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SGL Carbon Fibers & Composites sees significant improvement
03 Sep '08
7 min read
Sales in the Business Unit Graphite Materials and Systems increased by 11% to €197.4 million in the reporting period (H1/2007: €177.3 million). Adjusted for currency impacts, sales in the first half 2008 increased by 14% and was mainly driven by the Business Lines Graphite Specialties and Process Technology. Demand from the chemical, solar, and lithium-ion-battery industries was particularly strong.
EBIT increased by 17% to €29.7 million (H1/2007: €25.4 million) due to positive volume developments, continued high capacity utilization as well as cost savings of around €2 million, leading to a return on sales of 15.0% in the reporting period compared to 14.3% in the first half of the previous year.
This high margin level was partially the result of raw material inventory from the previous year as a result of which the cost of goods sold in the first half in GMS also did not fully reflect full year raw material price increases.
In the Business Unit Carbon Fibers and Composites, sales in the first half of 2008 increased by 16% to €93.0 million (H1/2007: €79.9 million). This corresponds to a currency adjusted increase of 20%.
The increase in turnover is mainly due to higher sales of composite materials in connection with the consolidation of SGL Kümpers GmbH & Co. KG and SGL epo GmbH.
High sales growth and capacity utilization as well as cost savings from the SGL Excellence initiative of around €3 million lead to a significant increase in EBIT from €0.9 million in the first half of the previous year to €4.2 million in the reporting period, corresponding to a return on sales of 4.5%.
As expected, past and current capital expenditures especially in carbon fiber capacities have not yet had a significant impact on sales, earnings, and EBIT margin in the first half of 2008.
As the year progresses, we expect the ramp up of new capacities along all Business Lines to significantly accelerate sales growth, leading to a sales increase of around 30% for the full year 2008, thus markedly surpassing our mid-term target of more than 15% sales growth per annum.
This strong surge in sales will have a corresponding effect on earnings, reflecting our 2008 target of a mid to high single digit EBIT margin. Surpassing the 10% EBIT margin threshold remains our goal for 2009.
Based on the favorable performance in the first half 2008, the good order backlog, and positive signals from the customer industries SGL Group remains very confident for the business year 2008.
For the full year 2008 the Company fully confirms its positive outlook and raises the EBIT guidance: Group sales will continue to grow by 10–15% despite the negative translation effects from changes in exchange rates, which already negatively impacted sales growth in the first half 2008 by four percentage points.
EBIT (earnings before interest and taxes) is now expected to increase by approx. 20% from previously 15-20%. Due to the new financing structure of May 2007, net financing costs on the basis of the existing business portfolio before mark-to-market valuations of the hedging instruments will amount to around –€40 million.
Consequently, the Company is expecting profit before and after tax as well as earnings per share to rise more than proportionately to EBIT growth, assuming a tax rate of 30% at the most.
Due to the efforts to accelerate the construction of the integrated graphite electrode and cathode plant in Malaysia as well as bringing forward some US investments for tax reasons (to benefit from the US Stimulus Plan), the Company expects capital expenditure for property, plant and equipment to exceed €200 million.
The progression of the Malaysian graphite electrode and cathode plant construction allows the Company to already commissio
EBIT increased by 17% to €29.7 million (H1/2007: €25.4 million) due to positive volume developments, continued high capacity utilization as well as cost savings of around €2 million, leading to a return on sales of 15.0% in the reporting period compared to 14.3% in the first half of the previous year.
This high margin level was partially the result of raw material inventory from the previous year as a result of which the cost of goods sold in the first half in GMS also did not fully reflect full year raw material price increases.
In the Business Unit Carbon Fibers and Composites, sales in the first half of 2008 increased by 16% to €93.0 million (H1/2007: €79.9 million). This corresponds to a currency adjusted increase of 20%.
The increase in turnover is mainly due to higher sales of composite materials in connection with the consolidation of SGL Kümpers GmbH & Co. KG and SGL epo GmbH.
High sales growth and capacity utilization as well as cost savings from the SGL Excellence initiative of around €3 million lead to a significant increase in EBIT from €0.9 million in the first half of the previous year to €4.2 million in the reporting period, corresponding to a return on sales of 4.5%.
As expected, past and current capital expenditures especially in carbon fiber capacities have not yet had a significant impact on sales, earnings, and EBIT margin in the first half of 2008.
As the year progresses, we expect the ramp up of new capacities along all Business Lines to significantly accelerate sales growth, leading to a sales increase of around 30% for the full year 2008, thus markedly surpassing our mid-term target of more than 15% sales growth per annum.
This strong surge in sales will have a corresponding effect on earnings, reflecting our 2008 target of a mid to high single digit EBIT margin. Surpassing the 10% EBIT margin threshold remains our goal for 2009.
Based on the favorable performance in the first half 2008, the good order backlog, and positive signals from the customer industries SGL Group remains very confident for the business year 2008.
For the full year 2008 the Company fully confirms its positive outlook and raises the EBIT guidance: Group sales will continue to grow by 10–15% despite the negative translation effects from changes in exchange rates, which already negatively impacted sales growth in the first half 2008 by four percentage points.
EBIT (earnings before interest and taxes) is now expected to increase by approx. 20% from previously 15-20%. Due to the new financing structure of May 2007, net financing costs on the basis of the existing business portfolio before mark-to-market valuations of the hedging instruments will amount to around –€40 million.
Consequently, the Company is expecting profit before and after tax as well as earnings per share to rise more than proportionately to EBIT growth, assuming a tax rate of 30% at the most.
Due to the efforts to accelerate the construction of the integrated graphite electrode and cathode plant in Malaysia as well as bringing forward some US investments for tax reasons (to benefit from the US Stimulus Plan), the Company expects capital expenditure for property, plant and equipment to exceed €200 million.
The progression of the Malaysian graphite electrode and cathode plant construction allows the Company to already commissio
SGL Group
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