Dear ladies and gentlemen, welcome to the First Quarter Results 2026 Analyst Conference Call for FUCHS SE. This conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity for the analysts of FUCHS to ask questions. May I now hand over to Andreas Schaller, Head of Investor Relations at FUCHS SE, who will start the meeting today. Please go ahead.
Thank you, Heidi. Good afternoon, ladies and gentlemen. This is Andreas Schaller speaking. On behalf of FUCHS SE, I wish you a very warm welcome to today's conference call on the results of the 1st quarter, 2026. With me on the call today is our CEO, Stefan Fuchs, and our CFO, Esma Saglik, and the IR team with Theresa Landau and Maximilian Seidel. Maximilian is the successor of Nicholas and is with us since 2 weeks now. Also, a warm welcome to the conference call, Maximilian. We are very happy to have you with us.
Thank you very much.
As always, Esma and Stefan will run you through the presentation, which is then followed by a Q&A session. All the documents for this call are available on our homepage, and we assume that you have them in front of you. Please be also aware of our disclaimer on page two of our presentation. Now it's my pleasure to hand over the call to Esma. Please go ahead.
Thank you very much, Andreas, and hello and also a very warm welcome from my side. I will now walk you through our financial performance for the first quarter of 2026, starting with the key highlights. I can say we had a very good start into the year. Organic growth continued and even accelerated. In a volatile environment, we once again demonstrated operational resilience and financial strength. Sales reached EUR 934 million, up by 1% year-on-year, which is mainly driven by an organic growth of 5%. This result has been achieved despite significant currency hedges. Our EBIT came in at EUR 125 million, up by EUR 17 million or 16% versus last year, which marks another new quarterly record. Additionally, it also underlines the quality of our earnings and the effectiveness of our costs.
Free cash flow before acquisition was very solid at EUR 54 million, an improvement of EUR 37 million year-on-year, and this despite usual seasonal buildup in net operating working capital during Q1. Earnings per share increased by 15% to EUR 0.68 per share. Now, turning to the next slide, let me briefly comment on quarterly sales. As you see a seasonal increase quarter-on-quarter, which is fully in line with prior years. Nevertheless, sequential sales grow by 8% and at the same time, sales year-over-year increased by 1%. Let me have a closer look at the main drivers behind our sales development. Sales in Q1 reached EUR 934 million, as yet 1% up year-over-year. At the first glance, this looks rather modest. The underlying performance was much stronger.
Organic growth contributed EUR 42 million or 5%. With that, volume growth was particularly strong with mid to high single digit range. This organic growth came from all regions, which reflects successful business wins and especially the strong demand in March. On the external growth side, the acquisition of IRMCO and ASEOL in 2025 were the main contributors. Currency headwinds remained significant with a negative impact of around 4%. We expect these headwinds to continue into Q2 and to ease thereafter. Overall, we can say that the underlying sales development was clearly positive. Looking at the EBIT on quarterly basis, we see the same seasonal pattern. What stands out is the strong EBIT improvement by over 15% both year-over-year and quarter-over-quarter. With EUR 125 million, EBIT marked a new all-time high for a single quarter.
This performance was driven by further improvement in our gross margin, continued cost discipline, and the EUR 7 million one-off gain from the sale of our property in Australia. Let me now turn to the KPI summary, starting with gross margin. Our gross margin improved to 35.1%. That is an increase of 80 basis points year-on-year and fully in line with the development we saw in the previous two quarters. Functional costs declined by EUR 7 million. This was mainly driven by the gain from the Australian land sale. As a result, EBIT reached EUR 125 million, which is an increase of 16% year-on-year with an EBIT margin of 13.4%. Capital expenditures increased year-on-year as well, is still in line with our full year guidance.
Net operating working capital showed the usual seasonal pattern, built up in absolute terms quarter-over-quarter. At 21% of annualized sales, it remains stable and unchanged compared to the end of last year or last quarter. Finally, free cash flow before acquisitions was very solid with EUR 54 million, an increase of EUR 37 million year-on-year. Let's have a look to our regional development. Sales in EMEA increased by 5%, driven by organic growth and stronger demand in March. Most countries in EMEA recorded higher sales. Particularly strong growth came from South Africa, Germany, Poland, Italy, and the U.K. External growth was supported by the acquisitions from our former distribution partner, ASEOL in Switzerland. EBIT improved significantly, mainly due to margin expansion and higher volume. The main contributors were Germany, Sweden, and South Africa. In summary, the Q1 performance in EMEA was very positive.
