Commerzbank German Investment Seminar Robert J. Koehler, CEO New York 12 January 2011

Transcription

1 Commerzbank German Investment Seminar Robert J. Koehler, CEO New York 12 January 2011

2 Agenda Carbon: our material Introduction to our businesses Growth opportunities resulting from fundamental trends examples Summary and outlook 2

3 Carbon: Our material

4 Our Material What is Carbon? 6 C 12,01 Synthetic Carbon & Graphite Natural Graphite Carbon Fiber resistance to heat electrically conductive resistance to corrosion environmentally compatible conducts heat dense energy storing light strong stiff 4

5 Our Material Has Strategic Competitive Advantages No material is lighter nor stronger and stiffer Density (kg/l) Steel Aluminum CFRP Specific Stiffness (km) Aramid Fiber Glas Fiber Al-alloy Steel SiC Carbon Fiber Specific Stiffness (100 km) Other ceramics would break or fail at temperatures > C 5

6 Introduction to our businesses

7 SGL Group Business structure Base Materials Advanced Materials Performance Products (PP) Graphite & Carbon Electrodes (GCE) Cathodes & Furnace Linings (CFL) Graphite Materials & Systems (GMS) Graphite Specialties (GS) Process Technology (PT) New Markets (NM) Carbon Fibers & Composites (CFC) Carbon Fibers & Composite Materials (CF & CM) Composite Components (CC) Technology and Innovation (T&I) Six Sigma (SGL Excellence) 7

8 BM AM Performance Products Graphite electrodes PP GMS CFC Steel Making An Electric Arc Furnace (EAF) Graphite Electrode SECTION VIEW TROUGH EAF Graphite Electrodes Furnace shell Molten steel Rocker tilt Tilt cylinder Eccentric bottom tapping (EBT) cm Teaming ladle cm Connecting Pin Source: steeluniversity.org 8

9 BM AM Performance Products Graphite electrodes (GE) for steel production in EAFs PP GMS CFC Growth in steel production fuelled by infrastructure demand from emerging countries Scrap availability limits EAF growth in emerging countries Worldwide steel production: blast oxygen furnace/electric arc furnace [in tm] Blast oxygen furnace Electric arc furnace Due to continued efficiency gains GE demand growth only 1 2% p.a. GE critical to EAF furnace efficiency but only ~3% of steelmaking conversion cost Source: WSD, IISI, own estimate An EAF (electric arc furnace) is a furnace that heats charged scrap steel material (also known as mini mills) BOF (blast oxygen furnace) is the steelmaking route that uses iron ore and coking coal to produce primary steel (also known as integrated steel) 9

10 BM AM Performance Products Cathodes for the aluminum industry PP GMS CFC Aluminum Smelter Cathodes cm cm cm Special glue Cathode blocks Ramming pastes Sidewall blocks Source: SGL Group 10

11 BM AM Performance Products Cathodes for the aluminum industry PP GMS CFC % % e 2011e 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e in Mio MT per annum 2010/2011 Al Capacity Investments needed now to meet Al Demand growth 2012 ff 2020: Pre-crisis 64 mmt 2020: Post-crisis 65 mmt Rest of World Near Middle East China Source: SGL Estimate, CRU, King, IWF Aluminum demand driven by - industrialization of BRICs - weight/strength/cost advantages in higher energy cost environment Cathodes essential to aluminum smelters - Existing smelters relining - Investment good (5 7 years shelf life) - New smelter construction leads to higher relining demand long term - Existing smelters upgrading - amorphous graphitized cathodes - only three established producers of graphitized cathodes - SGL Group largest producer worldwide Cathodes essential for aluminum smelting but representing only 1% of production costs for 1t aluminum 11

12 BM AM Graphite Materials & Systems Major customer industries and market shares 2009 PP GMS CFC Chemicals Energy: Solar Energy: Batteries & Nuclear Semiconductor Metallurgy Tool Manufacturing High-temperature Processes Automotive % of Total GMS Sales % 16% 15% 9% 6% 5% 4% 3% Global Market Share % 25% 25% 20% 20% 15% 15% 15% Source: SGL Group s own estimates 12

13 BM AM Graphite Materials & Systems Innovation driving new product portfolio PP GMS CFC Examples: Graphite for Li-Ion batteries Crucibles and molds for solar production and LEDs Consumables for semicon production High purity expanded graphite for thermal management (electronics, climate) and environmental needs Specialty graphite for nuclear power (PBMR) Graphites for particle filter for diesel engines and exhaust systems GMS 2009 sales: 365 m 2/3 established 1/3 new 1/3 of sales based on new products introduced over the last 4 years 13

