Unicredit German Investment Conference Munich. 22 September 2010

Transcription

1 Unicredit German Investment Conference Munich 22 September 2010

2 Introduction to SGL Group s Businesses

3 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) 3

4 BM AM Base Materials Performance Products (PP) PP GMS CFC Business Units 2009 Group Sales PP Sales & EBIT Margins Graphite & Carbon Electrodes Cathodes & Furnace Linings CFC 18% PP 52% 15% % % 24% 29% 24% GMS 30% Sales m EBIT Margin Key industries served Steel Aluminum Ferrous and non-ferrous metals Characteristics Supplying the metal industries Leading competitive position Ongoing growth in eastern world High ROS & ROCE Strong cash flow Stable growth 4

5 BM AM Base Materials Performance Products (PP) PP GMS CFC Sales 2009 Cathodes & Furnace Linings 29% Graphite & Carbon Electrodes 71% Medium-term targets Volume growth: 2 3% p.a. ROS: > 20% Highlights 2009 Strategic priorities Production adjusted to reduced demand Investment into 60kt Malaysian carbon & graphite plant continues Continued cost reduction projects Major initiative to increase customer value through product quality and consistency Full integration of GE production in Malaysia 5

6 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) 6

7 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 7

8 BM AM Performance Products Graphite electrode production process PP GMS CFC GE critical to EAF furnace efficiency but only ~ 3% of steelmaking conversion cost GE is a consumable replaced every 5 to 8h GE usually sold mostly in annual contracts Needle coke requirements sourced on basis of multiyear contracts Production process takes up to 3 months 8

9 BM AM Performance Products Cathodes for the aluminum industry PP GMS CFC 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 leading 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 Primary AL Production in kt/a Aluminum Global Production Scenarios /New Fundamentals for Al production growth remain solid leaving the original long-term outlook unchanged. Additional momentum expected triggered by various stimulus packages. kt World Primary AL Prod 4.1 % CAGR 39 mio. tm 36 mio. tm 48 mio. tm e 2013 e 2015 e 2017 e 2019 e Source: IAI, King, SGL Group s own estimates, Hydro; Alcoa, CRU 67 mio. tm 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 Advanced Materials Graphite Materials & Systems (GMS) PP GMS CFC Business Units* 2009 Group Sales GMS Sales & EBIT Margins Graphite Specialties New Markets 11% 13% 14% 8% Process Technology *Beginning 2010, Expanded Graphite integrated into Graphite Specialties, and New Markets spun out of Graphite Specialties CFC 18% PP 52% 7% % Key industries served GMS 30% Sales m EBIT Margin Chemical Energy Solar Semiconductor Energy-Battery High-temperature processes Mechanical Applications Characteristics : (Graphite) Specialties Business Unit incl. Expanded Graphite Business Line C-parts supplier of investment good industry (GS/NM) Broadest product portfolio Global footprint Sustainable growth potential in Solar Energy and Battery markets 11

12 BM AM Advanced Materials Graphite Materials & Systems (GMS) PP GMS CFC Sales 2009 Expanded Graphite 8% Process Technology 26% Graphite Specialties 66% Medium-term targets Sales growth: 6 8% p.a. ROS: >10% Highlights 2009 Strategic priorities Sales in Asia increased to 22% from 18%. First step of capacity expansion to accompany increasing demand of photovoltaic industry on stream (iso-graphite). Business with process technology maintained at high earnings level despite recession. Catch market opportunities in fast growing solar energy markets with timely investments. Maintain leading position in all other product technologies Further improve business position in Asia by strengthening local investments and skills. 12

13 BM AM Graphite Materials & Systems Graphite Specialties feedstock production and machining PP GMS CFC Raw Materials (Pitches & Cokes) High quality raw materials from reliable sources Pre-pressing Processes Breaking, milling, sieving, binding, mixing, homogenizing Pressing Isostatic pressing or Extruding Graphitizing 2,800 C 3,000 C Formation of graphite structure and densification Baking 850 C 1,200 C Carbonizing, Densification Machining Finishing Machining of the feedstock: Sawing, turning, milling, sanding, boring, lapping, polishing Impregnation, coating, purification 13

14 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 CFRC-Heaters for the semicon industry 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 14

15 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 15

16 BM AM Advanced Materials Carbon Fibers and Composites (CFC) PP GMS CFC Business Units 2009 Group Sales CFC Sales & EBIT Margins Carbon Fibers & Composite Materials 2% 4% Composite Components CFC 18% PP 52% 93-3% -3% % 208 Key industries served Energy Aerospace & Defense Automotive Mechanical Engineering Sporting Goods Medical Technology GMS 30% Characteristics New applications in automotive, energy, aeronautics High earnings improvement potential Sales m EBIT Margin SGL Technologies Business Unit excl. Expanded Graphite Business Line include Brake Disc business SGL Rotec consolidated from September 2008 onwards Complete value chain in house Only EU carbon fiber company 16

17 BM AM Advanced Materials Carbon Fibers and Composites (CFC) PP GMS CFC Sales 2009 Aero Structures 29% Composite Components 34% Carbon Fibers 10% Composite Materials 27% Medium-term targets Sales growth: > 15% p.a. ROS (mid term): > 10% Highlights 2009 Carbon Fibers & Composite Materials (CF & CM): Own precursor development JV with Mitsubishi for precursor New carbon fiber lines in UK, USA Continued growth from wind energy JV with BMW for automotive materials Composite Components (CC): Integration SGL Rotec Investment into automation technologies at HITCO for aerospace & defense business Strategic priorities Become supplier of choice for our focus markets Automotive Alternative energies Aviation/defense technology Construction Expand Carbon Fiber and Composite capacities Support organic growth with targeted partnerships and acquisitions Safeguard own raw material supply 17