Moving over to Asia Pacific. Organic growth remains strong at 6%, mainly driven by China and Australia, but also many other smaller countries contributed to it. This clearly shows the benefit of our investment in local production. However, strong negative currency effects almost fully offset the growth. As a result, reported sales increased by only 1% to EUR 266 million. From a profitability perspective, the region developed very well. EBIT increased by 38%, with China and Australia being the main drivers. That said, the Asia Pacific results include the EUR 7 million one-off gain, as mentioned before. Anyway, overall, we can say Asia Pacific recorded a strong organic growth and a high EBIT, which underlines the solid performance of the region. Turning to North and South America.
Sales declined by 6%, mainly due to significant depreciation of the U.S. dollar over the past 12 months. At the same time, organic growth was 3%, reflecting new business growth, particularly in North America. External growth was driven by the acquisition of IRMCO. EBIT declined by EUR 2 million, and that mainly due to negative FX effects. We also saw a positive business development in South America. Overall, the operational performance of the region is more solid, and we expect FX effects in South America to fade after Q2. In summary, Americas delivered a solid operational performance, which unfortunately was offset by currency headwinds. Now moving over to the net operating working capital. Looking at our operating working capital, we see the usual seasonal pattern, a build-up in Q1 after a low point in Q4.
Compared to Q1 2025, net operating working capital improved, both in absolute term and as a percentage of sales from 22.4% to 21%, reflecting disciplined working capital management and also the higher demand. Turning to net liquidity, we achieved the free cash flow before acquisitions of EUR 54 million, driven by strong earnings and a moderate increase in working capital. CapEx in the first quarter was almost in line with our depreciation level. Overall, net liquidity increased by EUR 52 million to EUR 250 million at the end of Q1, a very solid result for the first quarter. Please keep in mind there was no major cash out in Q1. In Q2, we will see the dividend payment and the cash out for our acquisition OPET FUCHS. Before turning to the material price development and the outlook, let me briefly summarize Q1.
We had a very strong start into 2026, with positive organic growth development and the highest quarterly EBIT ever. We more than compensated for significant currency headwinds and once again proved our resilience in volatile market environments. Moving over to the material development. As mentioned during our Capital Market Day, since the conflict in the Middle East, oil and petrochemical supply chain has come under pressure. High crude prices, longer transport routes, and rising logistic costs are putting pressure on input costs, especially for base oil. We see raw material pricing increasing sharply, and to counteract, we have implemented price increases and expect further increases in Q2. Even if the conflict were to ease, supply conditions are unlikely to normalize before year-end or even 2027, by 2027. Our sourcing setup is globally diversified, and this gives us flexibility.
We are confident that we can secure volumes to serve our existing customers who remain our top priority. As a result, we remain cautious by taking new businesses. In summary, the visibility regarding price development is currently not given, and it is currently impossible to give a clear direction how it will evolve. As you all recall, in 2021 and 2022, we faced a similar situation, and we managed it quite well. We have proven that we can handle inflationary challenges, and we are confident that we will manage this situation also successfully. Our key learning was to act faster on pricing, which we are currently doing. Now let's move to the outlook.
Based on the current market and pricing dynamics, and also assuming there will be no further disruptions to the global economy or supply chains, we update our outlook as follows. We now expect sales to increase significantly above EUR 3.7 billion, driven by price increases. As the final extent of the price adjustments are still uncertain, we refrain from giving a precise target. By significant, we refer to double-digit growth. The sales number includes the OPET FUCHS acquisition, which we expect to close this week, and we have considered two-third of their annualized sales of EUR 100 million. Our EBIT guidance remains unchanged at around EUR 450 million. We expect to offset raw material inflation by price increases. With EUR 125 million EBIT in Q1, we have laid a solid foundation.
However, this figure should please not be annualized as Q1 includes the EUR 7 million one-off gain. In Q2, we expect further one-offs related to OPET FUCHS, which will broadly offset the positive effect from Q1 in the P&L, but without cash effect. Please take into account when you are modeling your 2026 full year numbers. FVA is now expected at slightly below EUR 250 million, reflecting higher capital employed costs. Free cash flow before acquisition is expected to be significantly below EUR 217 million, mainly due to inflation-driven working capital risk. For cash, the reduction should be modeled consistently with our sales price advantage. Based on our strong start into the year, we are confident that we will achieve our EBIT target as previously indicated.
