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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by. I am Yasmin, your Chorus Call operator. Welcome, and thank you for joining the FUCHS PETROLUB analyst conference call. [Operator Instructions] I would now like to turn the conference over to Thomas Altmann. Please go ahead.
Good morning, ladies and gentlemen, and welcome to our Q1 2018 conference call. My name is Thomas Altmann, Head of Investor Relations at FUCHS PETROLUB. With me today Dagmar Steinert, CFO of FUCHS PETROLUB. As usual, we will go through a quick presentation; and afterwards, you will have the chance to ask some questions. Dagmar, please go ahead.
Thank you, Thomas. Good morning from my side as well. So let's start with the presentation. We had a good start into the year 2018, and our sales grew by 4% to EUR 643 million. We've seen a strong organic growth across all our regions. And -- but what's a bit negative is the currency impact, which is affecting not only sales but earnings as well. Therefore, our EBIT is down by 2% to EUR 92 million compared, yes, to the previous year. Our outlook for the full year 2018 is unchanged, and we still expect a sales growth between 3% to 6% and EBIT growth between 2% to 4%. And what I want to point out as well is that we faced the highest investments in the year 2018, with EUR 140 million, we ever had in the company's history.If you have a look at the quarterly sales development, you can see that this EUR 643 million in the first quarter 2018 are, despite the strong euro and the negative currency effect, it's the highest, yes, sales volume of a quarter.If you come now to the sales -- to the group sales of the first quarter in a bit more detail, you can see that we had a 10% organic growth. And this is -- the strong organic growth is continuing. And you might remember that we had a 9% organic growth in the full year 2017. As you can see, the negative currency effect takes away more than half of this growth, so it's minus 6%. The slightly external negative growth is due to our, yes, small operations in Dormagen, which we sold in the fourth quarter 2017.I'm coming now to the Chart #6 -- #5, where you can see the regional sales growth in detail. And as you can see, on an organic side, we grew in every region. Starting with Europe, it was a 9% organic growth; Asia-Pacific, Africa, a very strong growth, with 18%; and in America, we had a 7% organic growth rate. The negative currency effect was very strong in the region America, with minus 16%; followed by Asia-Pacific, Africa, with minus 8%. And this negative currency impact is something which goes through every line in the income statement, so this currency impact does not only affect the sales line but as well the gross profit, the EBIT, so overall, our earnings. Before translation into the group currency euro, the gross profit and the EBIT would have been above previous year.There's one line which might be maybe a bit of a surprise for you, and that is our income from our companies at equity, which is down by minus EUR 2 million, so that's, yes, 40% down. That's due to the weak economic environment in Saudi Arabia, where we had a big burden on our earnings.On the tax side, we had a little bit of a gain. So our tax rate decreased, and therefore, our earnings after tax are EUR 1 million above previous year.If you have a look at the quarterly EBIT development, you can see, despite the strong euro, which started more or less in the middle of the year 2017, that we see quite a stable development, and our earnings on a quarterly basis are always over EUR 90 million.The earnings in the regions, there we've got a mixed picture. Of course, we've got a very strong negative currency impact in Asia-Pacific, Africa as well as in Americas. In Europe, we see an increase of EBIT by EUR 3 million, and we had a strong growth primarily in Germany. In the region Asia-Pacific, Africa, of course, we've got the impact of -- from the equity company in Saudi Arabia; therefore, the EBIT is below previous year. But if you take that out, it would have been above previous year. But of course, we've got this strong negative currency impact.In North and South America, we report an EBIT below previous year. It's down by EUR 3 million. And we see a very, yes, weak U.S. dollar compared to the strong euro. And we faced increasing raw material prices in that region. So overall, our EBIT is down by EUR 2 million from EUR 94 million in the previous year to EUR 92 million in the first quarter 2018.On the next slide, you can see just the development of some selected currencies to give you a flavor how strong these, yes, currency impacts are. For instance, the U.S. dollar is down more than 30% compared to Q1 '17 with the first quarter 2018. And China, the Chinese renminbi is down by 6%; South Africa, by 4%. So all these currencies, yes, got, yes, quite a strong development.If we have a look at our cash flow statement for the first quarter 2018, you can see that we build up net operating working capital, but that's due to our increasing business to our growth in sales. And what you will see on the next slide is that our net operating working capital as a percentage of sales is still on the same level as it was before. So this increase in net operating working capital is due to the increasing business.On the CapEx side, we are investing a bit more compared with the previous quarter. But as I've said before, we expect EUR 140 million for the whole year 2018. Therefore, the free cash flow before acquisitions is below previous year's quarter, but that was expected.So I'm coming now to -- I'd like to sum it up to a short earnings summary. We see a strong organic growth across all regions, mainly in Asia-Pacific, Africa. The strong negative currency impact is seen in sales as well as in earnings, but we expect this effect to weaken over the course of the year if the currency stays as they are. Before currency translation, we see an increase in gross profit and in EBIT as well. That is a result of higher sales prices and of our volume growth. We see a better tax rate due to the Trump, yes, tax reform as well as lower withholding taxes for dividends, and therefore, we improved on that. And our CapEx increased according to plan.So therefore, if I come now to our last chart, our outlook 2018 is unchanged. And we expect, as I said in the beginning, a sales growth between 2 -- 3% and 6% for the full year as well as an EBIT growth between 2% and 4% for the full year. The negative currency effects were weakened over the course of the year. And we will invest around EUR 140 million to continue the expansion of our capacities as planned.So that was a very short summary for the first quarter 2018, but it's not such a long time ago we had the last analyst call in March. And now I would open the floor to your questions.
