SGL Group Plans Resumption of Dividend Payments

- Sales revenue up by 12% to €1,540 million in 2011
- EBIT before net gains from impairment tests rose 25% to €160.4 million; return on sales increased to 10.4%
- Solid balance sheet structure: equity ratio of 45.8%, gearing of 0.33
- Net profit up 40% to €73.2 million
- Proposal to Annual General Meeting of a resumption of dividend payments of €0.20 for fiscal year 2011
- Outlook for 2012: Assuming recovery of the global economy in the second half of 2012, additional improvements in sales revenue and EBIT expected

Wiesbaden, March 22, 2012. SGL Group – The Carbon Company – succeeded in reaching its Group targets for fiscal year 2011. Group sales revenue improved by 11.5% to €1,540.2 million (2010: €1,381.8 million); the target was to increase sales revenue by more than 10%. Growth was driven primarily by the performance of the Business Area Graphite Materials & Systems (GMS), which was well over expectations with a revenue increase of more than 18% versus 2010. The growth of the Business Area Carbon Fibers & Composites (CFC) was limited by the project-related downward trend in the Business Unit Rotor Blades. With respect to operating profit (EBIT) before net gains from impairment tests, SGL Group achieved an increase of 25% to €160.4 million (2010: €128.4 million). Return on sales rose accordingly, increasing from 9.3% to 10.4%. During the year under review, SGL Group performed impairment tests in the Business Unit Carbon Fibers & Composite Materials (CF/CM) and the Business Unit Rotor Blades (RB), both of which are included in the Business Area Carbon Fibers & Composites (CFC). The result of the impairment tests, which was published in the six-month interim report for 2011, was a net gain of €5.1 million. Reported EBIT thus increased to €165.5 million.

Robert Koehler, CEO of SGL Group, stated: “Against the backdrop of heightening risk in the general economy, fiscal 2011 was a good year for SGL Group, and consequently we will propose payment of a dividend to the Annual General Meeting in May. Outstanding performance was achieved by the Business Area Graphite Materials & Systems, which generated its best results to date in 2011 and thus established itself as a second key income driver alongside Performance Products. 2011 was also the year in which carbon – our material – achieved significant public awareness. We fully intend to benefit from this trend in the coming years. For 2012, we anticipate further revenue and earnings growth as the economy gains momentum in the second half.”

Earnings per share up 36% to €1.09

Consolidated net profit rose by 40.2% to €73.2 million (2010: €52.2 million). Based on an average number of shares of 67.0 million, basic earnings per share thus increased from €0.80 to €1.09.

Equity basis further strengthened, debt reduced

Due to the earnings improvement and the early, partial conversion of the convertible bonds (2007/2013 and 2009/2016), equity increased by approximately one-fifth to €1,041.1 million in 2011 (December 31, 2010: €864.4 million). At the same time, net debt declined by €67.2 million to €343.3 million (2010: €410.5 million). The equity ratio improved from 40.9% to 45.8%, and gearing decreased significantly to 0.33 (2010: 0.47) despite the continued increase in capital spending. SGL Group continued to consistently pursue its growth strategy in fiscal year 2011. SGL’s capital expenditure of €138.8 million (2010: €136.9 million) was funded primarily from operating cash flows, as in the prior year. Free cash flow improved to minus €33.1 million compared with the prior-year figure of minus €38.3 million.

Proposal to Annual General Meeting of a dividend payment for 2011

SGL Group intends – as communicated at the last Annual General Meeting – to resume payment of performance-based dividends. The Board of Management, with the approval of the Supervisory Board, will therefore propose to the Annual General Meeting on May 10, 2012 to pay a dividend of €0.20 for each share entitled to participate in dividends for fiscal year 2011. The expected total distribution to shareholders will amount to around €14 million.

Segment Reporting

Performance Products (PP) sees double-digit increase in sales revenue

Sales revenue in the Business Area Performance Products rose by 11% to €845.7 million in the past fiscal year (2010: €762.6 million). The revenue increase was driven by sustained demand for graphite electrode volumes as a result of global growth in electric steel production. As expected, cathode sales started recovering slightly in the third quarter of 2011, albeit at lower sales prices. The first half of 2011 was impacted by the investment pause and destocking in the aluminum industry as seen throughout 2010.