We remain committed to grow our dividend year after year as we have done it over the past six volatile years. With our FUCHS100 strategy, we are well-positioned and will drive for organic growth, margin improvement, and cash generation going forward. With that, I hand over to Stefan for some more company news.
Thank you very much, Esma, for the positive update. My news will be relatively short because we had a significant exchange with most of you two weeks ago in our Capital Market Day. I think if you go to the next slide, you all remember that about 3 months ago, we made a press release to take over the remaining 50% of our Turkish joint venture. As it was stated in the press release, that's a company with about EUR 100 million in sales and 250 employees. It's located in Istanbul. The plant is in Aliağa, nearby Izmir.
If everything goes well today and there's nothing to be expected differently, we will close the deal tomorrow, and we will be the proud owner of 100% of our Turkish subsidiary, which will also change consolidation from at equity towards a full consolidation moving forward. Most likely, you will see a press release tomorrow afternoon to just say, you know, that this will be closed as planned. We have a wonderful relationship with our partners. You know, our partner is OPET. OPET, you know, run filling stations. They run refineries in Turkey. They themselves is a joint venture between the large Koç Group and the Öztürk family. We have a good partnership and friendship with them.
We both thought, you know, that we as lubricant specialists focus fully on, on that company, and I think that's what we execute then finally. The other little update, I don't want to go deep. We had, I think a really good FUCHS 100 kickoff 2 weeks ago. Most of you attended our Capital Market Day. You could see all of us engage. You know, we had the 6 colleagues on stage on our, on our focus areas. In a few words, this is not a revolution, it's a evolution of FUCHS 2025. Whatever we have learned and done during the last 7 years, we can now build on. We really mainly focus on growth, but obviously also on people and sustainability.
Two days before we met, we had the internal kickoff. That's really cool because we had a 30-something minute video which was recorded with watch parties all over the world. All our people got at the same time the same amount of news. I think this was very welcome and gives our people direction, especially in challenging times like we have now. If you remember, I said the last seven years were volatile. Since the end of February, we know that also 2026 will be volatile. That's the eighth year in a row. I always say volatility is the new normal. I think with our, you know, business model, which is very resilient, we can cope with it. That was the update from Esma and I. Now I hand back to Andreas.
Thank you very much, Esma and Stefan. Now we can start with the Q&A session please, operator.
Thank you. If you wish to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We will take our first question, and the question comes from the line of Anil Shenoy from Barclays. Please go ahead. Your line is open.
Hi, thank you. Good afternoon, everyone, and thank you so much for taking my questions. My first question is on any pre-buying that you've seen in Q1. We have heard a lot of other chemical companies say that they have seen some panic buying, which has led to some kind of upside in their Q1 numbers. Have you seen any kind of uptick in your volumes because of this pre-buying, and if so, in which regions? That's my first question. Second question is on your guidance. If I look at the clean EBIT of EUR 118 million in Q1 after excluding the EUR 7 million one-off. If I extrapolate it for FY, I still get to about EUR 470 million-EUR 480 million, but your guidance is still EUR 450 million.
Does that reflect the lag between the price increases and the raw material inflation? Is that why you are a little conservative or is there any other reason? If you could just help us bridge the Q1 EBIT to the FY guidance. Thank you.
Thank you very much for your questions. I think they're very valid. You know, the first one with the pre-buying is if you compare large chemical companies, you talk about a few products only, which are large bulk items, normally their customers have significant tank capacity or they can rent tank capacity. Our customers are involved with a lot of other small and medium-sized deliveries, they don't have the capacity. Even if you go to our larger customers, they have a few bulk tanks for the product, but this is it. When they are full, they are full. We have maybe the automotive aftermarket of one or the other distributor who orders a little bit more.
We have made sure that we do as much as we can do to, you know, and not oversupply because we also want to have the pricing stick. On over 100,000 customers and over 10,000 different products, I can't tell you whether there was no impact. All in all, this whole pre-buying and, you know, to put large inventories aside is for us not a big deal. I would say the other opportunity for us that so far we have secured the supplies of our customers, which is always more important than the pricing.
We see more of our competitors being in a limbo situation and instead of saying overstocking, maybe I would say we probably have also picked up the one or the other delivery, which we would have probably not had in the Q1 in normal times. All in all, I would say, you know, when we look back in 2024, we had a, let's say a lower digit amount of volume growth. 202 5 was a mid-single digit amount. Now we were in the higher mid to higher single digit amount. For me, this is still an outflow of the FUCHS2025 strategy.
