
If they have a severe technical problem, normally they get us. Those are the nicest opportunity. If the customer has a problem with a competitor product and they ask you to come in. If you can help them to solve the problem, might be a quality problem, like corrosion. We had with one large OEM in China, a big deal. They had a cover corrosion problem, which is also part of the e-mobility. We sent them for the whole recall product just in time. Those type of things, when they come to you and you can solve their problem, it's not so important whether your product is 10% or 20% more expensive or double expensive.
If you help them solve their problem and help to make their processes and their application, you know, more efficient, that's what we follow and that's concluded in being first choice. You also know our mission statement, and we have established our mission in 2013 as we have established our five core values. The mission statement is lubricants technology people. Lubricants, I told you in my number one key message, it's a wonderful field to be in. They fulfill much more functional fluid criteria than many people think about. You know, thinking about a regular oil. Technology, you know, very often I get asked if Liqui Moly or Valvoline, they have a different business model. They're also successful, but they have not too much technology.
They buy an additive cocktail from Lubrizol or Infineum, they mix it with a base oil, they put all their money in marketing, and they are more or less in the me-too product. We want to be in the technical part, where we, you know, can help our customers a little bit more. The people part is the big deal. You don't see a lot of fluctuation in our companies. Our people are very loyal and we have a special Fuchs culture, which is really cool. On the other hand, after 90 years now to transform this culture into more processes and more standards, we really look forward to Isabelle. She wrote us quite a list to move forward on the digitalization and the performance management part. I think that's really something we want to drive.
The values, they start for us with trust, and they end with integrity. They also have creating value as a value because it's important that our people understand we all have to create values. It is about respect because we need to respect each other, and it's about reliability. You will hear more about reliability in a moment because in our new purpose, and that's moving your world, it's our new emotional slogan that was established in 2022. That was the missing link, you know, from vision and mission. The purpose was missing for our people. We really like that. I show you a movie, but we really talk about unconditional reliability. That's what we wanna stand for. That we make zero compromises with our customers when it comes to quality, delivery, and so on.
That is, you know, what we want to go for. Therefore, we have the Moving Your World. We discuss the what. You know, what are we doing? How do we do it? And why do we exist? Then the what part, I think it's a nice summary of what I told you before. Technical expertise, leading solutions, customer orientation, very important for us. Customer comes at the very forefront. A sustainable attitude. Those are our four what parts, you know, to deliver efficient lubrication solutions. The how part is unconditionally reliable. That's, you know, how we want to be perceived by our customers. You know, that we make zero compromises and that we do whatever it takes to supply them in time with a high quality product.
At the moment, you can imagine in times you have scarce availability, we need to change raw materials. We always do that only with the consent of the customer. We don't change anything behind the scenes or things like this. We tell the customer we don't have the raw material you need. We can do that for you. As you said, performance, do you agree or don't you agree? I think that's the only way forward. Then we come to the why and why we exist to keep the world moving. It's also about moving it forward. We have a little movie, I think, summarizing this pretty well, and I want to show you. I hope it functions.
Have you ever stopped to think, what keeps our world moving? For us, it starts with fluid conversations with our customers. We ask questions and then more questions. We listen, we observe, and we challenge. The result is lubrication solutions for everything that drives and moves them. Ideas, passion, and engineering spirit pump through our veins. We are team players, problem solvers, and solution seekers. There are no off-the-shelf answers here. We strive for perfection and unconditional reliability. We will not rest until everything is running smoothly, efficiently, and sustainably today and tomorrow. Moving your world is not only about keeping it in motion, it's about moving it forward. Nothing excites us more than when our customers leap ahead with technology from Fuchs. When we are asked what we do at Fuchs, we say with pride, "We are moving your world.
Okay. We're ahead of time. I think we have the flexibility. I would say we make the coffee break now. We get the time later on for the other topics and for Q&A. Thanks for your attention. That was the beginning. 60 minutes will come on later again, and see you at the coffee now. Thank you very much.
Hello to everyone. After the coffee break, we will continue now with strategy and structure, and I will start before I hand over to Ralph. The one slide I want to show again, and Stefan just also showed it during his first part, is really that one, our Fuchs 2025 journey. It's now roughly halftime. We started it in end of 2018 or beginning of 2019, and we are now in the year 2022. I think if you have been working with Fuchs for quite some time, you have the feeling, oh, it's the same faces.
It's the same business model, it's the same company. What I wanna tell you, we are a different company today compared to the last time we met with all of you in 2019 in Kaiserslautern. We have really used the last couple of years to push our FUCHS 2025 journey and the various elements that I show on this slide. On strategy, it's really about growing our market share also in our core business based on segmentation, and Ralph will give you more details on that. With regards to the culture, it's about establishing a high-performance culture based on hierarchy, free communication, also open feedback.
Honestly, if we look back to the last 2-3 years, where travel has been restricted and where we had to do more in the virtual world, we used that time and also the new virtual formats to connect our people. I think there's a lot of negative elements connected with COVID, but one of the positive elements is that we are now more of one global team than we have ever been before. We have really made great progress. Before COVID, travel was limited also to our leadership teams usually. Now we have, like, all levels communicate with each other, and that's a big deal for us within Fuchs as we work strongly with global networks and a huge step forward. With regards to structure, our organizational setup is also not the same compared to 3-4 years ago.
You sit here today in the new holding building. This is not just a new building. This is also really a clear sign that the role of our holding has changed. More like a lean admin center, which as I mentioned before, like in the old days, to really a strong business partner that helps our countries and our regions to grow their business. Massive changes, you know, with also a lot of new positions, like for example, our group CDO, a VP Supply Chain that helps us to manage our supply chain on global basis. Lots of changes and a lot of changes to the better. Before I get back to our organizational structure here, one recap on where we are and what our global footprint is.
What you see here on the map is like our 57 operating companies and our 35 production locations. We are where our customers are. This setup and this global footprint is unique in the lubricant industry. This setup has been a huge advantage now also during these difficult supply chain times because cross-continental supply chains are heavily disrupted. Twenty years ago, we started local for local, with local manufacturing whenever possible. We also put in a lot of effort to develop our three main hubs in Germany, in Chicago, in the United States, and in Shanghai, where we have state-of-the-art R&D centers and a lot of local support teams that can really drive the market development there.
In a way, now we, if you look at our customer base, we see a lot of our customers struggle to, for example, move all their manufacturing to China and they really put all their eggs in one basket. We never did that. In fact, we did the contrary. Fuchs 2025 has helped us to further strengthen our global footprint, and that's for us a key competitive advantage also for the years to come. Now, this was part of our dinner conversations yesterday. How do you run Fuchs? It's not so easy to explain how we run Fuchs because we really use a matrix structure to run the company. On one side, that's the top part, we have our strong countries and regions. We have invested a lot in local and regional teams the last couple of years.
On the other dimension is our global sales divisions with our five global sales divisions and our global functions. There we have also invested a lot in the last couple of years. In the end, it's about managing the interfaces. That's also where the cultural aspect comes in. We believe that this is by far the best setup for us. We also believe that this setup makes us an agile company. We see now that a lot of the big companies that are more centralized wanna go down that path and decentralize because now developments in markets are different, requirements are changing fast, so you need to react fast. If you're a centralized company, this is very difficult to manage. If you're a company like Fuchs, that's a key advantage.
We are fast, and that's also what we hear from people that joined us recently. They said the biggest change for them is our speed, our fast decision-making, and our entrepreneurial spirit. Really the core of our business model is customer focus. We wanna be where our customers are, we wanna understand their requirements, and we want to supply them unconditionally, reliable, with the right product at the right time. I think that's where this setup really kicks in and where we see massive advantages. The other point, that's a focused area for us, if you are decentralized or if you give a lot of freedom to your local entities, it might also be that there is local egoism, right? People say, "Hey, I do this, it's best for me," although it's maybe not best for the group.
That we wanna tackle by promoting a principle called Act Global. Act Global means acting in the best interest of the Fuchs Group, which means, for example, if we want to go for a customer globally. We cannot have a country say no and say, "Oh, I'm not interested. I focus on something else." Once we identify this is a customer of global relevance, we need that buy-in from everyone around the world and help us to conquer this customer. This is a lot of the work that we have done during Fuchs 2025, really aligning strategies, also putting us in a position the first time in Fuchs history to run global promotions and to target segments on a global basis, to learn faster from each other, to create an expert network around the world that helps us to accelerate our goals and market share.
It's a really very important change, and I cannot stress it, you know, often enough how much we'll benefit from that in years to come. In the end, managing the interfaces is about culture. It's about, you know, being honest with each other and helping each other to improve. That's why we have introduced training programs and also formats that allow our employees to give us feedback. On the one hand, we want critical feedback to improve. On the other hand, we are also pushing for positive feedback. Because to be quite honest, you know, during these times where our people have to work at least twice as hard to get their job done, it also feels pretty good if a colleague tells you, "Hey, thank you. You have done a great job for us." That culture of appreciation goes through all levels.
When we go and visit our distributors around the world, we shake the hands of all forklift drivers. We go and talk to our people on the shop floor because that's our backbone, and that's the culture we wanna further push and we wanna keep in the Fuchs world, and that's also what we say is part of our Fuchs DNA. The other part is hierarchy-free communication. Speed matters more than ever before. It's not big that beats small, it's really fast that beats slow. That requires hierarchy-free communication. What we don't wanna have is that the communication goes up the ladder, down the ladder. We want that direct communication between our colleagues.
Again, with the virtual formats we have now, we see that more and more, and it has become a natural habit, and our HR teams around the world are working hard in further promoting that culture and also giving our people the freedom to act independently in the best interest of the Fuchs Group. That was my start, and with this, I hand over to Ralph, who will now talk to you about our segmentation approach in more detail.
Yeah. Thank you, Timo. The mic is working? Yeah. Okay. Thanks, Timo. I would like to come back first to the one chart of Timo, where he was showing the organizational setup of our company in the regions, the world regions, and the global functions. It's not only global functions, but also our global sales divisions. The global sales division is for us a very important organization element in order to look our global business and to also push for growth. We have done that for many years to define and to act according to global divisions. You can see the global divisions on the left side, which are five of them: the automotive aftermarket, our OEM division, the mining, the industrial, and the specialty business.
Now, in our FUCHS 2025 journey and our strategy, how we further grow the business, we put a much higher focus on the segmentation of our market. We have identified now and defined more than 200 so-called market segments, and we have allocated all our existing business into these market segments. Which means that we look at our business now in a different and new dimensions, first of all, and that remains a very important element according to our regional setup. More and more, we look also from a market segment point of view. In our FUCHS 2025 strategy, we have identified now roughly 20 so-called global business segments of which and for them, we have employed some 12 global business segment managers.
These are the segments where we believe there's the highest growth potential for us from a global point of view. That's what we have done. What are these global segment managers doing? They're the owner of the strategy for the respective segment. They identify our target markets and the target customer groups we want to go for. Together, with the local teams and the regional teams, we define the priorities. That's coming back to the example of wind industry in India. I mean, this is not really a matter of discussion. This is just a matter of defining how we do it, not whether we do it or not. On the next chart, you see an example on the specialty division, how does that look like. The specialty division for itself consists of many, many different segments.
Some of them might be important from a local point of view, from a regional point of view. Four of the segments for the specialty part, we have identified as so-called global market segments. Effectively, that is the way we do it also in the other divisions, to come all together in our 20 market segments. Now, when we look at market segments, and I will show you a few examples of them, I think it's very important to say these are all segments which where we see growth potential, and these are all growing segments. We have a growing local demand in these segments. With our approach to these markets, I think there's a huge growth potential for us. These are segments across the board.
It's not only about the new fancy type of segments, it's also our existing business, our traditional business, where we believe we can further grow. That is existing markets, existing products, and the way how we approach our business offers a huge growth potential for us. The first example I would like to have a look is a really a global market, which is within the industry. On the right side of this chart, you see that the market is further growing. But what we do is we have a very holistic approach to that. We don't only go for the one specific application where we might have a product which is outperforming.
Our holistic approach would suggest that we want to act as a full solution provider for all the segments, supplying all the lubricants which are relevant for the wind industry. Which is the oil for the gearbox, which is the paste for the rotors, which might also be a cleaner for the electric cabinets in the wind turbine. All of that, I think, is our approach, where we believe if you have the right product portfolio, we have the global teams, and we have a global strategy, how to further grow. In the segment of wind, for example, it's not only supplying the product, it's also about the online monitoring of the lubricant in use. It's also about service elements.
