Dr. Michael Majerus, CFO Villa Kennedy, Frankfurt, 20 January 2015 - - PowerPoint PPT Presentation
Unicredit KeplerCheuvreux p 14th German Corporate Conference Dr. Michael Majerus, CFO Villa Kennedy, Frankfurt, 20 January 2015 Introduction to SGL Groups Businesses Page 2 | Investor Relations Presentation Unique materials and process
Villa Kennedy, Frankfurt, 20 January 2015
Page 2 | Investor Relations Presentation
Based on carbon, graphite & carbon fiber as well as the management of high temperature technologies
Mechanical High temperature products Mechanical strength
Battery Cathode graphitized Graphite electrode Furnace linings Carbon electrode
P ti
Battery graphite Ceramic brake disc CFRC Iso graphite Carbon felt Expanded graphite
Properties
carbon & graphite Thermal resistance
brake disc Carbon fibers
1,000°C 3,000°C
We operate more than 300 high temperature furnaces globally
Page 3 | Investor Relations Presentation
We operate more than 300 high temperature furnaces globally
Company profile 2013 Group sales* Sales by region - 2013
Asia
2013 Group sales*
C&O Rest of world
g manufacturers of carbon- based products
portfolio
Asia 25% Germany 16% 8% CFM 18% GS PP 53% North America Rest of 10%
worldwide
Reporting segments Key industries served
Main products
GS 21% America 24% Rest of Europe 25%
(PP)
(CFM)
non-ferrous metals
A t ti i d
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* Adjusted for the reclassification of Business Unit Aerostructures to discontinued operations as of June 30, 2014
(CFM)
industrial
Growth markets Performance Example Market positions Segment
Steel recycling
Performance Products enabler for
largest manufacturers worldwide
share (ex-China)*
Steel recycling New aluminium smelter construction
Excess scrap from China to drive EAF steel production
expected until 2030 globally**
Graphite Specialties enabler for
in variety of customer industries
Li-ion batteries for mobile applications LED
CAGR from 2013 to 2019***
range from 25% - 38% CAGR****
Carbon Fibers& Materials enabler for
in specific automotive products & applications
Automotive lightweight trend
BMW i-Series
discs
Page 5 | Investor Relations Presentation * Source: SGL estimates ** Source: The Global Aluminium industry, Dr Carmine Nappi, February 2013 *** Source: Research and Markets, "Global Lithium Ion Battery Market - Forecast to 2019“, February 2014 **** Source: Commerzbank July 2013, Compound Semiconductor, Volume 19, Issue 5, July 2013 quoting IHS’ research report “Q2 GaN LED Supply and Demand”
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Changing key performance indicator from ROS to ROCE Introducing stronger financial and capital deployment discipline, particularly with respect to capex and potential mergers/acquisitions Will also be guiding principle with regard to portfolio decisions in strategic g g p p g p g realignment Cash will only be invested with minimum ROCE expectations: businesses have to “earn the right to grow” the right to grow ROCE orientation reflected in long term incentive scheme of Board of Management and the next management layers
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the next management layers
ROCE
Enhance shareholder return
3
right-sizing the business will strongly delever the company and thus improve leverage ratios
result and free cash flow
ROCE hurdle rate Improve
2
flexibility to execute on strategic repositioning
new overriding guiding principle and management
15% Improve performance
1
new overriding guiding principle and management culture for strategic repositioning and future investments
shareholders to enhance shareholder return
Right size
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Invested capital
shareholders to enhance shareholder return
1
capacity/110 employees
Rationale Progress
capacity/110 employees
dismissal plan for all employees (~120) implemented
Asset restructuring
− Optimize global production network (relocation, consolidation, closures) − Improve capacity utilization and fixed cost base
demand development
Portfolio t t i g
businesses − Ongoing review of portfolio considering target ROCE
strategic review
SGL Group is progressing well with focusing its business and asset portfolio
restructuring
g g p g g − Assessment of strategic options for activities which do not reach mid to long term targets
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resulting in a stronger, more profitable company
2
Measures Progress as of November 30, 2014
SGL Excellence 2013 & th i
~ €55m 100% SGL Excellence 2014, 2015 &
~ €50m
g
~ 70% Divestments
~ €15m Organisational restructuring
~ €60m ~ 90% ~ 50%
Targeted cost savings of more than €200 million exceeding initial objective of €150 million
Asset restructuring
~ €45m ~ 40%
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Targeted cost savings of more than €200 million exceeding initial objective of €150 million
3
Graphite Specialties (GS)
Carbon Fibers & Materials (CFM) Performance Products (PP) Selective
est e ts g ap te a ode materials production for Li-Ion batteries pa s o SG C ( J ) investment - capacity increase to 9,000t p.a.