When you look on the guidance, I think we feel comfortable with the overall guidance because you can't just extrapolate a record quarter to the, to the full year times four. You always have seasonal impacts. In some countries it's in the summer, in some countries it's more towards the, the Christmas time. I would be careful with that and I don't want to detail now all the single reasons. All in all, we feel comfortable, and I think, you know, we have made that outlook in March. The situation has not done any better or didn't, you know, come to a, to a conclusion in Iran.
Therefore, I would say that we keep and uphold that, is a good signal to the market, but I would be, you know, a little bit hesitant to just extrapolate.
Great. Thank you so much for those answers.
Thank you. We will take our next question. The next question comes from the line of Constantin Hesse from Jefferies. Please go ahead. Your line is open.
Thank you very much for taking my questions. Just a couple from my side. Can I just confirm that the guidance implies or assumes that you'd expect a price decline in base oils in the second half? I.e., just the question would be, if they stay at this level because the conflict just continues dragging, are you able to keep prices relatively elevated and you should be able to keep your EBIT or would that put further pressure on your EBIT? That's the first question. Second question is on. I mean, obviously, you're holding back on new business, which is probably holding back your growth potential. If I think about further disruption or the current disruption even impacting your sourcing into 2027, how should we think about these opportunities lost?
Would they potentially go to your competition and as a result, they would have higher switching costs in order to go back to FUCHS? Do you see this more of a temporary disruption with potential new customers, or could this disruption last longer because they would then move to your competitors as a result of it? Thank you.
Thanks, Constantin. I think two good questions. Since it's fresh, I'll start with the second one. Nothing gets lost at the moment because all our competitors face the same challenges. Yeah. You have to understand, when you have 10,000 products, there's also a lot of reformulating going on. Our procurement team is fully absorbed to secure whatever volumes they can get. Our product management and R&D teams have to reformulate and have to also then talk to our customers with regard to the approvals and the documentation because we can't do anything in the gray zone. The other part is for our salespeople to negotiate all the sales prices.
All of that goes on. At that moment, I think it's clear that the time of our salespeople to focus on new business is limited compared to the other times what we have initially planned for. We don't lose any opportunity because all our competitors are in the same area. As you've seen in the first quarter, volume was good. Therefore, this lost opportunity, I do not see this keeping the prices up and the whole guidance. We do not see that the raw material will go down immediately. There are always two potential scenarios. The one is that the people order now and then the consumption goes back in the market because the economy will suffer.
I mean, this whole inflation, and people now also talk about how higher interest rates potentially coming up, thus the economy normally not good based on already existing tariffs and, and many other things. This is the one risk, you know, where we need to be careful. The other risk that people, you know, now do stock certain products and then the economy goes down and then the raw material prices fall sharply. That's the scenario we have seen in the Lehman crisis, 2008- 2009. There's nothing we can do about. The pricing we put in now will stick until the raw materials go down again. If you really look back on the large two scenarios, the one was Lehman. The prices skyrocketed and then they fell back.
It was like really a huge V. In 2021 and 2022, the raw materials went up by 70% and they actually never came back significantly. A little bit they came back in 2025 and also in the first quarter. That's why Esma said, you know, the volume growth was bigger than the 5% because there was still in January, February, certain price adjustments downwards. That's all I can answer you with that regard.
That's great. Thank you very much.
Thank you. We will take our next question. Your next question comes from the line of Angelina Glazova from JP Morgan. Please go ahead. Your line is open.
Hello. Thank you very much for taking my questions. I just have one at this stage. Could you give us a bit more color on how the second quarter is shaping up so far? Maybe to zero in a bit more on the raw material price dynamics. You have referred quite a bit to base oils price inflation in your opening remarks, but how are you seeing the additives? Are there also price increases? If you could compare and contrast the magnitude of those compared to what you're seeing in base oils, that would be helpful.
Thanks, Angelina, for that question. I think I answer the first half and then maybe Esma answers the second half a little bit to give you some light on this consolidation change in Turkey, because she made a comment earlier that there will be a one-off charge in Q2 absorbing the one-off gain in Q1. With regard to the trading, so far we see it unchanged. Obviously, you are right. First of all, the base oils go up, then the chemicals go up with a certain time delay. We are out, you know, the second round of price increases all over the world, and we do it based on product type, based on region. Some regions, it's not only the raw materials, but it's also the currency fluctuation because they have to import certain petrochemicals.
