Good morning, ladies and gentlemen, and a warm welcome to the FUCHS Capital Market Day 2026. My name is Andreas Schaller, I'm the Head of Investor Relations at FUCHS, and I will be your moderator today. I'm very pleased to welcome all of you who joined us here in person at the headquarters in Mannheim. I would also like to extend a warm welcome to everybody who's following our live stream. Thank you very much for taking the time today and for your continued interest in FUCHS. Before we start with the presentations, let's have a quick look at today's agenda. The Capital Market Day is divided into two presentation sessions. After my introduction, the members of the Executive Board will introduce themselves, and then we will have a look back at the last strategy cycle, FUCHS2025, together with our CEO and our CFO.
Before we then present the new strategy cycle, FUCHS100, with our Deputy CEO. After that, we will have enough time to answer your questions before we go into a coffee break. After the coffee break, we will have deep dives into the focus areas for growth that we will present together with specialists from each area. Before we start, and I hand over to management, I would like to remind you, as always, of our disclaimer regarding forward-looking statement. I assume that you are familiar with the language and the content, so I will not read this out to you. If you're not familiar, then please review the presentation material where you can find the whole disclosure. This Capital Market Day will be recorded today on April the 16th, 2026, and a replay will be available on our web pages together with the presentation material.
Now please welcome the members of our Executive Board for a short introduction. Thank you for being with us today, and we will start with our CFO, Esma. Esma, please go ahead.
Yeah. Thank you very much, Andreas, and also a very warm welcome from my side. My name is Esma Saglik, and I'm now with FUCHS since May last year. It's almost a year, and being responsible for the area of the CFO. I'm looking back on 25 years of experience in several areas, also as a CFO. I have studied International Business Management and Economics. I'm a Chartered Accountant, and after my introduction, I would like to hand over to my colleague, Matt.
Thank you, Esma. My name is Mathieu Boulandet. I am French. I'm 43 years old. I joined FUCHS the 1st of August 2025, as CTO. I am a Chemical Engineer from background, and I did join FUCHS with more than 20 years of experience in the lubricants industry, having worked for two of our major competitors in the past, across the lubricants value chain in various geographies in Europe, in the Middle East and in Asia. I will hand over to Ralph.
My name is Ralph Rheinboldt. I'm 50 years old, and I started my career at FUCHS in 1998, and I'm a member of the Board since 2009. Looking at my responsibilities, I overlook the region of Europe, Middle East, and Africa, and on top of that, I look after two of our five global divisions, which is namely the Industrial division and the Specialty division, and I hold a PhD in Business Administration.
My name is Timo Reister. I joined FUCHS in 2009. I started for FUCHS, actually in the United States, spent five years there, relocated to Asia, to Shanghai for two years, and came back to Mannheim in 2016, became a Board member back then in charge of Asia-Pacific, Africa, Middle East. Today, I'm in charge of our two world regions, Asia-Pacific and Americas, the two world regions I worked in before, and I also cover the three remaining sales divisions with OEM Aftermarket and mining. Since January 2024, I'm the Deputy CEO of the company, and I also hold a PhD in Economics.
Good morning from my side, and a very warm welcome to you. I'm Stefan Fuchs. In a few months, I will be 30 years with FUCHS. I started also in the U.S. I've been there for almost three years, came back, and then I was engaged in Europe, and now I'm the CEO since 22 years, and I'm as excited as on day one because it's a wonderful business model and a sound, really plan moving forward. I must say, I stand here as a very happy person today because we have a wonderful management team. We had two changes last year. Esma is with us since a few weeks now, then almost one year. Matt, almost three quarters of a year. The five of us really form a great team and we meet on a monthly basis.
We discuss all important topics for the FUCHS Group for the future, but we also laugh with each other, and I think that's very important for us. We have also had substantial succession planning in the U.S. and in China this year, and therefore we have also made our whole Group Management Committee younger. I'm in good shape. We have a good team moving forward. Now I would like to ask my colleagues to go back to their place, and I will then kick off the presentation. Thank you.
Thank you very much for the introduction. Stefan, the stage is yours.
Thank you. Alrighty. We want to do a little review on FUCHS2025, and it's amazing how fast the time goes by. Because the last seven years we were engaged in FUCHS2025, and as I told our colleagues at our Global Management Meeting, the year 2026 is the 8th year in a row with a high degree of volatility. If you think about the U.S.-China trade war, COVID, then the Russian invasion in the Ukraine. We had a massive inflation in the year 2022, and there were many, many other happenings around the world and increasing conflicts already last year in the Middle East. We had a lot of tariffs, and we had Trump 2.0. The last seven years were really volatile, but I think we have really accomplished a lot and FUCHS2025 did very, very good to the FUCHS Group.
I want to run you a little bit through. Today, I think we are stronger than we've ever been in the past. For me, we continue to have endless opportunities. I'm 58 years old. When I was born, there were 4 billion people on the planet. Soon will be 10 billion. At the same time, the standard of living goes up. People want to live in a house. They want to go to vacation. They drive cars. They want to take airplane, bus, train. That means you have to manufacture always more and more with less input. That is a big El Dorado for Specialty lubricants. Therefore, we have got so many opportunities. We have still wide spots in the FUCHS Group. Being a decentralized company has a lot of advantages.
Also, some of our colleagues around the world put a different emphasis on different growth segments, and therefore we have white spots, which is an opportunity. We also don't have yet a full penetration with our large customers because sometimes we only accomplish one or two niches, so there's more to sell to the existing base. We want to form more global partnerships as we have done already now. I always say, without arrogance, but there is no second FUCHS in the lubricants world. We have a worldwide coverage. We have more than 10,000 product formulations, and we have a very, very dedicated team. We supply everything out of 37 plants around the globe, and I think that whole base is really cool.
Now, I want to show you a few examples of our applications, and it's always important when you look at FUCHS, we live in our mind in the application of our customers. We want to create benefit and make their processes more efficient. Unfortunately, Andreas only provided me with 15 minutes, but here I could talk for two hours. We chose about three examples for you. The first one, because we receive a lot of question, goes with regard to the infrastructure program, not only in Germany but also in many other countries in the world. There's a lot of things happening with regard to road, bridge, airport, and railway construction going on. Here you talk a lot about heavy duty Automotive products. You also talk about specialties for the cement mills, for steel mills in the whole concrete industry.
That is a very, very interesting field and we participate. The other part I think, which is also very interesting and that's, for example, a segment we had not on our radar 10 years ago, is the whole semicon industry. First of all, when you have a machine producing chips, that machine needs lubrication, like a robot. Today they also want to have PFAS- free lubrication. You don't do an oil change with a robot. Normally, you take the part out, it goes in the maintenance shop. They clean it and relubricate it. That's how it works also with the machines producing chips. We manufacture today those products in Fairhaven at Nye in clean rooms. That is a very interesting business for us. Those customers have got one horror scenario and this is outgassing in their machines.
When we supply metalworking companies manufacturing parts for the semicon industry, they want to have special metalworking fluids and cleaners to prevent outgassing later when they assemble the machines manufacturing chips. I think we are a big player in that market and it's very interesting for us to go forward. We are scaling the Nye business since a couple of years, mainly to Asia but also to Europe. We also received a lot of questions from you regarding the whole defense part. Many of the applications we show you or the examples are like 1% of sales. Also, defense is not huge to us, but since decades, we supply different militaries with a lot of Automotive heavy duty lubricants for the whole fleet, so to say. You also have a lot of metalworking fluids for the manufacturing of the parts in those equipments.
You have got also a lot of Specialty products because also drones need lubrication and many other products. This is a whole new area coming up. When people, for example, ask, yes, is Automotive industry going down from a manufacturing standpoint in Europe? Might be, but I'm sure that defense will quite take up some of that part moving forward. When we now review FUCHS2025, I think thinking back, I'm proud of one thing. When COVID hit us at the beginning of 2020, we didn't pull the blanket over our head. We were looking, what can we do? We spent the time where all our people were locked up at home. We had everything in place from our teams and video conferences, et cetera, so that helped us.
We spend a lot of time to do a lot of groundwork on segmentation and on planning. That's what we also can build on FUCHS100. That was the cool part during COVID. Our people were all fascinated, and they worked very hard to segment their business in the countries according to our core segments we have. Therefore, we have achieved a lot. As always, there's improvement. Timo will show you later in FUCHS100 what we will do a little bit different compared to FUCHS2025. When you look at FUCHS2025, we always speak about the triangle. There is a famous saying which says, "Culture eats strategy for breakfast." I think that is so true, and we have a wonderful culture at FUCHS.
We have the people walking the extra mile, and especially now, in those days, which we all experience, I think that is very important. We pushed three key elements in the FUCHS2025 strategy with regard to the culture part. First of all, we didn't want that people remain in their comfort zone and had a closed mindset. We really pushed the people to have a growth mindset and to continuously change. If you experience FUCHS, we continue to change almost on a daily basis. I think we have really, when you look around and you all know the Germans are probably a little bit more stiff or conservative regarding compared to Chinese or U.S. colleagues. I think we came a very, very long way. The hierarchy-free communication was very important to us, not to have a big gap between leading people and colleagues.
I think that is important, and if you watch us as the Board, we want to be front runners and show a good example. The other part is the open feedback culture. Feedback, it doesn't help always to tell colleagues what they did great. On feedback, it's also important to give constructive feedback to improve yourself. We say feedback is a gift. Honestly, also for me, in the beginning, when you receive a lot of feedback, you don't feel it as a gift. You need to train that and make sure, but it is so important to understand how people perceive you. It doesn't help to say, "Yes, but I didn't want to do that." That is a really big deal, and I think we have come a long way, but that never stops.
We have culture scouts in our large subsidiaries, and they help us to transport a message, and I think only if you really receive feedback in a good manner, then you can make another step forward on that whole feedback culture. The other part is if you look on our structural side, FUCHS is a decentral group. All the people in the country report to the CEO in the company. There is a high degree of decision-making in the country, and we pay uncapped incentives on the results from the FVA in the company. Now, we also know that we don't want to allow that every country does everything on their own. Our Managing Directors, they are simple guys. If we can help them, they are more than happy to receive help. We have established networks.
networks, you can think about every function a company has, from IT to finance to purchasing to R&D. In the network, the peers of the large countries sit on the table. They decide what do we do on HR in the year 2026 in the FUCHS Group. Once the HR responsibles of the large countries sit on the table, there is not a lot of headwind because they were part of the decision-making. I think we learned a lot. We also defined a Board operating model of the FUCHS Group. I think there we can build on the future. On the left side, you see the strategy part.
As I said it before, if you have got so many opportunities and so many different markets to focus, 20 years ago, we said no matter where you grow by 10%, make an EBIT greater than 15%, and you are good in shape. We have large segments, and we don't want to allow that a country, which is, for example, a key country in wind, does not follow up on wind. Again, we have no fights with our countries. They see we provide them with help to grow their top line. We had defined at that time 12 large segments. We have defined key countries for those segments. I think we have established quite a lot. I always say as an example, when we go to the cement industry, we are a leading provider for the open gear lubrication in the cement mill.
That's the heart of a cement mill. We don't lubricate the conveyor belt, the excavators, the trucks, the forklifts and all other things. This is a high El Dorado for us to just sell more products to the existing accounts, to fill the white spots in certain countries where we are not yet fully involved with a certain segment, and to establish more global partnerships as multipliers and enablers. I think there we have quite a lot to do to make us even better. The one thing is if you ask me, what is the problem of the FUCHS Group? Our problem is we have endless opportunities. There are niche applications wherever you think about. The secondary thing is we get excited very easily. We can't run after everything at the same time.
Therefore, I think it's very important, and what Timo will tell you later is only if we focus, we win. Therefore, we have dedicated sales teams, application engineers in our segments, talking the customer language and helping them. We can't run after everything which comes to our mind. I think that's the big deal. What we have learned, we have kicked off the FUCHS100 strategy a few weeks ago with our Global Management Meeting. Really officially, we kicked it off on Tuesday internally. We had watch parties in 67 subsidiaries. We had a 32-minute video on the whole FUCHS100 content. They had a lot of fun, so it was important to have an emotional kickoff. Today, we had the press release, and now I think it's really the official later rollout of the FUCHS100 strategy together with you.
You also know, you have learned it in the introduction that Timo is my Deputy, so he's the Deputy CEO. As I always say, my contract runs until the middle of 2029. When you change during a strategy cycle, the CEO or there's a proper succession, you don't want to change the strategy. Therefore, I think it was very important for continuity and for the company that Timo was involved heavily, and he was leading the FUCHS100 strategy build-up, and I look forward later to see him on stage. Before we come to Timo, I'm happy now to hand over to Esma, who will run you through the financial part of our update today. Thank you very much for the first part.
Thank you, Stefan. Yes, before actually we go to the future FUCHS100 and listen about our strategy from Timo, I will take the next 20 minutes and walk you through our financial performance during our strategy cycle, FUCHS2025. Let's start with the overview. In 2019, when we defined our financial targets for our strategy cycle, we were under the assumption that the world will be actually continuing in a normal way. Honestly speaking, what we have faced was completely the opposite. We had the COVID pandemic, then we had supply chain disruptions, inflationary increases, the war in the Ukraine, and other geopolitical tensions, which are still continuing with the Middle East conflict. Considering the circumstances, we were capable to grow our business with a mid-single-digit percentage.
On the other hand, we generated cash even above the average, what we were thinking or what our target was, and that in an inflationary environment. We paid dividends to our shareholders year-on-year, but we also have to be honest to ourselves, we haven't achieved the EUR 500 million EBIT target, which was our ambition, and we were initially considering. Nor we have achieved the 15% EBIT, which was our target. Nevertheless, considering all the circumstances and the market volatility we have been in, we can say we have delivered a solid result, which also underlines actually the quality and the resilience of our business. Now I would like to dive a bit deeper into our financials and starting with the top line.
Over the strategy cycle, we increased our sales by 5.6% year-over-year from EUR 2.6 billion to EUR 3.6 billion, and that in a flat market environment. The growth or the organic growth came mainly via volumes and price increases, which we have implemented over the course of the strategic cycle. External growth came from strategic investments we have taken or acquisitions we have taken, like STRUB, LUBCON, we heard about Nye before, or Boss, which were actually strengthening our technological portfolio and on the other hand also expanding our market presence. Unfortunately, we also faced currency headwinds, especially in 2025, which decreased our sales trajectory. All in all, we were capable actually, if we summarize everything, we grew our business via volume growth. Secondly, our customers appreciated our value proposition, even in inflationary times, by accepting also price increases and helping us to grow organically.
Now the question is: Where did we grow? If we look to our regions, all regions grow mid-single digit and even outperform that. Our development you are seeing here, especially in Americas and Asia Pacific, was not unintended. It was a clear strategy of our FUCHS2025 cycle. We grew actually in areas where we were talking about segmentation before. We know actually we have expanded our footprint in these regions, and this outcome is the harvesting of it. Both regions grew and both regions gain share. Also, the growth in EMEA, I think is not negligible. We grew 5%. It was a mixture of organic growth and external growth. Considering the difficult industrial environment, that's a very solid result. One of the key success drivers behind this growth was our segmentation approach, as we heard before from Stefan.
Here, please note, we start our numbers from 2021 onwards, because as of 2021, our numbers for the segmentation was available. Segmentation was one of our most strategic shifts we have done in FUCHS2025. It changed our way, how we were prioritizing, and how we were allocating our resources to the areas we want to grow. The financial effects, as you can see, is visible. Our target segments outgrow the rest of our portfolio. The key takeaway, and we heard that before also from Stefan, our segmentation approach worked, and we grew actually our business with this approach. Now I would like to stop with the top line and move to the profitability, and let's see what happened there. Our EBIT has grown broadly in line with our sales by 5% per year.
We see actually in the COVID year 2020, a temporary setback in our profitability. Nevertheless, over the course of the years, we grew in absolute terms our profitability, and reached our highest level in 2025. This growth was actually achieved despite inflationary hits we have faced in 2021 and 2022. From a margin perspective, from a EBIT margin perspective, we had some fluctuations actually, and the reason here was the inflationary increases we faced. I think we did a good job and we see actually that our margin went back to a robust level of 12%. In a benchmark, it's over-performing the chemical industry. While we are talking about the inflationary increase, I think it's worth to take a minute and have a look how we have managed the situation in 2021 and 2022. Let's take a closer look to our EBIT margin.
Like I said before, 2021 and in 2022, inflation hit us and costs were actually rising rapidly. What we can see, we had a hit in our profitability or in our gross margin, where our gross margin went temporarily back to 30.9%. We didn't stand still. We were reacting on it, and we were watching the situation closely. We implemented price increases, and as we can see, over the course of the time, we went back to a robust level, and by 2025, we came to a level of 34.9%. I think that one shows, in summary, inflation can be a temporary challenge, but I think we also have the proven record that we can manage such challenges quite successfully. Sorry, I have to drink something now. Still, at the beginning, I said we are not there where we wanted to be.
