From the automotive aftermarket sector. We have positive currency effects in Australia, but they are offset by negative effects from Asia. Looking at the EBIT, the region Asia Pacific doubled the EBIT. They report €34,000,000 for the Q1 'twenty one. Turning to the region, Americas, Page 11.
You can see that sales are at previous year's level. We have an organic growth of 6% in Americas. And the Q1 2020 was as well as the region EMEA not affected by COVID-nineteen. The external growth of €8,000,000 or 7% is due to the acquisitions in the previous year 2020. Due to the strong euro, we have negative currency effects, as already mentioned, and they amount to minus 12% in the Q1 2021.
On the earnings side, EBIT is up 33% to €16,000,000 for the Q1. On the next chart, on Chart number 12, we want to give you an overview about what happens on the raw material price side. We have seen significant price increases from the beginning of the year in January, February, March. And one or the other base oil nearly almost double prices. And yes, it's something which we haven't seen and that impact ever before.
We will see negative impact on our margins in the 2nd and third quarter. And of course, on our selling price, as we pass through raw material price increases with a bit of a time lag due to our contracts. We expect, of course, higher sales due to price increases. With that, I would like to turn to Page number 13 to our outlook for the full year. Based on the development of sales and earnings in the Q1, the stronger than expected recovery of the global economy and significant higher raw material prices, we raised our outlook.
Sales, we expect to come in, in a corridor between €2,700,000,000 to €2,800,000,000 This, as said before, is based on the strong demand and price increases from our side. On the EBIT, we expect it to come in for the full year a corridor between €330,000,000 €314,000,000 As we face higher raw material prices and supply chain disruption, we will have negative effects on our cost side and our margin. On the other hand, of course, with some higher sales, that's while we increased our EBIT our outlook. The books where we added will increase slightly. And on the free cash flow before acquisition, we're seeing a reduction of around €50,000,000 And that's due to the increased business and of course, where we see due to the purchasing price increases and our selling price increases that we see the need of a higher level of net operating working capital.
Coming to the next chart, number 14. We just would like to remind you that we have a different development regarding our first half year and our second half year. So in the first half year 'twenty one, we compare ourselves with the weak first half twenty twenty, which was impacted by COVID-nineteen in the Q1 in Asia Pacific mainly, in the Q2 in Americas and EMEA and where we see in the second half year the recovery with a record quarter in the Q4 2020. And We will have definitely a weaker second and third quarter. And compared to previous year, We expect the second half of the year 'twenty one to come in below previous year.
With that short presentation, we would like now to turn to Q and A, and I'm happy to answer your questions.
So operator, please take over for the moderation of the Q and A session.
Thank you. Ladies and gentlemen, we will now begin our question and answer session. Australia. And the first question we received is from Martin Roediger of Kepler Your line is now open, sir. Please go ahead.
Thank you and good afternoon, Ms. Steinert. I have Three questions, and I would like to ask them 1 by 1. So I would like to start with the first one. This is on raw materials And especially on Page 12 of your handout, can you rank the upcoming margin squeeze in the 2nd quarter by region?
I mean, would it be fair to assume the biggest margin squeeze in Q2 will be in Asia and in Americas Because the increase in raw material price charts is stronger year to date than in Europe. And in this context, Would it then be also logic that once the production issues, for example, in Texas are solved, that these are the regions where you should expect The quickest easy in raw material prices later in this year.
Yes. Thank you, Mr. Roediger, for your questions. It's a bit like looking into a crystal ball, How the raw material price increases develop further, we want to give you Some details, some insights with the Chart number 12, you refer on. And Yes, you are right.
You see different, yes, development of raw material price increases. But of course, we have different product mix within this region and different margins. And of course, yes, due to the product mix, we need different raw materials. And overall, We it's more or less somehow, let me say, balanced or leveled out as We pass through our the price increases we face on a local basis. That means if there's a region with higher raw material price increase, they are forced to increase their selling prices to a higher level.
And therefore, I don't see that much such a difference. Regarding the disruption of the supply chain. There might be differences. Of course, that depends how refineries manage their turnarounds and how long time it takes. And then, of course, where you get the supply you need.
And regarding our, yes, price rounds or as we increase our selling prices, We already, of course, did it, but we will see effects in the second quarter.
My second question is on the organic sales growth of 15% in the Q1. And I understood that you have raised some selling prices in March already for the for your small clients, Which do not have price variation clauses. So maybe you can help us to understand how much pricing Contributed to the 15% organic sales growth. Was it 1% or 2% or even higher?
Well, I would say it's not significant What the increase of our selling prices is reflected in the Q1 because most of our price increases are effective in April, in May, come in March, yes. But then, of course, it's a question, At what time did the customer order? And even if there is a price increase starting in March. The order might be days before. And then of course, even if it's a sale in March, it might be with oil prices.
So the pricing effect overall in the Q1 is minor.