That remains or will be much more important element of our business than it is today. Another one is also on the specialty side. It's the food industry. Food industry for us is now really a focus on the industry. It's not only talking about the food-grade products, where we do have a very comprehensive product portfolio, where we have the approvals, where we have the right halal, kosher, and food-grade product range. It's also to understand the entire food plant, the food processing plant. With our local teams and our global support, we go there, we do plant surveys to identify the critical applications where they should use food-grade products. Also to talk about their general lubricant demand, where we also can offer solutions.
More and more, also due to the risk exposure, in a food plant, our customers tend to also use food-grade products for non-critical application, which is a huge potential for us. Think about a forklift which is running around in a warehouse of a bottling plant. They want to avoid any contact of a mineral oil with food. Therefore, it's also more and more a tendency there that our food-based products are used for quite regular applications. You see on the left side some of our industries we are looking at, which is the fabrication, the brewing industry, but also animal food, I mean, the packaging industry.
There are many markets we can go for. Another fascinating example for us is a field or a market segment where this global focus is pretty new to us, which are the world of e-motions. We talk about compressors, gas turbines, industrial gearboxes. I think we are a well-known supplier for these products. Now having a global approach to these markets will allow us also to further grow. Now, taking an example for another example for the industrial market, I think that's a pretty new one. It's a growing industry in the car manufacturing, which means the battery cell manufacturers. That is connected to the e-mobility. We expect a very strong increase of demand for this production process.
To manufacture these cans where you put in the battery requires a lot of lubricants, requires a lot of forming lubricants, but also cleaners. We do have that product portfolio, and we have now set up a global strategy how to attack and to gain customers. We have very nice first successes to supply these industrial products which is connected to the e-mobility, but which is a new market and a growing market where we want to focus on. I think this might not come as a surprise that we do see on the industrial lubricant side, there's a big growth potential. Now, we have seen some examples on the specialty side, on the industrial side, but also in our typical bread and butter business, for example, the automotive aftermarket.
There's also a nice growth market, and this is connected to the first increasing number of automatic gearboxes and also the automotive gearboxes. They need maintenance. They do not only need the products to maintain the gearbox, they also need devices to flush. Here we go for a combination of product supply on the one side. We supply a device in order to flush the gearbox and to refill the gearbox. We are talking about a segment which is workshops. You know, we're talking automotive workshops, automotive aftermarket business. That is a great tool to sell our product and to gain customer loyalty, because once you have your equipment at the workshop and they use your product, I think the customer enjoys working with us.
That's globally speaking, an element we would like to also grow. Last but not least, I think also for our OEM division, you know that we are a very known supplier to the car industry when it comes to. Sorry, one more. When it comes to gear oils, firstly gear oils, and now connected to the e-mobility, there's also a demand of transmission oil, so-called, EDF, electric drive fluids. There is a pretty. There's a high similarity to our today's OEM business. So there are huge technical requirements, you see on the right side, what such a product should do and can do.
We have with our BluEV technology, you know, we are again a partner for this industry in order also to supply first-fill product connected to the e-drive. I think that is very important to mention that the gear oils will not disappear even in the e-mobility and the e-drive. There is still a huge demand for gear oils and the focus on our gearbox manufacturer and the car industry also for that type of first-fill product will provide us with a nice growth potential over the next years. These have been a few examples in our way, how we go for the segmentation, how we do that, let's say, across the countries with a global focus and a global leadership by our global business segment manager. There's room to grow. Now I hand over to Dagmar for the next one, which is connected to our digital answers. Thank you.
Yeah. Thank you, Ralph. I hope you listen carefully to him because that's a very important part for our financial targets. I will talk later about that. Now, it's up to me to give you some more details about digitization. Of course, digitization is a mega trend. We for years thought about how to deal with it, what to do, because digitization is one of the key success factors for a company in the future. Stefan, you already mentioned it in the beginning. We have started a journey, Fuchs goes digital, and that's our answer to these mega trends. We took the help of a consultant to get an outside-in view. Of course, with Fuchs goes digital, we have like three topics we would like to tackle.
First of all, of course, it's improving customer experience. The second is that we believe we need to think digital and that we definitely are going to create additional value. We have the vision that we are being perceived as a frontrunner regarding digitization in our lubricant business. How did we start that journey? What did we do to implement this digitization, this we name it a smart solution ecosystem into the Fuchs group? As I already said, we started with an external consultant and with that we looked what do we have today, what do we want to have in the future? We developed together with our organization, with our GMC, with a lot of working groups, our strategy, our Fuchs goes digital strategy.
One of the results is a detailed roadmap which gives us guidance how to implement, how to go the path forward. If you look at that chart, of course, there's a lot of things in there, but the basis, in the center of everything is the customer. The customer needs, and of course, we ask our customers, we listen carefully worldwide, and we identified three major needs for the customer, which are important regarding digitization. It's protection. Protection is not only to maximize equipment life or the availability of machines or tools. Protection as well in a more holistic view about protection of health, protection of environment. The second need or major need for the customer, optimization.
Our customers, of course, want to maximize their performance and to maximize output, to increase quality and of course, minimize input. By talking about optimization, we as well not only look at a product, but we have the process in mind. It's a combination of process management and product. The third major need, of course, you look at financials, are always saving. Savings are very important, not only measuring like reduction of costs or maintenance, but as well savings in the use of resources. Here again, sustainability comes into place because you want to operate sustainable.
Therefore, for us it's very important to reduce all the input, the resources, because resources are not there for free. Let me give you some examples what kind of digital solutions we already have in place or where we are working on, what we want to implement in the whole group. These, of course, based on our technology in combination with our experience. If you see on the right side of the chart, there are four solutions named. Let me start with the Fluid Analyzer. The Fluid Analyzer, as well as the FUCHSmeter, they are both on the same basis. They are our sensor devices for the on-site analysis of the condition lubricants. The Fluid Analyzer, they are sensors placed in the machine.
FUCHSmeter, on the other hand, is a handheld device. That is more for smaller setups where you have a lot of small tanks and where it's much easier to have a handheld device to optimize your measurement, your condition monitoring of the lubricants. Of course, that is a great relief for the people working on that site, that they don't have to carry a lot of manual equipment, have to do a lot of manual documentation. It's a big advantage. What both solutions have in common is that they have the same basis, the same idea. It's about ease or give more support to the people working on this task. Coming to a more comprehensive example is if you connect these things, if you put software into that.
That means you have sensors, you have the software, and the platform, and everything is connected with each other. That, of course, is something which is a great advantage for our customers because they are able to in real time monitor the condition of their lubricants. But not only that, they are as well able to get recommendations when to do a maintenance or what about somehow inventory management. It gives you a whole insight view about the operation of the lubricants in your company. The only thing that our customers need to work with that is a device, a browser, and of course, an account with Fuchs. These are just some examples how digitalization works within the Fuchs world. There are a lot more, of course, coming.
Digitalization is not only something or the main focus is outside towards the customer, but of course, we are as well digitizing our own organization to increase efficiency and to be more efficient. That was a big part of our or is as well part of our Fuchs' digital journey. I would like to say the main focus always is the customer and to improve the customer experience. With that, I would like to hand over to my colleague, Lutz Ackermann.
I'm older. I need two devices to come. I'm going to guide you a little bit through the geostrategic setup we are in. We have seen nice products, nice product ideas, nice market, but in which world we are living, this is a different story, and this is a significant change we have discussed yesterday evening in the break, that the changes we are in are significant, and there's a high probability irreversible. On the one hand, we have seen the experience, the geopolitical impact of the Zero-COVID strategy of China, which is a nightmare. Besides the political disturbance between U.S. and China, we have now the Russian invasion with Ukraine, which is a breach of all civilized rules in the world.
Russia will not be back on the scene a long time, and it leads raw material, which leads to a certain extent markets. We are facing the inflation with the significant raw material increase we've seen, which I've seen in my career, not to this extent. This is not, let's say, a situation. This is not coming to, let's say, a little bit shortage here and there. This is a significant structural problem which increases the raw material and especially in the petrochemical landscape. In parallel, we see the increase in freight and energy and salaries, due to the inflation. This is no doubt it will come. All of that is accompanied with shortages and, our customers suffering from shortages as well. The order books are full. The material is not there.
All of this is a stop-and-go economy, probably to which extent and how long it takes is difficult to predict. We think it's not a time of half a year, it's not one year, it takes longer. Nevertheless, we have to live in this business environment, and we think we can really perform in this business environment. Looking into the map a little bit where we are in, we have more or less a structured world. The Americas, which are living a little bit on their own, the America first idea is still there. What happens in 2024, nobody knows it, but it's their own technology region, their own market and regulatory environment. We have Europe as a separate region with its own regulatory framework, especially in view of sustainability.
You are quite very familiar, I think, with the Green Deal activities, comes through a taxonomy, comes through CSRD, comes through European Green Deal. If you read the Green Deal, this turns the economy upside down, especially in view of the circular economy, where Europe will change raw material price, will change significantly in the structure of the economy and the demand of the customers, especially when it comes to efficiency and sustainability requirements. Then we have the third part of the world, which is China. China going to separate from the world with a clear decoupling announcement to say, "Hey, we want to be separate from the world, but we want the world have the world dependent upon us." At the end of the day, they have their own technology room, and they are really good.
They always say, "Yeah, we are copying and copying," but now they are better, getting better and better. Small example, we have special molecules we are using from from U.S. companies and European companies, polyolefin, synthetic ones. Normally it takes 10 years to develop a unit, to develop the process, to put up the unit. They've done it in two years, and perfect products. This goes through the roof. So far, the independence is possible, except food. This is a little bit shaded because they are sitting in between, but they are not as important for us as business, but not as technology region. The blue shadowed region is out of scope for a longer time. This is the world we live in and this affects raw materials, supply chain, and the market requirements.
At the end of the day, what is the answer to all of that? This is our three hub strategy. The three hub strategy means that we are developing these three regions to give them the ability to serve the market, to work on eye level with the market participants. In Asia-Pacific, the positioning is clearly China-centered decoupling, and they developed their own specifications. They even developed their own engine specifications for the aftermarket. The requirements, local manufacturing, local raw materials. This is driven by regulatory increasing. As described, Green Deal will give a significant change in the petrochemical landscape, especially when looking into the e-mobility, reduced fuel demand. At end, the refineries are going to change the slate they manufacture.
We need to substitute with spare chemicals or recycled material, complete different technology. They are stable on its own, focusing America first. In which direction they are going regarding e-mobility and regarding new technology, it's difficult to say. The industry says we need to move into this direction. The politicians are sitting somewhere. At the end of the day, the next years will show in which direction the United States are going to move. What's our answer? On the one hand, we have the fully fledged institutional structure in the world as laid out by Timo. We have our plants and we have our labs, and we have the three main hubs in China and Europe as an own networked hub. We have U.S., Chicago as an own hub to serve the U.S. markets and probably South America.
One may think this may lead to triple or double work, to developing double or triple, to have redundant capacities, to have redundant organizational structures to do the business. This would be the killer. At the end of the day, we need to get our efficiency out of the group, and this is the key element, as Timo laid out already, the networking structure of the Fuchs Group. I have a long history in industry with Exxon and with Texaco, so I know what matrix means, and I have experienced matrix structures not working. Our matrix structure, our sales understanding, this is the most brilliant thing I've ever seen in industry. We have R&D key working groups. This is a worldwide group of the biggest brains we have for the specific product groups. They really do start to work out the reformulation backbones end-to-end.
Not to do double work, but to guarantee knowhow transfer. We have the operations network that standardize processes and units to make things easier, more efficient. The sales divisionalization, as laid out by Ralph, allows us to transfer business models, sales approaches, and to support the segments by each other. The other one is, of course, this is the people, liberty, technology. People is the most important part, so education, evaluation, and really alignment with our company culture is the key element, and this only works in a network structure. This gives us the efficiency to run this separated three ECAP structure. We combine local presence with global approaches to networks. This works in a way which is, I would say, very good for the time being.
Could be improved in some pieces and corners, but at the end of the day, the self-understanding of the people working in these networks is already increasing and developing in a way where I can say this is really a good approach and quite unique in the industry. So now, Dagmar, it's your turn. The long-term financial targets, because the result out of this work must be reflected in the financial targets.