Our clear target was to achieve the 15% EBIT, which is still our ambition. We know we are not yet there. We are confident to be capable to get there. We see two levers, and we will hear later more in our FUCHS100 strategy how we can get there. First lever is efficiency. We have launched certain projects where we expect in the future to work much more efficient, which will also help us actually to drive our EBIT profitability. Secondly, we will drive for growth. You all, and in the discussions yesterday, we heard you have invested, et cetera. Yes. We have invested into our structure. Our structure is in place. Our asset base is in place. Now it's time to drive our growth and turn and convert it into a higher profitability.
With leveraging our existing structure, we believe we can do that. Our foundation is set, and now our focus is to drive profitable growth and reach the 15%. Talking about the foundation, I think it's worth to look at our CapEx. Another area where we are operating very efficient. As you can see, our heavy investment cycle ended in 2020, and since then, we are on a level of 2% of sales in our CapEx. Going forward, we expect also a CapEx level which is around the number of 2025. Also, what you see is that our capital returns are stable with around 1.9 turns. Yeah. Over-performing the chemical industry, so being better than the chemical industry. This means actually that we are using our CapEx very efficient, and we are a capital light model, which is definitely supporting a strong cash generation.
I would like to now talk a bit about our FVA, another area where we are creating value and where we are doing a good development. This slide shows clearly how we are using our capital. We generate turns which are far above the capital costs, and this in a constant and very disciplined manner. In recent years, you see that our ROCE was above 21%, which is a very good level for the lubrication industry, and it is also outperforming, again, the chemical industry. This resulted over the strategic period to a value add generation of EUR 1.4 billion, and that in a sustainable way. When we talk about value creation, value creation ends up in cash. I would like to move over to cash, and I think here we definitely proved we can deliver cash. Across the strategic cycle, our cash conversion has been very strong.
Our target was 0.8%, and we were even in the average above. Since 2019, it has resulted to a cash of EUR 1.6 billion, which is, I think, a very strong result. Even during the inflationary years of 2021 and 2022, where we had a hit due to inflations, we had to invest approximately EUR 350 million in our networking capital to support our business. We were still cash positive. That shows that we have the strong ability to generate cash, and that even in challenging times. Yesterday, I heard a couple of times, what are you doing with your cash? How are you allocating your cash? And frankly speaking, there will be no revolution in our cash allocation. We will actually continue the path and the guideline we are having.
We have an internal guideline which says 1/3 of our cash we are using for M&A, and 2/3 of our cash we are turning back to our shareholders or using for any share buyback programs. Since 2019, we have returned, as you can see, EUR 1.2 billion back to our shareholders. We have also initiated the share buyback program, which was going on from 2022 until 2024, and we have invested almost EUR 300 million in M&A. Probably you will ask here, you're talking about 1/3, 2/3, and this ratio is actually not fitting to that. You are right. This is not about that we didn't want to invest into M&A. Frankly, we are prepared to even invest more into M&A if we have the right target.
While we are talking about cash allocation and shareholder return, on this slide, you can see our long and reliable dividend track record. Based on our strong earnings and our cash generation in 2025, we will continue our progressive dividend policy. In our AGM in May, we will propose another dividend increase of EUR 0.06, which is amounting to a year-over-year increase of 5% for 2025. That would mark also our 24th consecutive dividend increase, which underlines also the stability and the reliability we are offering to our shareholders. Finally, let me close the FUCHS2025 strategy cycle with some key takeaways. When I look at FUCHS, for me and for us, FUCHS stands for resilience and continuity, combined with focused growth and a strong execution ability. As you can see, we delivered solid results over our strategic cycle, even as we were facing difficult times.
On the other hand, our segmentation approach worked. We generated growth over our strategy cycle. Finally, I think in summary, we can say we are happy, like Stefan mentioned before, with our FUCHS2025 strategy. We learned a lot, but also we have executed a lot. We know we are not there in regards to our profitability, but we are convinced with the foundation we are having and going forward being much more focused on growth and turning it into valuable profitability, we will be capable to achieve also this ambition target. With that, I would like to close actually the FUCHS2025 strategy cycle from a financial perspective and would like to hand over to my colleague, Timo, who will talk about our next chapter, FUCHS100.
Thank you very much, Esma. Today is a very exciting day for all of us because finally we have a chance to introduce our new strategy cycle to you. This strategy cycle is the result of a lot of work that went into our strategy development. Contrary to other companies that maybe work extensively with some strategy consulting firms, we do our strategy inside the company with hundreds of colleagues involved. All of them have been very excited when we kicked off our strategy with the entire team earlier this week, and they are very motivated to drive execution now. We made sure that you were busy during breakfast, and we sent you a press release earlier today, and I already had couple of conversations, so you studied it extensively. I will go now through the details of FUCHS100.
After the coffee break, we will have an additional session on FUCHS100 with experts joining us that will provide more clarity on our focus areas. You will also have the chance for questions after this session. A lot about FUCHS100 today. What you will read in our documents and what you will also hear in my presentation a lot is the word focus. Stefan already touched on it. For us, we want to make sure that in our new strategy cycle, we concentrate our time, efforts, and resources on the things that create most value. That's sometimes not so easy for us because we are a very ambitious organization, and also our market is very diverse, so focus is really critical. It will be all about focus. We will be turning 100 years in 2031, and that's why we picked the name FUCHS100.
We find it an appealing name, and we want to make sure that we drive growth in the next six years so we can all celebrate great results with you in the year 2031. At FUCHS, it's all about continuity and long-term thinking. As FUCHS2025 builds the foundation for FUCHS100, FUCHS100 will build the foundation for the years after this strategy cycle. It's not just about the next six years. It's again, about the long-term perspective of FUCHS. The one part at FUCHS we are really proud of is our history. 95 years, and we have always been able to go with times and to develop solutions for our customers that help them to succeed with their technological transformation. It started with oil imports from the U.S., and today we supply many high-tech applications in various industries.
We have the most comprehensive and most sophisticated product portfolio of all lubricant companies, and we are the largest independent lubricant manufacturer in the world. This is something which is not easy to copy, and this is something we want to further develop in the coming years. I've just one slide on FUCHS2025, and I think it fits well because some of you asked me this question yesterday. "Timo, so what are the main points of FUCHS2025 that you also find important for FUCHS100?" The first one is our customer and market focus. We introduced segmentation, which allowed us to slice the big lubricant market in smaller pieces we can focus on and we can develop expert knowledge on. That's a massive achievement, and you have seen it with Esma.
Our growth rates in these segments have been higher than outside the focus segments, and this is something we can incorporate, and we will incorporate in FUCHS100. The other part is shared and multiplied best practices and new business development through a better international collaboration. Are we perfect in that regard, transferring successes from A to B? No. During FUCHS2025, we have gotten a lot better, which helps us to increase our hit rates regarding the opportunities we go for, and we will continue to build on that. A strengthened market presence through improved local setups, but also through our acquisitions. We had some very nice acquisitions in FUCHS2025, and we will be able to leverage on these in FUCHS100. A positive cultural development. Some of you may wonder why we talk so much about people, about culture.
I can only tell you this is a massive competitive advantage for us. We have very loyal employees. Stefan mentioned the succession topics we had going on last couple of years. Just three weeks ago, when we had our Global Management Meeting, we farewell two U.S. colleagues, the former CEO and the former CFO, with combined over 80 years of FUCHS experience. They have dedicated their entire work lives to us, and they didn't call it a day at 5:00 P.M. at night when something had to be done. They stay till midnight, and they motivated other to join them on that journey and to follow their big shoes. This is what FUCHS is about. The culture work in FUCHS2025 was extremely successful, and this will be another focus during FUCHS100.
You also asked me yesterday, what are the things you would do differently or what didn't go so well in FUCHS2025? If I have to point out one element, it's maybe we were a little bit overly ambitious here and there. We wanted to do too many things at the same time. We decided, that was also based on the feedback we collected from around the world, that we need to be stricter with ourselves. We need to be more disciplined in focusing what really matters, because we also understand where we focus, we win. If we really focus on something, we usually do a great job with great outcomes, and that's why it's important for us to do fewer things, but do them right.
What was one of the main findings during the strategy development process that I want to present to you here is there is so many opportunities out there for us. The lubricant market appears to be flat in the coming years, or rather flat. We expect a volume growth of 0.8% over the next six years. So one could think, well, this is a very slow and stable market. The opposite is actually the case. There's a lot of technology changes. There's a lot of regulatory changes. There is new customer requirements. All of these changes create opportunities for us. For us, during FUCHS100, we identified that there's four megatrends that are very relevant for us. The first one is regionalization. You all know it. There's more protectionism out there.
We are in a good position that we have close to 40 plants, that we are close to our customers. There's a lot of nearshoring going on, and this needs to be supported by a strong lubricant company like us. There's also the mobility transformation. There's different driveline concepts now on the road, and this situation will continue. In some regions, we see an increasing population of internal combustion engines even. In others, we see different concepts. All these concepts need to be supported. We have the megatrend of AI and digitalization that's changing the world, also in maintenance, with predictive modeling, with other things. That needs to be supported. There's the megatrend of sustainability. In some areas in the world, it's gotten a little quiet on sustainability, but this is a megatrend that's there to stay. We are sure about that. We see it.
Our customers, they continue to have their net zero targets. There is a demand for more sustainable lubricants, and we all need to help to decarbonize the world. The beauty for FUCHS is that across all these four megatrends, our products enable innovation. With these megatrends, opportunities open up for us, and we want to go after these opportunities. Switching to the structural changes of the lubricant market, we identified that there's a diversification on the demand side. On the one hand, you have a commoditization of high-volume applications, but also an increased need for digital tools to support these business positions. Also, regulatory changes, supply chain requirements that come up, nearshoring, I mentioned before. You have a specialization that accelerates. This requires a high R&D power, fast time to markets, and also a deep understanding of customer applications. Stefan stressed it.
We live in customer applications like nobody else. Sometimes, our sales professionals in the field, they know the application better than the customer. They are also with us for many years, so they bring the experience. They are sometimes used as consultants by our customers. That's a USP of FUCHS. On the supply side, we see that some of our competitors struggle. We have different types of competitors. On the one hand, we have the large players. They struggle with complexity, and they try to take complexity out of their system by trimming down their product portfolios, by scaling down on technical support, by reducing their R&D teams, and partially, they also exit markets and market segments because they are just too cumbersome for them. On the other hand, we have smaller players, and they very often don't have the resources to meet all the requirements that customers have nowadays.
They also don't have the global footprint and the global reach. With that, we feel that we are uniquely positioned. We can handle complexity. We make sure that we get paid for complexity, and we can scale both our core business and the Specialty business. What sets us apart? First, the full range of lubrication solutions that we have. I said it, we have the best portfolio in the industry, and we continue to work on this portfolio. We are passionate about customer-specific solutions. It's not that we force our customers to take a second-best solution that we have on the shelf. We are willing to enter R&D projects with them and to develop something for them, and that becomes more and more important. We are independent and financially stable.
I don't need to tell you because you know our equity situation, our financial situation very well, but it's a big deal for our customers that we are not out there for sale. Some of our competitors have been sold just recently, and customers are irritated. They don't know what's going to happen. We create additional projects because we are there for the long term. We are the reliable party in the lubricant market, and that's something that's highly appreciated by our customer base. Our application and process know-how, this is something that you cannot build overnight. We hire also people from target industries that bring application know-how and that educate the people that we have already in the company. With that, we can create a lot of additional value. We are best in class in R&D.
We are very happy that we have Matt on board, who helps us to further strengthen our R&D setups around the world. We have three big hubs, one in Germany, one in China, one in the U.S., and they operate in networks as well. We have satellite laboratories. We work more efficiently in R&D, and we learn faster from each other than ever before. This is a very, very nice setup for us. In short, market dynamics and our unique strength create opportunities. To take full advantage, we must sharpen our priorities even further, and therefore, the clear mission of FUCHS100 is focus to win. We tried to summarize the key to winning in one headline that sticks with you, and it's also on the summary slide. What we consider the key to winning is delivering customer-specific technology-driven solutions powered by global, regional, and local collaboration.
This is really what will help us to win in the marketplace. During FUCHS100, we will focus on three key elements. It's growth, it's sustainability, and people. Regarding growth, we have defined six focus areas. You have seen them in the press release, but I will go through them later, and we'll hear more in detail in the session after the coffee break with our experts. I'm sure you're very curious about these focus areas. In these focus areas, we want to expand, and we want to specialize. Yesterday, during our dinner conversation, I noticed that it's also important to explain the lubricant market to you because there's different views out there and different assumptions, and I think it's important for you to understand how we look at the lubricant market. What I added here to the slide is some market data based on a Kline study.
It's 2025 data on the left, where you see that 66% of the lubricant market is considered Automotive. This is by volume, and 34% is considered non-Automotive. The lubricant market is expected to grow at a rate of less than 1% over the next six years, 0.8%, and will ultimately look like what you see on the right chart, very similar in 2031 compared to 2025, 65% Automotive and 35% non-Automotive. What we did now is we took the market data, and we added the FUCHS data, and that's the outer rings. What you see is that FUCHS has a stronger representation in the non-Automotive market. Our market share there is slightly above 4%. In the Automotive market, we consider our market share to be around 2%. This will not change during FUCHS100.
We will continue to have a stronger representation in the non-Automotive part of the market. Diving a bit deeper in the Automotive part of the lubricant market, you see that almost 70%, so 48% of the total market, but 70% of the Automotive market is Aftermarket. In the Aftermarket, there was also a question yesterday, we have a market share of around 1%. 1% only. So this means for us, this is a large growth opportunity. It's almost half of the lubricant market where we only have 1%, and there's very profitable business in that market. We'll have large growth opportunities not only during FUCHS100 but for the coming decades. We'll talk more about the composition of that part. We have a very low representation right now with our market share of around 1%, and we try to gain more business.
The second largest piece of the Automotive market is Customer Brands. In a way, that's also Aftermarket, but it's not under our own brand. It's under the Customer Brand. One example would be the Mercedes-Benz oil that we supply. So that's Customer Brands. That's 14% of the market. This is followed by mining and first-fill with 2 percentage points each. What is our representation, our exposure on first-fill? We have a below-average exposure on engine oils because in many cases, they are just commercially not so attractive for us. We have a higher representation in the higher technology lubricants, which we call other here. These are gear oils and other products where we see more value and where we can play the technology card more. We also try to explain to you the structure of the Aftermarket, and this is this slide.
Very often I hear Aftermarket, that's all passenger cars. I can only tell you that's totally wrong. There is 1.4 billion passenger cars in operation, so by the number of vehicles, this part is dominating, but the lubricant consumption is much higher in other areas. That's why the market, the Aftermarket looks like this. 39% only is passenger cars. 61% of the market is not related to passenger cars. There's areas like commercial vehicles, agricultural vehicles, heavy duty vehicles with a very high lubricant demand. For heavy duty vehicles, we talk about a lubricant demand average maybe 400 L per year, but there is applications with over 1,000 L per year. We don't know it because we don't see it on a daily basis because these machines operate elsewhere. The lubricant demand there is massive. EV transformation.
That was something we explained during our Capital Market Day in Pfronten. I want to follow up on this explanation. What we added here to the presentation is a picture of a car with an internal combustion engine, and you see two types of applications. You see the dark blue applications, these are related to the combustion engine, and you see the light blue applications, these are drivetrain independent. If I take away the applications that are only there because of the combustion engine, this part remains. If I now switch to an electric vehicle, still there because these application points are not related to the drivetrain. But we have additional application points that are EV specific, that are now new and that come on top. A lot of these application points are very demanding.
In many of these points, you talk about for life lubrication, you talk about new requirements like noise suppression because you don't have an engine noise anymore, so you hear every little rattle noise in the car, which a consumer doesn't like. This requires lubricants and very unique lubricants, and therefore, it's a question that we have been asked, so what's the impact on you of the transition from ICE to EV? We consider it net neutral to positive, in particular because we also focus on high value, high margins applications in e-vehicles. That's very important to understand. Now, we have talked enough about Automotive. Let's go to the non-Automotive part of our market. There you see the dominating area is industrial oils with 18%, followed by metal processing, greases, and base and process fluids.
The growth drivers in this part of the market are energy generation, production automation, robotics, food, semicon, med tech, railway, all very exciting fields. Our FUCHS position in that part of the market is very strong. We have a leading position in greases that goes back to a very strong manufacturing footprint with state-of-the-art grease plants on all continents and with an R&D and application know-how that's second to none. This is a position of strength that we can utilize during FUCHS100. We also have a very broad and leading-edge Specialty lubricant portfolio for the other areas. What's our FUCHS positioning? To give you a feel on where we stand today. General industrial, above average. Metalworking fluids, above average. Greases, above average, and Rotary Motion is a little bit of an exemption here. We consider ourselves only average regarding the market representation.