[Operator Instructions] The first question comes from the line of Martin Roediger of Kepler Cheuvreux.
Ms. Steinert, I have 2 questions. First, on the tax rate, excluding the income from participation, was 28% in Q1. Do you change now your estimate for the tax rate in the full year, which you have provided to us 5 weeks ago to be 29% to 30% in the current year? And can you explain to me why the withholding tax for dividends, so-called Abgeltungsteuer, is lower in Q1 this year versus Q1 last year? And the second question is on working capital -- on net working capital, which is still at 22.3% compared to sales. And you mentioned 5 weeks ago that this is the outcome from increased raw material costs and the problem of Pentosin to export stuff to China and, thus, requires high inventories. If we assume that the raw material prices stay where they are right now and if we assume that you get approval by your customers for local production of Pentosin in China next year, how far could net working capital/sales ratio shrink? You mentioned 5 weeks ago that you won't go below 22%, but former benchmark was 20%, so maybe you can shed some light where we can land at the end of the day with Pentosin and local production in China.
Yes, thank you very much for your questions Mr. Roediger. I will start with the more easy one, with the tax rate question. As you said, we got a tax rate of 28% in Q1 2018 compared with 31% in the first quarter 2017. And ratification for the full year tax rate will be something between 29% or 30% because it's -- for the full year 2017, we had, if I remember it right, 29.5%. And we were seeing more or less on that level. The question of withholding tax, or Abgeltungsteuer, that's a question, of course, of the timing, at what time of the year you, yes, get the dividend, if this is in the first quarter or in the second quarter. Then of course, as we've got our big investment program, we might not get the same dividend from all the companies as we did last year, so it might be a bit lower, but I can't give you there a reasonable number. Regarding net operating working capital, as said 5 weeks ago, that of course, that we are working on the localization of production. And not only regarding the Pentosin product, but as we need the approval of our customer for that for production side, I said it won't happen before 2 years' time; therefore, you shouldn't expect in 2018 or 2019 a bigger reduction of net operating working capital. And you asked the question what could be the -- after localization of production, what could be the new level of net operating working capital because, in the past, there was like a -- yes, like a target or goal of 20%. That, of course, is a question not of the, yes, structure of the business and, of course, of the underlying product mix because there are products with -- which need higher working capital or inventories and other ones which don't. So I can't give you there, at the moment, a guidance.
Okay. But maybe one follow-up on the tax rate answer. You had benefits from the U.S. tax reform in Q1. But you say for the full year, the tax rate will be rather stable. And you mentioned that it is partly related also with the dividends you received from your subsidiaries in the world. So there is no material benefit from the U.S. tax reform in the next couple of quarters or at least the benefit will be compensated by any items from -- on the taxes from the dividends you received from your subsidiaries. Is that the right understanding?
Yes, well, we had already the tax benefit from the U.S. tax reform in 2017. It was the -- like a recalculation of deferred taxes. Of course, in 2018 and ongoing, we've got like a real effect, but it would be -- well, it's in the same amount. Then of course, regarding the Abgeltungsteuer or withholding tax, you have to pay it in the time where you -- where we take the dividend. And therefore, of course, we don't get the dividend from all our companies in the first quarter. So the tax rate will be below, yes, 30%. But if it will be, at the end, 29% or 29.5%, I'm not able to give you that detailed calculation because it's impact of currencies as well. If we have a lower tax rate in the U.S., and due to the strong euro, the translation is less in our group sales, less impact, of course, that gets an effect on the tax rate again. So I hope that answers your question a bit more precisely.