Base oils, they jumped up immediately and now the rest of the petrochemical supply chain follows, but with a slower cadence. The one thing is, you know, we always explain to you, and I want to emphasize this is not a normal time. In normal times, if prices go up, we run behind for 6 months to a certain extent, or 3-6 months. If they come down, we have the tailwind. What we have learned in 2021 and 2022, we can't have this period of running behind too long, and therefore the sequence now is much shorter compared to 2021 and 2022. I see that run behind thing a little bit more limited.
Obviously, we always say the larger impact probably comes end of Q2 and in Q3, then to be seen how the economy develops. Maybe, Esma put a little bit of light on this Turkey acquisition.
Yes. Maybe one, or let me start this way, Angelina. There will be three key drivers for Q2. Number one, like Stefan said, it's the sequence of the price implementations we are doing to counteract on the material price increases and the inflation. Other than that, we expect actually a good Q2 as we have performed in Q1. In regards to the OPET FUCHS, as you know, right now, OPET is in our at equity results. We will take that from the at equity result up, and it goes into our normal EBIT, where you will see higher costs because we have the full consolidation of the costs, but accordingly, the sales and then the profitability. In Q2, due to that we are consolidating now 100%, we expect some accounting topics.
Like I said before, it will be a negative in our profitability. It's a balance sheet cleanup, but it has no cash implication for our, yeah, for our financials. Summing up, all in all, we expect Q2 to be also solid. I mean, of course, nothing changes all of a sudden, a solid performance. As Stefan mentioned, the main kick in the raw material prices, et cetera, we expect towards, yeah, June, July, I would say, kicking strongly with. I hope that answers the question.
Great. Thank you very much for responses.
Thank you. We will take our next question, and the question comes from Christian Bell from UBS. Please go ahead. Your line is open.
Yes, hello. Well, well done on the really strong result this quarter. I've just got two questions, thanks. My first one relates to your guidance. Yeah, you obviously have started the year really strongly. Underlying margins improved this quarter. The guidance implies a meaningful margin compression over the remainder of the year, obviously. Given the strong demand backdrop and the pricing power you've highlighted, can you just help us understand what is driving the conservatism a little bit more? Is it an assumption that not all cost inflation will be passed through? Is it the timing lag, or is it sort of more caution around feedstock availability?
just, yeah, just trying to understand that given how much sales of will be going up. Thank you. sorry, I'll wait for the second question.
Thanks, Christian. You know, this is for me, crystal ball reading. I can't tell you how much sales go up. Especially this year will be a transition year. Let's say you go up certain percentage in April, a certain percentage in May, and then maybe in June, July, and then again in the Q4, you will only get a pro rata increase for this year. The impact will be fully there, and therefore also Esma made a comment with the free cash flow because this is a year-end number only. You get a full hit on the, let's say, on the receivables and on the inventory from whatever the December increase stands at. We have very high increases in certain countries on oil-based products already now.
But I have really no visibility on where we go. Therefore, you know, we say, yes, sales will go up, the EBIT will stay in line. I think that's a solid statement, you know, bearing in mind where we are, you know, with all the risks in the market. I can't really put more light onto this. I also sitting here, I couldn't say, you know, how much sales price increase we will have at the end of the year.
Okay, fair enough. Then my second question, are you just to comment on volume elasticity at current pricing levels? Like, are you seeing any signs of resistance as some of these price increases that you're talking about are flowing through? Also, if possible, could you please break down where you're seeing the strongest demand by end market, auto or industrial and by region?
I think Esma has lined it out by region. I mean, we saw good growth in the U.S., or in North America, but in the region America, we were hit by 12% currency, you know, headwind in Q1, but also in Asia was good. You know, Europe was good here. With regard to certain, you know, industries, I don't think anything has changed, you know, what we told you at the year-end analyst call or on the Capital Market Day. You know, so far, I think we are in a good situation that we have the stuff available. We see some smaller and larger competitors who have fallouts, you know. Therefore, as I said before, to keep our customers running is the most important.
Many of our customers in 2020 or most of them in 2021 and 2022 were really happy with our performance. Not all the price discussions go through easily, but we push them through, even if it has to be up to the board level. We don't hold back, yeah. As I said, it's not normal times. In times of availability, price increases normally go through easier than in normal times, the availability is fully given.