This is something we want to change during FUCHS100, and we'll be working very hard on that area. Special Application Solutions, that's something we really love. Food and packaging, representation above average, and the requirement for food-grade lubricants is getting stricter and stricter. In the past, it was only the machines directly involved in food processing. Now it's the entire value chain. It's everything that needs to be lubricated in a plant. It's also the logistics around the warehouses. More and more higher demand for food-grade lubricants around the world. Med tech, exciting area for us. Compatibility plays a big role, certifications play a big role. Not everyone can do that. We are very strong with that and we did also strategic acquisitions in that space with Nye having a strong med tech portfolio, but also Boss in Europe.
An area where we are already above our average and we want to build on our strength. Semicon, I can keep that one short because Stefan elaborated on it. Very exciting area for us. That low outgassing that's required in semicon, we actually learned with space applications because they also don't like outgassing. We transferred what we learned there to another high-tech area, and we see that customers love our solutions. Nowadays, that PFAS ban out there, which is changing the market entirely, and we are the first company that offers PFAS-free solutions in that space. Very exciting growth area for us. Railway, also very good, above average with more to come. That's a business where we really need to internationalize more. Our biggest business sits in Europe right now. We're picking up speed in the Americas and in Asia, and we will grow there as well.
This brings me to the six focus areas. Here summarized on that slide. The six focus areas will generate the majority of our growth in the coming six years. We will still be a full line supplier, but we will give these six focus areas priority. These are Customer Brands, Automotive Aftermarket, Rotary Motion, Performance Greases, New Mobility, and Special Application Solutions. Our experts will tell you exactly what's in these focus areas, why do we think we have a competitive advantage, and how do we execute on our plans. Looking at our sales split today, it's roughly 50/50. 50% Focus areas and 50% rest of the business. The majority of our growth will come from the focus areas. We believe. Roughly 2/3. That means that picture will change and the share of the focus areas is expected to increase in the coming years. Acquisitions.
We have been able to realize couple of nice acquisitions in recent years, and these acquisitions fit very well to our focus areas, and we continue to watch out for acquisitions. It's now also very easy for us to screen the market for acquisitions that give us the highest value because we know what we want to focus on. What I want to highlight here is the Specialty acquisitions we did with Nye, LUBCON, and also Boss, that we can leverage not only in Special Application Solutions, but also increases. Sometimes it takes some time to train our people to initiate customer projects. Some of them have long sales cycles, but in FUCHS100, we want to harvest on these acquisitions, and we feel we are in a very good position to do so.
Coming back to the focus elements of FUCHS100, I want to now move to the people aspect. This has two dimensions for us during FUCHS100. One is the people empowerment. We want to make sure that we continue to train our people, that we also give them the decision-making power to unfold their full potential, and that we further work on our very strong company culture. What I want to highlight here is the foundation we can build on is very solid. We did our first global employee survey last year, and 87% of our employees said that they feel proud or very proud to work for FUCHS. They also feel empowered to make the decisions they need to make to succeed with their jobs. I don't think there is many companies out there that have that.
You will also feel that today when we go on the plant tour. Working for FUCHS is not just a job. For many people, it's passion, it's a sense of feeling to the belonging of a great team, it's the sense of making a difference for our customers. That's something we can build on. The winning culture that was also mentioned on the slide is a combination of two elements. One, the strong bonding culture, the family-oriented bonding culture we already have in the Group. Two, performance culture, which we want to push more by focusing more on KPIs, by educating our people across all functions and levels more on our financials, and by also pushing performance across the Board. The two points we want to mention here is also cross-country and cross-functional collaboration. You have that in all organizations.
It's like people tend to only look at their area, and they don't think so much about what does that do to the neighbor, to the neighbor department, or how can we efficiently work together. We see that in particular with our big competitors that struggle, where sometimes the right hand doesn't know what the left hand does. We don't want to be like that. We need to make sure that we work together, that we align, and our HR teams around the world have put a nice program together to further also invest in our cultural, intercultural competence and to make sure that we do better than others on that.
We also have very nice and new performance management tools, all digitalized, all standardized in the Group, that will help us to create more transparency, to also identify talent earlier, and to make sure that we get the career pathing right, and that we have a full pipeline regarding internal succession. The FUCHS team is going to be in the focus once more during FUCHS100. The last part of the elements we want to focus on is sustainability. For sustainability, again, two dimensions. The first one is our path to net zero. We remain committed to be a net zero company by the year 2050, which means 90% reduction of our emissions.
We also continue to be committed to our midterm targets, which is the 42% reduction of Scope 1 and 2 by the year 2030, and a 25% reduction of our overall emissions by the year 2035. We had to update our path to net zero as FUCHS100 comes with some growth, so it's getting more challenging. We feel we have a very good handle on Scope 1 and 2 with actions already implemented and identified. Examples are switch to green energy, but also replacement of equipment, for example, investing in e-boilers, and that will help us to get to where we need to get to. Scope 3 is more challenging because Scope 3, we need support. We need support by our suppliers with the raw materials, and we also need support by our customers.
One emphasis in FUCHS100 will be to not sit down and wait for the support, but to create that support. How do we want to create that support? We want to create that support by highlighting and quantifying the customer benefits of our products in a smarter way. The beauty about lubricants is lubricants are by nature sustainable. Our products help our customers to reduce energy consumption, to reduce water usage, to reduce waste. That's very positive, and that needs to be quantified more. Lubricants have an overall positive sustainability leverage, how we call it. You generate less CO₂ with the manufacturing process of the lubricants and with the product, than what you can save during time of operation when the lubricant is in use. That's a unique feature of our products. For us, it's about transforming customer benefits into strong sales arguments.
We have a department that creates life cycle analysis for data for companies and for cases, and some of them are very powerful. Sometimes it's like that you need 2 kg to manufacture the lubricant, but you can save hundreds of kg in the application. That's something that will become increasingly relevant for our customers. We are very systematic in quantifying that, and we also do some industry committee work to make sure that we apply the same standards and that we can compare ourselves to competition. That's very important to us. That closes this chapter, and now I come to a part that's maybe the most interesting one for all of you because it's our financial targets. Before I get to that part, I want to talk a bit about the assumptions that we used when we put our financial targets together.
There is four different type of assumptions I want to go through first. It's market and economic environment. When we put together our financial targets, we assumed that there is no unexpected decline in the lubricant market that is in contrast to current market studies where the lubricant market is heading. We also assume that there is no disruptive competitor's behavior that changes the lubricant market fundamentally. We don't see that right now, but we felt it was important to really put it in there. We also assume that there is no catastrophic events that severely negatively impact the entire lubricant market, like another pandemic. That's not factored in in our numbers. Second, supply chains and raw materials. We based our numbers on stable supply chains, largely stable supply chains, and also availability of critical raw materials.
You will have all the fine print in your documents. I just give you the highlights right now. Geopolitical conditions. No massive escalation of geopolitical conflicts that shut down economies. Also, largely intact trade relationships, no further deterioration. That was the assumption there. Regulatory environment and policies, that the regulatory environment evolves in a predictable manner with no abrupt changes, and the same is true for other policies like taxes and tariffs. Again, you will have all the fine print in your documents. There's also other macroeconomic assumptions I want to highlight. First of all, we based our numbers on fixed currencies based on August 2025. We don't forecast currency development or anything. This is a neutral effect for us in our numbers as of August 2025. Raw material cost inflation, sales price development, we also assume stability here.
This brings me now to our financial targets for 2031. First, sales. We want to grow our sales from EUR 3.563 billion to between EUR 4 billion and EUR 4.5 billion organically, as I said. That's a CAGR of between 2% and 4%. We want to realize an overproportionate EBIT growth, growing our EBIT from EUR 435 million in 2025 to between EUR 550 million and EUR 600 million by the year 2031. We want to realize an EBIT margin of between 13% and 15%, heading towards our 15% long-term EBIT potential. There was a question that came up before we met all in here today, and that was, all right, we can just take the upper ends of all your numbers and calculate your new target. This is not how it works, no? If we say we realize an EBIT between EUR 500 million and EUR 600 million, that's it.
It doesn't mean we realize EUR 4.5 billion at 15%. It needs to stay within the corridor of all these financial KPIs to make sense for us. What are the drivers that help us to get there? Let's cover the sales side first. It's to realize growth in the focus areas we identified, also to leverage our superior application and R&D know-how, and to deliver value add through a customer-centric approach that has made us so successful. EBIT and cash flow, again, four points to mention. Pricing and purchasing excellence, that's critical for us. Operating leverage of existing CapEx and OpEx. That's also what Esma highlighted in her FUCHS2025 review. Focus on efficiency, and that's a new approach for us.
Esma brings a lot of competence to the company and has a clear target picture for her finance departments around the world, and they will take the lead in this and help us to drive efficiency. Operational efficiency and excellence, but also realizing the improvements we want to realize through our T2G value case, and I will come back to that. Networking capital optimization in 2025, we finish at around 21%, and we want to get to 20% during FUCHS100. T2G is the largest global project we have in the FUCHS Group. It's a big investment for us. Important to understand, this is not just a technical conversion from R/3 to S/4HANA, it's a transformation. It's a business transformation.
We use this T2G journey to simplify and standardize our processes, to clean up our data, to improve our governance, and this will allow us to build a more effective IT architecture. Also to use AI more to enable automation and seamless integration and to improve transparency. We see that this will help us to create a return on investment due to higher effectiveness and efficiency, due to also an improved competitiveness by a better customer and supplier experience, so we'll be easier to do business with. We see a net positive impact starting the year 2030. This is when all the roll-outs will have been completed. You see it on the bottom there. We are right now in the testing phase. The first region that will go live is the region Americas, followed by Asia, and then by EMEA.
By 2029, we will be done, and this is then the time we will see more of the benefits. Cash. We are strong in generating cash, and we will remain strong in generating cash. The targets we put out here is we want to continue to realize a cash conversion rate that averages at least 0.8% on net income. This will put us in a position to pay increased dividends also in the coming years to further build on our strong track record. We also want to make sure that we continue to pursue targeted M&A. We have a shortlist of targets, and we work also with the owners of these targets to develop relationships. Lubricant industry is still highly diversified. There is still a lot of room for consolidation. In the lubricant industry, it's not so much about cold deals.
It's about gaining the trust of family owners, so they ultimately sell their businesses to us, and that's what we will continue to do. We will continue to invest time in these relationships, so we are there when these owners are ready to sell. This brings me already to the summary slide for FUCHS100. Our mission during FUCHS100 is focus to win. We want to focus to win by focusing on three central elements with growth, sustainability, and people. The six focus areas that we have identified that will drive the majority of our growth are Customer Brands, Automotive Aftermarket, New Mobility, Rotary Motion, Performance Greases, and Special Application Solutions. Our sales targets for the year 2031 is to finish between EUR 4 billion and EUR 4.5 billion.
Our EBIT target for 2031 is to realize an EBIT of EUR 550 million-EUR 600 million at an EBIT margin between 13%-15%. I can only tell you, after these kickoffs that we had earlier in the week, our teams around the world are now excited to start with the execution. Everyone feels super motivated, and what we saw during FUCHS2025 is that when it gets rough out there because of negative external circumstances, back then it was COVID, now it's the war in Ukraine, it helps our teams to have that North Star out there to know what the game plan is. This helps to manage us and stay positive through difficult times, and we have a highly motivated team that wants to show all of you that we can realize the targets we have defined during the strategy process.
With that, I hand over to Stefan, who will now summarize the equity story for you. Thank you very much.
Thank you very much to both, to Esma and to Timo. I had a great time listening to you, and I just want to summarize a little bit on the equity story before we go into the Q&A session. To really start from the bottom to the top, I think, and it's very important to say, we have an existing, very strong asset base. If you look here from the right, we have about 38 manufacturing plants. We have 67 subsidiaries all over the world. This is there, and we are ready to grow with that. I think R&D plays a major role, and Timo mentioned it. It's good to have met with the 20 years of experience. The R&D part and the technical part is really important to us. The very left is also important because for us, complexity is no problem.
We have large competitors. They don't like complexity. We make complexity as a part of our business model, and we do whatever it takes for our customers as long as we get properly paid for that. The second part, also important, is our winning mindset. What Timo said, the first global employee survey, I always say there are certain things you can't pay for. But when 87% of your people say they are proud to work for FUCHS, I get tears in my eyes, and that goes a very, very long way. I think we are focused on growth and you know the expression, profit is opinion and cash is king. We are very focused on cash and therefore the combination of the profit and loss account with the balance sheet, combining the FUCHS Value Added as the basis of our incentivization, I think is a very important part.
Customers play the major role. We do whatever it takes to satisfy our customers, and we come back a little bit later to that. Now, also, it's not only focus on the focus areas, but it's also focus on the execution. If you look, we have about 3,000 salespeople in the field. We do 3/4 of our business direct with our customers. We are very, very close to our customers, and we are ready to execute. We gain market shares in shrinking markets, and you remember that one long-term sheet where we show Europe going down year-by-year as a lubricant market, and we grow year-by-year. Shrinking markets is not a problem to us. It's very often an opportunity. Value-based pricing is also very important.
To sum it all up, profitable growth, and I think Timo went through the whole growth areas. The strong cash flows is very, very important. We measure ourselves in cash, and the high return to our shareholders summarizes all of that up. Now I want to ask my Board colleagues to come on the stage. Before we go into the Q&A, we want to make a general statement to you. You have heard now in the last 1.5 hours a lot about our long-term strategy. I think we have a solid foundation. We have a wonderful culture, and we have a very good plan moving forward. We are also aware that you and many other players in the capital market are very nervous on the short term and the Middle East conflict, and therefore, we want to shed some light to you on current trading.
As you know us, we always walk the talk, and for us, growth was also important in the FUCHS2025 strategy, and in the year 2024, we had a very nice volume growth. In the year 2025, it was even higher from the volume growth side. The year 2026 started really good in the first quarter, so we were really on a growth path. Now we know with the whole Middle East conflict coming up, there will be supply chain problems, there will be availability issues, and there will be pricing. I think very, very important, we are ready for it. It's going to be a demanding time. I mentioned it before. It's the 8th year of volatility in a row. I think you can call volatility the new normal. Good that we are in all the world regions. We are local for local and regional basis.
I think that is a major asset we have at the moment. I think we have gone out four weeks ago with the first price round. We are at the second price round as we speak. If you think back in the year 2022, after COVID, after the Russian invasion, we experienced in the year 2022 a 70% raw material increase. I have never experienced that. My father has never experienced that. If you think about Lehman and the beginning of COVID, the raw material prices went up and down and up and down. In 2022, they stayed up. There was a little bit leveling in 2024, 2025, a little bit softening, but not a big deal. Our customers loved us at that time. We went with multiple rounds of steps which they could digest, and we always kept them running.
Don't forget, we are no heating oil traders. We do a lot of technical products, which are very critical for applications, and we kept our customers running the whole time. If you look to some of our large companies, the current order book is probably double as big as it is normally. The biggest thing at the moment is to make sure we supply our existing customers properly and we secure all the volumes. It's a massive time for our purchasing people, for product management, for R&D, for our salespeople. We are already busy in reformulating certain products. We do that all totally transparent with our customers. We get written approvals for deviating to the original formulation. We have done very well in 2022, and I can promise you we do very well in this time as well.
I think it's more important, if you think back in 2022, and we checked it also, the profit didn't go down. That shows the resilient business we have. Yes, there will be a sales inflation. Yes, it will cost us cash from the NOWC. When you think about if you inflate all your receivables, you inflate all your inventories, obviously, it costs you some cash. Good that we don't have to go to the bank. If you need a bank in those times, it's not good. I think both Esma and Matt will shed a little bit more light to that, and then we are more than happy on your Q&A, and I hope we don't spend the whole Q&A on the short-term trading.
Thank you, Stefan. Yes, as Stefan said, we wanted to shed some light on it. Obviously, we are monitoring as closely as we can the Middle East conflict. It's very dynamic. As of today, what we wanted to share with you is, first of all, we remain very confident that we will be able to find the volumes we need of raw materials in order to serve our existing business. As Stefan said, our first priority is and will remain to deliver our existing business. We are very cautious when it comes to acquiring new businesses. We will of course look at everything we can, but the priority is clear. On the pricing side, we have experienced strong price increases.
This is due to a base oil market that is today short, as well as the pressurized supply routes for crude oil, for petrochemicals, and obviously having a repercussion on our raw material. As Stefan said, we already reacted with price increases to the market. From today's perspective, what we can say is that it is very likely that more price increases are needed during the second quarter and maybe beyond. Last but not least, to just look forward in the future, even if this conflict were to end today, and the Strait of Hormuz would be open without any restrictions whatsoever, it is very unlikely that the situation would normalize before year-end at least. Okay. I just wanted to make sure that you had visibility of that. That's true for availability, that's true for prices.