The next question comes from the line of Michael Schäfer of Commerzbank.
My 2 questions, if I may, operationally. First one, on the Americas business, looking at your -- the profitability of the segment, referring to 14.7% EBIT margin you have posted in the first quarter, and looking also and comparing this to the fourth quarter, where you posted something like 16.6%, so what happened? I mean, my understanding was that you rather looked for translational effects in the Americas. So you elaborated a bit on that higher raw mats may have played a role here. So what has changed from the fourth quarter to the first quarter that we see such a significant drop here in profitability, would be my first question? And the second one is on the organic growth you're referring in the APAC region, 18%. Still impressive. Congrats on this one. Just help me understand what are the key drivers there. You mentioned also Australia now picking up. So what are the kind of industries driving this? Primarily, in what kind of regions within the APAC?
Yes, thank you for your questions. Mr. Schäfer. Well, your first question regarding the earnings level in the U.S., if you look just on a fourth quarter, of course, it's impacted more -- a bit by one one-off due to preparing the full annual report. So I don't want -- if you look in general on the fourth quarter, it might not be the best benchmark to compare it with another quarter. But what we've seen in America in the first quarter 2018, well, compared with '17 is significantly increasing raw materials, especially on the base oil side. And in the first quarter 2017, there was no increase in raw material prices seen or recognized. Then we've got a small -- or a smaller amount in the first quarter 2018 as we, in the U.S., paid our workforce a special bonus due to the, yes, benefit of the tax reform. So that, of course, is fully included in the first quarter. And we had some more airfreight we had to pay to be able to deliver in time to our customers. But the main reason for the margin decrease in the U.S. are the increasing raw material prices.
Can I follow up on this one on...
Yes, please.
So how do you see this unfolding basically as we walk through 2018? So if you're already assuming, basically, that we don't see a further acceleration of raw mats from today's level, let's say, should we expect any significant recovery back to the 16-plus type of level in the quarters to come, or how should we really think about this one?
Well, what we definitely see is that we were just following up the increase in our sales prices, so we will, yes, increase our profitability. But it's a question how the raw material prices develop in 2018. So if they are still increasing, we will always be behind. And if you look just at the margin, it's a bit a question of math. If you pass through the increase in raw material prices and not more, then, of course, you dilute your margin if you'll get the same absolute profit. But sorry, Mr. Schäfer, I forgot your second question. What was it about?
The second was more on the key drivers for the organic growth in APAC basically.
Yes.
What kind of industries, what kind of regions. Because we now see APAC growing organically close to 20% for quite a while, so I just wonder what are the pattern or the key drivers have changed over the years. What is...
Yes, there's -- it's like the ongoing development from 2017, there's no significant change. We see a very strong growth -- or we still see a very strong growth in China. And we -- our growth in China is -- well, as well as industrial lubricants, as in automotive, but stronger in automotive as we are stronger in that field in China. And we got a really good increase in our, like, aftermarket business in China and the overall automotive lubricant business. And we got a continuing good development in Australia and South Africa. And with all things we've seen in 2017 as well, so that's continuing.
So do you see kind of mining industry recovering, basically?
It's already recovered in 2017 if I look at the volume, and that's still ongoing, yes.
The next question comes from the line of Ben Gorman of UBS.
Just a few sort of end-market questions. And specifically on Germany, you said that's a particularly strong driver in Europe. Can you give us any more color in terms of where that's coming from end market-wise, also versus others, in a bit more specific detail? And then essentially the same question actually on Asia. Is this still predominately driven by the autos industry? I know that, that seems to be the commentary historically. But I'm just wondering -- obviously, another very, very strong quarter against one of the toughest comps of the year. So just sort of wondering, the sustainability of that not only this year but sort of in the next few years, so how should we think about the layers of growth there? And why shouldn't we model a higher growth rate in that business going forward?