Yes. Thank you, Lutz. You're absolutely right, but therefore I need all of you to manage that and to produce the results. Now you heard a lot about FUCHS2025, a lot about culture, structure, and strategy. With that, I would like to start a little excursus just to the world lubricant market before coming to the financial targets and what's all about it. As you can see here, the lubricant market, the world's market demand is flat or slightly growing. Below the surface, it's different because there's a strong shift towards high-tech lubricants with low volume, and that is our home turf. Our relevant market is growing. As you can see on the right side of this slide, during the same period of time, we managed to increase our sales quite a lot.
Yes, the left side is volume, the right side is sales. Anyhow, it just gives you an impression what you can do with a slightly growing market or even with shrinking market, if you look a bit deeper into that slide, having a look at the development of Europe, EMEA, where the market share of the world market demand decreased from 36% to 27%. On the other hand, we increased our sales quite a lot. The same counts for the region America, where there is a decrease in volume from 35% to 30%. I mean, the big or bigger growth in the region Asia Pacific. Now I would like to come to our financial targets. Here you can see an overview.
I'm really happy that we are able to present the financial targets today because we wanted to do it quite some time ago. COVID happened and everything, and we just, of course, postponed. Even today, I mean, the environment is quite uncertain, as you heard from Lutz. Overall, we are still in a very uncertain environment, but anyhow, we are committed to our financial targets. We have three financial targets. The first target is about growth. Strong organic top line growth, which we see in a mid-single-digit percentage growth year by year. The second target is about profitability. With profitability, we see a clear upside potential, and we stick to our long-term EBIT margin of 15%. I come later to that in a minute on the next chart. First, let me talk about cash flow.
Cash flow is very important for us, and we have a high cash conversion because that's essential of our business model. Looking at the cash flow, at the cash conversion, we defined a cash conversion rate, which is free cash flow before acquisition, divided by earnings after tax or net profit. Our target there is an average cash conversion of 0.8 year by year. Why is it not one? Because we are looking, if you look to the left side, we want to grow. If you grow, you need, of course, to build up net operating working capital and to invest, and therefore, your cash conversion can't be one. That slide, you already know from Stefan. Let me talk a bit deeper or a bit longer about that. Our 15% EBIT margin target is a long-term margin target.
Of course, we are not able to reach it this year or next year, and I would say, will be hard or not even the year after. For the year 2025, we said we look at an absolute number of EBIT. Our target is to deliver EUR 500 million in 2025. Each region can contribute to that. Asia Pacific with the highest contribution, North and South America following. While going to get a bit of a challenge maybe to uplift your contribution. Okay, thank you. It's challenging, but with FUCHS 2025, we are well prepared for that and we will see how it works. What are our growth drivers?
You see here some remarks for the region, but you already heard a lot about from Ralph, about examples, about the focus on market segment. Data examples about our market segment, wind, food industry, e-motions, battery production, as well as gearboxes for the automotive aftermarket, and of course, for the OEM EDF fluids. There are lots of examples, and you find it from more or less all industries, and that's one of our core growth drivers, which goes across all regions. Every region is focusing on penetrating the market much better and to grow. That's an integral part of our 2025 strategy. In EMEA, they have as well a focus on supply chain and logistics excellence to increase profitability. Of course, in the other regions they do it as well.
The main focus here is in the region EMEA because it's the most complex region. With the highest number of companies, the highest number of countries, and this of course gives just much more room for improvement. As you already heard, we are working in a matrix structure. We have a lot of network, and of course, we are exchanging best practices and act global, so we try to identify the best practice and then, of course, to accelerate that in the whole. If you come back to top line growth. In the last 10 years, in the group, our CAGR, our growth was on average 5%. You might think our target, mid-single-digit % target on an average is not very ambitious. The history includes acquisitions.
If I would just deduct acquisitions, we are talking about roughly 3% CAGR for this period of time. Our mid-single-digit percentage growth year by year is quite a target and a challenge. As you can see on the chart, we have different altitudes of growth in the region. In Europe, we had the highest growth with 6% in Asia-Pacific. Europe was 5% and Americas was 4%. That, as I said before, includes as well acquisitions. Looking forward, as already mentioned, we expect the highest growth in Asia-Pacific, followed by Americas, and then Europe. There's one thing I really want to point out, and that is the inflation we have and the raw material crisis.
Because the inflation raw material crisis and of course the other cost inflation, which we pass through to our customers with some time lag, is impacting our sales. That you really have to bear in mind. If you look, for instance, for the year 2021, if I compare our prices in December 2021 with our prices one year before, December 2020, our selling prices are up to 20%. But of course, even if you show the top line growth of over 20% in the year 2021, it doesn't reflect all the impact of increasing our selling prices because our growth in 2021 was dominated by volume.
The same somehow will impact the year 2022, because we see somehow a similar development as we still have increasing raw material prices, increasing inflation, and therefore our target of the top line doesn't reflect this inflation. As of 2023, we hope that we are in a normal environment again. Of course see that target growth. Coming back to profitability, to our EBIT figure, our EUR 500 million in 2025. You see here a really long-term development starting in 2004. You have the crisis, financial crisis, 2008, 2009. It's just a little dip if we are not, or we didn't make any losses. We have the downturn in 2019 from the, you know, geopolitical crisis.
2020, we had the hit of COVID. 2021, we increased our earnings again. As you can see that, for the year, our target reflects a higher growth potential compared with the last ten years. Based on our strategy FUCHS 2025, of course, in combination with the outcome of our investment program, which we did in the years 2016 to 2020, we want to achieve EUR 500 million as a target in 2025. We have backed this all with a very solid balance sheet structure. Here you can see our equity ratio of the group, which is, since the year 2012, above 70%. This gives us a strong stability even in uncertain times.
Of course, I don't want to increase the equity ratio year by year. That's not the target. It just gives us stability and the flexibility to follow our strategy. Of course, we want to give back value to our shareholders. With that, I would like to just make some statements regarding M&A. Of course, our financial targets don't include M&A because we don't know when we are able to make an acquisition or not. It's a question of availability, but we are open for M&A. It's an integral part of our strategy to look for nice M&A targets and we have set our a framework about what we are looking for and what it should be.
We are looking for transactions, and hopefully, if we are able to do some, we would even accelerate growth. Here you can see a chart because we often get a question, is Fuchs a cyclical company? What about how do we perform in cyclical times? Here you can see that we are quite even in volatile times that we have achieved a good development and really robust structure. This reflects our business model. Our business model, which is all about lubrication, about technology, about people. Of course, this is a reflection of our organization. You heard a lot about that from Timo, how we work, how our daily work is. This all, of course, is part of the outcome or the outflow of this development. Having a look at the cash conversion, our cash conversion rate.
Here you can see the historic development for the last 10 years of our profit and cash conversion rate. Our target, looking in the future is 0.8. In the year 2021, our cash conversion rate was 0.35, so far below. Of course, we had huge negative impact in our free cash flow due to this massive build-up of net operating working capital. We expect, of course, that this will normalize in the next years. Hopefully, inflation will normalize, will go away. We will keep CapEx on the DNA level because our investment program is finished. As I said before, this target of 0.8 of the cash conversion rate, that is reflecting the growth which we expect and which we want to deliver.
In the history of these cash conversion rate, you have the impact of our CapEx program. You have the impact of funding some pensions and everything. In the history, the average was a bit above 0.7. I would like to talk a bit about our dividend policy. We are upgrading our dividend policy from after quite some time. Since 20 years, we have increased our dividend year by year. With that, if we manage to do it five years further, we will be a dividend aristocrat. With our upgraded dividend policy, I think that's done because in former times we said at least we will pay the dividend paid the year before, we intend to increase it, and now we are going to increase the dividend. That's what we understand.
Under upgrading the dividend policy and, that's a commitment for us as well to you, to our shareholders and reflect all these, yeah, commitments. Because we would like to let you participate on our process. Last week, we announced a share buyback program. That's another commitment to you because we want to give back some value to you. Of course, it's on the other hand, a signal that we think that the current share price does not reflect fair value of the Fuchs' shares. We are going to buy back 200 million shares. Not 200 million shares. We are going to buy back shares in the amount of EUR 200 million, sorry. Not 200 million shares. No. It's 3 million of each share class, preference shares and ordinary shares.
The program started yesterday. The shares will be canceled once we've done it. What I want to point out is that it will be not a limitation in our ambition to grow and that it will not hinder us in our potential to do M&A or to look for targets for the acquisitions. Of course it's backed by our free cash flow and we might use some bank loans for short term, but our free cash flow generation, that's one of the key success factors for our business. As you can see here on that chart, it's the, like, free cash flow of the last 10 years and what we did with that. We generated the last 10 years EUR 1.8 billion free cash flow.
Out of that, we paid up to close to 70% to our shareholders as dividends. There was a share buyback program included in the years 2013, 2014. So it's even more what we paid back to our shareholders. Of course, the cash generation in the future will be even more if our business model is working out. Of course, if we take all the chances we have regarding sustainability, regarding mobility transition, what you will hear after the lunch break, which shows a great potential which is out there and we just have to to grab, to deliver. This slide somehow sums it up, what I said before. Our CapEx is expected to stay on the depreciation level. Acquisitions are an integral part of our strategy.
Of course, we have to focus on the return to shareholders as dividends and, of course, if it might be opportunistic, share buyback programs. With that, I would just like to show you again our financial targets because, the full management is committed to these targets, and it's the first time as published targets, midterm targets. As I elaborated before, growth, profitability and cash flow are the main drivers of our business. Therefore, I'm really happy to present that to you. Here again, you see our 2025 EBIT target of EUR 500 million. I hope to make it. With that, we are a bit before time, but, more or less, I think, ready for lunch.
Welcome back from the lunch break. I really was afraid that I'm losing the game against sunshine and barbecue, but thanks for coming back. Lunch break is over, and now we come to our sustainability activities. Sustainability at Fuchs is a long story. Our basic understanding of sustainability is, of course, the three pillars. We are living in the economic part, in the social part, which focus on safety, corporate citizenship, and compliance with human rights. I mean, this is their understanding. The ecological part, that means the efficiency, environmental-friendly. Do not mix it up with biodegradable. This has nothing to do with environmental-friendly. Environmental-friendly means products with raw materials containing raw materials which do not harm the environment and do not harm the biodiversity.
Of course, the reduction of CO2 emissions or better, the greenhouse gas emissions. It's a little bit a mix-up. The greenhouse gas emissions is we always see it in 37 million tons CO2 emissions. This is one part. This is 50 gigatons. 37 CO2, seven greenhouse gas, like methane and nitrogen oxide, plus the LULUCF that means Land Use,use change and forestry. At the end of the day, this is the world we live in. Our target is at least to move our company into a more sustainable world and a sustainable management and a sustainable economic environment, including circular approaches. This is supported by the Green Deal.
Everybody is more or less familiar with the Green Deal in Europe, which really focuses on sustainable by design, sustainable chemistry, and of course, at the final end, a full circular approach that leads fully independent on the existing raw material imports and of course, being climate neutral. This is the target. At the end, looking into the ecological development at Fuchs, what we are doing is, first of all, we are looking into our own environment, which we call gate-to-gate. That means design, R&D, and manufacturing. This is our world where we live in. This is which we can directly influence to reduce CO2 footprint, called gate-to-gate, and we are CO2 neutral since 2020. In using renewable energy, reduction of waste, and partly the non-compensable is due to climate protection projects and compensation.
For example, the CO2 emissions generated by a travel. We cannot change the emissions of an airplane. If our people are going to travel, they are emitting CO2. These are part of the compensation. The other piece we are heading is the raw material side, so exploitation, refining, processing, and manufacturing of our raw materials. This is the field of refinery. This is the field of chemical industry. We are working with our suppliers to get CO2 neutral products, so through their chains of manufacturing, chains of molecules, different suppliers with different processes. At the end of the day, finally, they need probably to compensate. It's a challenge. The chemical industry is far away from being CO2 neutral. Far away.
There is finally gas, oil, heating, energy, gas turbines, and the primary feed for the process is fossil origin. It changes, but it will not change in two years, in three years. It will change probably in 5-10 years. The only exit for us may be to use biochemical processes to generate molecules which we can use. We are working on it. Come later to it. This is a problem with the scale-up. Small volumes, yes. Big volumes, no. At the end of the day, the important piece is the whole value chain. We are looking at cradle to cradle. That means exploration. Exploration is a little bit too much. It's a raw material supply, design, and manufacturing.