When it comes to the financial impact of that, I will hand over to Esma.
Yeah. Like Matt said actually, that will have an implication on our guidance. For now, we are currently assuming that we will be compensating the increases we are facing. That means actually that we are holding on our EBIT level. In regards to our sales, of course, the price increases, it will inflate the sales and it will go up. That's our expectation. On the other hand, Stefan mentioned it before as well, these increases will also have an effect in our networking capital and respectively, also in our cash. I think all in all, when we look where we are right now, we believe from profitability perspective that we can compensate the current situation, and we have proven that actually in the past.
Cool. Now, ready to go.
Okay. Thank you very much for the statement on the current situation, and then we would start with the Q&A session. We first take questions from the room, so if you already raised your hand, that's very good. Please wait until you get the microphone and then we can go ahead. We start maybe with Sebastian.
Sebastian, please.
Thank you. Sebastian Bray of Berenberg Bank. Thank you for taking my question. Can we go back to the original EUR 500 million EBIT target? What made the difference for the incremental EUR 65 million of EBIT that FUCHS didn't quite get there with it, and why is 2031 different? My second question is on the newer EBIT margin target. It sounds as if the company is gently stepping away from the 15% as a point estimate and has moved to a range of 13%-15%. Is that because of the incremental investment required to achieve the growth it's targeting, or is there another reason behind it? Thank you.
Thank you, Sebastian. I think I answered the first question on the EUR 500 million goal because Esma wasn't here at that time. The one thing we fell short is we didn't put any conditions to the goal. I think Timo rightfully today put conditions behind his numbers today and our numbers, and we will look at them on a yearly basis. As I mentioned before, if you look on COVID, the Russian invasion, the high inflation, the tariffs, the Middle East conflicts, Donald Trump 2.0, all of that was not known. In that time, it makes us proud to have grown to EUR 435 million. You are right, we are short of EUR 65 million, but we should have probably better put conditions behind this high inflation in 2022, the exchange rates. We had not conditioned it. I think we will review our goals on a yearly basis.
I think to the EBIT percentage range, Esma can answer your question.
Frankly, I would like to answer first what you say. We are going away slightly from our 15%. That's not the case. We had to condition it because certain things are happening, volatility in the market, et cetera. We believe from today and for the future to the 15%, also like Timo has said. We will work more efficiently. We were talking about a T2G project, which is changing our entire setup and actually will help us to work more efficient and drive efficiency. On the second hand, we all know we invested a lot in the past in our footprint, in our assets. We don't need any more this capital addition to support our growth and the cost addition to support our growth, and that will definitely help us to convert our growth we are generating in a much higher profitable earning.
That are the two levers where we are believing, and we are confident, it's not only a belief, that we will achieve the 15%.
The next question from Martin.
Thanks. Martin Rödiger from Kepler Cheuvreux. First of all, you talked about the huge growth opportunities you see in the future. You want to focus on growth segments. You have obviously a promising future. You mentioned the great management team, you mentioned the great culture, the great positioning, and you also indicated that the market growth is now accelerating to 0.8% in the next five, six years, while it was more or less flattish in the past. I don't understand why FUCHS is now reducing the organic sales growth target from previously mid-single digits, which is 5%, to now 2%-4%. Why is your target lower than before while the prospects are very promising? That's my first question.
Yeah. I think, if you look at our targets, our sales targets, we generated them with a bottom-up approach. There's many things that play a role. Partly, it's also product mix, it's other areas. The numbers that we put together are actually the numbers that resulted from these business plans that we have in the country. Again, we also based these developments on stable prices, no sales price inflation. You know exactly that in the past, and Esma highlighted during her section, sales price inflation was part of the mid-single digits. If that comes on top, I think we'll not be far away from where we were, but this is not part of the assumptions we put into place. What you have also noticed, that we have factored in over proportional EBIT growth rates that are in the mid-single digits and that are above historical averages.
With that, we feel it's a very strong set of numbers we have put together, given the assumptions that we have used to come up with.
Adding to that, I think looking back, there's M&A included. Looking forward, it's organic only. I think that, and Timo also mentioned that we continue to look at M&A targets. That I think we leave to you to figure in, how M&A we are going to do. That I think it needs to be taken into account, too.
Okay. Thanks. The second question is on your pricing strategy. From history, I know that you used to do your pricing strategy partly on customer profitability and not on individual products, because the reason was that you differentiate between large customers who bought many products in your portfolio, compared to some clients who occasionally bought one or the other product only. Do you intend to change that kind of approach, how you deal with the pricing strategy with your clients or, will you stick to the previous approach?
We have not changed our approach, and we always had the same approach. We don't have the one and only global price increase. It's not that the five of us sit there and hit the button and say, "That's it." We have price increases on regions. At the moment, the impact on base oil, for example, in Asia, is much bigger compared to Europe or to the Americas. We always build it on product groups. Heavy oil-based, probably at the moment a little bit more. On the grease side, the rates might be a little bit lower, but we still need a lot. We have a lithium issue at the moment because of the batteries. We really make sure that we are very transparent to our customers and we ask for what we need. I think there's no change.
What we have given clear guidance to our people around the world is don't make compromises. In times of availability, we go out and we make sure that we have a high rate of execution when we come back.
Next question comes from Constantin.
Thanks, Andreas. Constantin Hesse from Jefferies. Couple of questions on my side. I'm sorry for my ignorance, but I'm still trying to understand this EBIT guidance that you've given. I get the figures. The EUR 4.5 billion on the sales obviously would translate probably to EUR 600 million. If I do the profitability calculation on that still takes me to the lower end of that range. I'm still trying to figure out what exactly is that range all about. What is missing to take you to the 15%? And, yeah, I'm just trying to understand why you're giving us both, given that the 15% isn't even achievable in 2031 yet.
As Esma pointed out, I think the clear goal is to go for the 15%. This is also what we communicated to our teams, and they bought in, so they want to support us to get there. At the same time, we also want to be realistic. As Esma pointed out, there's a couple of market circumstances out there that will maybe also hinder us from reaching the 15% during FUCHS100, so by the year 2031. We want to make sure that we give you a realistic picture, that we don't base everything on the upper end, but that we give you that range which we feel is the most likely scenario during that time.
Okay. Can you tell us, Timo, what these things are that are keeping you away from the 15%? What are these scenarios that are not taking you there?
Well, it's a combination of things. Of course, we also need to see where we realize the sales growth. There is some areas that are more profitable than others, so product mix plays a role. There's also other things that still need to be determined, maybe additional customer requirements that come up that cost us money. It's not that we live in a certain world where we know everything. What we wanted to do is, and that was also the feedback we got from all of you in Pfronten, that the numbers that we give you are the numbers we commit to, and that the numbers are realistic numbers. Do we want to go for the maximum? Yes. We also need to make sure that it's somehow based on realistic assumptions.
Constantin, if I may add, Timo said a very important part. We are so excited, so we need to be also a little bit more realistic. Normally, you always build on top when you plan, but there are also things happening which we have not envisaged, which we don't like, and I think in that combination, it's a very solid plan for me.
On the other hand, we want to deliver. We want to deliver what we have promised. I'm here for a cycle of a year now, and we were frequently poking 15%, 15% even we know, for example, the denominator was accelerated. Here, the numbers you see, we clearly said, we promise we'll deliver what we have promised.
Understood. Thanks. My other question would be on M&A. You obviously generate a ton of cash. The balance sheet, it's quite limited, EUR 150 million-EUR 200 million net cash. In terms of potential future M&A, is there anything that could come up that could be quite a large acquisition in this market, and you could potentially lose out on that because you don't have enough cash on the balance sheet as a result of it? Or are M&A opportunities in the future rather more specialized bolt-on acquisitions for which you don't really need to have a EUR 500 million balance sheet, for example?
We have got no restrictions on M&A. Also our Supervisory Board tells us, "Why don't you do more?" As you know, we talk to a lot of families, and you can't enforce people to sell their business. I think when we get an opportunity like Nye or LUBCON, we are also willing to pay good money because we can scale those things. In the year 2015, for our experience, we did two large acquisitions and both within Ralph's area of responsibility. They were pretty demanding on us, PENTOSIN and Statoil. It took us a few years to make them really FVA positive. We have got no restriction. It's not that the five of us stand there and say we don't want any bank debt. From a calculating standpoint, when I go back to university, there is nothing which we could not afford.
We also don't want to go stupid. On the other part, there are not the large opportunities, they are not out. There are maybe three companies between EUR 200 million-EUR 400 million. There are a couple of very large ones, where either they are not available or it makes no strategic sense. We don't want to deviate. We don't want to go outside of the lubricants, including cleaners and forming and everything, to go outside in the Specialty chemical area. We want to stick what we know. As Timo explained to you, we have got so many opportunities that we really need to focus now, and that's the one part. There's nothing hindering from our part.
Thank you very much.
Maybe you can just give it to the right. To [Felix].
Yeah. Thanks a lot. Two questions from my side, [Felix from Amundi]. Just following up on Constantin's question regarding the ranges. If we take the upper end of your revenue guidance, upper end of your EBIT margin, you get on an absolute EBIT number quite a bit above. Does that mean that maybe the swing factor is a bit more coming from the lower end or profitability lower-end products and volumes, which are maybe more cyclical, and if they come back are, yeah, positive for the absolute EBIT margins but detractive on the margin percentage?
Perhaps I can try to start the answer. I think you should also look at our range in the top line, and that goes to EUR 4 billion-EUR 4.5 billion. That comes very much back to what Timo said. It depends where we grow. You will hear later in the deep dive session about Customer Brands, about Automotive Aftermarket, where we have internally very ambitious targets. At the same time, you hear about EV and Specialty Application, let's say higher value, higher relative contribution to the bottom line. Depending how the business will look like in 2031, it just is different. Where we grow more, where we achieve or overachieve our targets, and that brings us to the band of sales top line. At the same time, it also is decisive for what will be the absolute EBIT and the EBIT margin.
That I think we try to be realistic not to take everything which was submitted bottom up and make a band in both areas, in the top line and also in the EBIT. Then the EBIT ratio, the ambition is 15%, but the EBIT ratio is in between 13% and 15%, depending on how will the final portfolio looks like.
Okay.
Just so.
Second question, you've defined these six target growth areas, and you've given the sales split right on these. Could you maybe give us also a bit of color of the CapEx of the organic investments that you're going to do, how large the share will be of these six target segments within your organic investment? I don't know whether you can also share how much of your EBIT are these six segments or six end market segments currently making?
Actually, we don't do an EBIT breakdown by focus area or by market segment, and I don't think we plan on changing that. Regarding the investments, I think Esma pointed it out, regarding CapEx, we don't see higher CapEx levels than in the past. It's more the year 2025 will be a reference for the coming years. Of course, CapEx projects that support or, how we call it, enable our focus areas get priority. This is actually what we have done during the FUCHS100 strategy process, where we have identified the focus areas and then also identified what's needed to realize the success. Partly it's CapEx, partly it's OpEx, partly it's people. This is how we have built our financial planning, and this is all reflected then also in the financial numbers we have put together.
We can now not say, this is EUR 20 million CapEx in X, Y, Z. This is not how we will communicate it.
I think the cool part on the assets is that we have spent most of our CapEx, and which is the basis for future growth. We have built a lot of grease plants in the U.S., in Germany, and in China. They are there. To extend them is not such a big deal. On the other hand, the EV fluids are made in the same plants, like the combustion engine fluids. We don't have any restriction. The number of sites we have is plenty.
To add another warehouse, to add another blending deck or more tanks, is not a EUR 40 million exercise, and therefore we feel comfortable with the number to come, including T2G.
Thank you. Appreciate it.
I think we have another question here in the second row. Yeah.
Thank you for taking my question. Peter Spengler, DZ Bank. You shared with us the market growth, the global market growth of 4.8%, so can you maybe elaborate a bit on the areas or the regions, like U.S., Asia, Europe and so forth? Also connected maybe to that, all the chemical producers that I know have large efficiency programs running for the future. Maybe you can also tell us what your kind of cost control concepts are for the next five or six years. Thanks.
Regarding the market development, you're right, it's 0.8% we predict for the coming years. This is by volume. That's the first part that's important to understand. Secondly, there is not these massive variances between the regions. You have Asia a little higher than Europe, and the Americas is somehow in between, but this is all very close together. It's not that you have one region with 8% and the other with -5%. This is not happening. It's a rather flatter market in Europe and slightly below 2% growth in Asia, but it's all very similar.
Thank you.
Mm-hmm.
If it comes to cost efficiency projects or measures, what you have mentioned, number one, what I would like to highlight, when we talk about efficiency measures, we are not talking about restructuring. That's number one. Going forward, and Timo has showed it, we will change the way how we are working. We talk about Transform2Grow. A lot of people keep just S/4HANA in the mind, and Timo mentioned it's not an update of an IT system. It's a transformation we are going through. Getting the same language in the company means the same data, working with the same processes, and definitely this will have an implication to our structural work and how we work in the future. That's number one.
Secondly, you heard probably last year about cost avoidance, cost measures we have taken in place, and we were very happy, frankly speaking, with the outcome. It was a lower million digit, what we have achieved last year. What we will do, we will continue with our cost discipline. It's not that we are just saying, okay, now we are growing and we are loosening our belt. We will be very cautious and question whether everything what we are doing is needed. That took a certain cultivation, and I think we are there now. It was very nice to see in our strategic process when our colleagues were actually talking about what they want to do. The efficiency topic and how we are going forward was actually synced into the organization. There, we definitely expect a harvesting going forward.
That's what I expect from a CFO being a sparring partner and a business partner. We were sitting down on a Board in the middle of last year, and Esma made us discussing this topic. We agreed on an amount, and we got a monthly update, and we overachieved the amount, and I think that's what a good CFO is there.
Okay. Thank you.
Let's get another question over here, from Michael. Maybe Constantin, you can hand back the microphone. Yeah. Thank you very much.
Thanks. Michael Schäfer, ODDO BHF. Two questions from my side. You will focus a lot on Automotive Aftermarket also as a growth driver in the new strategy. Well, my first question is looking backward. Why so weak in the past? What is the, at least from the outside, you are not breaking down EBIT contribution and things like that, but from the outside at least, maybe I would at least assume that this is a rather, let's say, profitable or more profitable business maybe than others. What went wrong in the past? Let's put it that way. Also related to that, going forward, certainly we have the Mercedes Aftermarket deal just closed. We all knew that this came with implementation costs.
Going forward, what are the kind of, let's say, regional focus areas, and what should we assume also in terms of extra costs in expanding this one? This would be my first question. The second would then go to your working capital to sales target of 20% ambition. There's no timestamp on it, so when should we think about you're in a position to reach 20% of networking capital to sales?
Not this year.
Timo, the Auto question.
Yeah.
Yeah. Maybe we start with the Automotive Aftermarket. You are right. As I pointed out, our market share there is right now around 1%, which is fairly low compared to how we are positioned elsewhere. I would say in the past, we more focused on the business relationships with the OEMs. We got all the approvals also to work with them on first-fill applications. We didn't capitalize on these in the Aftermarket. It was just not a focus in many markets. The lubricant market is so big, and we focus on other things that were, back in the day, maybe a little more exciting for us. Could we have started earlier in the Automotive Aftermarket? Maybe yes. I think what we see now is, again, in markets where we focus on Automotive Aftermarket, we have a lot of success.
We can capitalize also on developments that we did for other areas, and now we just want to systematically roll it out. Yes, we are a little late to the game in some markets. You will hear it later on from Krisztián, who will come on stage. For example, in the U.S. and Mexico, we are just starting. It just was kicked off two years ago, three years ago, and now we are finally gaining strength. That's also the beauty about FUCHS. There is enough growth opportunities there, and for us it's not about looking backward, it's about what can we do in future to accelerate our growth. For us, this is a very exciting area with all the aspects that it covers, not only passenger cars, but also the heavy-duty machinery, commercial vehicles, all that's in there.
Michael, as Timo explained earlier on, all the customer premises is Aftermarket. It's not only the one you mentioned or any large OEM you think about. There are also parts dealing companies who supply construction companies or agricultural companies. They also have a whole thing, a whole line of their own lubricants. We don't meet their customers when we approach the market, so we don't fight with each other, and those are nice businesses. We have a lot of industrial equipment manufacturers who want to also participate in the consumables, so we do a white label or private label with them as well. It's a very broad area, and it's a very stable business.
When it comes to the networking capital, I like that question, especially in the times where we just said we will have a hit or we face a hit in the networking capital this year. Definitely, like Stefan said, it will be not this year. Again, depending how we are getting out of the cycle. When we set the targets and when we discussed it also with the community, we said actually it needs a time window of two to three years to be sustainably there. We can do crazy things to get this target, achieve this target by a year-end, but what we want to do is having a sustainable level of 20%, and if you ask me as a CFO, [hard], I would even say slightly below.