Despite the rise in sales revenue, EBIT remained at nearly the same level as in the prior year at €143.3 million (2010: €144.1 million), mainly due to the lower sales prices, particularly for cathodes. The start-up costs for commissioning the new production facility in Banting (Malaysia) likewise weighed on earnings of the Business Area PP. Cost savings from the SGL Excellence initiative amounted to approximately €10 million. The return on sales for full-year 2011 thus declined to 16.9% compared with the previous year (2010: 18.9%).

Outlook for PP: SGL Group anticipates an increase in sales revenues of the Business Area Performance Products in fiscal year 2012 compared with 2011, at comparable margins.

Graphite Materials & Systems (GMS) has record year

Sales revenue in the Business Area Graphite Materials & Systems rose by 18% to €468.7 million in the past fiscal year, up from €395.9 million. The growth was attributable to very high demand from all customer industries, primarily in the solar, semiconductor and LED sectors.

EBIT more than doubled, increasing from €36.9 million to €84.0 million, and the return on sales rose to 17.9% (2010: 9.3%). The positive good earnings development is attributable to a high utilization of production capacity, implementation of price increases and improvements in earnings power. For example, cost savings of €8 million were realized under the SGL Excellence initiative.

Outlook for GMS: For GMS, the company expects sales revenues to remain stable compared with the record year of 2011. Due to an anticipated decrease in capacity utilization and higher input costs, however, it is not likely that the record return on sales of 18% achieved in 2011 will be repeated. Nevertheless, a return on sales well over the medium-term target of at least 10% is still expected.

Carbon Fibers & Composites (CFC) with positive and negative outlooks

Sales revenue in the Business Area Carbon Fibers & Composites rose only slightly to €220.2 million in the past fiscal year (2010: €218.5 million).

EBIT in the Business Area CFC amounted to a loss of €16.9 million (before effects of the impairment tests conducted in 2011) versus a loss of €6.6 million in the prior year. As described in the interim reports for 2011, the lack of profits in the Business Area CFC is solely the result of the disappointing development in the wind energy industry. The project-related lack of sales revenue at SGL Rotec in fiscal 2011 also had a disproportionately high impact on earnings due to the high level of fixed costs in rotor blade production. The Business Area CFC excluding SGL Rotec generated slightly positive EBIT, given that the Carbon Fibers & Composite Materials and Aerostructures Business Units performed well for the most part. The cost savings from the SGL Excellence initiative amounted to approximately €5 million. Return on sales fell from minus 3.0% in 2010 to minus 7.7% for full-year 2011.

The sales revenue for the equity-accounted investments totaled to €168.6 million (2010: €158.0 million; both figures based on aggregated, unconsolidated full values of the companies), out of which €155.7 million was attributable to the Business Area CFC (2010: €137.0 million; based on aggregated, unconsolidated full values of the companies). The total net loss from these investments amounted to €32.6 million (2010: loss of €11.9 million). This figure includes the expenses recognized for impairment losses and extraordinary write-downs at PowerBlades and EPG, which added a total of €13.9 million to the loss from equity-accounted investments.

Outlook for CFC: The company expects the rotor blade business to be able to reduce its losses based on an improved order situation. With respect to the other CFC business units, growth momentum in 2012 should be reflected in notable improvements in the business with carbon fibers, composite materials and structural components. From a current perspective, however, it is difficult to assess whether these improvements will be sufficient to compensate for the anticipated losses in the Business Unit Rotor Blades.

Outlook: Further improvements in sales revenue and EBIT in 2012

It is difficult to make a concrete projection for 2012 due to economic uncertainties, especially those resulting from unresolved sovereign debt issues. Most experts are expecting the economy to cool down in the first half of 2012 in particular, especially in Europe, even culminating in a recession in some countries. For 2012 as a whole, however, a sentiment of cautious optimism prevails – assuming policymakers succeed in getting a grip on the problems with the euro and the financial crisis and thus mitigating the resulting impact on the world economy.

Based on an improvement in the global economic situation in the course of 2012, SGL Group expects – from a current perspective – that sales revenue and EBIT will continue to improve for the Group. However, it is currently difficult to assess whether it will be possible to reach the target of a Group return on sales of at least 12% (based on EBIT) as of the end of fiscal year 2012.