The usage phase, this is an important piece where we can contribute a lot in reducing the CO₂ footprint of our customers due to efficiency gains. At the end of life, how to handle the end of life scene. This is the key element because there the story do not end. At the end of the day, the key element is to get from here back to there. This you call refining processes, reprocessing, whatever you may call it about. This is the typical way of circular economy. To make things circular, that means we are talking about design and R&D. There the European Union says we need at least finally a directive which says sustainability by design. That means you need to develop products which you can repair, not just throw it away.
We cannot repair our products, but we can formulate our products on a base which is recyclable. This is the work we are in. At the end of the day, the way to a CO₂ neutral, climate neutral, circular approach is a long way. The European Union says 2050, Germany says 2045. Is it a reality? I don't know. Under these circumstances we are in, definitely not. Today it's just to survive independent of what happens. All in the open, the industry needs to run. This takes a while until probably this materializes, but we try to develop methods and projects to come to this and to reach this target.
The key element for our products, independently from raw materials, is that we enable our product, our customers, as a solution provider for their applications, and especially when it comes to the operation, it helps a lot to be more efficient. Efficiency gain is the most prominent target in development, specification of product to improve the efficiency of the use phase, within the use phase to help the customer to develop, and to save CO₂, materials, CO₂ emissions. Self-understanding we have is that we empower our customers to perform more sustainable in using specific raw materials, in providing an efficient solution, in providing the solution which gives energy efficiency, and which provides a solution which makes it not too difficult for the customer to reuse loose materials.
We have projects ongoing where we recycle on-site and make it reusable for the customer when it comes from the end. If the customer works for an OEM, he needs to prove towards the OEM what is his footprint, and then he is going to put out a building for it. All of that helps us to bring the sustainability idea into industry and really to look into the whole value chain where we are working in. The sustainability journey of Fuchs is a long trip, long journey, because sustainability basically is not a piece of paper, it's not a colorful presentation, it's a real doing. It's a saving. It's a change in mindset.
This, especially in Europe, will take a little bit time really for the economy to understand and to really do what needs to be done to change the economy in a sustainable economy. For the time being, to take the same car, truck, to store in a battery and then new engine will not take the world. There is probably more to be done. At the end of the day, since 2021, including all affiliates and JVs, we are CO2 neutral. The production volume from say 2010 to 2021 increased by 50%. The specific waste generation has been reduced by 7%. At the end of the day, our emission is 140,000 tons. 140,000 tons sounds a lot. It's nothing.
In comparison, Germany in itself is 1,000 megatons. It's 0.1 megaton. This is our share in Germany. It's 0.1%. We have 1.7 megawatt peak in on solar power and green electricity, 52% moving forward in all plants in the world. At least for the unavoidable CO2, which we cannot avoid due to travel, trips, cars, whatever you're using, we need a certification. The certificates we are using are not something to buy CO2 certificate. It's a real project in the world for water power or other projects where we really invest into projects where people generate energy, CO2 neutral, for example. At the end of the day, it's a success, and this is throughout the whole Fuchs group, not only in Europe.
This is an important piece of our self-understanding with the whole group. The people within the Fuchs group do understand that sustainability is not only limited to Europe and some crazy European idea, but it's really an essential way forward to save what we have, to save partly the future of the next generation. The final target we have is that we are going to become gate-to-gate neutral, 2025. That means we have projects with our suppliers, with refiners end to end. You can imagine a 40 million ton primary refinery cannot be set carbon neutral. This is impossible. But what you can do is to use recycled base oils, biochemical methods, renewable raw materials to reduce the CO2 footprint.
The suppliers are going to invest into optimization of their processes to reduce their CO2 footprint. I think we are quite confident that we by 2025 to a major extent can be cradle-to-gate neutral. Partly with the compensation, to which extent needs to be seen. In 2040, we think we can manage to get net zero. Net zero means that our whole processes from cradle to cradle is CO2 neutral. That means even the waste handling and the refeed of the waste into processes to generate new and upcycled material is the target. That means through conversion of renewables, CO2 neutral raw materials and packaging, energy supply, energy management, and waste elimination. Waste elimination is important for our plants, and it's important for our customers, especially in regions which are a little bit not so developed.
Leak oil and this sort of things are a significant part of their cost, and there we can take a significant amount of CO2 generating waste. At the end of the day, 2040 is ambitious. It depends a little bit. If the world is going to change more drastically than the change today, then it's not a target anymore. For the time being, and assuming that this craziness disappears a little bit out of our world, then probably it is possible. The key element is that we need to have the supporting structures in R&D, which we are developing now, and groups for backward integration. Backward integration means that we are using biochemical methods to generate the molecules we need to have. At the end of the day, to find partners to recycle used oil into a valuable product.
Recycled base oil is existing in Germany, but the recyclers are probably recycling, and they are not providing high quality products. At the end of the day, they have the technology and the knowledge to provide high quality products, but for the time being, the willingness is not there. This is the work we are in today to say, "Fine, we need to find an industrial solution to get recycled base oils which are recycled in efficient way, carbon neutral, and giving the quality we need to supply the market with high-end products." This happens in Germany, this happens in Italy, this happens in the U.S. The circular economy, just to give you an overview what's really the three principles. The prioritization of renewable feeds. Renewable means that comes out of biochemical or photochemical processes and not competing with food.
The craziness in planting rapeseed and feeding it into fuel oil probably is not so hot for the time being. This should not take place. We have a lot of processes on the industrial scale, which are using palm oil. This is not an option. Because palm oil in the long run, in the short run, destroys the natural habitat and biodiversity. That is a nightmare for nature. So far, even these molecules we cannot use. Molecules are available out of renewable material or organic waste, real organic waste. This is in process and probably in 5-8 years, we have higher volumes available with our partners we are working with. The maximization of product utilization is the other piece to prolong the lifetime of the product. Prolong the lifetime.
One will say, "Oh, the volume is going down because the lifetime is longer. Oil change interval is longer." At the end of the day, that means higher added value for the customer. We are not selling a product. It must be understood even for us, we are not selling a product. We are selling a solution to the customer with an added value. This added value is reflected in the pricing and the margin, definitely. Supported by IR, supported by sensors, supported by what have you. All things being equal, the maximizing of product utilization, there are a lot of projects going on where we extend the lifetime by on-site filtration, by online monitoring and variable oil change intervals, or by re-additivization after the use phase. This all is a package.
The customer pays not EUR 1.50 for the gear oil. He gets 8,000 hours lifetime. This is the key element for our sales understanding, which fits perfectly into our abilities we have to offer the solution for the customer. This is true for a lot of fields. For example, metal processing oils. If you have metal processing oils, or you have seen it in your companies you are covering, partly they have metal processing oils. They need to maintain the metal processing oils. They have to buy the metal processing oils. They have to buy the tools. They have to drill the holes and so on and so forth. What they want is they want to drill a hole. What we offer is you can drill 100,000 holes with this setup.
This is what the customer wants, and it brings us the efficiency the customer needs. This is a win-win situation. To recover the used products and waste, as already explained, this is recycling or burning, which is natural material. To reuse the waste or to advertise it on site, the waste, the wasted product, then we can probably close the loop, and we reach CO₂ net zero, CO₂ neutrality, provided that the trucks are e-drive, provided that the energy they get, it seems it's CO₂ neutral generated and so on and so forth. It's a longer way, at the end of the day, we have already the right solutions for this field.
We are on the way in this field, and here it takes a little bit more time with the circular approach to close the loop, but we are convinced that we can manage that till 2040, really, to get a net zero approach for our company. Looking into our activities in the industry, this is the key element. You cannot do it alone. You need partners. You need a specific sales understanding. All what you do in each and every step, you need the reference. Always a standard where you will measure against. Sustainability is a nice word, but it's not quantified. It only says, "Yeah, I'm acting sustainable." What the hell does it mean? 10, 8, 5, 6, this must be the answer. The answer to everything is 42.
At the end of the day, standardization, measure, and set the boundaries of a CO₂ evaluation is the key to convert the industry into a real sustainable industry in finding the right direction. What we are doing in our industry environment is that within the European framework, we have set up working groups, especially defining this sort of cycle with the refiners, with the chemical industry, the UEIL members and the OEMs of the world, with our lubricant partners and competitors, and of course, the refiners, which are organized in a specific setup. This is a large working group, and it works to an extent where I must say, right, they have all the same target.
At the end of the day, we can always say end of the year, I think a real good program which we can offer to the public, to customers, to our suppliers to say, "Fine, this is the standard. Please measure against this standard." Then we have quantified target gains and to say next year is a real next year and not a fake next year. This is one piece. The other piece is social sustainability at Fuchs. Social sustainability is our heartbeat. If you look into our company, into our self-understanding how the company developed, the familiarity of the company is reflected in the self-understanding of all our employees. This, the employees find we are on our own supporting projects for zero hunger, quality education, sustainable cities and communities especially, good health and well-being, no poverty.
These are the projects for the SDG goals where we play in. If you count it, you count 159 projects. The real number of projects is 151 because we have some projects counting in for two SDG goals. At the end of the day we have 44 projects, 22%, counting into sustainable goals which are not part of our target goals. The left ones are the important ones, and it is nice to see it's coming out of the organization, folks, to say, "Fine, we are willing to support. We have the social responsibility." We take this responsibility and do something wherever we can. This is my favorite. The sustainability ratings and ranking.
Especially here in the different rating things, CDP, ISS, MSCI, EcoVadis, they take a rating and find this is the knowledge we have taken from the companies out of publications in not applying standards. Partly, these ratings are a little bit poisoned by non-existing standards, but let's say more or less rough evaluations. We have seen significant improvements because not we improved our behavior, but we improved our reporting. So far this is honored by an increase in the rating or net rating. The one with the CDP, this is the most climate thing, yeah. You need to put in really CO2 emissions step by step in each and every corner of the company. This, I think, gives the best overview, CDP is a demanding exercise.
It needs a lot of capacity to fill out the number of questions. At the end of the day, all overall, depending upon the type of rating, the type of format we are reporting in or where we are evaluated shows an increase and more and more and step by step, I think we come to grips that we get the full transparency into the public, especially when it comes to everybody knowing the ESG standardization. We are now near the GRI standardization, and I think within the next two to three years we fulfill the full GRI standard. Coming to the other aspect. What does sustainability mean? Sustainability means at the end of the day, to guarantee and not to use irreversible resources, and not to damage habitats, biodiversity and the social set of our living.
To keep what we have and to save it for further generations. This all needs to be reflected to the outside. The reflection to the outside is only one name and no corporate name. Petrolub. Lube is okay, Petro is a nightmare. Everybody says, "Petro, oh, they are dealing with heating oil and this and that and that." This is our problem per se. Everybody thinks we are dealing with heating oil, per se there is a little lubrication behind. We are functionally providing solution to customers. Without us, the German industry would have a standstill. Independently what you want, and you have heard it in mechanical, medical, wherever you can think about it, has nothing to do with heating oil, nothing to do with some base oils. It's. We are using molecules and time really has no interest wherever it comes from.
It needs to be sustainable. It needs to be a carbon chain, and then we lose it. We are looking for different sources of this carbon change. So far Petro is a misleading name. So far we think, okay, probably it's better to move away from this Petro excess and say, "We are Fuchs. We are Fuchs SE." Fuchs SE providing solutions as explained. Fuchs reflects the self-understanding of the company, a family-owned company with a character which really drives the culture of the company and makes the success we have had in the past and which we will have in the future. The variable compensation, it fits with the actually aim and the performance sector and the individual share. This is explained in extent, already explained the performance sector.
This is probably a thing which one may link to a certain extent to a sustainability thing, but this needs to be discussed at a later stage. The important part is that the intention is really to go away from the petrol and to show to the public, even through the name, that we have nothing to do with heating oil and benzene. That we have to do something with high-tech and high technology. This was the say, and now I will show you a short video about our sustainability efforts and how we understand sustainability. It gives you an impression, and I think it's a very nice impression what we too think about sustainability and what our view is on sustainability.
We believe in a future in which sustainability sits at the heart of our vision.