Okay. Looking at the time, I would say we take maybe one more question now before the break here from the room.
We have another round later.
We have another Q&A round later, and we also have one question I think that we can take from the online and maybe, Lars, I saw you raised your hand.
He's raising his hand.
Okay, please.
That's my laser. Just two quick questions. Two sides of the margin improvement is operating leverage. In which region do you see the most, and is it only growth or could it be also some asset consolidation? That's the first one. The second one, you talk about efficiency and operating leverage. How about margin mix within the margin guidance? Because as we talk about Aftermarket, I understand today's contribution is probably lower than history. That dilutes the margin short term, but I believe there is also a margin mix story to improve the margin given the Value Added on the Aftermarket.
Shall I take it? Okay. In 2025, yes, we will always have a margin mix story. When we look, like in the Specialty businesses, et cetera, where we have a strong margin and when we look in other areas where we have lower margin or average margins. Especially in 2025, we had this situation, and when you are referring to the Mercedes business in Americas, we had the dip, we are now leveraging it. We expect actually this business going into a profitable, good, even above average margin. Such puts and takes we will have, but I think one of the strengths we are having is actually the mix of our segments where we are operating, and we are driving for higher margins.
When we talk from a contribution margin perspective, if you talk from an earnings margin perspective, and we talked a lot yesterday about it, by leveraging our existing base currently, we will be capable of turning that into much more efficient earnings.
For me, another big part will be the Transform2Grow. When you look how we deal with our customers, our customer service people have to overcome a lot of shortcomings sometimes, and they spend a lot of time on the phone with our customers, demand planning, logistics, and I have good hopes on Transform2Grow that we become much more efficient because we have companies today, they run at 15% in net operating working capital and at very high EBIT levels. It doesn't mean that we have to restructure anything. We have a growth scenario, and then we can just grow with the existing team, and that's part of the efficiency as well.
Okay, we take a final question from online.
Yes. There's really only one that we haven't answered so far. That is, which business segments will face the greatest headwinds structurally on the long run, and what are these headwinds you see to the business?
The business segments with the biggest headwinds are maybe the ones we have deprioritized because we really identified the ones that show the biggest growth potential for us. We don't have a specific business segment where we feel right now, oh my gosh, we are losing out or the market is going away. I think it was also one goal initially when we did the business segment screening during FUCHS2025. We had 12 global ones. In total, we had over 30 segments, including the local ones. These were all segments with a good potential and therefore we don't see any market collapsing right now, or we don't see us under pressure with business breaking away in one area that we didn't see before. I don't think we have that.
Mm-hmm.
We have got more time for questions later, but I can only ask you to enjoy the next session, because on the six focus areas, we bring our experts in. You don't get often the opportunity to talk to other people than to us, and I think that will be a very highlighting session, where we go through the six focus areas. There's always a partner with them, but we bring the experts in, and then we should have also some questions to them later, but we have enough time today.
Okay, very good. Thank you very much for all the good questions. We will now take a break and restart on time, 20 minutes past 11:00 A.M. . Thank you very much.
[Break]
Welcome back after our coffee break. Now we start with the second part of our Capital Markets Day. This is something special that you don't see that often, actually, at Capital Markets Days. We have invited specialists from the six growth focus areas, and they will do interviews with the Board members in order to deep dive into the respective growth areas. We think that this is probably very interesting for you. Yeah, we will start with the first session on Performance Greases, and I invite Matt on the stage, who will host this session. Thank you.
Thank you very much, Andreas, and I am very happy to be in front of you today to speak about grease. It's a fascinating product, and we will try to articulate that. In order to do that, I will ask my colleague, Thomas Litters, to please join me on stage. Thomas, come with us. Let me introduce Thomas briefly. He's our Research and Development Senior Expert for Greases. Thomas has more than 31 years of experience in FUCHS Group. He has spent his 31 years working on greases, so he's really a true expert. Thomas is a Chemical Engineer from background, and it's very nice to have you with us today, Thomas.
Hi, everybody. I'm very excited to be here.
Great. Let me ask the first questions. Usually, when we speak about lubricants, I think everyone think of a liquid oil. Something from the can that is a liquid. Actually, greases are also lubricants. Thomas, can you tell us a little bit about the difference between oil and greases?
Well, the easiest way I can explain it is a grease is like a sponge containing an oil. It's a second lubricating oil, and so it offers a lubricant that remains at the lubrication point and act as a seal, like a physical barrier against contaminants. It offers a lubricant that remains at the lubrication point and it remains at the parts to be lubricated to avoid or to prevent that dry start, that dry running. The beauty of using grease is it simplifies machine designs and production costs because there is no need for oil circulation and oil filters. There are a lot of other benefits to the greases than just cost reduction. The main thing is they rely on advanced chemistry and manufacturing processes, and there's a high necessity for tribological know-how and deep application understanding.
Absolutely. Greases bring a lot of benefits to the applications. Additionally to that, it's fair to say that we find greases in a wide variety of applications across multiple sectors, and there is a lot of technology within these greases that are needed. Thomas, can you guide us through where we find greases on the market? Can you tell us more about the opportunities you see when we are talking about these applications?
No, Matt, you find greases in almost every industry. Yeah. Look at the center of this slide. You see here a roller bearing. More than 80% of those are grease lubricated, and they're used in many traditional industries. See here at the left part of the slide, you see here, for instance, a steel plant, mining industry, textile industries, or construction industry, and there are many other industries too. In the view of the modernization of manufacturing processes, the sustainability agenda of these traditional high energy intensive industries leads to a growing demand for high performance lubricating greases, especially to reduce friction and to extend the service life of machines. Additionally, there are high tech applications requires grease in fast growing demand, such as electric vehicles, electronics or medical devices, food production or robots. Yeah.
These industries are asking for very specific product properties, and there's a fast growing demand for Performance Greases too, which requires high R&D effort and specific manufacturing technologies. This makes Performance Greases, there's no doubt, more expensive than oil, but with traditionally better margins. This is accepted by the market due to the proven benefits of a lubricating grease for the application. I would say nowadays, a grease is not just a lubricant, it's an essential design tool for engineers.
Thank you, Thomas. I think the takeaway is that greases intrinsically have a lot of value. We discussed earlier about the profitability story. It is definitely a focus area that will help us drive the profitability part. As you've heard from Thomas, there is a lot of complexity in the chemistry of it, and there is also a lot of complexity in the manufacturing of it. It is probably the most complex product range we have to produce within FUCHS. Thomas, can you tell us a little bit more about the market opportunities that you are seeing, as well as how we are positioned and how do you believe we're going to win against competition in that field?
Our market share today is higher in greases than its overall in lubricants. We are well positioned for the future, as we established global R&D and manufacturing excellence in that way that first, yeah, our R&D capabilities and application engineers are close to the customers. By this, they are trained in our comprehensive grease portfolio and know-how, and they are able to extract their benefits from our products thanks to our grease technologies. The second is we invested for several years in our manufacturing footprint of greases. We have built up a unique setup of three exact same grease plants in U.S., Germany, and in China. By this, we are able to produce similar exact high-quality greases with same properties for the global market. I think we are a little bit proud of this because we believe we left here a unique footprint in our industry.
Looking to the future, I think we are in action. We bring added value with our ability to anticipate, act fast and globally, on any regulatory requirements affecting greases. Yeah. Our strategy will be to co-engineer and to co-develop greases close together with our customers and partners. Our competitive advantage is our ability to turn global and regional regulatory pressure into product innovation in a complex product category thanks to our global product compliance and R&D setup.
Thank you very much, Thomas, for these insights. We are coming to the end of the deep dive, and as a summary, what I wanted to highlight just as what Thomas said. We are in a leading position with Performance Greases. That's a good base to capitalize on. These products are highly complex, and therefore they have a lot of value. That's part of the profitability story as we push this category out there in the market. The opportunities are massive and present in every single sector, so we have a great chance to differentiate there, and we're going to do that with our dedicated team, as you said, and we have the three R&D hubs in the U.S., in Germany, and in China to support this activity.
Last but not least, we have a unique global manufacturing footprint for these Performance Greases that we can leverage in order to be close to the customers and answer these very high needs. Thank you very much, Thomas, for being there. With that, I will hand over to Timo for the next deep dive.
Thank you very much, Matt and Thomas. I can tell you that no grease expert worldwide doesn't know Thomas Litters. Thomas Litters is the expert that's out there, and his time is very valuable because there's always problems he has to solve, so we are very grateful that he made some time for us today, and it was very exciting to hear you speak about your area of passion. Very great. Now we come to another focus areas, and yesterday I was asked how we develop people within FUCHS and whether there is also a chance for people that work in a subsidiary to take over a holding position. Today, I have actually an example. I want to welcome Krisztián Rada on stage.
He's our Head of Automotive Aftermarket, and Krisztián started for us at FUCHS Hungary, worked his way up, was ultimately the Managing Director there, and he did great in his job, so we moved him over to the holding and made him in charge globally of our Automotive Aftermarket. Please welcome Krisztián. Thank you very much for being here.
Thank you. Happy to be here.
Okay. Krisztián , we have already talked about the Automotive Aftermarket during my presentation about the size of the Automotive Aftermarket, and I felt some excitement here in the room that we need to do more in that aspect. Now we have you. Can you please explain to us what's the Automotive Aftermarket about and what position does FUCHS have in this market?
Thank you. No pressure that you have interest in the Automotive Aftermarket. Thank you. Automotive Aftermarket, many of you. Did you just click? Many of you might think that Automotive Aftermarket is nothing else than just passenger cars, oil change once the car reaches its out-of-warranty period and change the engine oil. Passenger cars are very important just because there are 1.4 billion cars on the road. That represents a significant demand for lubricants. The market is very complex, and the route to market is also very complex. We are in cooperation with different kind of partners like distributors, like retail partners, like hard parts companies, like workshops, workshop chains, also branded car dealerships to reach our customers in the passenger car segments.
Offering them full portfolio, so not just engine oil but also transmission, also brake fluids, also power steering fluids, coolants. Many kind of applications, what you find in the passenger car segment. Passenger cars are not the only one. I would like to mention the agriculture and forestry segment. Agriculture was maybe partly mentioned in the morning session. The world population is growing. All the people need food. The food industry is heavily relying on the agriculture. In the agriculture, you see tractors, harvesters, specialized equipment. These are essential investment of the farmers because this essential investment, this equipment enables them to produce their products effectively. This equipment is really highly technically demanding. Uptime is absolutely critical. It's a no-go that a tractor or harvester is not working in the season time.
It has to be always reliable and up and running. A typical agricultural machinery needs 100 times more lubricant than a car. FUCHS has just a blueprint also in the agricultural segment, market leader in Poland and Australia. That's a great example what we can just multiply in many other markets. The next one on the list is the off-highway equipment. Maybe when you last time drove nearby a road construction site, maybe you were also angry that it caused some delays as you come to your destination. Maybe next time you will have a different look with a different eye on that construction site because you will see also the bulldozers, also the excavators, the dumpers, the planers. All that equipment which is moving earth on that construction site, they just do their job.
Such a monster requires 150 times more lubricant than a passenger car. In this case, this equipment must also work reliably because if these machines are not moving, they don't earn money for their owners. In this case, we are a reliable partner for those customers with our high technology products. Again, an example in South Africa, we are market leaders in the road construction off-highway segment. Let's jump then to the next one, which is commercial vehicles, still heavy duty on highway. We talk about trucks and buses. The technical demand, what we face in this segment is a little bit different than in off-highway. The high mileage is the challenge, what we have to face. Trucks often run 10,000 km, 12,000 km per month. Buses even more, sometimes 15,000 km.
By having such a high mileage, fuel efficiency plays a critical role. A typical mid-size trucking company has 500 trucks. Every truck is running 10,000 km. You can just calculate the fuel consumption. Just by having the right lubricants, you might achieve 1.5%, maybe 2% of fuel saving. This is again, the right arena for us to play with our high technology products. The next one on the list is motorcycles. It's a completely different category. We might see also the commuter bikes, which is a primary transportation method in the Southeast Asian region, having hundreds of millions of commuter bikes. We are close to market leader position in Vietnam, having the local infrastructure, production, sales partners. Once we talk about the high capacity, high power leisure bikes, we can also call an example.
In the U.K., we are market leader in that specific segment. The last one on the list is the stationary aggregates. These are untypical Automotive Aftermarket segments. Here we talk about typically the diesel fueled emergency power generation aggregates, or the natural gas or biogas fueled cogeneration heating power plants. Complicated word. These are the so-called gas engines. In remote locations, those produce energy or heat for their users. These are untypical, I say, but at the end of the day, these are just engines, just a little bit bigger. The same technology, what we have can be used in a fantastic way.
Thank you, Krisztián. I think you impressively explained to us that there is many different examples, many different applications in your area of responsibility. The Marketing team around Tina was so kind to put a slide together, and you see it here. There is many options, also many success stories in the group. We talked earlier today about transferring success stories from market A to market B. This is one focus for Krisztián in the coming years. Now if we look at the development of the Automotive Aftermarket, we got another question from our analysts before, and this is about the future of the Aftermarket, given there's a trend towards electrification. Why is this still a massive growth opportunity for FUCHS, Krisztián?
Yeah, first, it's very simple. It's a huge market with solid margins, and FUCHS has only around 1% market share. There is a huge headroom ahead of us to grow. Second, many people talk about electrification of the mobility. What we see that internal combustion engines will remain dominant in the upcoming decades. Maybe there is a different speed of change in some countries like China or Norway or the Netherlands. Also, different level of the change in the segments. Maybe in the passenger cars or the motorcycles, there's a faster change. The change of electrifications or the change of propulsion in the heavy duty arena might be much slower.
In my opinion, the internal combustion engines remain dominant in the upcoming years and decades. If you have a look on the statistics, the number of new cars that are registered, not just cars, but all kind of vehicles. We see that in the upcoming years, the internal combustion engine population globally grows. As of today, next year, it continues to grow. Our estimation is that in the late 2030s, we will come to a peak point, and the peak point will be followed by a long plateau. Because there is a long period of time until these aggregates are in use. Typically, the passenger cars, 16 years, 17 years, but the agricultural machinery even longer, off-highway construction machinery even longer. We can expect for a longer period of use of the internal combustion engine, which gives us a fantastic opportunity.
You also already mentioned the opportunity to use the experience from one country to the other. We had already successes in many European countries, why not just copy-paste in different countries, in different regions? In the U.S., we started the Automotive Aftermarket business just 2.5 years ago. We are at the beginning of our journey in a huge market. In Mexico, we just started in 2026. Sub-Saharan Africa represents a widely untapped opportunity where we are preparing to enter.
Thank you very much, Krisztián. I like your example about the U.S. because that's by far the largest Automotive Aftermarket, and we have just started there. Many decades of growth opportunities ahead of us. If we go further, and I ask you now about our starting point and our plan moving forward, how would you describe that?
I think segmentation is really a key point. I just listed the sub-segments within the Automotive Aftermarket, and I think it's important to understand the relevance of the individual segments per country. There is a combination of segment and country, and if you ask me, we should just roll out the successful experiences, what we just gathered in one country to another one. In this case, I would say we have already a high market share in France, typically in the passenger car markets. There is an opportunity in France for the agriculture business. We have already a high market share in Germany with passenger cars and in agriculture, but the market share is relatively low in the off-highway road construction segment.
I think by just applying the experiences, what we got in one country in one segment, applying to another country in another segment, that would be a great starting point. Also, I would like to mention that we still have some countries where our infrastructure could be further developed. I mean, our supply position, production positions, but also just having the right sales infrastructure in the given countries might help to upscale the business in these regions. Third one, very important. Also the Aftermarket business is changing in the direction of digitalization. Our partners would like to discover, order, follow, track their orders. Also some buzzwords might come up, e-commerce, integration, ERP integrations, digital catalog solutions. That's something where we have done already a lot, but I think that's an arena where we have to continue and invest into our digital presence. We see brand awareness.
Brand awareness just matters. In Automotive Aftermarket it's pretty important as one of the buying motives in the customer's eyes is the emotion. I think the cooperation with renowned OEMs, like with Mercedes-Benz, it helps a lot. We are looking for additional cooperation with the OEMs, really helping us to increase our brand awareness, contributing in a measurable way to increase our business in the Automotive Aftermarket arena. The last point on the list, what I would like to mention, that also in the Aftermarket, we see a consolidation of the market players, a kind of conglomeration of market players. Hard parts companies or car spare parts companies merge. They represent a higher buying power. They become international. Previously, the Aftermarket was very much a local business, now becomes more international.
With our customers, we have to also grow our infrastructure by establishing international key account structures. I believe all the measures what I have listed put us in the right place to continue our growth journey in the Automotive Aftermarket segment.