14 Carbon Fibers & Composites Complete Carbon Fiber Value Chain BM PP GMS AM CFC Stages PAN Precursor CF Fabrics Preforms Prepregs CFRP CFRC C/SiC Technologies Polymer chemicals High temp. technology Textile technology Engineering Competence Production Materials SGL Group core competences Components JV with OEM / Tier-I-supplier Applications Wind Industrial applications Automobile Aerospace Defense Sports Aircraft/ F1 Brakes High temperature furnaces Chemical industry Semiconductor Car Brakes Armoring 14

15 Carbon Fibers & Composites Global Carbon Fiber Supplier Structure BM PP GMS AM CFC North America Europe Asia Established Carbon fiber producers SGL Group: only integrated European producer 15

16 Carbon Fibers & Composites Annual Carbon Fiber Consumption by Application BM PP GMS AM CFC [in thousand mt p.a.] Sports Aerospace Industrial Forecast 2009 Updated forecast Source: SGL Group market research Growth delayed 2-3 years due to crisis, yet long-term growth drivers are intact Demand reduction between 2010 and 2009 esp. due to Aerospace and Wind 16

17 Ensuring the Future SGL Excellence enables productivity and growth SGL Excellence Innovation Excellence Started in 2002 The core element of the Company mission An ongoing and Company wide program Our philosophy of doing business Operational Excellence People Excellence Commercial Excellence SIX SIGMA Our core methodology Focuses on: Customer value Measurable objectives and results Applies to every function in our Company Empowers our employees with skills and tools: > 2,000 SIX SIGMA trained employees > 600 Green Belts > 100 Black Belts 17

18 Ensuring the Future SGL Excellence savings Since 2002 continuous cost reduction of 210 million in total * Annual Net Savings ( m) *excluding Brakes business 18

19 Growth opportunities resulting from fundamental trends - Examples -

20 Growth opportunities resulting from fundamental trends Fundamental Trends Opportunities for SGL Scarcity of resources Climate change (CO 2 reduction) Energy efficiency Mobility Digital lifestyle Urbanization Energy efficiency Alternative Energies Lightweight construction 20

21 Our Carbon-based Products Offer Sustainable Solutions towards less CO m* 60% of Group Sales Aerospace Automotive 736 m* 11% Light Weight Wind 22% Alt. Energies Solar 67% Energy Efficiency Scrap Recycling Batteries Automotive *Based on 2009 sales Cooling Systems 21

22 Growing demand for resources due to ongoing industrialization requires carbon and graphite for the production of steel and aluminum Steel and aluminum: Essential for infrastructure in Asia and Eastern Europe High per capita growth potential in steel and aluminum in comparison to Western World Steel consumption 2008 Finished Steel (kg/capita) Aluminum consumption 2008 Aluminum (kg/capita) Japan Italy 502 Germany Canada Spain 319 China USA Turkey Russia France Mexico South Africa Brazil Argentina Other Asia India North America 15 Europe 10 China 8 Russia 4 Brazil 2 2 Asia w/o China Other Source: World Steel Association World Steel in Figures 2009 Source: Alcoa analysis Infrastructure build up in emerging economies has only just begun 22

23 Growth Markets Example: Lightweight Construction for Automotive Carbon Fiber Composites Reduce weight Increase safety Lower emissions and conserve resources 1. JV with BMW Group for production of carbon fibers and fabrics 2. JV with Benteler Automobiltechnik for development of lightweight components from carbon fiber composites 3. JV with Brembo for carbon ceramic brake discs 23

24 SGL Group / BMW Group Joint Venture Precursor Otake, Japan Carbon Fibers Moses Lake, USA Fabrics Wackersdorf, D CFRP-Comp. Landshut, D BMW MCV Leipzig, D JV w/mitsubishi SGL Automotive Carbon Fibers BMW Megacity Vehicle 24

25 SGL Group / BMW Group Joint Venture New carbon fiber plant in Washington State (USA) Most cost efficient carbon fiber plant globally $100 million cap ex in first investment stage for 3.000t p.a. carbon fiber production 80 new jobs in first investment stage Groundbreaking on 7 July 2010 Competitive energy prices maximum 1/3 of German prices Environmentally friendly energy from hydropower Favorable infrastructure and logistics 25

26 Growth Markets Example: Lightweight Construction for Aerospace Components from carbon fiber composites substitute traditional materials (Aluminum) share of carbon composites increases to 50% and more in new aircraft generations subsidiary Hitco is leading Tier-II-supplier for aerospace industry Hitco supplies commercial aircraft programs (e.g. Boeing 767 and 787 Dreamliner ) as well as military programs (e.g. F-35 Joint Strike Fighter ) 26

27 Growth Markets Example: Energy Efficiency - Graphite for High Performance Batteries Graphite for lithium ion batteries allows reduction of CO 2 emission for hybrid vehicles no CO 2 emission for electrical vehicles storage of energy from renewable energy sources 27