Okay. And my final The third question is on the reconciliation line in the regional performance. In the past, you complained about the issue that your German automotive OEM clients did not give you approval for the pentosine products produced in China. This was the reason why you still had to export the pentosine products from Germany to China, which has been reflected in this reconciliation line. And in your introductory remarks, you mentioned, obviously, this was still the case in Q1.
Now what I wonder is With this current super high demand in China, and I guess it cannot get better, when Will you get approval by your customers in China for local production of kymptotene?
I don't know. We work on it. But it's again, looking into a crystal ball, If it's 'twenty one or it will be 'twenty two, I've got no idea. It's a bit even more difficult regarding to funding.
Okay. Thank you.
Next question received is from Max Meyer of Baader Helvea. Your line is now open. Please go ahead.
Yes. Good afternoon, Dagman Lutz. I have also three questions. I will also ask von Braunen as Martin did. The first one is, again, on the demand.
We've heard from other companies, in particular from private ones. So far, it's only anecdotal evidence, but we've heard that there was double sourcing And in particular, automotive customers. Have you also experienced this? And in addition to this, there's also Was the rumor that there was pre buying due to significant price increases, which are effective for the Q2 in the Q2, Which has you have also basically flagged. Would you also see that there was a kind of a pre buying?
That would be my first question. Well,
we have a strong demand. We have very strong demand in the Q1, in the Q4 last year. And there might be 1 or the other like prebuying or advanced purchasing in it, of course. But regarding our OEM customers, as we have there usually price We have contracted price variation clauses. And there, we pass through Raw material price increases with the time lag of 3 to 6 months.
So In quite some parts of our business, we will see there a significant Margin increased in the 2nd and third quarter as the price increase with this contract is coming into yes, into force on a later stage in September August. So they have no reason to do some rebuying or advanced purchasing.
Okay, understood. Thank you for this. And second question would be, again, on the demand there. Maybe you can shed some light where if there was a stronger demand in automotive or at industry applications, I guess it was more automotive driven. Is this industry demand if this is the case, do you think that this industry demand Just lagging and will then accelerate the second or third quarter?
Or is there something structural in it? Well,
when we look at the Q4 of the last year, That was mainly driven by demand in automotive lubricants. And In the Q1, we've seen a pickup of industry demand as well. So both from automotive and industrial silicon demand. There is no lack anymore.
Okay. Understood. Okay. Thank you for this. And then the last question would be on the CapEx phasing in 20 21, maybe you can help us how the guided CapEx spending will be spent then over the year?
Well, we expect for the full year around €80,000,000 CapEx on level of depreciation. And in the Q1, we spent only 15,000,000 €20,000,000 would have been a quarter. So from today's point of view, I expect the €80,000,000 And there won't be a quarter where we will have Half of the amount, it will be spread out over the next quarter.
Okay. Thank you so much.
Next question received is from Sam Perry of Credit Suisse. Your line is now open. Please go ahead.
Hi, Dagmar. Hi, Lukes. Thanks for taking the question. Just on raw materials, thanks for the chart, Can you remind us what proportion of your raw materials are base oils? So I was thinking it was only around 50% or slightly less.
And what with the remainder of additives, what sort of inflation are you seeing in those products? And then also, with the guidance, what is your assumption regarding raw materials from here? So do you assume they stay flat Q2 exit rates? Or is your assumption that they increase further from here?
Well, looking at the proportion of base oil from our raw materials, Of course, on a volume basis, it's higher. If you look at the value, It's 30%, 40% of our raw materials. But of course, it depends on the product or product mix as well. And looking at the price development of additives and packages, That's with the time lag as well as we usually have with our biggest supplier as well contract with price variation clauses. And therefore, we still benefit from lower not lower prices, but from prices with no significant price increases.
They will come to a later stage.
Sorry. So just to be clear, for the remaining 70% or 60% to 70 Percent in terms of value of raw materials, you're seeing limited to cost inflation?
Yes. It will come later for the time of year.
And your assumption and where do you expect raw materials to go from here for the remainder of the year?
I can't give you a number for that by now. And for us, it's always the balance between our selling prices and the raw material prices. So it's our challenge to increase our prices as much as we needed.
Great. Thank you very much.
The next question we received is from Oliver Schwarz of Wabburg Research. Your line is now open. Please go ahead.
Sorry about that. Thank you for taking my question. I've got only one remaining. When looking into the different regions, is there currently A variety or a huge variety in the taxes you have to pay? Or is that mostly similar To what we see in the group level.
Thank you.
Yes. Osborne, as well. The tax level, there's no significant difference. It's more or less similar to the group level on an average as it is yes, there are no big exceptions.
And the next question is from Eleonore Seddon of UBS. Your line is now open, madame. Please go ahead.
Hi there. Yes, congrats on the quarter. And yes, first question for me is just whether you could talk a little bit about the run rate Out of the Q1 and into the Q2, so the top line trends that you've described in your results, were those accelerating through Q1? Are there any that you're seeing Continue to accelerate or any that you think might decelerate through the rest of the year?