Whoa. Did he just say vision? That's so 2010. The future is now. How about a little more reality? We're standing on the roof of our Fuchs production facility here in Spain. All solar panels, and that's just a taste of it. We're converting our production sites to use green energy whenever possible. Carbon neutral since 2020. Yep, it's all real. We increasingly collaborate with suppliers who share the same goal. Working toward a fully sustainable supply chain, all the way from raw materials to production to you. Over a little bit, guys. Move it over. Perfect. In 2025, we'll be there. Speaking of raw materials, how can we use them more sustainably? Hmm. They're researching stuff like recycling waste into raw material or material from renewable resources. All top-notch scientists. Great.
Even more crucial than getting Fuchs' sustainability on track, empowering our customers to perform more sustainably. With lubricants and thermal fluids that go the extra mile. Thank you.
This is where our CEO, Stefan Fuchs, likes to take his afternoon snack.
Let's go.
We are actually working with some data at the moment.
Oh, gentlemen.
Hi.
Hi.
Hey, Marcus. I really love those pipes.
Yeah.
Did you know that we make lubricants out of pipeline?
No, I didn't.
Actually, that's putting circular logic into practice.
Lubricants and heavy-duty action. With our premium hydraulic liquids, during 8,000 hours of operation, this excavator saves 30 tons of CO2. That's massive.
Oh, yeah. Okay. Sustainability is more than a vision at Fuchs. It's a reality. Imagine how much we could save if we used premium lubricants by Fuchs in our machines, in our factories, in our cars and railways, and of course, in our everyday lives. Fuchs, moving your world by empowering you to perform more sustainably. For real.
That is it. Thank you very much for listening, and thank you very much for your attendance.
All right, I think we are complete. Let's move on to the next session. The next session done by Ralph and myself is an exciting one. It's about the mobility transition. When we put the presentation together, we thought the best thing to kick off the session is to start with a market trend analysis to show you where the lubricant market, the automotive lubricant market, is heading based on the technology changes we see in the marketplace. The first slide shows by region where new vehicle sales, passenger cars and light vehicles will be most likely until 2040. An outlook over the next 18 years.
The first finding on that slide is that if you compare the three regions, Europe, U.S., and China, the new vehicle sales in China will be bigger, with 35 million per year, than Europe and the United States combined. That's the first big finding we have on that slide. Really, massive growth in China.
In 2021, China had new vehicle sales, passenger cars and light vehicles, of around 26 million. That's an additional 9 million vehicles per year. There's a couple of assumptions in that outlook, so it's also an assumption that China does not limit or cap new vehicle sales for passenger cars and light vehicles, but that's a massive growth over there. The second message on that slide is that we really need to look at different regions because technology will develop differently. On the left side, you have Europe. In Europe, there will be no more combustion engines in new vehicles in the year 2040. Our assumption, and this model and these numbers have been generated together with FEV Consulting. That's an institute closely associated with RWTH Aachen University.
That scenario shows that in the year 2040, 74% of the new vehicles sold in Europe will be battery electric vehicles, and 26% will be driven by hydrogen, with the fuel cell being the dominating concept. That's really what that model says. There's a couple of assumptions, of course. One assumption is that hydrogen can be manufactured based on renewable energy. Also, that the charging infrastructure is there to support it. This is all part of that model. If you look at China and the United States, the situation looks quite different. In China, half of the new passenger cars and light vehicles sold will most likely still have a combustion engine. That's on top of the Chinese bar, it's the red and the gray parts. These are hybrid concepts that still have a combustion engine.
In the United States, between 55% and 60% of the vehicles sold will still have a combustion engine. We only talk about new vehicles, about passenger cars and light vehicles. If we now zoom in into Europe, we also see that we talk about a so-called accelerated transformation. That means a lot of the change is happening after the year 2030, the closer we get to the year 2035-2040. We also know about the political discussions in Europe about banning combustion engines starting 2035. We'll see what will be negotiated with the countries. Really, the scenario shows there will be an acceleration starting the year 2030, based also on the emission targets that are out there and on technological reality. Why did I start with passenger cars and also light-duty vehicles?
Because that's the primary target for e-mobility, and we see that with all the customer conversations we have and with all the projects. In heavy-duty applications and also in stationary engines, the combustion engine will still be there and will survive for much longer. If you talk about stationary engines, so what do I mean? It's for example, engines that are used in power plants that are natural gas. It's also engines that are used to pump liquefied gas, which is right now a big discussion, you know, to supply Europe in the future into these vessels. There will be a lot of stationary engines out there, and this market will also still be growing and very slow change away from combustion engines. In long-haul and off-road applications, a little more extreme picture.
You know, that's where our customers tell us that there will be a long-term future for combustion engines in these applications, so that will remain. What does that mean for the lubricant demand in China, in the U.S., and Europe? Let's start with China. The left part I don't need to explain anymore. New vehicle sales in year 2040 will be roughly 50-50 between the ones that will have a combustion engine and the ones that don't have an combustion engine anymore. Now for the lubricant demand, the total car population is relevant. The cars in operation, the cars on the road. What we see for China is that there will be a massive growth of the car population.
The car population today is roughly 300 million cars, and it's going to increase to 450 million cars, which means that's an increase of 50% in cars in operation. We also see that in the year 2040, just over 80% of these cars will still have a combustion engine. In other words, the number of combustion engines on the road in China is going to grow tremendously. There is not a market shrinkage over the next 18 years. There's a massive growth in combustion engines. There's also massive growth in vehicles with no combustion engine, but still the dominating factor is really that. Based on that, we see the automotive lubricants in demand in China growing, and we see it growing substantially. We think it'll be roughly 800 tons, coming from 3.5 million tons today.
It will be roughly a 4.3 million ton market. There will be efficiency gains, so that tempers the growth a little bit, but it will be 800,000 tons of additional lubricants, automotive lubricants needed in China. Switching to Europe, the picture looks quite different. We see here that in, I think, the year 2035, because of the political discussions, it will be roughly 25-75. 25% of the cars will still have combustion engine of new cars sold, 75% not. The total car population is not gonna grow, and that's the big difference to China. It will remain roughly at 242 million vehicles in operation. The share of vehicles with a combustion engine in the year 2040 will roughly be three-quarters. 74% of the cars will still have a combustion engine.
This is only passenger cars and light duty vehicles. 50% of the automotive market in Europe is heavy duty, and we think that this market is gonna be fairly stable. With this scenario, it's our assumption that the lubricant market in Europe is gonna shrink substantially by roughly 700,000 tons by the year 2040. This is driven by a stable car population on the road and by increased share of cars with no combustion engine anymore. What about the United States? In the United States, and I think Lutz mentioned it earlier, the path is a little bit unclear, you know, where we are heading. We know the big announcement of Tesla and also the big three to really go towards electrification, and there will be for sure more electric vehicles on the street.
At the same time, the U.S. is more similar to China. We'll also see a car population that will be growing, and the much bigger impact in the United States will be efficiency gains. Now, in the U.S., I'm not sure how many of you are on a regular basis in the US, but you still have people that change their oil, their engine oil, for example, every 3,000 miles. It's a reality there. If you tell them in Europe, "I don't do that before two years or 25,000 kilometers," they don't believe you. There is long ways to go, and that will actually drive the lubricant demand for automotive lubricants down, but that's nothing new. Dagmar has shown it before when she showed the global lubricant market. That's just a continuation of what's happening.
What's also happening is that the technology is trending in our direction because we don't sell the oil that's changed every 3,000 miles. We sell the oil that's changed every 20, 25, or 30 thousand miles. That's really the dominating factor in the U.S. If we sum that all up, and we see a rapidly growing automotive lubricant demand in China over the next years, and we talk more than 10 years, we see a shrinking demand in Europe, and we see a high tech demand coming up or higher tech demand coming up in the United States. That's just the baseline scenario we need to work with, and I think that also delivers some clarification on where the lubricant market is heading.
Taking a different perspective on the market and focusing on e-mobility, we are extremely excited about e-mobility and e-mobility applications. Because what we know today is more than what we knew when we met the last time in 2019 in Kaiserslautern. We knew that e-mobility will be coming and maybe also a little faster than people back then thought, but we did not know so much about the technology that's needed on the lubricant side. Now we know more. We know that there is a high demand for high-end lubricants and for very specialized applications also on the fluid side. What you see here is some market data that McKinsey published in 2020, and it's about the market size for fluids, for electric driveline fluids, EDF, and also for thermal fluids.
Thermal fluids are used to cool components in the battery electric vehicle. Like, for example, to cool the battery, but also to cool other electronic elements are much higher than what EV manufacturers thought couple of years ago. It's specialized applications. It's like very high cleanliness requirements, very special viscosity requirements. It's really, in the end, a specialty market, which is very much in favor to our business model. We also know that there will be an aftermarket coming up because these thermal fluids will most likely also be changed after 60,000 kilometers or something around that. We also know today that gearboxes won't go away. That was also indicated in 2016, 2017 when people said, "Oh, as electrified cars, there will be no more gearboxes." It's not going to happen.
We know for sure that for premium cars and for sports cars, but maybe later on also for the mass market, there will be gearboxes. Which means there's also a very substantial demand for these gear fluids and for the electric driveline fluids. In a way, and this is really now also new because we have never quantified the market potential, there is a big potential for us. To back this information, if we look at our project pipeline today, we have over 100 fluid projects for battery electric vehicles right now with a value of over a quarter billion EUR in our pipeline. That shows that the potential is there and that the potential is also growing, and that a large part of that market is accessible for us.
That slide, we say 50%, but we believe this is a very conservative estimate. Overall, very attractive for us, e-mobility. Also, in the meantime, through our project work and also through some work in the key countries, we are definitely perceived as a front runner on e-mobility, and we believe that this will be a massive upside potential for the Fuchs Group in the years to come. With that, I hand over to Ralph.
Yeah, thank you, Timo. Just building on what Timo said on our long-term market expectations with regards to car sales, which means new registrations, the car population, but also with regards to the market potential connected to the e-trikes and the e-cars in the field of passenger cars. The question is, well, where is the market? What is it? I think you heard about our BluEV technology and that this shows the market. It's not about the e-car, it's about the e-specific applications in an e-car. We were talking in the breaks that I can't remember, you know, how much sales do we do with e-mobility?
Well, that's difficult to say because we still have all the fluids connected to the car which are not e-specific, like, a grease for a steering, engine or for a steering wheel or for a brake. There you only see the e-specific applications where we are active in. You see red ones and you see blue ones. The blue ones are basically application and lubrication points where the products remains in the car, in the part, in the component, and the red ones are during the process of manufacturing of parts and components which are then built in the e-car. We talk about the functions of the lubricant connected to e-mobility, and they are pretty common and known to us. It's about the reduction of friction, it's about cooling, and it's about protecting parts and components.
We are basically ready to work on all these fields. Timo mentioned the number of projects we are running and these number of projects represent a huge sales potential for us. You can see also that was part of many discussions during the break. There are new applications, you know, there are cold forming products and forming applications which are not new to us, but there are connector greases for electric connections, for example. This is new to us. Also new markets are appearing, with regards to the e-specific applications in a car. Later on, I'm also going to talk about electrolytes connected to our startup E-Lyte, and just to put that into perspective with regards to the battery technology.
So far, the number of cases that we work on and that we believe we can go and exploit the market potential is more than just quantifying the $1.5 billion in total market demand. Here, coming back to the transmission part of our e-mobility. Also that one, it's a complex oil. It's not a one transmission oil. There are different technical requirements you can find on the left side. There's protection, performance, cooling and friction control. Also the way how fluids are developed are different depending on the technical specification coming from the customers.
Also here, our research and development, our, let's say prospects and business development is very heterogeneous, very broad and Fuchs remains to be a partner of the car industry and also of new suppliers and customers for us to the car industry for the transmission fluid in e-cars. We work on pure water containing products. We call it vision fluids. Non-oil containing products which has both lubricating capabilities but also cooling capabilities. This is just to show where is the market and it's not always easy to say, "This is the size of our business with e-" because that's direct and indirect connected to hybrids and full electric vehicles. Now, talking about our small equity share we put in E-Lyte.
I would like to start with a quote from one of the founders of E-Lyte saying that electrolytes are performance fluids, and they are the heartbeat of the battery, which means energy transport. What does it mean? The electrolyte is a liquid. I think in talking about E-Lyte, it's about liquid electrolytes and the function of the electrolyte is basically to get the energy from A to B inside the battery. Now you can ask yourself, why would that be an investment case? Why is that an investment case per se, electrolytes? Why could that be a good investment case for Fuchs? I have put in here, you can see a few elements why this could make sense.