Thank you very much, Krisztián. I think what we take from your presentation is the Automotive Aftermarket is an exciting market for us and therefore also a focus area in FUCHS100. We start with a fairly low market share, but we have a game plan on how to improve that market share. One element is improved international collaboration to transfer success stories from market A to market B. With the additional volumes we bring on with that business, we'll be able to utilize our operating leverage, which will help us also to drive our profitability in the right direction. With that, I thank you very much and welcome the next speaker. Thank you very much, Krisztián. The next speaker I want to welcome on stage actually came to us through an acquisition. It's Philipp Niemax.
He came with the PENTOSIN acquisition, and this is one element of acquisitions that cannot be underestimated. We do not only buy technology, customer access, or set up in a certain geography, we also get good people with the acquisitions, and we are very happy that Philipp is with us today. He's the Head of Global Business Segment in the OEM Division, and welcome, Philipp.
Thanks for having me, Timo.
Philipp, we talked already about the Automotive Aftermarket with Krisztián, and your Customer Brands focus area that you want to explain today is closely related to the Automotive Aftermarket. What is it all about?
Okay. Customer brands are Aftermarket products that are sold under the own label of the customer. FUCHS provides the product, the customer labeling, and is also taking care of the logistics to the garage. This can be done for all kind of vehicles. The picture on the slide shows an example of an engine oil branded by Mercedes-Benz. If you have a look to the lower left, you can see the FUCHS logo. We are working here as a technology and logistics partner. Of course, we are also providing products to OEMs outside passenger cars. For example, to the agricultural area. The benefit of the customer is that you can generate Aftermarket business. The end customer trusts that the product has a high quality and is specifically made for the application of his product. This is what we at FUCHS are taking care of.
We are leveraging our technological know-how by providing first lubricants to the OEMs. It's a win-win situation for all participants.
Thank you very much. We learned from Krisztián that in the Automotive Aftermarket, we have a fairly small market share and a big growth potential. Is that similar to Customer Brands?
Partially it is. It's a market of sizable volume, and we expect that the volumes remain on a high level beyond 2014. One difference is that we already have an above-average market share inside the segment. However, it is still in the low- to mid-single digits, and we have plenty of room to grow. It is not necessarily a large volume when it comes to single customers, and we have seen large players moving out due to reduced complexity. The business is very complex. This is exactly the point where FUCHS comes into the game. We know how to handle complexity. Like with the Automotive Aftermarket, like Krisztián explained, we in general have good success businesses that we can now easily transfer to other regions around the world.
We want to leverage our existing business relationships that we are having with OEMs, like we did last year with Mercedes-Benz for the Aftermarket business in North America and Canada. We want to leverage this to other regions. All in all, we have very good opportunities to grow within the segment and to gain new market shares.
Okay, the growth will mainly come from taking share from others, huh? How exactly do we want to do this, and why do customers decide for FUCHS?
First of all, we have very good relationships to OEMs since many years. They know about the products. They know about the performances and the quality. Besides this, we offer them additional services. We're offering them digital services that makes their life easier. We're offering them digital order platforms, for example, or smart meters to control inventories. We are also taking care of the logistics to the garage of the customers. We are working here with distributors so that all the products from FUCHS are coming out of one hand. This is a huge advantage for FUCHS. Of course, with our FUCHS global footprint worldwide, we can transfer businesses from one region to the other region, exactly like Krisztián mentioned before. We want to deepen, and we must deepen and extend our relationships with OEMs that we're having right now.
Of course, we also have a lot of opportunities with new customers. We saw in the last one to two years, new business opportunities with Chinese OEMs are coming up. Therefore, we have very good success stories with markets like in Europe, Mexico, South Africa, and in other countries. There's a lot to come, and we are very well prepared for the FUCHS100 strategy, and I'm very happy to be here today. Thank you very much.
Thank you very much, Philipp. Just to summarize it, Customer Brands is a very exciting area for us. We have a couple of good success stories. For example, Mercedes-Benz, you're all aware of this, but also Triumph in the motorcycle area. Customers go with FUCHS because we have the necessary approvals, we have the necessary support teams. We also have digital tools that we can offer to these customers to monitor consumptions in the market better than before. We see a bright future, and with that, I wish you all the best for this focus area.
Thank you very much, Timo.
Thank you very much. The next focus area we want to discuss is New Mobility, and I invite Damian Weinzierl on stage. Damian is our Head of New Mobility. Welcome, Damian.
Thank you, Timo. My pleasure.
Before we go to the next slide, I wanna do a little pulse check here in the audience. Who is driving an e-car? Okay. Who is driving a hybrid vehicle? Yeah, I think there is still a little room for the enthusiasm to grow. I think nevertheless, Damian, you're representing a very exciting focus area. I want to ask you to explain to us what New Mobility is about for FUCHS.
Thank you, Timo. The easy answer for us is New Mobility covers lubrication and cooling solutions for new energy vehicles. Let me break that down for you. Basically, what are new energy vehicles? That is anything that goes beyond what I assume most of you are still driving, fuel combustion engines. Anything that is in my responsibility is all forms of hybrid vehicles, pure battery electric vehicles, hydrogen applications, and fuel cell applications. The good stuff is that we cover the whole range of potential vehicles. If you go from a city scooter over a passenger car, commercial vehicle, electric flying, air taxis, boats, until mining trucks. In the end, it's always about the technology that the powertrain uses. My colleague has outlined these types of vehicles already. Basically that is the most important point.
Last but not least, we also serve the whole life cycle of a vehicle. From the manufacturing over the factory fill of fluids towards the service while on the road. We are very deeply involved in the manufacturing of battery cells and battery trays themselves. That is another very important topic. Last but not least, we also serve an industry that is kind of new for us, that is everything around infrastructure. Charging infrastructure, battery energy storage systems, and data center cooling.
Thank you very much, Damian. That means that's a very wide field. We talk about all kinds of different vehicles outside the traditional combustion engine, but also the infrastructure. We know there is a transformation going on and there's regional differences. Where do you see the growth opportunities for us in the coming years?
Yeah, thank you. I think for any New Mobility, it always helps to kind of break down and structure the very big market. I think it's most easy if we look, for example, at the passenger car segment. We have two spheres. One sphere is the production and sales figures of vehicles. In that case, if we look for passenger car, for example. Also those vehicles that are on the road, again, we call that the vehicle pool. My colleague has outlined that already at length. For example, now if we look at the passenger car segment, roughly 100 million vehicles are built currently, projections for 2026. Out of those 100 million, between 35%-40% are already new energy vehicles. This is not a new technology or something that we're waiting for to appear sometime.
It's here, it's happening right now, and we are involved in it. This, if we look now, of course, at the field of the Aftermarket, the Automotive there, he said we have 1.4 billion vehicles out there that still await that transformation. Of course, you see that poses very high potential growth areas for us, and that's also why we expect this [mid-10 digit CAGR] over the next years.
All right. I think that makes a lot of sense. Now we talked about passenger car maybe changing the fastest, but electrification is also on the horizon in other areas like agriculture or heavy duty. It will come sooner or later, right? Should we forget about that or are these markets also relevant for us?
All these markets are relevant, and it's very interesting to kind of lay down why the adoption of electric vehicles is taking a while. I think it is basically down to a set of tipping points. If you look at many of you who are not yet driving electric vehicle, that is potentially due to questions about range. That is something that is always out there. Then maybe it's also about cost, TCO of vehicles. Right now we see a lot of rather low and mid-size segment vehicles coming to the market. Of course, it's about also charging speed and reliability of an infrastructure out there. Last but not least, of course, political and worldwide topics as we see these days, which could also lead to switching to that technology. The cool stuff is what you see here.
Those are all the, let's say, pain points or topics the industry is working on these days. The interesting stuff is we are working on exactly all that. If you go from left to right, you have range and performance. Any electric vehicle, if it wants to be an alternative that is taken seriously, then it has to have a good range. How do you achieve range? Through efficiency. How do you achieve efficiency? Through perfect setup in lubricants. Also, electric vehicles are fun. It's about performance. It's about cool aspect of this technology. That's stuff that we are working on. Of course, any electric vehicle needs to have the utmost safety. That is a non-disputable thing. We are working on that, especially in temperature management with cooling technology for all types of powertrains, batteries, and so on, also reliability.
Maybe you're aware of the term of NVH, noise, vibration, and harshness. That basically describes everything that in an electric vehicle you could potentially hear in comparison to a combustion engine vehicle where you have a basic sound level. If you have this NVH topic is very much down to lubrication, especially also greases in a vehicle, and that of course helps with reliability. Last but not least, we are looking at a new type of customers that so far we were not so familiar with because they are not only interested in a one-time buy or a service of a product, but actually in running infrastructure.
Customers who run charging infrastructure or battery energy storage parks, they are interested in uptime and availability, getting the highest amount of availability of their systems to make money with them. Sorry, and last but not least, this all poses great opportunities to us. It's of course a lot of work, but this is exactly what for us, as an R&D driven company, stands out to position ourselves against the competition, combine R&D strength with global availability, cost-effectiveness, and a very great team around the world that can help you and potential customers to scale this business.
Thank you very much, Damian. I like the technology aspect a lot because we are a technology company, so demanding applications help us to grow our sales. I also have to say, from a private perspective, there's also a nice technology aspect with an EV vehicle. Even though the fear factor is still high in the room, I drive one since three years and I enjoy it quite a bit. You might try it moving forward and join the club. Now, Damian, this is also a market that's interesting for others. How do we differentiate ourselves and how do we take market share?
I would like to answer that with a threefold answer. Firstly, I always say we are not alone in this transformation. FUCHS has, for close to 100 years now, been very strong in contact with its customers, held long-standing relationships, and all our customers but also our suppliers and partners all go through the same transformation from internal combustion engine vehicles gradually towards new energy vehicles. This is really what we are really good at. Now, in addition, while that has maybe in the last years mainly been applicable for Europe and the U.S., now we also have a really, really strong footprint in China. If you look at Chinese OEMs and Chinese Tier 1s, FUCHS really is a name, and we have a really strong foundation.
The good thing is these companies now can not only count on our domestic service, but actually whenever they go abroad to, my colleague laid it out, maybe Indonesia, Mexico, Brazil, Spain, they can count on the same service they are used to with FUCHS in China. That is something that really, really helps us in the future and that also boosts extreme potential. Secondly, we are well prepared. We have a full product range for all these applications. We have a brand umbrella called FUCHS BluEV. Under FUCHS BluEV, we have currently around 100 dedicated products that serve dedicated applications within the NEV world. We are well equipped to serve all potential customer requests. Last but not least, we are working very strongly on building our brand awareness. We are very outspoken at fairs, at conferences.
We try to transport our knowledge, our level of trust into the world. I think these three aspects really help us to stand out against the competition.
Thank you, Damian. I find one aspect you brought up very interesting. We went to China in the mid-1980s as FUCHS, and this was early, but I think it was Manfred who said we need to be present in that market. For many years, it was a little bit a one-way street. We brought European and American technology to China to serve our customers. This is now changing. In particular in the field of New Mobility, we see our customers in China in a leading position, and we also learn with them, which helps us then later on in other markets that are right now two or three years behind, particular also in Europe. It's one strength of the FUCHS setup and also of the great R&D network we have put in place.
With that, we feel New Mobility is an exciting opportunity for us, also an opportunity where technology matters, and that's always good for us. With that, I thank you, Damian, for your great presentation.
My pleasure.
We move on to Ralph, who will now cover the focus area of Rotary Motion. Thank you very much.
Yeah. Thanks, Timo. I think now we addressed a couple of focus areas. The first one was a fascinating product group, is Performance Greases, which basically serves both industrial and Automotive applications. Then we touched on Aftermarket Customer Brand and now EV. I think that is good. Now we would like to switch over to rather the industrial and the Specialty areas. I think here also we have identified focus areas where we want to grow. The first one is our focus area of Rotary Motion. To deep dive into that, I have the pleasure of welcoming Romina on stage. Romina, she does not have a business or a sales responsibility. She is part of our technical community for a very important product group, which is industrial oils. Her role is the Head of Product Management for Industrial Oils. Welcome, Romina.
Thank you, Ralph.
Now, before we move on, I think what it's all about Rotary Motion, the name sounds somehow self-explanatory. Before I hand over to Romina, let's just say what it's all about Rotary Motion. Basically, we talk about industrial applications in many industries, and what they have in common is that power is transferred via rotating movement. We talk about compressors, refrigeration systems, or industrial gearboxes.
Yeah, exactly. On the next slide, I would like to show you some practical examples. This is just a small overview of different applications. For example, our RENISO refrigeration oils are specifically designed to lubricate supermarket refrigeration systems or high temperature heat pump applications. Conveyor belts or transport systems in airports, as well as gear motors in the food and beverage industry, are using a broad variety of industrial gear oils. Long life compressor oils are used in dedicated air and gas compressors. Again, this is just a very few examples of different applications we are serving in the market. What they all have in common is that these applications are constantly turning and require a good lubrication and related service to fulfill their job.
Similar to what Krisztián said on the Aftermarket, when you stay in a traffic jam in a construction zone, think about FUCHS when you stand at the airport, at the Frankfurt Airport, waiting for half an hour for your luggage. There's a high likelihood there's FUCHS oil in the conveyor belt. Also to the fact that we have good answers for these types of applications. Talking about that and building on what Romina said, basically, we talk about applications which you meet on a daily basis, both in public and also in manufacturing environment. That, I think, is also quite obvious where we do see the growth drivers. The growth drivers are on a very high level. It's the ongoing industrialization we see. It's the growing world population. You have more people not only requiring food, but also they require access to mobility.
They require access to infrastructure. Think about all the commercial shopping malls with modern heating and cooling devices. That's what we are talking about when we talk about Rotary Motion.
Yeah, this means that Rotary Motion serves essential industrial applications that ask for low disruption risks. To ensure this, the industrial OEMs do not only ask for technical specifications and approvals, but also they require a fast trial support by experienced chemists and engineers. It's very technology driven, and it's a data-backed validation approach. This prevents commoditization and allows us to differentiate in the market. Industrial applications become more and more compact or simply operate under more severe conditions. Thus they require high performance lubricants, which serve to, for example, lower friction, prolong the lifetime of equipment, and ensure reliable operation under high thermal or high mechanical stress as well. In addition, this focus area comprises not only first fill, but also Aftermarket business with a genuine brand and private label approach.
We already have a strong position in key countries like Germany that we can leverage to expand our business worldwide in all the regions.
Here you see one example, where we were talking about Customer Brands. We are not only talking about Customer Brands being the Mercedes of the world. We also see potential in food or in Rotary Motion also with Customer Brands. Then we have to make sure, looking at the focus areas, that we don't double count, that we don't do, don't worry. Also here we have a very interesting customer base who are working together, like technological partnerships to develop a product range, and they market it as a spare part via their Aftermarket structure, and we provide the product. Now, having said this, I think what makes FUCHS different, what is our competitive advantage compared to many other players who also offer products for Rotary Motion applications?
Yeah. The general situation is that industrial customers in Rotary Motion have very specific requirements. As I said, they expect a high degree of performance, but also reliability of the product, secured by demanding specifications and approvals. Even we see that specifications are becoming more complex and with higher requirements. They want to have a fast reaction time in case of a disruption, and they are looking for cost-effective solutions and local logistics. What FUCHS can offer is that we have a broad product range with a full variety. We are a full lubricant supplier. We have proven formulations which are proven in practical applications, local production. With our customer-centric approach towards the industry OEMs, we are, I think, very well positioned to cater all these needs. More specifically, we have a very strong backbone in R&D expertise. We've heard this before already.
When developing a product, we can draw on the full variety of raw materials, not only limited to mineral oils, but also all groups of synthetics. We can build on deep application know-how, and by preserving our global core technology and tailoring the formulations to local cost-effective raw materials, we can optimize a regional portfolio. This fully supports also our region-for-region strategy. With our technology partners who are leading manufacturers and who see our lubricants not only as a by-product but really as a construction element, we can create individual solutions dedicated to their needs. Our customer proximity, also to end customers in all the markets, enables us to strengthen our position. Last but not least, we will exploit cross-selling and cross-segment opportunities.
Thanks, Romina. I think based on what Romina explained, I think it's a truly exciting focus area for us. It combines R&D application know-how, customer proximity, local- for- local. I think there are many, many elements where we can build on what we bring to the party, basically. I think we have a high ambition, and I wish you good luck achieving all the targets you have set yourself.
Thank you.
Now, last but not least, there's a focus area which we call Special Application Solutions. I would like to welcome Julius Fuchs on stage. Julius Fuchs is the Head of Global Business Segment for all our Specialty divisions. That is a pretty fascinating aspect. Before you ask the question, I answer it. Julius does not belong to the founder's family.
Actually.
He belongs to the Fuchs family, but not to the FUCHS founders family. Welcome, Julius.
Thank you.
