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SGL Group reports improved financial results for 1Q 2015

The consolidated net result improved to minus EUR 16.5 million, compared to minus 24.4 million for the first quarter 2014.

30th April 2015

Innovation in Textiles
 |  Wiesbaden

Industrial, Transport/​Aerospace, Civil Engineering, Construction

The measures executed in the course of the cost savings programme SGL2015 increasingly had positive impact despite a continuing difficult environment for the core business with graphite electrodes.

“As expected, we made a solid start into business year 2015. We were able to improve our Group earnings – despite the continued difficult environment for our graphite electrodes – because the measures from our cost savings program SGL2015 are increasingly showing positive results. Therefore we are on track to reach our guidance for this year and to achieve sustainable profitable growth in the medium term,” commented Dr Jürgen Köhler, CEO of SGL Group.

Financial results

The Group EBIT improved from EUR 0.9 million in the previous year to EUR 5.1 million. The EBIT margin increased from 0.3% to 1.6%. The sales development was affected by a decline in the reporting segment Performance Products, as well as by the slow start into the year at Graphite Materials & Systems.

This was almost entirely compensated by the positive sales development in the reporting segment Carbon Fibers & Materials and positive currency effects. As a result, Group sales only declined marginally by 1% (currency adjusted by 8%) to EUR 315.3 million.

Non-recurring charges related to SGL2015 declined to EUR 0.8 million. Accordingly, Group EBIT after non-recurring charges improved to EUR 4.3 million. The net financing result remained virtually unchanged compared to the prior-year period at minus EUR 12 million. The result before taxes from continuing operations was accordingly cut by half to minus EUR 7.8 million. The consolidated net result improved to minus EUR 16.5 million, compared to minus 24.4 million for the first quarter 2014.

Performance Products

As already seen in the previous year the ongoing Chinese blast furnace steel overproduction continued to result in a weak demand for graphite electrodes in the reporting period. In addition, graphite electrode prices further declined, driven by lower raw material costs relating to the crude oil price.

Sales in the reporting segment Performance Products decreased slightly by 3% in the first quarter 2015 to EUR 128.3 million. Recurring EBIT in the reporting period doubled to EUR 8.2 million. The EBIT margin reached 6.4%, compared to the 3% for the same period last year.

Graphite Materials & Systems

Sales in Graphite Materials & Systems decreased by 9% (currency adjusted by 15%) to EUR 104.1 million. The main reason for this development is a project-related big ticket order from a customer in the electronics industry in the prior-year period. Additionally, the weak order intake in 2014 at Process Technology leads to a weaker first half year 2015.

In total, recurring EBIT decreased to EUR 8.9 million and EBIT margin to 8.5%. Cost savings from SGL2015 amounted to EUR 3.4 million, of which EUR 1.9 million was attributable to SGL Excellence.

Carbon Fibers & Materials

Sales in Carbon Fibers & Materials increased by 16% (currency adjusted by 9%) to EUR 80 million, mainly due to the significantly higher sales in the proportionally consolidated joint operations with BMW Group (SGL ACF).

But the business unit Carbon Fibers & Composite Materials (CF/CM) was also able to increase sales due to the improved demand from various customer industries. Recurring EBIT increased substantially to minus EUR 0.7 million from minus EUR 6.9 million, leading to an EBIT margin of minus 0.9%. Both the business unit CF/CM as well as SGL ACF contributed positively to this development.

Outlook for 2015 confirmed

SGL Group confirms the guidance for fiscal year 2015, which was published with the annual report in March 2015. Group sales should remain roughly stable in 2015 in comparison to the prior year. In addition, no near-term recovery in electric steel markets can be expected. Nevertheless, Group EBITDA and Group EBIT should significantly improve year over year.

The cost savings program SGL2015 will be further pursued with highest priority. Accordingly, the total savings target was increased from initially EUR 150 million in two steps to EUR 240 million.

A number of long-term expansion projects are either largely completed or at the end of their investment phase in all established businesses. Given the weak earnings situation, SGL Group will additionally curtail capital expenditures further. Accordingly, for the year 2015, total capital expenditure will be significantly lower than in 2014 and for the first time in many years at most at the level of depreciation.

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