06-27-2013

Ad hoc notification pursuant to § 15 of the German Securities Trading Act (Wertpapierhandelsgesetz)

SGL Carbon SE: Adjustment of full year 2013 guidance and impairment charges necessary in the first half year

• Increased competitive pressure from Asia and lack of business recovery burden in particular the graphite electrode and graphite specialties businesses
• Additional tax expenses mainly due to the release of capitalized deferred tax assets related to tax losses carried forward
• Event-driven impairment tests lead to impairment charges in the Business Area Carbon Fibers & Composites (CFC)

Wiesbaden, June 27, 2013. The weak business environment, which had already negatively impacted the first quarter of fiscal year 2013, has continued in the first two months of the second quarter 2013. Additionally, in particular over the last weeks, competitive pressure from Asia has significantly increased, intensified by the devaluation of the Japanese Yen. Consequently, the anticipated business recovery will not occur either in the second quarter or in the second half of 2013, particularly in our businesses relating to graphite electrodes within the Business Area Performance Products (PP) and graphite specialties within the Business Area Graphite Materials & Systems (GMS). SGL Group therefore now expects Group EBITDA in the second quarter 2013 to be slightly below the first quarter 2013 (Q1/2013: €34 million).

The full year 2013 EBITDA guidance also has to be adjusted to the altered expectations: SGL Group now anticipates Group EBITDA to be 50-60% lower compared to 2012 (2012: €240 million before project write-offs) and the previous guidance of a 20-25% decline.

The substantially lower EBITDA means that the set target for a positive free cash flow in 2013 can no longer be met.

However, the decline in free cash flow will be substantially less than the reduction in the EBITDA due to rigid expense controls particularly relating to capital expenditures and working capital.
The Company expects mid to high double digit million Euro tax expenses in the first half 2013. A major share of these tax expenses results from the release of capitalized deferred tax assets related to tax losses carried forward. This non cash tax expense is a consequence of the reduced earnings expectations in Germany and the USA. The measure will not restrict the possibility to take advantage of the tax losses carried forward in future.

The adjusted guidance for the year also triggered an event-driven review of asset valuations. Within the framework of these IFRS required impairment tests, all businesses are prompted to review their 5 year plans and to identify potential deviations. A delay in the earnings development is becoming apparent in the Business Units within the Business Area CFC, due to numerous project shifts and continued high development costs. However, this does not apply to the activities in the automotive field, which are developing as scheduled. Altogether, the impairment test for the Business Area CFC results in a significant impairment charge in the second quarter 2013, which, from today’s point of view, is tentatively estimated at €150 million at the most.

The Board of Management will decide on appropriate countermeasures and potential restructuring projects in close cooperation with the Supervisory Board.

The interim report on the first half year 2013 and further information on the outlook will be published on August 8, 2013.
 

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 45 production sites in Europe, North America and Asia as well as a service network covering more than 100 countries, SGL Group is a company with a global presence. In 2012, the Company’s workforce of around 6,700 employees generated sales of €1,709 million. The Company’s head office is located in Wiesbaden.

Further information about SGL Group can be found online at: www.sglgroup.com
 

Additional Information:
ISIN: DE0007235301
Listing: Amtlicher Markt / Prime Standard / Frankfurter Wertpapierbörse
(Official Market / Prime Standard / Frankfurt Stock Exchange)
Company's seat: 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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