Thanks for having you. Now, talking about Special Application Solutions, I think what we did building our FUCHS100 strategy, we have selected a number of market segments from our Specialty division. This number of segments, all of them, we expect them to grow over proportionally. The market segment is expected to grow over proportionally. That, I think, is the first element, how we selected the segments. The second element is, and that I think many Specialty segments have in common is, all of them, they have very specific customer requirements. These customer requirements can be commercial, they can be regulatory, and they also can be technical. A prime example, and you heard this quite often, is the food industry.
We like these type of segments because we do have a leading position in the food industry because we can address these very specific demands of the food industry. In the forefront in the food industry is the consumer protection. That comes with changing requirements with regard to hygiene standards, with regard to different legislation. I think we have a very broad product portfolio of food-grade products according to the NSF standard. That's how we build, under the CASSIDA brand, a very strong market position. Now, Julius, I think there are other segments which are similar, fascinating, like the food industry. Tell us more about how we selected these segments and what they have in common.
Yeah. We already talked a lot about the food industry today, and you heard that the population growth is really driving this demand. If you think about this, the population is not only growing, it's also getting older. Therefore, the medical industry is a very promising one for us, where a lot of investments and a high innovation rate are still taking place. If you think about applications in medical, there's a variety of applications. Just tomorrow, I will have an appointment at a dentist. If you think about dental hand pieces, they need to be lubricated. They even need to be lubricated after every use. This just shows one example how tricky these applications are. To be able to sell products into the medical industry, you have to fulfill a lot of standards.
Here, I want to give you an example from the European Union. In the European Union, if you want to qualify a lubricant for the medical industry, you have to fulfill the Medical Device Regulation. This means the lubricant is qualified like the device itself. Globally, you have also biocompatibility standards, patient safety standards, for instance, also very strict in the United States. Here, FUCHS is in a perfect situation that we acquired six years ago, Nye Lubricants. This was an acquisition in the United States, and just recently, one year ago, Boss Lubricants in Germany. These two companies, they have a great expertise in the medical industry, and they know how to qualify the products according to these requirements to be able to serve a real high-tech segment. Another high-tech segment is the semiconductor industry.
I see a lot of laptops and also smartphones here in this room. If you think about how a chip is produced on a wafer, this always happens under clean room conditions, so under vacuum conditions. Means if you also apply a lubricant into these clean room conditions, they have to serve low particle rates, low outgassing rates, because otherwise they will not deal with this environment. We have to select your materials very carefully. FUCHS is able to do this. Also, due to acquisitions like, for instance, Nye, and here there are still a lot of PFPE-based products used. Even on PFAS and PFPE, we have an answer with the MAC technology, so we are well prepared for that. This industry is driven by artificial intelligence, digitalization, and this will further drive this chip demand.
At the end, I would like to highlight another industry, which is the railway market, the railway segment. If we continue the story about the population, which is growing, which is getting older, the population also needs to be transported. Especially in huge countries like in China or India, the track systems, they are still evolving. In the railway industry, reliability, safety are key. You have to perform long field tests to be able to approve a product. Also sustainability plays a major role. If you think about, for instance, a switchblade, which is moving a train from one track on another directly in the environment. Therefore, the product needs to be biodegradable. Also here we have an answer with products based and certified on the EU Ecolabel.
You see a lot of opportunities in these markets, all alongside the Automotive industry. As I know you're not only interested in these opportunities in cross fits, you like the financial attractiveness of these segments, right?
I like all of that, and I like that you are here and that I can hold you accountable for how successful we will be. Based on what you said, I think this market segment, that's our understanding. That's why we love it so much. We are so much passionate about these specialties. I think we talk about segments which have value orientation. The risk to be commoditized is quite low. That's what we like, apart from the other specific requirements which we already mentioned. The other part of the story is why we like these type of segments so much is the competitive landscape. Because all along with these specific requirements to succeed, there are entry barriers for other competitors, and there are the majors who might not like that because they don't bother, because it's a niche.
If they would be interested, they don't like the complexity. There are other ones, the much smaller players on the lubricant market who might have technology in the one or the other area, but they cannot fulfill all these regulatory stuff or they cannot scale it globally. I think also here with our footprint, with our positioning in the lubricant market, we have a quite unique position. I think that's worthwhile even having more insights on our differentiation on the market and what makes us different to grow in these segments.
Yeah. Actually our strength is that we really speak the language of our customers. If you speak the language of your customers, in Specialty means you have to speak a lot of languages, different languages. You need to know the requirements of your customers, but also the requirements of their customers. Here we are able to help them with our R&D capabilities, like we learned from Matt and Thomas, for instance, or from Romina. With our test rigs around the world standardized on also our quality control means we can combine the specialized knowledge in such a segment with global standards, with a global production network. This makes us unique and therefore we can focus on the product in use. If the product is in use, it's all about the performance improvement.
This can be an efficiency gain, the extension of an interval, even lifetime lubrication or material compatibility. This technical consultation is the key because it involves us as also Romina described, even in the engineering process of our customers. For instance, in medical or semicon, you define together with your customer even the specification for your own product. This is really the added value. Then it's not only about the single product for the special application, FUCHS is also able to offer the whole portfolio. If you think about a semiconductor plant, there are also metalworking processes, cooling processes. We can offer this as well. I don't only want to talk about the products, because it's all about a common solution and therefore services are also very important.
Within FUCHS100, we put a lot of emphasis also on services, and FUCHS has a well-established FUCHS Smart Services program. Here we launched, for instance, in the Specialty division, a Lubrication Critical Control Point analysis. This sounds very complex. At the end, it's a software tool in our service program where you can track all your different lubrication point of a plant, connect them with each other, connect it with the demands of stock management, but also with sensors, so condition monitoring is possible. Means here we empower our customer to manage their own lubrication demand, of course, with our support. Therefore, the combination of the product performance and our technical consultation as well as the service really makes the value.
That is right. Listening to Julius, I think you heard to a large extent what is all about the FUCHS DNA. We have the technology, we have the application know-how, we are close to the customer, we are globally present. I think that's what is FUCHS, if you want to describe FUCHS, and that makes us, I think, very strong. We try to enforce that and increase this with our most recent acquisition. I think just to talk again about what did we do with Nye, what did we do with Boss, I think we even want to further expand our technological portfolio because we are able to take it, to further develop it, and to scale it. I think that makes our world in the Specialty arena so fascinating.
Now turning back to your role, Julius, I think you have very ambitious plans you put together with your team and the segment managers during the FUCHS100 process. Now it's about the how. It's how to win and how are we going to achieve our FUCHS100 goals, because I think we have plenty of opportunities, yeah. We have to go for it.
Yeah, this is true. At the end, also in this focus area, we had global, regional, and local teams who defined a roadmap. Now, a roadmap, which overarching tasks, so this might be organizational tasks or the manufacturing footprint, which need to be optimized mid-term relocations to different regions, but also shared resources across these segments. The nature of this segment is really that we have to treat them differently. They are all different, and therefore, for instance, the food or the packaging segment, you already heard about this, they're well established already. Therefore, we have to bring them on the next level. The next food safety standard, new product innovations, new service innovations, and also a lot of market research about what is coming next.
Segments where we just had a regional focus so far or only targeted a certain part of the value chain, it's all about extension. We heard already about a multiplication of success stories or approvals. This is the same here. This can happen in existing accounts, but also across regions and countries. What also have all these segments in common is that they all need a market-specific portfolio. They need to be defined globally, and they need to be maintained and enriched. This is something we do together, of course, with our product management colleagues. Here the acquisitions play also a major role because we are able, with these acquisitions just recently, to close technology gaps, integrate them, and also enrich these market-specific portfolios. At the end, it's also about key accounts and partnerships. Here I would like to highlight the partnerships.
For instance, if you take the railway industry, we have here partners since a couple of years, L.B. Foster, a U.S.-based company, and they offer trackside lubrication systems. An applicator, so to say. For this you also need the right lubricant. We offer together to the customer a common solution with dual branded products, and these kind of partnerships is also something we want to extend. Finally, I have to say, with these global, regional, local teams, with these experts, with these business development managers, product managers, application engineers, I'm very confident that we will reach these goals in this focus area until 2031 and even beyond, because they have a great team spirit. Now we also have a plan, and the first time for FUCHS to this extent, also a clear focus, and this makes me personally very confident.
Thanks, Julius, for that very exciting insights and deep dives into our Specialty segments. With that, I think we conclude the deep dive session in our six focus areas. I hope you enjoyed. You have seen a broad variety, starting from Aftermarket, Customer Brands, via our most beloved customer product group of greases, and then moving on to industrial and specialties. I think that concludes the session and thanks for your attention. I hand back the floor to Andreas. Thanks a lot.
Yeah. I hope you enjoyed the deep dive sessions, and I would like to especially thank all our specialists for being here today. I think this is something that they usually don't do in front of such an audience. Please give them another hand for their performance today. Thank you very much. Now, as promised, we come to the next Q&A session, and for this, I invite the members of the Executive Board back on stage, please.
Before its success.
We start with Angelina.
Thank you very much for all the presentations today, for taking my questions. I'm Angelina Glazova from JPMorgan. I would like to ask on the Automotive Aftermarket and maybe touch a bit on Customer Brands. You have talked about the need to increase the market share in that segment, in the process to increase the brand awareness for FUCHS. Now, we know from the past that this is a segment where you engage with distributors to sell your product. My question is, in terms of increasing the market share, will you still partner with distributors or will you aim to take a bit more business in-house? Because that typically helps the brand awareness. Then secondly, depending on the choice of the option here, what impact do you see for your margins?
What gives you the conviction that you can still deliver profitable growth while growing your market share?
Maybe I take this question. Customer brands, we usually have contracts with our customers directly, not with distributors. Usually let's pick Mercedes-Benz. They have that business with us. We have a contract with them, but sometimes we use distributor to do the last mile delivery, where we ship our product to distributors and then they serve all the dealerships that are in the area. What we have done is we have done a P&L based business case where we say, "Okay, how much can we afford? Does it make sense for us or not?" I think we take the liberty to focus on the business positions that make sense for us and that create the margins that we need to also drive our profitability targets up. For us, the preferred model in general is we also have instances where OEMs have central warehouses.
We ship the entire product there, and they distribute it in their value chain. That's also an option that excludes distributors and that can partly be beneficial on the margin side. Overall, I would say there is not one or the other. We look at it case by case. We evaluate the financials. We have our templates there, and whenever it makes sense, we go for it. Regarding the brand awareness, very often these businesses are shipped under the Customer Brand. If it's not a dual brand where the FUCHS brand is on the label as well, it's not strengthening our brand awareness. It's more capitalizing on the strong Customer Brand that's out there. Regarding Mercedes, we achieved something nice. It's a partnership where both is on the label.
It's the Mercedes sign and FUCHS, where FUCHS is advertised as a technology partner, and that's for us a very high value because we feel that strong Mercedes-Benz brand benefits FUCHS and has created also a lot of customer attention and a lot of credibility in this market.
Maybe get first to Christian, then to Constantin and Sebastian.
Hello, Christian Bell from UBS. Thank you today for the presentation. It's been really helpful. I just had two short questions, I think. Understanding that you're obviously in niche markets, I'm talking about Automotive at the moment. But as the overall refill market for engine oil declines, how do you expect competition to evolve? Do you expect existing players in directly impacted markets to create stronger competition in the segments that you have strong positions in?
I think we touched on that before. First of all, the engine oil volumes are not declining everywhere. It depends a little bit on the sub-segment you are talking. There might be certain sub-segments where this is the case, and where there might be increased competition for the volumes that remain, but that's not across the Board. In fact, we see in many cases, in particular also what we discussed before, agriculture or commercial vehicle, that it's in the end, a total package you need to offer. It's not just about the price for the engine oil, it's about you need to be able to monitor the tank systems of the customers. You need to be able to automize orders. You need to be able to deal with technical issues that appear in the field. It's a manifold set of customer needs that we serve.
With that, we feel there is more than enough room for us to profitably grow in this area.
Okay.
If I may add, Timo, I think also we do see developments of our major competitors. The major oil, they rather exit markets. They hand over markets also for the Automotive Aftermarket to what they call macro distributors or golden distributors. They lose the direct customer contact because they believe it's good enough for them to serve Aftermarket business via a distributor. That, I think we don't do. We stay very close to the customer. There's also a competitive advantage to us if we continue to deal directly in a market with the customers. That makes us stronger and gives us more credibility than if other competitors would go indirect to a market.
Okay, thank you. That's really helpful. The second question, and I understand you're probably not going to be able to answer this directly, but, I understand that you are sort of under-indexed in the passenger car market relative to where you're competing in other parts. Just, it would be really useful to get a sense of, I guess, how much of your overall volumes are related to passenger cars. Are we talking like low double digit or is it closer to 50%? Are you able to give any sort of sense of size for what that represents to the overall Automotive segment?
Yeah, I think intentionally we don't provide you with volume data on sub-segments and smaller categories. I also touched on that yesterday when we had the dinner conversations. Sometimes we get the feeling that people have the one application in their mind, and they want to know, are you successful in that one application? And if yes, they feel we have a bright future. If not, they feel the future is behind us. Look at our product portfolio. We have 10,000 products. We don't have the one product that makes up 10% or 20%. It's highly diversified, and with that, we feel it would be rather misleading to provide you with volume information, and I think we don't disclose that.
Understood. I guess, just to push a little bit further on that. In the passenger car part of the market that you do currently compete in, just ignoring how big it is to the overall portfolio.
Mm.
Do you still expect headwinds within that part of the portfolio relative to the other parts?
I don't think so. I think it also depends what customer you are talking, what kind of technology you are talking, but in general, one statement is clear and that we try to point out also when we explain the Automotive market, passenger car is not the main share in that.
Okay, cool. Thank you very much.
Thanks. Constantin?
Constantin.
Thank you. Hi, Constantin Hesse from Jefferies. A couple questions on my side. One of them is, can we just take a step back? I just want to get a better feel for these top six focus markets. If you could give us an idea of just relative size, what are the biggest opportunities within these six from both a growth perspective and a margin perspective, just so that we can have a rough idea of ranking on that one. First question.
I-
Yeah.
No, I think I had one slide where I showed that these six focus areas roughly make up half of our sales, no? We don't provide you with the subcategories saying now focus area one is 30% or whatever. I think that we don't do. I can tell you they are called focus areas because we see substantial growth potential in all of them. It's partly a little bit different. Some are more higher volume, some are higher margin. In the end, you can also see with the financials that we put together, that we want to keep a healthy balance. Huh? There's also three that have a stronger link to Automotive compared to other three that are more industrial and Specialty type.
With that, we feel we are in a good position to grow our portfolio in a healthy way and to also meet the financial targets that we have put out there.
Just to ask it differently then, I'm assuming all six are above group average margins.
No.
Okay. Maybe a question follow-up on that one then. Focusing on a specific segment that would be negative to margin, is that because of?
Well, let me try to add one thought for you. Talk about the EMEA region. Let's assume for a second the EMEA region is enabled with its infrastructure to take on additional business.
Now we always have two things in mind. The one is that you're asking for, what is the margin of that type of business? The other one is what we call the conversion rate. How much of that margin do we get down to the bottom line or to the EBIT? If you have a given infrastructure, an additional business potential, where you have perhaps a below-average margin, but a far above-average conversion rate, it's a very, very attractive business. What we perhaps are more hesitant to look at are, let's say, where we do such type of business, and we would have to build upfront a multimillion unit in order to support that type of business. That, I think, is then a different ballgame, and Timo was talking about templates to figure out how does the business case look. Both come together.
Are we enabled to support such a business or not? If the answer is yes, we don't need necessarily above-average margin to make a very good EBIT contribution to that.
Okay, understood. Last question from my side. I'd love to understand a little bit better what the switching costs are for customers in the Aftermarket business or Customer Brand. What would make Porsche, for example, and any other future brands switch to FUCHS, like, for example, Mercedes did?
I think it's usually a combination of things. First of all, these customers really strive for reliability. For them, the service business is an increasing share of their profit. They want to make sure whoever they engage with, also on the lubricant side, can deliver. Delivery performance is very important. That part usually beats all the other aspects. If you can show that you can deliver and that you can also offer the services they need to have transparency on their business, there is a higher chance to get the business. The switchover cost for them is, so of course, it's some administrative work to phase out one supplier and onboard another one. They also have to work through the inventory. Of course, also, if you win a new customer, you need to learn a little bit with the new customer.
Who are the key decision-makers there? How reliable are their forecasts? What are usually expected delivery times? Do they work with freight forwarders you can count on? It takes a while till you have the perfect setup in place, and that's maybe also what makes some customers hesitate to change. In general, we feel if you make a strong business case, and if you can also show that you can help them grow their market share in that space, you have a good chance to get to it as long as you have the approvals. That's another big aspect. For example, if you want to supply to Mercedes, you need approved products, and not all the players out there have these approvals for all the products they have in their portfolio, let's say for ATFs, for others.