Yes, Mr. Gorman, thank you for your questions. Your first question, regarding Germany, what are the drivers? We've seen in Europe 7% organic growth, and I've said with Germany was very strong. And with -- well, Germany, of course, got the biggest portion of Europe. But one of the reasons why Germany had such a good performance is the Pentosin business for our customers in China. That is a part or portion of that -- or driver of that growth. But besides that, we had a good growth for our overall business in Germany. Coming to China, yes, the strong driver in China is the automotive industry. And your question was how sustainable is that. We've seen it now for a longer time, and we see big growth potential not only in China but in Asia, of course, as well, because we've got still a very low market share. And as you might know, we are building a new production in China, which will be even a bit bigger as the one which is replaced in Shanghai. And we're already expanding our production in the north of China, in Yingkou, because there's organic growth. And this volume growth, of course, has to be produced.
The next question comes from the line of Markus Mayer of Baader-Helvea.
Two questions as well from my side. Firstly, on the organic growth, there was acceleration compared to the full year. Am I right that the delta came from the price side and not so much from the volumes? And I understood it rightly that the majority of organic growth was volume-driven, then should we see an acceleration of the price effects? That was basically my first question. And the second question is on the raw material impact, which maybe kicked in or started to kick in, in the second half of last year. In the first quarter, as far as I saw it, the raw materials was sequentially flat. Maybe you can update us on the development in the first quarter?
Yes, thank you, Mr. Mayer, for your questions. If I look at our organic growth and to split between volume and price, it was more volume than price. But of course, we see there a price effect in there compared to 2017, where our organic growth was more or less volume. So there is a bit of a change. But, of course, we have to keep in mind that it's not always a question of a percentage of a growth but as well a question what and what kind of basis. So if you see the growth in 2017, we've got a higher basis. And then, of course, you still get a significant or the same growth in an absolute number, but it might look less as a percentage. So, so much to that question. And to raw material or the raw material development, we've seen an increase in 2017. And if I look just at the base oil, for instance, for the first quarter 2018, the development in the first quarter, if I look at the, yes, actual prices, of course, it's a currency question as well because in U.S. dollar, they are, compared to the fourth quarter 2017, a bit unchanged. But of course, it always comes in a later -- or with a time lag to us. Compared with Europe, for instance, due to the currency development, the strong euro, raw material prices -- or base oil prices in Europe are a bit below the fourth quarter 2017.
My I add -- can I add like a question on the first one?
Yes, please.
So at this acceleration of the price effects, is it fair to assume that we should see a further acceleration then also in Q2 and also maybe going into the second half, as you might have noted a few price increases in particular then in the end of the third and beginning of the fourth quarter, is this the right way how this phasing of the price effects should be this year?
It seems to be very reasonable what you expect.
The next question comes from the line of Daniel Buchta of MainFirst Bank.
My 2 questions. And the first one is on what you have mentioned or touched a bit on Saudi Arabia before. Can you clarify a bit more what the problem there is? And is there a risk of a write-down of the joint venture stake you have in there? That's the first one. And the second one, the quick one again on raw materials. I mean, you mentioned in -- that in Europe, the prices are even down now. Quite recently, the euro has weakened again. Can you kind of provide a bit of a sensitivity on what a 1-cent change might mean on your raw material cost build if nothing else changes in that? So just to get a feeling a bit how that might benefit you or put a disadvantage on you if the euro is moving.
Yes, thank you for your question, Mr. Buchta. Regarding Saudi Arabia, our joint venture, this, yes, decrease in earnings, that's just due to the overall economic situation in Saudi Arabia. And they suffer somehow, of course, from the crude oil price development, and there is nothing -- yes, nothing special. And we don't face any risk today regarding a write-off of the asset. That's not the case.
So that means, if I can quickly follow up, you assume the profits in the Asia-Pacific from this joint venture to recover step-by-step as well over the course of the year?
Well, we still have the -- as equity consolidation means that you draft sched your portion of net profit into our own P&L. And they are still making a profit. So compared with last year, the profit is less, but it's still a profit. So yes, we are missing...
But do you expect that to...
Pardon?
Do you expect that to improve again going forward? I mean, if you say it's just the crude oil prices that went up so much, so that it's not a specific situation?
Well, I think looking at the Middle East, it's quite a difficult political situation. And personally, I think it will stay difficult for quite a while. Then you had a question regarding raw material prices and asked for -- yes, for the sensitivity of like a change. And I can't give you that and if not -- if nothing else would change because that's what never ever happens. If there is a change in currencies, we see an outcome in our raw material prices. If there is a change in raw material prices before currency, of course, it has an impact. So as we got a lot of presence in lots of countries -- in different countries, and we have to get our supply local, therefore, it's a very mixed or complex picture. And there's no possibility at all to give somehow sensitivity. On the other hand, of course, it's a question -- if you look at base oil or base oil supply, we buy it, of course, in a larger volume, so you don't have to buy it every 2 or every 3 days. So it's a question, when you order it, what's the price at that time, and the price might change some days later and -- but would get delivered in 2 or 3 weeks later. So sorry, I can't give you there anymore more insights.