Sorry, I was more trying to understand the, I guess, the auto versus industrial by end market. Are you basically saying that demand is strong across both auto, industrial, I guess, in equal amounts?
No.
Yeah.
I would say so. You know, as we have spelled out also in the Capital Market Day, auto is, for us, a lot of aftermarket. You know, FUCHS branded customer brands, Industrials, also Specialty Rotary Motion. I would say the answer is yes.
Great. Thank you so much.
Thank you.
[That's my question. ]
Thank you. We will take our next question. The question comes from the line of [Julia Winkleman] from Bank of America. Please go ahead. Your line is open.
Hi. Thank you for taking my questions. I have two. You said that you already did several rounds of price increases. How does this work for your larger contracts, for example, with the OEMs? Because these are typically indexed, so then price increases usually come with a lag. What kind of lag can we expect here? Can you indicate how large the share of index contracts is just to give an idea? My second question is on the guidance. The EUR 7 million one-off, was it included when you initially guided the EUR 450 million EBIT for this year, or have you just included it with your, you confirming the guidance?
Thanks, [Julia]. Maybe I come back on the price variation clause. We don't have the one price variation clause, yeah. We have definitely a number of them, you know, always based on if there are more base oil in the product, if there are more chemicals in the product. What we have done, we have shortened the cycles. I can't really give you more details on that, we have shortened the cycles compared to 2021 and 2022, which is really good now. I would say, Andreas how much of our total business is under a formula price variation clause is the standard answer we normally have is around about a quarter or so.
That's a number I would look at. Normally, you have it with large mining customers or with large OEM or industrial customers. If you count about on a quarter is good. We have significantly shortened that cycle time. That was the important part. To the EUR 7 million, I think, if I can come back.
I mean, the EUR 7 million, as I've mentioned, is the one-off in regards to the sale in Australia. It is cash relevant, [Julia]. The OpEx we have included as well, which is a similar amount more or less, which is not cash relevant. It will balance out each other. With the positive side that we are actually having getting cash in, but don't need to pay anything.
Other than for the 50%.
Yes.
Thank you.
Thank you.
Thank you. Once again, if you wish to ask a question, please press star one one on your telephone. We will take our next question. The question comes from the line of Michael Schaefer from ODDO BHF. Please go ahead. Your line is open.
Thanks for taking my questions. First one, I want to come back on your implemented price initiatives. I think, Stefan, you also at the CMD, you said that you have implemented 2 price rounds in the meantime. I'd like to understand when we look into the respective regions, whether there is a kind of different speed of implementation to be expected in the quarters ahead. This would be my first question. The second probably goes to Esma. I think your net working capital to sales ambition is 20% or remains 20% as outlined at the CMD. 21% was the rate, 25% in 2025.
I wondered whether you, given all the constraints, whether we should think about maybe a kind of extra security buffer in raw mats or finished products which you allow and have baked into this kind of significant free cash flow or significantly below the EUR 270 million type of new guidance. This would be my second one. The third one, last not least, I wanna come back on the Americas performance. I mean, you posted 3% organic sales growth in the first quarter. Obviously, this is significantly below what you have at the group level. Just wanna understand what holds back there the kind of organic sales growth if you compare this with other regions. Thanks.
Thanks, Michael. I start with the last question. What holds us back there with regard to other regions is the economy. You know, when you read about certain large customer segments in North America, they're still not at full throttle. Also what we had is we had a significant freeze especially in January and the beginning of February, where we have a lot of water-based products, either for metalworking or for the mining industry, which really shut us down for a few weeks for those product lines. Those were the main part of it. Price rounds, I would say the speed is the same around the globe.
It's different steps we take in different regions because the U.S. is also hit but a little later and they are not as much hit, you know, from the Strait of Hormuz than other countries. You have certain countries where you need to increase more because the currency is a secondary impact, not only the raw material oil-based price, so to say. I would say speed is the same, but different timing and different amounts in the different regions.
If it comes to net working capital, Michael, we said the 21% or the 20% is our target, but we know in such volatile times, we cannot actually drive for additional reduction in the inventory. It's more about securing raw material and make sure that we can deliver to our customers. What we are modeling or what we have modeled in, and I said that also in my speech, please have a look how the sales is evolving and model that in your cash. Accordingly, we are looking, of course, how we think the price increases will be and model that in our inventory and respectively to our receivables and payables. We haven't put in our net working capital any assumptions of buffer stock or anything.