There is a limited number of players that can actually play in that field.
Okay, the switchover would really mostly be bureaucracy instead of certification with a particular brand.
Yes
Okay.
Plus the underlying risk. If you have, for example, part manufacturers for the agriculture industry, they get orders from the large farming equipment, garages at 5:00 P.M., and they get the spare parts overnight, including lubricants. If they have a supply chain issue, which we very often witness, because most of those guys give it to two parties, and sometimes we have to help out for the other party, that's the biggest risk for them. If you think about agricultural manufacturers' equipment, forestry equipment, even Mercedes, they sell most of their products through their own distributors. If they have a supply chain interruption, that's the biggest changeover risk for them.
Thank you.
Mm-hmm.
I think we go to Sebastian first and then to Martin. Thank you.
Thank you. Sebastian Bray of Berenberg Bank. I'd have two, please. On the consumer brands and Aftermarket push, FUCHS was historically quite cautious about these markets, particularly for Automotive in the U.S. I think since 2022, which is the last time there was a big update on this, the global products business of Valvoline, which did a lot of Aftermarket business in the U.S., was sold. This business was generally doing mid- to high single-digit EBIT percentage margins, if I remember. What is the differentiator or strategy for FUCHS here, and why is this market attractive? Is it there to basically fill capacity for the company in quite a sticky way, such that the contribution margin is higher, or what's the strategy then? My second one is for Esma.
We haven't talked about cost savings from last year in ERP system, but my understanding was that some of the savings made last year may be deferrals or temporary in nature. What is the company spending annually on ERP and related measures through for the next five years, and what is the expected benefit from this? Thank you.
Thank you, Sebastian. Maybe on the first part, I think what has changed really is we have learned a lot about that business. It's what we tried to explain before. We have success stories in some countries. Also, we have figured out a way of doing that business profitably. Now we want to make sure that we take advantage and move these successes to other geographies where we have been not so active in before. With the Valvoline business, I'm not so sure whether the comparison is accurate because they have one business, which is their global products business, which is not the Automotive Aftermarket business with the oil change stores. That was the other part of the business, which was way more profitable. I'm not there to comment on Valvoline, but I'm not sure whether this was a fair comparison.
What we have established.
A global team that is now working on a steering committee on solutions that we can then roll out globally, and that also helps Krisztián to set the right priorities. I think we feel we are more ready for this. We also have the right people actually in the U.S. now to tackle these markets, which was maybe not the case before. We invested also in people, in education, in connecting them to the FUCHS Group and in being more well-rounded when it comes to our capabilities over there.
Especially, I think when you look into the U.S., I found two numbers from Timo intriguing in the morning. He said we only have a 2% market share in Automotive. About 2/3 of Automotive is Aftermarket, and of the Aftermarket, I think it's only 38%. So there's a lot of heavy duty and then agricultural and fleet. In the U.S. you have a huge part of Walmart type, AutoZone type. You have a huge part also for the instant oil change intervals. That is all no-go area for us. There is plenty of opportunities for us to double and triple our business there without touching any part of where you might get nervous.
Now let's come to the cost part. You are right, we were saying we are doing cost avoidance and questioning if we need all the costs we are spending. I would say the bulk part of the savings we have realized is really to say, "Do we need that, what we do?" It is a cautiousness which came into the organization and avoiding actually to do that, what we were doing before. There were also topics what we of course postponed, but with this thinking, we are convinced that we will hold a certain level also continuing forward from a cost spend perspective. Now when you are asking IT, we have a certain base where we are having running IT costs.
I have to say in the last years, especially with, of course, our T2G project, which is not all CapEx, there is also OpEx in it, and also the digitalization initiatives. This is the area where we are increasing, obviously. I will not disclose a percentage if you are okay with that, let's say it this way. On the other hand, the major initiatives what we have in IT spend is right now our T2G project. It goes over five years. It will step by step, being an investment, mainly CapEx, but turning into OpEx partly in 2026 and then 2027 onwards. We have a EUR 2 million or EUR 3 million budget foreseen for it, which we believe we will get through with it, a low EUR 3 million, let's say it this way. Don't let them frightened high.
Where we believe we will need that for rolling out this project.
Martin?
Martin Rödiger from Kepler Cheuvreux. In the past, you have been very positive on growth markets such as, for example, what was it? Thermal fluids, electric driveline fluids, dedicated hybrid transmission fluids, immersion cooling fluids and so on. Can you provide an update where we stand right now and how you see the future is unchanged? Or do you gain market share in these activities? Certainly, yes, but maybe some more color would be helpful. Then also, an update on your joint venture with E-Lyte. That would be also helpful. Thanks.
I can take the first question, Rödiger, on the electric driveline. You saw and you heard from Damian on the New Mobility. What we mean by New Mobility is us watching what is happening on the marketplace when it comes to changes of technology. From the ICE car to the EV car, there are plenty of different driveline possibilities in between. The update that you did receive before and the trends, technologically speaking, remain the same. You see hybridization, you see new fuels, e-fuels, you see hydrogen engines, you see multiple strategies for the driveline, depending on which vehicle we are talking about. Passenger cars, we have the tendency to reduce the conversation, especially out of Europe, from the conversion to EV. But if you look at trucks, for instance, decarbonizing the truck vehicle is a complete different story.
If we look at agriculture equipment or if we look at off-highway equipment, it's also a complete different trend. To answer your questions on how do we see the market evolving, we are very well-positioned thanks to our connections to the OEM in that space. We have plenty of projects. We have, as per what you heard during the deep dive, a lot of businesses in EDF, in electric driveline businesses over time. We see this business progressing over the cycle of FUCHS100 strategy. Now, when you look at the car park or the vehicle park in every of these single categories, the transition per region will not go at the same pace.
That is why we have the technical readiness, and we invest a lot of money with the OEM in Europe, in China, where these players are very big, as well as in the U.S. The adoption per regions will differ broadly.
On E-Lyte, perhaps a short update. We are still a minority shareholder of the E-Lyte company. The founders, they continue to have the majority of E-Lyte. E-Lyte now is a company which is not any longer a baby company, so I think they have now industrialized. We have now, E-Lyte, they have a manufacturing facility, which is in Kaiserslautern. We have now reached a stage where I would say we have started the first industrial type of production and some serious customer delivery contracts. I think the company is enabled. Having said this, we also have to take into account that the transformation into full e-mobility type market is relevant also to E-Lyte. Therefore, I think the, how should I say? The future of E-Lyte will also very much depend on how fast the overall market will transfer into full EV type markets.
Take [Felix] first, and then.
Thank you very much. I have two questions specifically for Krisztián on the Automotive Aftermarket, if I may. We've heard on sort of being in the BEV world, the first fill being not a negative on car-by-car base. How do you view the Aftermarket for the BEV? And how does the refill differ in the Aftermarket? Both in volume, but also in terms of go-to-market strategy, because probably in terms of the how to address the market is a lot different given the fluids are different and the refilling maybe is not that easy like with engine oil or drivetrain oil.
We get you a microphone quickly.
From a technical perspective, you just open up the manual of an e-car and you can read it out, what is the demand of a car. There is a period for the coolant to change, there is a period to relubricate the brake pads and so on. This is different car type to car type. We have to make sure that we have also the relevant lubricants for that.
Is it Aftermarket business overall the same size? Do you think if you look at two cars which are similar size and type and just the drivetrain is ICE and BEV?
Yeah, it's just the fact that a combustion engine car needs regularly an engine oil change. If the car has no engine, then it's no need for engine oil. It's typically coolants, what we are talking about, and greases.
[Felix]?
Yeah, one for the industrial side. You showed up a couple of customer or end market group and the rotary equipment you highlight where you see yourself, your market position a bit more average, while on others you see yourself as excellent and very good. Where does that come from, that in the rotary equipment market, you've lagged maybe a bit, and where is that going now to accelerate more?
I would not necessarily say that we have lagged, because I think we always had the R&D expertise for this segment. We have very, very good and very successful businesses and markets. Germany was mentioned as one of the market where we have both an established relation to the industrial OEMs and a very nice Aftermarket position. Now I think we have rather identified that as a growth opportunity where we would like to focus on in order to, Krisztián would say, copy and paste, what we have across the world, and that is both on the OEM side and the Aftermarket side. Therefore, it's more identifying a growth opportunity than not lacking up to today. I think you might add on that.
No, I think it's exactly in the scope of what Timo was describing. We might have been lacking the focus more than anything else. Technology-wise, we are there. Market access, we are there, too.
Thank you so much. Appreciate it.
We have another question. [On side.]
Yeah, just one question on the Automotive segment and all the sub-segment. Given the fact that some of the historical clients you have, not necessarily the winner of today and tomorrow, and given the presence you have since a long time in China, what percentage of sales today is made with non-German client or with Chinese client?
Well, we cannot give you a concrete percentage, but one part is clear that our business with Chinese OEMs is growing. We see that in China, in particular, they are more successful than the international companies in China. If you want to stay successful in China, you need to succeed with local players. It's not only in Automotive. Take, for example, wind. Wind is a very strong Specialty segment actually for us, and we are the global market leader there, and it's because of our strong setup in China. For us, the key there is to work with Chinese OEMs and also make sure once equipment is moved and exported out of China, that we can capture the service demand because we have the approvals. Wind is one example where we are very successful with that.
Philipp has mentioned it also for his business in Automotive. Of course, we see Chinese OEMs going global, and we want to be their preferred party to go with. We also have adjusted our setup globally for that. We have established something called a Chinese liaison office, where we have a Chinese colleague, and he has just relocated to Mannheim. He's leading a global team of counterparts in all world regions.
That makes sure that we have a good communication between the Chinese customers there and our local teams, and usually these are Chinese nationals, or at least people that speak Chinese. With that, we want to leverage our strength in China and grow our sales with also Chinese OEMs globally.
In China today, what's the mix between Chinese client and non-Chinese?
As I said, the share of Chinese clients is growing, and it's growing rapidly. It's a more balanced mix than it was in the past. Of course, when we went to China, first we went with European and American OEMs, and now this is shifting, and it depends a little bit by segment. In some segments, like wind, it's already 95% Chinese. In others, we are maybe more at 20%-30%. It just depends on where we are and what also the speed is in which these local players evolve.
Mm-hmm.
There was a question at the last row, I think.
Oh, yeah. There.
Thank you. Last year, you had this higher cost that came with the Mercedes contract, and now that the Consumer Brand business is a priority for you, do we have to expect something similar more regularly in the future? Then my second question was on, in the last CMDs, you spoke about smart lubrication, and I was wondering, what role does this play in the next strategy cycle?
I think I can take the first question. If we take on a new Customer Brand project, this doesn't have any incremental cost behind. This was a U.S.-specific part because for them, the Automotive Aftermarket, and that market is similar, was a whole new business. There was some branding activities in the beginning. That was a U.S.-only example, I think, where we had this. If we take on a large customer in Europe or in Asia, we don't have this.
I may take the question in regards to digitalization towards our customers. I think you are referring to FluidsConnect.
Yeah.
Last year. Yes. This one we were rolling out over our portfolio. Actually, we even improved the information in the FluidsConnect, and we have also further steps what we want to improve. We want to get more and more the R&D knowledge in. You hear that from some of the colleagues. We are getting product information in, which we are sharing with our customers. I would say it's one of our value proposition where customers really want to do business with us because they have the visibility and the transparency of that what they are buying and where the lubrication is actually placed.
I think it's also important, if I may add, what Esma said. We don't wait for all the digital stuff until Transform2Grow is finished. We also work on the customer experience platform where we harmonize our websites globally, where we combine them with our web shops to have one customer experience. With FUCHS, we have done a lot of groundwork in the last five years with PIM for the product information, our marketing material. We have established a lot of web shops around the world for existing customers. In many countries, it's a closed shop, where our B2B customers can order products, and all of that goes on parallel.
Is there, because I saw that you have one partnership with a predictive maintenance firm, I think. Is this connected to the FluidsConnect project, or is this a completely different topic?
Predictive maintenance? We work together with a couple of companies when it comes to measuring devices in tanks at these distributors or this all connected. We have a smart service team within FUCHS, where Fluids Connect is our own software with our customers. We dock on a lot of partner solutions, and maybe that's the one you refer to.
Yeah. Okay. Thank you.
Okay. I think we have one more question here in the room, and then we take another question from the live stream.
I thank you. I thought I'd take the opportunity while I can. Just thinking potentially a little bit, obviously, a little bit further out. Heavy duty EVs, the technology is not there yet, due to cost and range constraints. Say roll forward five years and the technology has sort of caught up and you start to see more electrification of heavy duty EVs, heavy duty vehicles. What's the strategy to start pushing against that sort of trend?
Well, again, as Damian explained, we have projects going on also in the heavy duty space. As you rightfully point out, they are a little bit behind, but there is the first serial vehicles out there also on the roads. Again, what we want to do is we want to capitalize on our OEM relationships we have, and we want to be early on part of that game because we see a lot of benefits there, a high need for high tech products in that space as well. As Damian pointed out, energy consumption even plays a bigger role there. Maybe it's even a little easier in that regard to illustrate the value of our products. Certainly, something that we have on our agenda and that we focus on. It's not only EVs, it's all kinds of different concepts.
We go through the entire portfolio of drivelines and have projects. We also have hydrogen projects and other projects for heavy duty. We don't want to put all our money on one horse. We want to make sure that whatever technology evolves, we are there to support.
Great. Thank you.
Mm-hmm.
We come to the question from the live stream.
Yes. Esma, it's a question for you coming back to efficiency. Where do you see the highest potential for efficiency gains within FUCHS? And can you tell us where the organization is already efficient and where it could become more efficient?
I might go out for a moment.
Maybe.
If I talk the same language, and if I standardize topics, I think we all know what we are talking about and which direction we are walking. The main leverage, what I see, and the possibility to get more efficient is really the outcome of our T2G project. Number one, again, setting the stage, talking the same language. The denominator will be the same. Secondly, we will work in a similar way, the same way, and that will definitely show us where we have inefficiencies, where we can do better. Secondly, it will help us actually also from a structural point of view to leverage over the globe, not only in our own country. That's the area where I expect efficiency actually accelerating. Are we efficient today? I wouldn't say we aren't, but there is always space to improve.
Okay. I think that's a very good closing word actually for the Q&A. Thank you very much for all your questions. Now I think it's time for the closing remarks. Stefan, I would hand over to you.
Cool. Thank you very much. I enjoyed, I think, the last couple of hours very much. You have seen I think our FUCHS100 plan. I think we also went a little bit back and reviewed FUCHS2025. First of all, a big thank you to Timo, to Esma, Matt, and Ralph. I think you have done a great job in rolling it all out and laying it all out. I think very important are the six focus areas, and I think you had the opportunity to talk to our experts and see them. A big thank you to Romina, to Damian, Julius, Thomas, Philipp, and Krisztián, and I think they get a hand of applause. Also, very, very big thank you to you, Andreas. I think you have done an outstanding job.
We are very happy that we have you on board also together with Theresa and our latest addition, Maximilian. I think starting from Heidelberg last night for all the parts around the Capital Market Day, but also for today, I think we are in time. We are two minutes a little bit over the time, but a big hand of applause for you and your team.
Thank you. That's a big project.
To summarize everything, I think nothing new, but I think very important to go quickly through. We operate from a very strong and unique asset base, and we talk about asset base, obviously, our 67 subsidiaries, our 38 plants we have around the world. I think the biggest asset we have is the team of 7,000 really committed people willing to walk the extra mile, and that's a big part of the FUCHS culture, which makes me the most proud. I think we have a team second to none. I think there are many market dynamics going on, and we have a lot of FUCHS strengths to create growth, and I think both of it comes very well together. I think we really win by customer-specific solutions. We think in applications, we are there for our customers day and night, and we are technology-driven.
I think we act globally, but we execute locally, and that's very important in today's world. The decentralized model works very well. I think you can do whatever you want. We have given you the bandwidth. We envisage sales of EUR 4 billion-EUR 4.5 billion, and we envisage an EBIT of EUR 550 million-EUR 600 million. We will look at those targets on a year-by-year basis, but this is really what we would like to achieve to have a wonderful celebration of our 100th anniversary in the year 2031. Looking in the short term, you always have seen in the past, I think, over many, many decades, that we were able to turn challenges into opportunities. I think that's what we also will do in 2026. I say a big thank you for all of you for participation. We invite you for lunch now.
Later, we have an optional plant tour. The entire Board will participate, so we will have more time to talk. Really, thanks again, and I look forward to the remaining program.
Thank you very much, Stefan, for the closing remarks. This concludes our Capital Market Day. Thanks to everybody following on the streaming. If you have any further questions, just let us know here at the Investor Relations team. With that, we can now end the live stream.