resulting from new technologies St t l g th i l ti d
i d t i l b it
high Chinese scrap availability increasing steel production in
Structural growth from growth investments Cyclical
potential price and volume recovery in graphite electrodes
markets significantly above GDP industrial carbon composite use
precursor (Fisipe) increasing steel production in electric arc furnaces (EAF)
potentially recover I d t i l
growth from existing assets
O l li it d i t t i d f f th th
Cyclical recovery
recovery in graphite electrodes
adjustments − Industrial − Solar − Semiconductor
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Only limited investments required for further growth
2013 Group sales Growth opportunities Strategy & Outlook
GE profitability
Worldwide steel production (in mt)
PP 53%
implemented in context of SGL 2015
electrode plants in all key regions
600 800 1.000 1.200 1.400 1.600 Blast furnace Electric arc furnace
“Wave of scrap” expected in medium term
€1,477m
PP Business Units
Graphite & Carbon Cathodes & Furnace
i d li i f h d id
200 400
Source: WSD, IISI, own estimate
1975 1985 1995 2005 2015
Graphite & Carbon Electrodes (85%) Cathodes & Furnace Linings (15%)
G hit l t d f
industry limits further downside
even in flat pricing environment – due to
Future high Chinese scrap steel availability to trigger strong increase in EAF production mid to long term
upside
l
C th d f l i
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Graphite electrodes for electric steel production
Malaysia
Cathodes for aluminum production
Strategy & Outlook
customer and materials base
Growth opportunities 2013 Group sales
e.g. graphite anode materials for Li-Ion batteries
sustainably maintain adequate margins in a high fixed cost environment
demonstrated by ~30% revenue share with new products**
GS
10 15 10,000-15,000g
for Li Ion batteries
€1,477m
products
applications to be addressed
21%
% of GS 2013 Market share*
Laptop Battery Auto Battery
10-15g
Source: SGL
Key end markets
and profitability
track and increase share of higher margin businesses, e.g. sales share* Batteries & Nuclear 20% 35% Semiconductor & LED 14% 15% Solar 11% 15%
materials for Li-Ion batteries
(e.g. automotive - Tesla “giga factory”)
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Chemicals 11% 35%
* Source: SGL estimates ** Less than four years old
2013 Group sales Growth opportunities
e.g. carbon composite use in automotive
Strategy & Outlook
value chain
CFM 18%
for carbon fibers
automotive and potentially other industrial
€1,477m
2013 2020
Source: Carbon Composites; AVK
chain for aerospace carbon fibers
ROCE target criteria
Value chain
Materials Components
supporting financial targets
Composite Compo- nents Fisipe Carbon Fiber SGL ACF Composite Materials SGL ACF, SGL Kümpers, SGL Benteler SGL, Brembo SGL Raw Material (Precursor)
from increasing use of carbon composites in automotive
automotive products & applications Involved in the two largest projects
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Sustainable break even in the short term
SGL epo Brembo SGL
globally (BMW, Audi MSS)
Reference plants / JV’s
Stop loss makers and cash drainers by t t i Capex for selective growth opportunities bj t t i i Return on capital is key management i i l f t t i
Create flexibility for restructuring and iti i ith restructuring or disposing subject to minimum hurdle rates principle for strategic realignment and future investment repositioning with capital increase and disposal proceeds (HITCO, etc.) N d b /EBITDA Net debt/EBITDA < 2.5 Positive net result Positive free cash flow* ROCE ≥ 15%** Gearing ~ 0.5 Equity ratio > 30%
Page 15 | Investor Relations Presentation * Excluding disposal proceeds ** ROCE defined as EBITDA/capital employed
€267m capital increase* completed in October 2014
Management and core shareholder commitment Enable strategic realignment Strengthened financial position
VW): Full pro-rata participation in the capital increase
Combined investment into SGL
adjustments
measures
Proceeds will be used to strengthen capital structure and improve leverage ratios,
Combined investment into SGL shares totaling more than 50% of the aggregate yearly base salary
investments or dividends
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for debt repayment*** and for creating a foundation for enhanced profitability
* Gross proceeds ** Source: Based on financial data as of August 31, 2014 and assuming net proceeds from the capital increase of €261.4m *** Approximately €26.9m of the net offering proceeds will be used to repay MYR 112m of the HSBC Loans to SGL CARBON Sdn, Bhd (Malaysia), plus accrued interest, to HSBC Bank Malaysia Berhad
SGL Group successfully prolonged maturity profile in
ll d f l d p g y p December 2013
Supported by previously issued
conversion price of €27 2959 (maturity 2016) Supported by previously issued debt instruments (June 2009 and April 2012) conversion price of €27.2959 (maturity 2016) (originally €190 million prior to conversion)
price of €40.9598 (maturity 2018) SGL Group has solid balance sheet ratios and liquidity post the October 2014 capital increase
34%**
0.47**
€401 million**
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* as of December 31, 2014
Total liquidity: €401 million Solid despite temporary earnings deterioration
** as of September 30, 2014, adjusted to include the proceeds of the October 2014 capital increase
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expected due to lower graphite electrode prices. Prices stabilized on low levels