The next question comes from the line of Knud Hinkel of equinet.
Just one question left from my side. So I would be interested if there had been already any contributions from your new grease factories in Q1. And if not, when do you expect them to occur?
Well, as we ramped up the production of our new grease factory in Harvey in the U.S. in 2017, and we finished more or less by the end of last year, we are already producing there greases, and therefore, of course, we have a contribution. But we still got there plenty of capacity, and -- but that was all expected, and it will take some time to -- yes, to get the market shares and to fill in these orders. But on the other hand, as we said last year as well, with our German special grease factory in Kiel, we are running under full capacity. And therefore, of course, it's for us very essential to have the opportunity to shift maybe the one or the other production from Kiel to our West facility and to have a better levered-out production.
The next question comes from the line of Oliver Schwarz of Warburg Research.
Firstly, SG&A costs have hardly moved year-on-year. Is that the result of preparation costs for the new plants having switched their top? And is that a level that might be ongoing for, let's say, the remainder of this year, or is that just a breather before you take in new personnel, especially in regard to sales? When regarding your strong volume trends here, I guess taking on new people to work the markets and to gain market shares, for example, in the U.S. is on the cut, so could you fill us in, in that regard? That would be my first question. Secondly, the D&A., is that EUR 14 million we are currently seeing in quarter 1, is that something we could use as a run rate for the remainder of this year? Or is -- due to the high investments, so significantly ahead of depreciation, is there a constant rise in the costs, especially looking at numbers of 2017, which had to -- which were a bit lumpy, especially when it came to the end due to some special effects there? And lastly, perhaps -- sorry to labor that point again on your joint venture in Saudi Arabia. I'm still a bit puzzled what's going on there. When we hit the low mark in the crude oil price in 2015, the profitability in that -- in the joint ventures was higher than it is today. And now we are back to $70. So how does this connection between the crude oil price and performance of that joint venture, how does that work? Because we had higher -- a significantly higher income from that joint venture in 2015 and 2016, when the prices were back on the rise. And now they are rising or having risen more, even more to USD 70 per barrel, and now all of a sudden, the profitability has obviously dropped. So I don't really get the connection between crude oil prices and the performance of the joint venture here. Can you please fill us in on that point?
Okay, yes, thank you very much for your questions Mr. Schwarz. Well, I start with your last one regarding Saudi Arabia. I mean, if you look at that region, it's a very difficult economic environment. And the government, yes, took something like, let me put it in this way, out of the reserves. It's not only the question of the development of the crude oil price. So I think more or less every industry, at the moment, is a bit suffering in that area. And as I said before, I don't expect our portion of earnings to come back to old levels in this year, but we have to see what's going on there. Your first question was regarding our cost base or overall cost, maybe a bit pointing out admin costs and so on. But as we invest in our -- in the improvement of our processes, as we invest in IT, and that's more or less all shown in that line, and as we increase our R&D expenses, that's all expected and planned. Regarding our depreciation and amortization, the EUR 14 million we had in the first quarter, that's not -- I wouldn't take it as a run rate because, as we invest more, as we invested a lot last year and as we invest even more this year, we will see, of course, if we finish projects, higher depreciation. And I expected more going into the direction of EUR 60 million than to stay at like EUR 56 million, what would be just the calculation if you multiply it by 4. So something between EUR 56 million and EUR 60 million.
Okay. I have just checked WIP numbers from Saudi Arabia starting January 2015 until end of 2017, and it seems like there wasn't much of a change in this period of time; so rather anemic growth, as you already stated, around about 1%, 1.5%; but rather consistent over the last 2 years, and still the results from the joint venture dropped only in Q1 by 40%. And hence, yes, it's still very hard to understand, but I think we can take your answer for granted that there won't be much relief in the very, let's say, next future or on your future on that. In regard to D&A, EUR 60 million, that would be without any special effects, right? That would be the expected rate without any Fannies for the full year, right?
Yes. But don't get me wrong. I don't expect exactly EUR 60 million depreciation, but...
Around EUR 60 million, yes.