I mean, I think it's fair to say that we have at the moment huge investments going on in Europe in order to bring the battery industry to Europe. The full mobility transformation won't take place just importing batteries and all battery type technologies from Asia to Europe. There will be a new industry coming up in Europe. There are massive amounts which are planned at the moment to build battery industry in Europe. Such a new market also offers niche applications, offers niche products, and that's exactly where E-Lyte is active and that's exactly where we want to be active. Electrolytes are always considered a bit commodity. Might be true, but not for us. Because there is a market for high performance electrolytes, and that is very much what we were looking for.
Therefore, there is the investment case to invest in electrolytes. Furthermore, now talking about us as a company, I think for us it's also the access to a new market, which is somehow this high flying fluid for e-cars through the electrolytes. For us it opens up a technology and a market we have not been active so far. At the same time, we can offer many, many elements to be successful in this market E-Lyte cannot provide. That combination between new market entry and our expertise we have, I deeply believe was a good fit in order to go to that equity share of 28.4%, I think, in that very small company.
Talking about electrolytes, I think it's also important to say and to emphasize that we are not talking car, e-cars only. We talk about battery technology. The battery technology is not only for e-cars. You find here some applications where E-Lyte wants to be active, and they also have projects in, let's say, on their project list and also they are working actively, which is not only these, right? It's also drones, for example, but also power tools, consumer electronics, communication tools. All of that requires high performance electrolytes where we can be active, which is not only the theme of BEV in terms of a passenger car. Now, I think that's also important to mention. And on the next chart you see the logic behind joint venture.
On the left side, you find our expertise, why we believe we should be part of that joint venture, and the right side is E-Lyte brings to the party, E-Lyte brings to the party. I think we don't have at the moment the access to the industry, nor do we have a network for the electrolyte industry. At the moment, we still don't have technical know-how. The E-Lyte company, I mean, it's a two handful of chemists basically, who do nothing else than working on electrolytes and battery technology. There we get access to technical know-how. We, on the other hand, know how to do it. We know how to do the product safety, the procurement, the raw material supply, the manufacturing.
I mean, to do such type of business, to convert projects into business, I think that we know very well. That was the reason why I think we believe there's a very good fit. On the right side, we you see the next steps. We invest now. The money we gave into that company will be spent in order to build the plant. That plant will be built in Kaiserslautern in Germany. There's a quite potential timetable behind. We would like end of the year, beginning of next year, we would like to manufacture in a pilot plant the first electrolytes in the industrial space. Then I think one year later we should see the SOP for a large volume manufacturing for electrolytes.
Therefore, I think we have a lot to benefit from that joint venture and that's also an attractive market to us. I think, Lutz, that was all I would like to say on the e-mobility change and the fascinating world of the new applications connected to e-mobility and also to E-Lyte. I would like to hand over or hand back to you. Thank you very much.
All right. Okay. As promised in the very beginning, slide number 96. You have been very patient today. That's the final slide, but just one more summary of the 6 key messages. I hope you find them all during the presentation. First of all, lubricants. We love our unique business model, and you've seen, you know, from the various applications that it's quite interesting and geared towards the future as being an innovation enabler for our customers by our tailor-made solutions and to help them with their technology transformation. I think at the end, from Timo, with the market, and from Ralph on the application on the e-mobility, we see the mobility change as a net gain for Fuchs, you know. It's a very interesting field for us.
Sustainability for Lutz was a tough spot after lunch, but I think very interesting presentation. You could also see us helping our customers to operate more sustainable if the lubricants provide specific help for the CO2 footprint from them. It's very interesting for us. Digitalization from Dagmar, mainly talking about services and how the customers perceive dealing with Fuchs. At the end, the growth we were waiting for a long time. I think we have a quite nice ambitious target ahead of us. We have detailed planning behind us that is fundamentally based on segmentation. All our colleagues work very hard, and we look forward to exploit it in the coming years. That sums it up, and now we are more than happy to have five of us to take your questions and go through the Q&A. Thanks for your attention, and we go from there.
Okay. Shall we start here?
Hi, this is Sam Perry from Credit Suisse. Just on the sort of CapEx program that went to 2019, and then you've spoken about four years of difficulties post then in terms of volatility. If you were to sort of fill that capacity that you've added, what would be the operating leverage in the business and how much does that help you get towards your targets?
Well, number one, our entire CapEx project was not just to increase capacity. Unconditionally reliable also means we substituted older plants by new and more efficient plants. Just think about the new site in Australia. We had the one project start in Sweden, where we built a plant for the acquisition, where we specifically did not want to buy the Statoil site. We did capacity increases on the polyurea grease plant in Kaiserslautern and on our specialty grease plant in Chicago. Those are the two tougher parts because you need a couple of years to get all our customers, you know, for lifetime fillings, for tool clamp applications with regards to processes, localized raw materials. It takes years. We are well on our way.
Then we increased capacity mainly in China, but also in some of our European plants, but also in the United States. For us, it helped us to grow over the last couple of years and will further grow us in the future. We are not so much stuck, you know, with the capacity question, you know. Our deal is the complexity we are dealing with and to be unconditionally reliable for our customers. That was one massive wave of CapEx for ourselves, but we also have now everything state-of-the-art manufacturing laboratories and offices. That's what we wanted to clean up one time.
Okay. I guess a sort of related question then would be, if you're sort of moving towards the specialty part where it matters less around capacity, and you've stepped away from the margin target, but you've kept the absolute target, where do you think that margins would go? Where would you be happy for them to be at, to get to EUR 500 million?
We only stepped away from the 15% due to the massive inflation. Dagmar was showing you one side of 20% sales price increases during the year 2021. Don't forget, impact was at the end of the third quarter and in the fourth quarter. In the full year number, only one part was inflated, so you get the full impact this year. Plus we expect another increase in the sales
Mm-hmm.
You talk, if you just add it, of about 40% plus. If you put that on the sales price, you still want to make 15%, then, you know, finally the world is a pony farm. That's not what I believe. I've never seen in 26 years such an inflation. Therefore, that question for me, with the 15%, you know, bear in mind. The EUR 500 million is much more important. That is completely built on segmentation, but also on new markets like the electrolytes, like on the service parts for digitalization. We have a full business plan. The 15% in times of such a high inflation is just something promising you would be pie in the sky for the next couple of years. We don't know how long that goes.
Thanks very much.
Thank you. Good afternoon. Sebastian Bray of Berenberg Bank. Thank you for your hospitality. I had a couple of questions, primarily on e-mobility. The first one is there a competition between keeping CapEx at relatively low levels, maybe EUR 1 million per annum by historical standards relevant to depreciation, and the ambition to gain sales and take share in e-mobility applications? I think a EUR 250 million sales pipeline was mentioned earlier. Another way of pushing this question is, to what extent is existing production interchangeable with new e-mobility applications? My second question is on 50% of the market for eDrive fluids and cooling fluids being identified as relevant for Fuchs. Why is the other 50% not relevant? A final one on inputs.
I would refer to Lutz's words earlier on changing inputs for net zero. If it's not oil seed or palm oil, what is it that's going to be used as an input in future? Thank you.
Maybe we take the three questions at a time, and I can answer half of the first question, then I hand over to Lutz with regard to transferring production from regular gear oils to the EDF fluids. When you look at our depreciation, we come from a period of time, Dagmar, we had about EUR 30 million a year, 35, 40 million EUR a year. Now we have depreciation of EUR 80 million a year. If we say, you know, CapEx will be on the level of depreciation, it allows for projects of 5, 10, 50 million EUR a year. It's not all just pipes, pumps, cars, and computers. It does not allow for a 40 million EUR plant. For 80 million EUR, we can invest quite some number of projects, so we continue to believe that's good enough.
I think, Lutz, when we look today for our gear oils, I'm not a chemist. Some look like tap water because they are very thin already, and I can't expect that making those EDF fluids is a completely different manufacturing technique. If you would come here and tell us a little bit.
Question to, let's say, additional fluids where we haven't before. The EDF fluids have specific requirements. Let's say probably it needs to be dry, needs to be cleaner. These sort of things, we can handle because this is a usual specification which we need to fulfill in other parts of our product line. So far it's not a new technology. It requires not a new process, adapted processes, and our plants can handle it. This is not a significant problem. The electric fluids, it's a similar thing. They need to be dry and clean. Dry and clean, this is a situation and a specification which we can fulfill with our units, with most of the units. So far, this is not a significant problem or obstacle to change from A to B.
Look, maybe the question then Timo for the 50% of.
If inaudible question could be repeated, I didn't get it due to the bad connection.
When you were presenting earlier, you mentioned the disadvantages of palm oil and also the disadvantages of growing oil seeds for using as a feedstock for base oil generation. If it's not those that are going to be used in future and taking petrochemicals out of the ground for whatever reason becomes more difficult, what to use instead?
You mean the substitution for palm oil and/or fossil fuel?
What is going to be the source of your base oil in the future if not?
At the end of the day, the source of the base is always can be organic waste. It's basically each and every type of organic waste. We don't have the units, but I think with the partnerships we are building up, we can, let's say, develop an industry which really uses the base oil, the organic waste to generate base oil. If enough organic waste available, also use partly, I would say 10%-15% to replace through biochemical processes. We use algae or bacteria to really generate molecules which we are going to use for substitution of petrochemical primary products for our industry, this is a real challenge. It's a much more greater challenge for the rest of the industry not to get petrochemical products. Anyhow, the substitution till 2040 from our point of view is possible with recycled material, reprocessed material and organic waste processed material and biochemical processes.
Yeah. The next question was about, you know, why only 50% relevant for us with regards to the market for e-fluids. This was based on the assumption that for some parts of the market it will be easier to find solutions and therefore there will be big competition also more focused on price. Whereas we want to pick the 50% that are more demanding, which fit very well to our specialty strategy and which does offer a nice growth potential for us also with regards to profitability. It's more like the more attractive part of the market we wanna go for, and that's why we decided it's only half of the totally available market.
Oliver Schwarz, M.M. Warburg. I have just two questions, please. Firstly, looking back at your slide 83, where you showed the potential of the EV fluid market potential growing up to EUR 60 billion. Looking at the 2025 number on that chart, that would resemble, let's say, EUR 1 billion sales, 50% of that, as we just learned, addressable for us. Could you elaborate how much of that sales wise, but more likely EPS wise, is baked into your 2025 target? Is that presumed to be of, let's say, equal, let's say margin wise, equal profitability as the existing business or is there a ramp up phase where that business needs to be grown and will be less profitable and profitability kicking in later? That would be my first question.
The second question is when learning about what we see as the dispersion of combustion engines by the year 2040, regionally, it seems like as you say that Europe will be mostly combustion engine free. Other regions will be growing and declining at the same time. So basically, what does that do to your production setups, where your sites are located? Today, only very few sites are located in China and also North America, compared to the number of sites you have here in Europe. Will that have, let's say, a significant impact on how your sites are set up by the year 2040? Thank you.
I do the first one, which was pretty much asking about the profitability for these fluids required for the e application. Well, if you look at our markets and also new technologies, it's usually not the pattern that you develop new products and initially they have a lower profitability than the old ones. Usually when new technology comes up and you develop customized solutions and you're also a little bit ahead of competition, you usually see also profitability above average. That would be our assumption also for the products we sell to the e-mobility industry. It's not a low profitability, and then we go up over time.
It's more we start with a very healthy profitability, which might be also a little bit above average. That's our assumption on that one. Yeah, I don't think we have something broken it down that in such a granular way, but it's certainly a substantial part. I cannot give you a million number.
The other question was, with regard to our manufacturing or production side, depending on the development of, certain product group. I think that's primarily a question to Europe. You have seen in one of the charts, Dagmar has shown, what the profit contributors are coming from the EMEA region. There are some elements which concern manufacturing and logistics excellence. Yes, we do the work, and we work already today, on two elements. One element is that we would like to further specialize our plants throughout, the EMEA region. Already today, not all the plants manufacture all the products. I think there is today already a certain degree of specialization, and that will further be the case.
In line with that, we also take into account our expectation on certain product groups. What would be the manufacturing capacity we need per product group? Having that in mind, we will streamline our production landscape in Europe according to our expectations.