due to big ticket order from the electronics industry, strong demand from Li-ion- battery customers and a general, albeit slow, recovery of major end markets. H2/2014 t d b l H1/2014 expected below H1/2014
higher demand for carbon fibers and fabrics (SGL ACF) higher demand for carbon fibers and fabrics (SGL ACF)
mainly due to non-recurrence of big ticket order in PT; EBIT margins in PT remain double digit Lower planned profit contributions from PT compensated by significant
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double digit. Lower planned profit contributions from PT compensated by significant improvement in Corporate costs as a result of implemented SGL2015 measures
decline after 9M/2014
expected to be below Q3/2014, but above Q4/2013
more than €200 million by end 2015
Substantial increase for SGL ACF due to tripling of carbon fiber capacities to reflect BMW’s p g p growing demand for carbon fibers and fabrics Excluding SGL ACF, Group capex to be down significantly due to rigid capex control in light of weak operational development
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* Adjusted for the reclassification of BU Aerostructures
SGL2015 measures
Main changes affecting the organizational structure:
( )
will be combined to form one BU Performance Products (PP)
i i hi i l Business Unit Graphite Materials & Systems (GMS)
(CFM) together with the proportionally consolidated joint arrangements with BMW Group (SGL ACF)
reported in the segment Corporate
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Performance Products (PP) Main JVs
Brembo SGL Graphite Materials & Systems (GMS) Carbon Fibers & Materials (CFM)
Graphite electrodes Carbon electrodes Cathodes Furnace linings
Graphite specialties Process technology Carbon fibers Composite materials SGL ACF (51%)
Technology & Innovation (T&I) Corporate Functions & Service Centers Joint Venture
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gy SGL Excellence (SGL X)
Business Unit Aerostructures (AS, HITCO) reclassified to discontinued operations as of June 30, 2014
Venture Partners
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This presentation contains forward looking statements based on the information currently available to us and on our current projections and assumptions By nature forward looking available to us and on our current projections and assumptions. By nature, forward looking statements are associated with known and unknown risks and uncertainties, as a consequence of which actual developments and results can deviate significantly from the assessment published in this presentation. 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 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 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 may arise in our opinion include price developments, unexpected developments associated with acquisitions and subsidiaries, and unforeseen risks associated with ongoing cost savings programs SGL Group assumes no responsibility in this regard and does not intend to
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savings programs. SGL Group assumes no responsibility in this regard and does not intend to adjust or otherwise update these forward looking statements.
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in € million 9M/2014 9M/2013 Sales revenue 428.8 595.9 EBITDA b f i h * 45 7 94 3 EBITDA before non-recurring charges* 45.7 94.3 EBIT before non-recurring charges* 16.2 63.8 EBIT-Margin before non-recurring charges* (in %) 3.8 10.7 EBIT 9.7 38.9
giving evidence to price stabilization in graphite electrodes resulting from better volumes and lower costs
Narni (Italy) plant phased out during H1/2014 and now terminated
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* Non-recurring charges of €6.5 million in 9M/2014 and €24.9 million in 9M/2013
Narni (Italy) plant phased out during H1/2014 and now terminated
in € million 9M/2014 9M/2013 Sales revenue 265.3 222.4 EBITDA b f i h * 43 2 26 4 EBITDA before non-recurring charges* 43.2 26.4 EBIT before non-recurring charges* 29.1 14.6 EBIT-Margin before non-recurring charges* (in %) 11.0 6.6 EBIT 28.7 14.6
Mainly driven by big ticket order in H1/2014 and continued strong demand for anode materials for Li-ion-
g ( ) improved order situation leading to higher utilization rates, particularly in H1
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* Non-recurring charges of €0.4 million in 9M/2014
in € million 9M/2014 9M/2013** Sales revenue 213.5 183.2 EBITDA b f i h * 8 4 11 4 EBITDA before non-recurring charges*
EBIT before non-recurring charges*
EBIT-Margin before non-recurring charges* (in %)
EBIT
Significantly increased sales contributions from our consolidated joint venture with BMW Group (51% share). CF/CM benefited from strong demand from the wind energy sector during H1 /2014
Operating loss at CF/CM halved due to some recovery in demand. However, earnings situation in CF/CM still impacted by global overcapacities in carbon fiber production. Partially offset by higher ramp-up costs for tripling of carbon fiber capacities to 9kt until end of 2015 in our joint venture with BMW Group
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* Non-recurring charges of €0.4 million in 9M/2014 and €41.6 million in 9M/2013 ** BaFin corrections are reflected in the financial statements as at September 30, 2014. All comparative figures for 2013 are restated.