Yes. Or it's something between EUR 56 million and EUR 60 million, and that's just the normal scattered depreciation. And I don't expect any impairment or write-off this year as we had this EUR 6 million impairment for -- as with last year. But one last remark to Saudi Arabia and WIP development and so on. Of course, in the WIP development, there's always services in. And if you look at our equity earnings, it's not only Saudi Arabia. Yes, that's a big portion of it, but it's got Turkey in it, with a big amount, and therefore -- okay, you don't have the details out of that. But of course, it's not only Saudi Arabia. And I would say we'd leave it like that, yes.
The next question comes from the line of Sebastian Bray of Berenberg.
I just have 2, please. The first is the potential for capacity constraints in your growth rate to develop. I'm wondering, given that you -- as I imagine that you're basically nearing production limits in several of your facilities, how quickly are you likely to be able to expand capacity? And could you perhaps give us some guidance on the achievable volume growth rate for the group as a whole for 2019 if things continue to develop as they have done on the macroeconomic side? And secondly, I have a question on pricing. It looks as if the pricing increase across the group for Q1 was fairly low single digits. And I'm just asking the question, well, if base oil prices, maybe not so much in Europe and in other parts of the world, have continued to rally into Q1 to Q2, how much scope is there for further increase in prices over the course of 2018? And do you feel comfortable returning to an underlying margin that translates at the EBIT level of around 15%?
Yes, thank you, Mr. Bray, for your questions. Of course, we expect a further increase in pricing in the running year. And -- well, but what happens to the margin, of course, depends as well on the development of the -- or further development of the raw material prices. You asked about our capacity and how easy or fast we are able to expand capacity, and there, I can give you like 2 answers -- or 2 kind of answers. On the one hand, of course, if I look at our more recent production site, for instance, the one in Yingkou in the North of China, the one in Russia, even the one in Kaiserslautern, there we have, in general, more space. So quite easy, we are able to add more tanks, to add more kettles and more piping, and that's something what's -- yes, possible to do it quite fast. If I have a look, for instance, at our site here in Mannheim, there, of course, it's much more difficult because it's a modern production, but it's grown historically. So it's -- if you would build a new one, a greenfield, it would look different. So it's more difficult to add capacity because that ends up, at the end, like an operation on -- like in a surgery on an open heart. So that's more complicated. Then of course, if we are talking about new places, new production sites, where we build a new one to replace an old one, then, of course, it's quite easy to add capacity or to, yes, build up more capacity from the beginning on. And yes, that was the answer to that. And I can't give you like a growth rate because our market shares overall are still small. We see in every region a good growth potential. We are working on it. And it's not only the question of production capacity, it's as well the question of technology, of R&D and of the overall development. But we are very confident that we will fill in these new capacities as well. And if you have a look at our organic growth, and we've got EUR 2.5 billion sales in 2017, so -- and then looking at our growth rate, then you would need a new plant every 2 or 3 years, middle-sized plants to, yes, produce this organic growth.
Just to follow up on this...
Yes.
There's nothing that -- which speak against, if the demand is there, FUCHS continuing to do underlying volume growth of over 5% per year?
That's a hard question. Could be. Could not be. I mean, that's a very hard question because I don't want to be -- I don't want to read that I said FUCHS would grow 5% year-by-year.
Actually, it's not so much if it would, but is it physically possible based on [ your capacity now? ]
Yes, yes, yes, it is possible.
The next question comes from the line of Martin Roediger of Kepler Cheuvreux.
I apologize for my follow-up question, but I have to come back to the raw materials issue. You mentioned base oil, so that's clear. But I remember that the majority of your raw material value is additives, and you didn't mention anything about additives. So is it right to understand that in Q1, there was no price increase from additives, and your additive suppliers did not announce any price hikes for the second quarter? Is that the right understanding?
Mr. Roediger, as far as I know, I'm not aware of any significant price increases on the additives side, as well as big key supplier didn't give us a notice of significant price increases. There might be a small one, possible, yes, but in general, there's no significant movement on that side.
The next question comes from the line of Markus Mayer of Baader-Helvea.
I just had a question or a clarification question. So far, yes, I mean, is that guidance unchanged, but only confirmed then the revenue and EBIT guidance. It's also valid for the free cash flow guidance, I assume.
Yes, of course. As well as, obviously, our free cash flow as well as for the FUCHS Value Added, it's all unchanged and confirmed.
[Operator Instructions] As there are no further questions at this time, I hand back to Thomas Altmann for closing comments.
Thank you very much for joining our conference call today. Our next conference call will be on the half year financial results on July 31. Until then, I wish you a good time and a good weekend. Bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.