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Composites

Composites and graphite drive SGL in first half

Recurring EBIT from continuing operations increased to EUR 9.6 million, compared to EUR -1.9 million for the same period last year.

12th August 2016

Innovation in Textiles
 |  Wiesbaden

Industrial, Transport/​Aerospace

The reporting segment Composites – Fibers & Materials (CFM) made a particularly strong contribution in this regard, with recurring EBIT substantially rising to EUR 12.2 million – the best result since its inception.

Adjusted for one-time effects from the previous year, EBIT of Graphite Materials & Systems (GMS) also saw an increase. Due to the legal separation and the progress in the ongoing disposal process, the business unit Performance Products (PP) has been classified as discontinued operations as of 30 June 2016.

Focus on growth

“We’ve intensified our review of strategic options for Performance Products (PP) since the completed legal separation early June,” said Dr Jürgen Köhler, CEO of SGL Group. “It became apparent that a sale of the business unit is the most sustainable route, both for SGL Group and for PP. Our aim is to sell PP by the end of this year.”

“We are now focusing on growth-driven industry segments. Our business units Composites – Fibers & Materials (CFM) and Graphite Materials & Systems (GMS) enable us to drive developments in the megatrends mobility, energy supply and digitization. CFM’s new Lightweight and Application Center is already in its initial phase and has attracted attention of customers and prospects alike. At GMS we will expand the capacities for coated graphite components used in the production processes of the solar, semiconductor and LED industries.”

Results

Group sales from continuing operations amounted to EUR 379.4 million in the first half of the year 2016, compared to EUR 385.3 million, nearly matching the previous half-year level.

In contrast, EBIT after non-recurring charges turned positive from EUR -3.3 million to EUR 9.6 million. The Group’s net financing result saw a slight decline from EUR -23.2 million to EUR -25.9 million. The result from continuing operations before taxes improved to EUR -16.3, versus EUR -26.5 million in 2015.

Composites – Fibers & Materials

Sales in the reporting segment CFM decreased by 2.8% in the first half of the year 2016, to EUR 156.5 million. While sales in the carbon fibre business recorded favorable growth, the acrylic fibre business despite higher volumes posted substantial lower sales based on lower raw material (acrylonitrile) prices, resulting from the depressed oil price.

Recurring EBIT improved in the first half of the year to EUR 12.2 million. The strong results in the first quarter turned this into an all-time high for CFM. The highest earnings increase was recorded by the joint ventures with BMW Group, SGL Automotive Carbon Fibers, which have completed the start-up phase. In addition, the Group’s own carbon fibre production facilities had a high level of capacity utilization. As a result, the EBIT margin increased from 2.4% to 7.8% compared with last year.

Graphite Materials & Systems

GMS sales, at EUR 218.9 million, remained on the previous year’s level. In particular, customers from the solar, LED and semiconductor industries in Europe and Asia had higher demand for isostatic graphite and fibre materials.

In contrast, the business in North America was negatively impacted by lower demand from energy-related industries. Demand for anode material for lithium-ion batteries developed at anticipated stable level. Recurring EBIT decreased by 18.7% to EUR 13.5 million. Excluding these one-time effects, the operating result improved by EUR 2 million due to cost savings. The EBIT margin amounted to 6.2%, compared to previous year’s figure of 7.6%.

Results of discontinued operations

Discontinued operations primarily relate to the business unit PP. Its results continue to be characterized by a significant price decline for graphite electrodes, while the delivery volumes increased slightly. Business with cathodes, furnace linings and carbon electrodes developed well within our expectations.

Including discontinued operations, SGL Group generated a consolidated net result attributable to the shareholders of the company of EUR -73.2, compared to EUR -85.0 million in the first half of 2015.

Outlook for 2016

The adjusted guidance for the year 2016 reflects the reclassification of PP as held for sale. Accordingly, SGL Group sales from continuing operations will be slightly lower year-on-year, while recurring Group EBIT is to slightly exceed the previous year’s level.

In the business unit CFM, higher sales of fibres and materials for composites is anticipated to offset the declining price in the textile acrylic fibres business. Sales will therefore remain close to stable. Sales in the reporting segment GMS are expected to remain stable.

Since a number of investment projects in the business units CFM and GMS have essentially been completed, investment requirements have declined compared to prior years. For this reason, the company plans substantially lower capital expenditures in 2016 than in the prior year. Moreover, by the end of the year the SGL2015 cost savings programme will be successfully concluded.

www.sglgroup.com

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