Hi. Matthew from America. Couple of questions, please. The first one is definitely around the processing process. If I understand it correctly, you've created these 200 cells or so, and the organization has come up with a lot of ideas of how to take the company and the business forward and generate growth. How do you risk that? I'm inferring from the pipe act you announced that you're pretty confident that you can do these numbers you're talking about. But how do we ensure that the organization hasn't been overly optimistic in its projections? The second question, maybe to Dagmar, is around the profit bridge. On the slide you showed, I forget which number, but you showed it from a geographic standpoint, Asia being a loss and then you.
Conceptually, why do you think profits grow twice as fast as revenue? Are there listed items there? Is that mix? Is that operational leverage? Why do we get, say, profit, EBITDA to profit growing faster than top line over the coming years?
First of all, I don't think that our people have been overoptimistic because we factored in certain declines. We also looked at the segmentation, and we challenged our colleagues. That's the number we published to you. I don't think that this is, for us, pie in the sky and overly optimistic. It's not that we just add up whatever came from the bases and show it to you. I don't think it's overly optimistic.
The question about the profit bridge and why profit should grow much faster than top line, well, maybe it's a mistake or I didn't explain it in the right way. Because on the earnings bridge, yes, we took an absolute number. We stepped back or stepped away just for that time from an EBIT margin. Therefore, our target for top line is a target which is there beyond inflation. We don't know today what will be the starting point. Therefore, I don't know today what kind of sales number we will see in 2025. I would love to, but I don't know.
I understand why you didn't have a percentage margin target. I get that. Your gap from the EUR 360 or so that we were to the EUR 500 is the assumption within that the drop-through margin on volume growth is very high. You can fill up capacity, you've built the mix is good, productivity is better.
Well, Dagmar is saying that, at least in my experience, the last 26 years, we've never seen such an inflation. If you take two years in a row with +20% in sales price, we can't tell you whether we profit EUR 4 billion, EUR 4.5 billion, or EUR 5 billion. That's the only reason why I would say we throw overboard, Christian. We are just not able today to tell you what our EBIT margin will be because we have never experienced such inflation. We fight every day to get our price increases in a timely manner, and I think we've done pretty well so far.
All our people and all the competition is there to catch all of the increase, which is not good enough because we need to pay for the capital, you know, which we find in increased receivables and then inventory. Therefore, we have not told you any sales number today for 2025. We've only told you a profit number.
Yeah. Thank you. Ivan Linzer at Commerzbank. Can you talk a little bit more about your Fluid Vision? A market for water-based fluids, how fast the development in terms of functionality and how the performance eventually match with oil-based fluids and what's your general market vision here? Thank you.
With our vision fluids, we develop our water-based fluids. We have a number of water-based fluids and water-based other products. Water-based doesn't mean clear water. It means part of it is water. But the water-based fluids are good efficiency. They are sustainable due to the water content. At the end of the day, the problem is the handling. Water evaporates. You need to take care of the water, for the bearings and this and that. At the end of the day, we have projects ongoing, and we think that water-based fluids may be in this sort of application or other applications in hydraulics is already in a long-term application. In a specific gear application, we think that water-based fluids will become a major significant part of our sustainable product future.
It's limited due to the fact water evaporates, but at the end of the day, it covers a lot of applications with low temp, and where you can apply this sort of fluids. The formulation is quite tricky, but this is our name of the game.
Marcus Herrmann from DZ Bank. A question regarding e-mobility once again. 2035 marks the estimated addressable market $1.5 billion. What would you see as your natural market share in the competitive landscape?
That's actually a question that's not so easy to answer, you know, because there's, again, new customers, new requirements, also new competitors that are active in that field. We are for sure striving for a double-digit market share there. Then we need to see where that brings us. We are confident that we can capture a substantial market share on the demand for e-fluids.
What kind of markets do you have in similar requirements or similar sub-segments of the market?
Well, it really depends, you know. I mean, as you know, we have so many different applications, you know, we certainly also have a double-digit market share, for example, in other gear oils and sub-structure and fishing fluids and stuff. It's something which we believe is achievable for us and which we have shown.
How high is the level today of revenue linked to combustion engines in automotive?
That's a little difficult to answer, Stefan, I think.
You can say more or less when you look at our product portfolio, and this is the difficult part. We showed you today we work in regions, and we work in divisions, which is applications. We show you in the annual report is the product portfolio. When we talk about automotive, can be a 100-ton dumper in a mining, which will never be electrified. More or less, you can say around about half is related to the powertrain of our automotive business. If you have a stationary engine in Saudi Arabia or for biogas, you know, it has nothing to do with the regular combustion engine of passenger cars and light vehicles where we are not so strong in.
We are mainly in the gear oil part, shock absorbers, and greases. More or less, you can say half of the automotive business directly linked with the powertrain. As you've seen from the market data, what Timo has shown you that it's not the amount of cars manufactured but of the car population. When you look at China, you can make the same example in India or in Africa. We are pretty confident moving forward, being in the heavy-duty market and participating in the market both in those countries that it's not a black and white scenario where all the combustion engines will disappear.
I know. Now it's working. Okay. Martin Roediger from Kepler Cheuvreux. First question is on the organizational structure and the market segmentation. You have implemented this strategy already more than three years ago. Can you provide an example where you can show how successful this implementation has been in the last three years? In general, when you add all the actions for market segmentation in this organizational structure, how much do these actions contribute to extra sales or extra earnings compared to the previous strategies, so that we can see how successful this new strategy is?
Thanks. I think it's an important question. We look at a monthly basis. We have already done budget. We work, for example, on our larger divisions, all the time on budget since many, many years. Segments is just the divisions broken down. We have the segment. We can have a look each month how they do to previous year, how they do to budget. Rest assured, if we invest in 12 dedicated sales coordinators worldwide, they pay off. We don't want to show you good numbers or big numbers because we are a listed company. We have competitors who just jump in that information. Therefore, we don't wanna make those examples. Rest assured, the EUR 500 million we don't put out, you know, without a whole strategy behind and without checking the performance on a monthly basis.
The second question is a little bit into sustainability. I think you certainly also check on a daily or weekly basis your supplier base and several of your suppliers certainly are a bit insecure if they really get sufficient natural gas for their production. I would like to understand, when you talk with your suppliers, where is your biggest fear right now, especially for your German hubs and the production there, for availability of your raw materials, your input materials from key suppliers, be it Linde first, or be it oil companies, or be it a BASF or whatever. That we can get a bit of a color. Are you more concerned about different kinds of base oils or different additives instead?
Maybe also the thoughts that everybody's right right now trying to get around and reduce natural gas need and replace it by other energy sources. Maybe you can give also a color here. What is your feedback like your suppliers can solve the problem?
I can tell you a story, but what the people say, if the gas is out, the industry is dead. We're done. There is no room, no alternative. If you listen to our friends over the Rhine, if there is no gas, they are dead. Same is true for each and every company doing polymers, something like that. The moment the gas is out, industry is gone. This is not a problem for us because we have so many alternative suppliers coming out of the U.S., out of other parts of the world, where we can substitute partly. Especially in the landscape of the petrochemical industry, a lot of people are now changing from gas to oil. This changes completely the demand product slate ratio of the refineries operating in Europe.
It's a complete disorder of the whole value chain. At the end of the day, you can sit on the table and jump up and down. If the gas supply out of Russia stops tomorrow, then we have a significant problem in Europe. It starts with pharmaceuticals, with hygiene articles, with everything you think is yogurt makers, what have you. Nothing will happen. This is a clear message from the supplier. The good news is, the Russians cannot stop the energy of the gas supply due to the risk that the gas supply will then be cut. You cannot close the gas. Gas source is impossible. If you close it completely, it's dead. So far at least, it will be a difficult time.
For the time being, the supply is there, partly we substitute by renewables or by organic waste or plastics or something like that. This is to a certain extent possible. For the time being, we are carrying a significant inventory, and we are not just carrying a significant inventory because we are bad planners, but we are looking to the future and say there is a risk. For us, it's better to carry a high inventory and not losing customers than to reduce the inventory and say we save a little bit net operating current capital, and then we cannot supply the customer. At the end of the day, for the time being, the supply is safe. The European supply has, for the time being, no clear substitute.
Yes, it hardly can substitute for naphtha, but not fully. At the end of the day, this would be a catastrophe for the German industry. No doubt about it. We are safe more or less, but I can guarantee you if BASF stops operating, the rest of the industry in Germany will be hit as well. It's no doubt about it. We are in a situation in Europe, not related to our industry and our company, which we haven't seen before. It's really riding on a knife-edge, and one can only hope that it doesn't come true, that they close the valve at the end of the day. Partly we are covered. The base oils are there. This is a pure base oil-driven industry. This is not a big thing.
I mean, the synthetic ones are safe and clean. Some polymers may be short. For us, it would be a harmful thing, but for our portfolio, it will not kill us immediately, but the rest of the industry will be hit significantly. At the end of the day, we probably can supply, but the customers will have to remodel. This is the answer.
For our own plants, a little detail we had, I think all three plants in Europe, we switched from oil to gas and now switched back to combi oil and gas. It cost about EUR one and a half million for the three plants, so it's not massive. It's rather how long it takes to get, you know, the spare parts and
Hi, this is Leah Patrick from Bank of America. I have two questions, please. My first is on e-mobility. I want to understand how you classify or define e-mobility related business. One of the slides, you had a 50% share approximately in America and China of PHEV as well as BEV. Say it is 50% worth of a pure BEV because OEMs want to streamline platforms. How does that impact your addressable markets? In other words, what is the lubricant content of a PHEV versus a pure BEV? This is my first question.
Can you repeat the question without the mic because we get an echo here. Just can you read it down here? If you just repeat one more time.
[audio distortion]
For us, mobility is battery-driven. Each hybrid thing is internal combustion. This is how we count if we say it's 40% or 60% BEV or e-mobility, it's pure battery-driven cars. The e-mobility or the hybrid ones, anyhow, it's really a questionable concept, having two drivetrains in one car. At the end of the day, this is good for us because you double the demand for specific lubricants for things, and so the demand for a car, I mean, for a hybrid car, maybe a full hybrid or mild hybrid is higher than in a normal internal combustion engine because you basically run two drivetrains in the car.
This is good, but we consider it as a simple internal combustion engine, not evaluating the number of mild or full hybrids in the car population with the disadvantage to our prognosis in the long run is the conservative side. So far, we consider everything hybrid is internal combustion, traditional, and e-mobility is pure battery-driven. Probably a little bit hard fuel cell, but fuel cell is probably not so much an option for passenger cars and really suitable for the conditions around it. Anyway.
This only is true for the electric drivetrain and the cooling fluids. For the case, we cannot distinguish, you know, whether a windshield wiper or a sunroof or steering wheel goes into a combustion engine car or in a Tesla or anything else. Cases, safe to us, speed adjustment, lighting systems, you know.
[audio distortion]
First of all, the competition landscape. Yes, and CATL, the big ones doing 400,000 tons, 500,000 tons of electrolytes. This is the standard traction battery. Standard traction battery from BYD, what have you, with, let's say, horsepower 100, one small EV engine, and that's it. This is the standard e-mobility product. The, let's say, the Fiat out of the concept. We are focusing with the electrolyte investment on the batteries for high-performance traction batteries. That means high energy throughput and high power for loading. This is, for example, if you have a Porsche Taycan, for example, these sort of batteries they have in. They need special electrolytes, specially designed for the structure and architecture and the energy management of the battery.
For the people like CATL doing the sort of standard batteries or some of them which you find in a Tesla, for example, they're not interested in. It's not. It's a market niche, and they say, "Okay, it's nice, it's fine, but no." The other piece is, why is our market accessible besides that? As already laid out, we are focusing on special applications. One is high power batteries. Then stationary batteries to store energy. If you have an overflow of energy coming out of the renewable part, we need to store it somehow, and part of it is battery. It's not the ideal solution, but part of it is battery, therefore we are focusing on it.
Where we have a huge power take-off in buses, partly big trucks and small and little applications with specific geometries, like in smartphones, in drones, in medical applications. These are specifically designed electrolytes. Electrolyte is not what you know probably out of the school. If you take natron and potassium chloride and two electrodes, and something happens. This is a composition of more than 10-15 substances which you need to balance out. Balancing out takes time, and it's adapted to the structure of the battery. The second part of the question I forgot.