Well, of course, we don't know how the crisis developed. If you look, for instance, To India, which have a major impact of the crisis, on the other hand, China and America increased their expectations for GDP growth and Germany as well. The start into the Q2 on the demand side is still good.
Okay, great. Thank you very much. Actually, one more, if I could squeeze one in. Do you have any visibility on rough impact from the cold spell in Americas that you've mentioned for The Americas business. And any comment on the underlying business ex
that impact?
We didn't get the question. Sorry, maybe you could repeat it again.
Yes, of course. So in the North America's business, there's clearly an impact from the cold spell that, that region experienced. Are you able to, in any way, give insight into what level of impact do you think that was for your results? And A comment on the underlying business apart from that impact.
Well, North America, we report 6% organic growth. So our business in North America is nicely growing. At the Q1 and the previous year was not affected from the crisis. But yes, in America, there is an impact of the cold weather in the Q1 in Texas. And What we see for just for example is, of course, that 1 or the other supplier had damaged like pipes.
And of course, it takes some time to get it all, yes, repaired. And due to that, There are like shortages in 1 or the other raw material in America and disruptions or delays in the supply chain. But These difficulties regarding the supply chain, we are facing everywhere, not only in America. We face it in Europe. We face it in China.
And it's a hard task to manage that. But so far, We are doing it quite well.
And the next question is from Sebastian Bray of Berenberg.
I would have 2, please, both strategic. The first is on electric vehicles. Could you please give a sense of the amount of sales that Fuchs Is currently making to this value chain, either via its Blue EV brand or via other is about EUR 40,000,000 On an annualized basis, a reasonable guess. The second question is on longer term procurement of raw materials. If transport fuel demands in Europe and the U.
S. Goes into reverse longer term and refineries start to shut, Can FUK start to source its base oils based upon bio based feedstocks or recycled inputs? How does the group think about its raw material procurement on a 10 to 15 year basis?
Yes. Thank you, Sebastian, for Your first one, regarding our amount of sales with like products for electric vehicles. I'm sorry, I can't give you an answer, and I can't give you a good or bad feeling if your guess is the right guess because we As our customers are not only like OEMs but the suppliers and Therefore, we have a lot of products which go into re heater, But we don't know, are these electric vehicles, are these vehicles with combustion engine or hybrid. Then of course, we have products which are for electric applications and so on. But we don't have a sales number available so far with this, yes, group wide.
Our view on longer term procurement and the supply chain or disruptions of the supply chain. Our R and D team is since years working on finding new Raw materials, new raw material sources. Sustainability is a strategic an important task force. And we are Yes, we aim to use more bio based feedstock as we do today, as we already use some but not in a very big amount. And we are open for like life cycles and recycling.
And We are working strategically on that and not only strategically, but our R and D team in their daily work.
That is understood. Thank you. Dagmar, I appreciate you cannot quantify the exact number of sales flowing from Into the electric vehicle chain. But if I were to say, if Fuchs has the same or higher or lower market share For EV applications relative to traditional ones, which of those statements would you agree with?
Sebastian, I'm sorry, I can't give you an answer.
Understood. It was worth a try. Thank you.
The last question for today is from Isha Sharma of Stifel Europe. Your line is now open. Please go ahead.
Hi, Dagmar, thank you for taking my question. Do you expect China to continue to be as Strong. What kind of regional development do you see into April? I appreciate that you see still strong demand. Could you help us with the regional
Well, if you look at all We have expectations regarding the growth the economic growth In China, it's very strong, a strong GDP growth. I think it's the highest worldwide, and it's across all industries. It's strong in automotive but as well as in other industries. And as we finished our growth initiative, our investment program in the last year in 2020. And we have 2 very modern new Production plants in China, we as I said, we managed like 46% sales growth in China in the Q1, a very strong growth in the Q4.
So Our setup in China is very good, and We are prepared to grow even further with a strong demand for a longer time.
Thank you, Ashley. That would have been my second question. How much incremental Volumes can we expect for the full year coming from your recent CapEx initiative?
As we don't report volume figures, as we can easily increase volumes If we increase batch sizes, we are able to add additional ships. But In China, we opened a new plant a year ago. We enlarged that plant already in the planning phase. There is enough space. There is enough room to even allow further if we would need that.
In our 2nd production plant in the North of China, we enlarged it 2 years ago, and there's still as well enough space and room to even further expand. So capacity in China is not at all a restriction for us.
Perfect. That's very helpful. So it is fair to assume that this is a sustainable growth rate In China or let's say at least for the year, we can imagine
Not 46%, I would say.
And we're very satisfied.
But I'm yes, I believe we will see a strong growth in China, yes.
That's very helpful. Thanks a lot for that.
As we receive no further questions, I hand back to Mr. Akerman.
Yes. Thank you very much. With that, we have come to the end of our Today's conference call. Thank you very much for your participation. And as always, if you have any further questions after the call
or over the next days, please Don't hesitate to contact us. Thank you, and goodbye.
Ladies and gentlemen, thank you for your attendance.