28 Growth Markets Example: Energy Efficiency - Expanded Natural Graphite for Cooling Systems Expanded Natural Graphite embedded in cooling systems for an optimal air conditioning low energy consumption efficient energy storage 28

29 Growth Markets Example: Alternative Energies - Carbon Fibers and Composites for Wind Energy Carbon Fibers enable big offshore windparks increase wind turbine performance 29

30 Growth Markets Example: Alternative Energies - Graphite and CFRC for solar applications Graphite and carbon fiber reinforced carbon (CFRC) enable the production of products for the solar industry are indispensable for the semiconductor industry 30

31 Global growth potential for carbon fiber and graphite related green technologies CAGR Carbon Fibers (kt) % Photovoltaic (GWp) % Acc. Wind Turbine Installations (GW) % Li-ion Batteries (Mio cells, only 3c) % Share of Composites in Airplanes (%) 1 (B 747) ~50 (B 787) >50 (A 350) GW: Gigawatt = 10 9 Watt; GWp:Gigawatt peak; kt: 1000 tons Source: Public available surveys, client information and own estimates 31

32 To summarize

33 Portfolio Iron & Steel Chemical Automotive Solar e-mobility Ceramic brake discs Carbon fiber fabrics for composite materials High purity fine grain graphite for polysilicon and mono crystal pulling Graphite anode material for lithium-ion batteries Graphite electrodes for electric steel Furnace linings made from carbon and graphite Sealing materials Equipment for HCl synthesis Heat exchangers Aircraft Wind Air Conditioning Structural components made from carbon fiber composite materials Carbon fibers, prepregs and rotor blades for wind turbines Air conditioning systems made from expanded graphite Established business in basic industries New business in growth markets Emerging countries infrastructure build up Industrialized markets technology step changes 33

34 Portfolio: Core Areas for Growth Present Future Energy efficiency Scraprecycling Heat recovery LIB for CCC markets LED Air conditioning CFC damage Batteries Materials for HEV/EV Alternative Energies Solar Nuclear HTR Wind Lightweight Construction Car brakes Defense F 35 Aircrafts A380, A350, B787 Project i Automotive components CNG tanks Carbon/Graphite Natural graphite C/SiC Carbon Fibers LIB: Li-Ion-Batteries; CFC: chlorofluorocarbon; HEV/EV (Hybrid) electric vehicles; HTR: high temperature reactors; CNG: compressed natural gas 34

35 Financing Structure, Balance Sheet Ratios and Cash on Hand Allow continuation of growth path SGL Group established a solid long term financial structure in May million Corporate Bond at EURIBOR plus 125 bps (maturity 2015) 200 million Convertible Bond at 0.75%, conversion price of (maturity 2013) 200 million credit facility, undrawn (maturity 2012) Followed by a supplemental debt instrument in June million Convertible Bond at 3.5%, conversion price of (maturity 2016) SGL Group has no refinancing requirements until 2012 SGL Group has solid balance sheet ratios and cash on hand at end of September 2010 Equity ratio: 42% Gearing: 0.50 Total liquidity: 275 million 35

36 Outlook 2010 will show a moderate but better than expected improvement over Sales growth of ~10% vs EBIT growth of almost 20% vs to up to 130 million (compared to guidance of flat EBIT at beginning of 2010) Net financial costs higher than in 2009 (including results from at equity companies) Key KPI: Gearing level to remain around 0.5 based on today s portfolio Gearing ~ 0.5 defines capex level Capex up to 10% lower than % improvement possible in 2011 compared to original 2010 guidance of an EBIT close to the 2009 (recurring) level of 110 million Earnings improvement driven by GMS and CFC Capex approx. flat compared to 2009 exact level defined by gearing target of ~

37 Mid term Minimum Targets Over the Cycle Unchanged Once normality returns after transitional post crisis years Group Sales growth: 5 10% p.a. CAGR organic ROS: > 12% Performance Products (PP) Volume growth: 2 3% p.a. ROS: > 20% Graphite Materials & Systems (GMS) Sales growth: 6 8% p.a. ROS: > 10% Carbon Fibers & Composites (CFC) Sales growth: > 15% p.a. ROS: > 10% mid term To deliver profitable growth! 37

38 Thank you for your attention!

39 Important Notice Forward-looking statements: This presentation contains statements on future developments that are based on currently available information and that involve risks and uncertainties that could lead to actual results deviating from these forward-looking statements. The statements on future developments are not intended as guarantees; rather, such developments and results are dependent on a number of factors, they contain various risks and uncertainties and are based on assumptions that may prove to be incorrect. These risks and uncertainties include, for example, unforeseeable changes in political, economic and business conditions, particularly in the area of electric steel production, the competitive situation, interest rate and currency developments, technological developments and other risks and unanticipated circumstances. We see other risks in price developments, unexpected developments relating to acquired and consolidated companies, and ongoing cost optimization programs. SGL Group does not intend to update these forward-looking statements.