in € million 9M/2014 9M/2013** Sales revenue 79.9 94.7 EBITDA b f i h * 17 4 15 1 EBITDA before non-recurring charges*
EBIT before non-recurring charges*
EBIT-Margin before non-recurring charges* (in %)
EBIT
Lower sales contributions from the BU Process Technology (PT). In the prior year, PT benefited from the execution of a big ticket order in China.
Lower profit contributions from PT as planned
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*Non-recurring charges of €17.1 million in 9M/2014 and €3.3 million in 9M/2013 ** BaFin corrections are reflected in the financial statements as at September 30, 2014. All comparative figures for 2013 are restated.
Continuing business in € million 9M/2014 9M/2013** Sales revenue 987.5 1,096.2 EBITDA b f i h 63 1 94 2 EBITDA before non-recurring charges 63.1 94.2 EBIT before non-recurring charges 3.0 35.4 Non-recurring charges
EBIT
Results from At-Equity accounted investments
Net financing result
Result before tax
Consolidated net result attributable to the shareholders of the parent company*
* Including result from discontinued operations
EPS, basic and diluted (in €)
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** BaFin corrections are reflected in the financial statements as at September 30, 2014. All comparative figures for 2013 are restated.
*** relating to a write-down on deferred tax assets and provisions for ongoing tax audits
in € million 30.09.2014 31.12.2013** Total assets 2,066.1 2,059.1 Equity ratio (in %) 25.2 29.5 Total liquidity 139.7 235.1 Net financial debt 628.1 491.1 Gearing (net debt/equity) 1 21 0 81 Gearing (net debt/equity) 1.21 0.81 Continuing business in € million 9M/2014 9M/2013** Cash flow from operating activities
82.7 Capital expenditures in property, plant and equipment and intangible assets
Cash used in other investing activities*
F h fl 99 5 10 2
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Free cash flow
10.2
* Payments for capital contributions in investments accounted for At-Equity and other financial assets, payments for the acquisition of subsidiaries, proceeds from sale of intangible assets and property, plant and equipment. ** BaFin corrections are reflected in the financial statements as at September 30, 2014. All comparative figures for 2013 are restated.
€ million 30.09.2014 (actual) Capital increase 30.09.2014 (adjusted) Total assets 2 066 1 261 4 2 327 5 Total assets 2,066.1 261.4 2,327.5
139.7 261.4 401.1 Equity attributable to the shareholders of the parent company 519.7 261.4 781.1
182.3 51.7 234.0
703.5 209.7 913.2 Equity ratio1) 25.2%
2) 1) Equity attributable to the shareholders of the parent company to total assets 2) Interest bearing loans at nominal value less liquidity 3) Net financial debt to equity attributable to the shareholders of the parent company
Net financial debt2) 628.1
366.7 Gearing3) 1.21
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This presentation contains forward looking statements based on the information currently available to us and on our current projections and assumptions By nature forward looking available to us and on our current projections and assumptions. By nature, forward looking statements are associated with known and unknown risks and uncertainties, as a consequence of which actual developments and results can deviate significantly from the assessment published in this presentation. 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 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 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 may arise in our opinion include price developments, unexpected developments associated with acquisitions and subsidiaries, and unforeseen risks associated with ongoing cost savings programs SGL Group assumes no responsibility in this regard and does not intend to
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savings programs. SGL Group assumes no responsibility in this regard and does not intend to adjust or otherwise update these forward looking statements.