Due to the high number of long-term expansion projects already begun in all Business Areas, investments in 2012 will continue at a high level of up to €150 million. Not until 2013 is a reduction in capital expenditure anticipated. Since its continued high capital spending requirements will be covered to a large extent by operating cash flows, SGL Group is maintaining its target of a gearing ratio of approximately 0.5.

Return on sales of at least 12% targeted in the course of 2013

A long-term economic recovery and the fundamental trends that remain intact, especially regarding the substitution of materials and increased use of SGL Group’s products in energy technology, are likely to allow for additional revenue and earnings improvements in 2013, in the course of which SGL Group intends to once again reach the Group’s return on sales target of at least 12%.

Key figures of SGL Group

 ( in € million)

Full Year
2011 2010 Change
Sales revenue 1,540.2 1,381.8 11.5%
Gross profit 419.0 369.6 13.4%
Operating profit (EBIT) before net gains from impairment tests 160.4 128.4 24.9%
Operating Profit (EBIT) 165.5 128.4 28.9%
Return on sales (ROS)(1) 10.4 9.3%  
Return on capital employed (ROCE)(2) 10.0% 9.0%  
Profit before tax 83.7 73.2 14.3%
Consolidated net profit 73.2 52.2 40.2%
Earnings per share, basic (in €) 1.09 0.80 36.3%
Dividend per share 0.20(3) 0.00  
31. 2011
31. 2010
Total assets 2,271.3 2,113.3 7.5%
Equity attributable to
shareholders of the
parent company
1,041.1 864.4 20.4%
Net debt 343.3 410.5 -16.4%
Gearing(4) 0.33 0.47  
Equity ratio(5) 45.8% 40.9%  
Capital expenditure on
property, plant and equipment
and intangible assets
138.8 136.9 1.4%
Free cash flow -33.1 -38.3 13.6%
Employees 6,447 6,285 2.6%
(1) Ratio of EBIT before net gains from impairment tests to sales revenue
(2) Ratio of EBIT to average capital employed
(3) Proposal to the Annual General Meeting for fiscal year 2011
(4) Ratio of net debt to equity attributable to the shareholders of the parent company
(5) Ratio of equity attributable to the shareholders of the parent company to total assets


About SGL Group – The Carbon Company

SGL Group is one of the world’s leading manufacturers of carbon-based products and materials. It has a comprehensive portfolio ranging from carbon and graphite products to carbon fibers and composites. SGL Group’s core competencies are its expertise in high-temperature technology as well as its applications and engineering know-how gained over many years. These competencies enable the Company to make full use of its broad material base. SGL Group’s carbon-based materials combine several unique properties such as very good electrical and thermal conductivity, heat and corrosion resistance as well as high mechanical strength combined with low weight. Due to industrialization in the growth regions of Asia and Latin America and increased substitution of traditional with innovative materials, there is a growing demand for SGL Group’s high-performance materials and products. Products from SGL Group are used predominantly in the steel, aluminum, automotive and chemical industries as well as in the semiconductor, solar and LED sectors and in lithium-ion batteries. Carbon-based materials and products are also being used increasingly in the wind power, aerospace and defense industries.

With 46 production sites in Europe, North America and Asia as well as a service network covering more than 100 countries, the SGL Group is a company with a global presence. In 2011, the Company’s workforce of around 6,500 employees generated sales of €1,540 million. The Company’s head office is located in Wiesbaden.

Important note:

This press release may contain forward-looking statements based on the information currently available to us and on our current projections and assumptions. By nature, forward-looking statements involve known and unknown risks and uncertainties, as a consequence of which actual developments and results can deviate significantly from these forward-looking statements. Forward-looking statements are not to be understood as guarantees. Rather, future developments and results depend on a number of factors; they entail various risks and unanticipated circumstances and are based on assumptions which may prove to be inaccurate. These risks and uncertainties include, for example, unforeseeable changes in political, economic, legal, and business conditions, particularly relating to our main customer industries, such as electric steel production, to the competitive environment, to interest rate and exchange rate fluctuations, to technological developments, and to other risks and unanticipated circumstances. Other risks that in our opinion may arise include price developments, unexpected developments connected with acquisitions and subsidiaries, and unforeseen risks associated with ongoing cost savings programs. SGL Group does not intend or assume any responsibility to revise or otherwise update these forward-looking statements.

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