I think, you know, mathematically there will be an increase in the percentage. I mean, that Esma takes it very serious. You've seen at the end of the first quarter. You just have to bear in mind that the inventory and receivables at year-end will have the value of the inventory and receivables in the month of December or maybe in November also. The sales will still be in a dynamic stage because, you know, if you have increased certainly at the beginning of November, another 20%, you only have left 2 months. You look at the lower sales number with a tough balance sheet number of the, of the cash and then the NOWC. Mathematically, you will get in such a year, a higher percentage at the end of the year.
The denominator will actually change. Yeah.
Okay, good. That's understood. Thanks.
Thank you. We will take our next question. Your question comes from the line of Martin Roediger from Kepler Cheuvreux. Please go ahead. Your line is open.
Just one question left for me regarding Asia Pacific. If we take out the EUR 7 million one-time gain from the disposal of this property in Australia, the so to say, underlying EBIT margin in Asia was good with close to 15% margin. Is it fair to say that you now have exceeded a certain threshold in your business in China and Australia, which are the two most important countries in Asia, so that any additional sales is falling down to the bottom line, so you have a big leverage effect? Is that the right understanding?
I would say, you know, Martin, my understanding is that they perform very well, especially with regard to China and Australia, but that things just fall through is never the case because you need a manufacturer still. You need to ship it still. I think they run at a very good dynamic at the moment. This is for us, the high-performing part. Aside of that, also really India is worth well mentioning and a lot of other countries in Southeast Asia. This is at the moment our, you know, positive horse in the stable. We are also, you know, proud of our European and American business, but definitely from an efficiency standpoint, they do better.
Let me maybe add one thing that was also mentioned in the Capital Market Day. We clearly said that's one of our key elements. We are going to use our existing asset base, which will automatically bring a better conversion of the additional sales into our profitability. That's what we are seeing right now as well.
Thank you very much.
Thank you. We will take our next question. Your next question comes from the line of Lars vom Cleff from Deutsche Bank. Please go ahead. Your line is open.
Thanks very much. Good afternoon. A quick follow-up question for Esma, I have to apologize in advance that I did not properly pay attention. You, you quantified significantly as above 10%. Above 10% with regards to revenue, if I, if I take the EUR 3.7 billion you were guiding for, you would already reach the lower end of your 2031 targets this year. Was significantly, i.e. 10% meant as a year-over-year change compared with 2025 sales being the basis?
Thank you, Lars. Number one, with significant, I said it's a double digit. It can be 10 ++ . We don't know where it will end. We know it's unforeseeable what the dynamics will be. You are right. When we put the guidance out with the EUR 3.7 million, there was no inflationary increase and not such a volatile market environment considered. For us, it's right now important that we hold our profitability. Yes, it will be that the sales will be inflated due to the market dynamics. Probably you are right, it can hit the EUR 4 million, the lower end of our guidance or even, I don't know it yet.
Lars, I think also, you know what is true, if you look at, you know what Timo said at the end of FUCHS100, there is a small print, and the small print is the assumptions we have taken with regard to FUCHS100 for the financial targets. One assumption was, you know, stable currencies based on August 2025 and stable raw material prices. We also said we will review, you know, each year, you know, where we stand. It's much too early now, but I think every year we will review it. We compare to our plans, and we are also willing to do updates at a certain time. That's what we missed in FUCHS2025. I think it's only fair if you make a 6-year projection that you put it under certain assumptions.
Obviously, we are way out of the assumption on raw material price stability.
Yes.
Completely understood. It was neither meant as a criticism nor.
No, no.
It was just for me to understand. I mean, Esma, you're still relatively cautious, but, EUR 3.7 billion multiplied with at least 10% easily brings you to above EUR 4 billion. That was the only point I'm making.
You are right.
Thank you. I'll go back into the line.
Thank you. This concludes today's question and answer session. I'll now hand the call back to Andreas Schaller for closing remarks.
Yeah. Thank you very much, everybody, for your questions. I think we had a very strong start into 2026, and it will be a lot of work now going forward to manage all the supply and demand, but we are very positive that we can do that based on the experience from the past. If you have further questions, please do not hesitate to contact the IR team. With that, I would like to close the call. Thank you for your interest and participation, and you may disconnect now. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.
Thank you. Bye-bye.
Thank you.