Solid versus
Oh, yeah, okay. This, the competing technologies, we have different concepts for traction batteries. There is, on the one hand, you can think about sodium sulfur batteries, sodium oxygen batteries. You can think about the standard electrolytes, where you can have the lithium or lithium silicon anodes, which you can handle as well. The other part is the so-called solid-state batteries. The solid-state battery consists of an anode, which is pure lithium. This is highly reactive with oxygen. The moment oxygen drops in, it explodes. It's basically not under control for the time being. You have the electrolyte, which is the nano type ceramic, that the lithium ions are moving from A to B. The key problem, the substantive thematic problem is the phases are, let's say, progressing a little bit.
Solid phases. If the lithium ions are in, it moves a little bit. It's like a sponge. It gets bigger. When they're out, it gets thinner. Then you have the decoupling of the phases. The solid phases. This leads to a short circuit. This is not fully under control. The second part is there are some needles staying up, the solid state battery and moving to the cathode. This to a certain extent leads, in specific point of time, to a short circuit. At the end of the day, the specific problem of the solid state battery, which has not been solved. There are a lot of companies saying, "Yeah, we have it, we have this." No.
Taking into account it will be solved, and at a certain point of time it will be solved, no doubt about it. No doubt. Probably 8 years, 10 years, I don't know. You have the solid state battery. What is a solid state battery? High energy density, that's good. High energy outflow? No. The specific thing is that the energy outflow is not possible. It will not be a high super feature battery. The other thing is, it can store, it can load it with high power. In 5 minutes, 8 minutes, 4 minutes, 150 kW. Now think about 150 kWh in 5 minutes. You need a power plant in the backyard to fill the battery. The whole infrastructure laid out is laid out for fluid electrolytes all over Europe.
The whole infrastructure is laid out all over Europe for these sort of electrolyte driven batteries. At the end of the day, it will be part of the structure, it will be part of the technology, but it will definitely not substitute the electrolyte driven batteries, because the technology is simpler, to a certain extent. It has power, it's easy to handle, and the whole infrastructure, charging infrastructure is used to it. Otherwise, if you imagine driving on the German Autobahn, five cars in a row, with maxing out 2 MW at the same time, impossible. At the end of the day, yes, we have it under consideration. Yes, we have to move forward. Batteries will come. Yes, it will be part of the technical process in parallel, and it will be an element of the solid state batteries.
It's not from our point of view, especially looking into the mentioned. It's not a threat that we see by no means. Similarly, the chemical battery, ICE, you know, we have the solid state chemical battery. There is a technical background, so it's different. But we're not challenged.
Now there's a question from the online, so I will be direct to you, Dagmar. The question is, how far are the sales CAGR that we have given out, and how far that is driven by price and high volume? This is the first question. The second one is, how far we have already digested the price increases that we have seen, and in how far, or how long it takes to catch up in terms of the price increases we have seen. I think these are the first two questions for you.
Well, the first question, if you look at our midterm target, our midterm target, mid-single-digit % growth per annum. In the past, our growth was like two-thirds volume, one-third price. In a normal environment, so in a non-inflationary environment, that should be quite a good year looking forward.
Okay. The next question goes to.
The second question was how much is in so far? I mean, we are by far, far away from having anything in so far. I mean, the year 2022, we continued to increase our prices, and in the beginning of 2023 we will tell you it was a dynamic process during 2022. Perhaps the increase in the second half of the year will only be seen in the sales inflation in 2023 comparing to the 2022 year. That's the answer to that question.
The second one goes to Stefan. I tried to read it here. How many Fuchs family members shareholders are there, and how do you make sure that good corporate governance is in place?
I think it's a very important question. As you know, the Fuchs family holds 55% of the voting share. Of which around about 51% are combined in the Rudolf Fuchs KG, in a company. There we are 10 shareholders. Most of the shares are with my generation. My father have two sisters. We are seven shareholders in my generation. With the three of the second generation, we have 10. Comes the generation of our children, which is then, I would say, another 15 to 20.
They hold singular shares themselves. I think the corporate governance in the Fuchs Group is given that we are very well aware as the family that we only own, let's say a little bit more than 25% of the entire capital. We have an independent supervisory board with an independent supervisory board chairman. I think that's how we run the company. The family holds one seat in the supervisory board. As a large investor, I think that's okay. Whether there will be always a family member on the board has to be seen. I think we really run the corporate governance very well. All the family shareholders know as much as all of you. They get the information if we publish it, and I think that's very important.
Hi. Konstantin Wiechert from Baader Helvea. If I understood you correctly, you said that you are pretty certain that gearboxes will come back in EVs. Can you maybe elaborate on that? Because maybe secondly, if that's also in your volume assumptions on your 2030 and 2040 targets. That'd be nice. Thank you.
I think you know, Lutz or Timo know this very well with the entire e-mobility market. It's a developing market. The answer you would like to have, we can't give you. It's a developing market and it's factored in the growth we anticipate. We don't want to break it down for you know, step by step. I don't know whether the question is right, Lutz, whether the gear oils are coming.
I mean, they were never gone. You know, partly in the discussions they were gone, but most of the cars we see, electric cars, still have what we call an EDF type. Yeah. Therefore, we can't really answer the question, what goes out exactly, what comes in. We have factored, you know, what we can anticipate today in a developing market where we see a net potential for us. We have factored in the best we are able to, but nobody really knows where exactly the market goes in the next coming years. Thank you.
Yeah, thanks. One second. Andrew Scott from UBS. Two questions. Can I start with, I think it was Timo, you said in your presentation that over the last say three or four years, sorry if I misquote you, this is what I heard. You've seen quite a difference in your feeling and maybe your customers' feeling about your revenue per vehicle in electric vehicles, particularly with regards to coolants and fluids. Is it a technical development or a number of technical developments? Or is it just a general learning process? Just a bit more on that, please, and I've got a second question.
Thanks for the question. I think you're exactly right. It was a learning process. You know, I think initially, as in many fields, you know, the lubricants were a little bit underestimated. So, if we now look at these electric vehicles and also the thermal requirements and what Lutz explained, you know, it turns out that this is quite tricky. Tricky application. It also turned out that lubricant really plays a key role, and I think that's what our customers have learned and also learned through failure, and also through, like, batteries that did not charge properly and other things. In a way, it was learning by doing because everyone wanted to enter that field fast. We now know that this will be a specialty market, which is good for us, which requires more R&D work.
It's a high burden on our R&D teams around the world, but they're used to that. That's why we are certain that we will really benefit from that market. That's why this is an opportunity for us. You're right. In the end, it was more open. Now for the first platform, through learning, through new performance requirements, which has turned out to be very favorable for us.
Okay, thanks. Completely different question, and apologies, it's utterly miserable as a question. Maybe better addressed to Stefan. I mean, in the past, you've been pretty good in a recession, as you showed. Dagmar, you showed the slide. I guess there's this dark cloud at the moment over the whole industry whereby we have a scenario of high energy costs and severely reduced volumes, and we've never seen that in the history of the industry as far as I'm aware. What do you do in that scenario? What levers can you pull?
I think, you know, when you look back, we have always reacted very quickly. When you look at our profit and loss account, the biggest impact we have from the raw material pricing. Normally when you see a recession, you also see a significant decline in raw material prices. That's when we get a lot of tailwind, and that's what we have shown in 2008 and 2009. I can't predict what kind of a dark cloud will come or whether the hail will come, you know. I think we have shown in our 90 years of history that we have always reacted appropriately, and we will do so also when it comes. We don't see it totally dark, you know, but we see the clouds on the horizon.
There's a lot of things happening at the same time. It's not as if they are not new clouds. I mean, we operate in the fourth volatile year in a row. Let's say it was cheap. Rest assured, you know, that we will react in order to also safeguard our profits. I mean, we are now on the stock exchange since 1985, we never had a loss. We always pay dividends. Dagmar made a new promise, you know, on the dividends. We are optimistic about our future. The sessions we can't influence, but we have to see what comes and then, react accordingly.
Thank you.
Any more questions?
Thank you. There are two, please. The first is on what is the definition of an electric drive, driveline or drivetrain fluid? Because when I think of electric vehicles more commonly, I tend to think motor greases as an area that's potentially of interest. Another way of putting this question is the $3 billion guided for market size for 2040 for electric vehicle applications for thermal and electric driveline fluid. Is some total of the accessible market that Fuchs views for EV-only applications, or is it larger than that? Where do motor greases fit in? Thank you.
Can you repeat in a few words without a microphone because we get the echo here? Sorry, but without a microphone. Here's our external guest. Sorry for that.
The greases are always part of our automotive world. Since we have the mild hybrids and the full hybrids already in place, this specification for the greases are already there a long time, which we can handle in the chains a little bit, but this is not an extraordinary additional technology room which we need to cover. This is more or less the EV and the thermal fluids, where at the end of the day, this is an additional market which comes up. The other standard or the summit applications we have already under control, and they are not part of this review.
Thank you. The second question is a simple one on trading. How's business been doing through, May, April, June time? Is there any sequential difference between those months, from your perspective? Thank you.
Well, you know our first quarter, and in the end of July, we will publish our second quarter. Of course, in March, they started the zero-COVID strategy in China with these massive lockdowns of big cities. Of course, that has an impact on our local business in China. As well as the geopolitical crisis with Russia-Ukraine is going on, and we still have this uncertainty and disruptions regarding the supply chain and, of course, demand of our customers. With our first quarter numbers, we seem a bit more precise regarding our outlook that we set on the earnings. On the EBIT side, we go to the lower end of the range, and that's still in place. Therefore, we stick to that outlook and nothing else to report today.
Okay. There's another question from the webcast. I need to rephrase it because it's quite long. In how far has the competitive landscape changed given the fact of the war in the Ukraine and especially with regard to Russia and competitors like Lukoil are seriously handicapped? How far has the competitive change to the competitive landscape?
I think there are two answers to that question. The first answer is regarding the market in Russia that has fundamentally changed because there are many players being completely pulling out of Russia but there are also new players coming into Russia. There are Asian competitors who enter now the Russian market while European Western side competitors pull out. There is still competition in Russia. The other part of the question is what about Lukoil and other Russian players on the global lubricant market. I think that has changed because there have been quite some aggressive approaches from also Russian lubricant players in markets in Europe but also in Africa, for example. I think they suffer at the moment because they can't do their business like they did before. There has been a change, specifically to the competitive landscape in Russia due to the conflict in Ukraine.
Okay. There are no more questions from the webcast. If there's not someone else who may ask you for a question. Maybe one last one from Martin.
Regarding the dividend policy, you changed it to an increase in dividend every year. Does this also imply that we can expect also an increase in the payout ratio, which has been 66% for 2021? In the past, we had also fluctuating payout ratios, and I recall that a couple of years ago, it was already above 60. Could you consider this as a viable option, or do you want to keep the payout ratio as it is?
Well, as you know, we don't look at the payout ratio, as we in the past said, we look at the dividend we paid out last year and at least keep it at that level. In fact, we increased it 20 years in a row. Now we changed or upgraded our dividend policy and we are going to increase dividend year by year. Of course, our target is not looking at the payout ratio. Because if our earnings would go down one year, immediately, the payout ratio would go up. I'm convinced that with our dividend policy, we add value to our shareholders, but in the future, we still won't look at the payout ratio.
Okay. With that, we've come to the end, I would say, if there are no more questions. I think Stefan wants to make some closing remarks. Stefan, go ahead.
Yeah. First, I would like to say.
Sorry, yeah.
A big thank you to all of you, that you all made the way here to come to visit us in Mannheim to be part of our Capital Market Day. The first one since 2019. It will be my last one for Fuchs, and that's somehow a bit sad. I would like to make, give a big thank you to Lutz and his team, who made the whole organization and the setup and great lunch. Thanks a lot for everybody. My colleagues, of course, for their participation. I must say, to me, it was a great day.
Thank you, Dagmar. Thank you very much for coming. Thanks for the interesting questions. I really hope that we covered, you know, some areas of uncertainty you were carrying around. We are positive about our future. Recession, you know, we need to see where the world is going. But we are very, you know, optimistic on our business plans moving forward. I think the messages you received today are for us very meaningful. Therefore, a big thank you to my board members, because they put a huge effort into this over the last couple of weeks. Also, thank you to Lutz. Welcome, Isabelle. Thanks for coming, taking a day of vacation at Schenck, you know, to spend the day with us. Have a good return. Really thanks for your interest, and you continue to follow us in a positive manner. Thank you very much.