18 BM AM Carbon Fibers & Composites Unique offering of the complete value chain PP GMS CFC Carbon Fibers & Composite Materials Composite Components Raw material Carbon Fiber Composite Materials Aerospace & Defense HITCO (100%) PAN Precursor Carbon Fiber Prepreg Preform Industrial & Energy SGL Rotec (51%) EPG (44% JV with Lenzing) JV with Mitsubishi Rayon (MRC, 33%) Prod. capacity ~ 4kt in UK ~ 2kt in USA JV with BMW (51%) SGL epo (100%) SGL Kümpers (51%) JV with BMW (51%) Automotive Benteler SGL (50%) Brembo SGL Carbon Ceramic Brakes (50%) Core Competencies Materials Technology Processes Core Competencies Development of final use/applications Design of finished parts/ manufacturing techniques Marketing Promoting substitution 18

19 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 19

20 Ensuring the Future SGL Excellence savings Since 2002 continuous cost reduction of 210 million in total * Annual Net Savings ( m) *excluding Brakes business 20

21 Latest Financials and Outlook

22 SGL Group H1/2010 Results for the Group in million Sales EBITDA Profit from operations (EBIT) Result from investment accounted for At-Equity Net financing result Profit before tax Income tax expense Net profit after minority interests EPS, basic [in ] H1/ H1/ Sales increase 10% of which volumes/price +9%, currency +1% Sustainable cost savings of 10 million from SGL Excellence Initiative (SGL X) 22

23 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 June 2010 Equity ratio: 41% Gearing: 0.50 Total liquidity: 274 million 23

24 SGL Group 2009 crisis did not impact all businesses yet Performance Products Dramatic volume declines in GE BUT GE price increases Use of lower cost needle coke inventory from 2008 Good cathode year Graphite Materials & Systems Declining order intake since early 2009 leading to lower sales and earnings in 2H2009 BUT Record order backlog at end 2008 and one time large project invoicing kept 1H2009 strong Carbon Fibers & Composites Delays mainly in new aircraft projects led to substantial industry volume and price declines and high inventories in carbon fibers and underutilisation of HITCO BUT Strong order backlog at end 2008 supported wind related business Group EBIT at 110m (approx level) ROS at 9% Equity ratio ~ 40% Gearing ~ 0.5 Net debt increase only 35 million despite high cap ex level ( 154m) 24

25 SGL Group this is why 2010 will show only a moderate improvement over 2009 Group Single digit sales growth over 2009 EBIT up to 10% higher than our previous guidance of an EBIT close to the 2009 (recurring) level of 110 million Net financial costs higher than in 2009 (including results from at equity companies) Capex and Balance Sheet Key KPI: Gearing level to remain around 0.5 based on today s portfolio Gearing ~ 0.5 defines capex level Capex around 2009 level (~ 154 million) 25

26 SGL Group Business Area Outlook 2010 Performance Products Graphite electrode unit sales expected to be substantially higher than in 2009 ROS will at best reach our medium-term target of 20% in FY 2010 due to raw material cost increases in graphite electrodes which could not be compensated by pricing, weaker cathodes business due to capital expenditure pause in aluminum industry and start up costs for new Malaysian plant Graphite Materials & Systems Order intake has started to recover strongly across all end markets since beginning 2010, leading to an earlier than expected recovery in business volumes already in Q2/2010 Overall, sales and EBIT in GMS will slightly exceed 2009 level Carbon Fibers & Composites Business volumes in carbon fibers and composite materials have recently shown some signs of improvement but we will continue to post a loss in 2010 primarily due to continued difficult market situation However, sales and EBIT in CFC will improve substantially in FY 2010, driven by production ramp up at aerospace and defense components producer HITCO and better volumes in carbon fibers and composite materials resulting in a single digit loss 26

27 Significant earnings improvement potential in Exact timing of return to pre crisis earnings levels difficult to predict 2009: trough year part 1: All Business Areas weaker than 2008 But some businesses weakened only late in : trough year part 2: Recovery in some early cyclical businesses, but businesses that were still strong in 2009 (e.g. cathodes) are now experiencing their downturn Still high inventory/low demand in carbon fibers despite recent improvement 2011: first year of recovery in all businesses All Business Areas to improve over 2010 Recovery of EAF steel production volumes to pre-crisis levels will take longer than blast furnace steel production due to different regional growth profiles Uncertainties regarding exact timing of new capacity build in aluminum industry, earliest 2011/12 Surplus capacities in carbon fiber industry may take longer to be absorbed due to production delays in aircraft industry and financing restrictions of wind projects with significant upside earnings potential 40-50% improvement possible in 2011 compared to original 2010 guidance of an EBIT close to the 2009 (recurring) level of 110 million However: return to pre-crisis earnings levels might take longer 27

28 Fundamental Long-term Growth Drivers for our Businesses

29 Fundamental Global Challenges PROBLEM Financial and Climate Energy Economic Crisis Crisis Crisis APPROACH Towards an ecologically sensitive World SOLUTION PROVIDER Light Weight Alternative Energies Energy Efficiency 29

30 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 30

31 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 31

32 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 32

33 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 33

34 Alternative Energies Carbon fibers and composites for wind energy Carbon Fibers enable big offshore windparks increase wind turbine performance 34

35 Alternative Energies Graphite and carbon fiber reinforced carbon 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 35

36 Light weight Carbon fiber and composite materials for automotive Carbon Composites reduce weight increase safety will significantly enlarge its share in cars of the future JV with BMW Production of carbon fibers and composites for use in the Megacity Vehicle currently being developed by BMW Milestone for the application of carbon fibers in automotive serial production Sustainability along the whole value chain 36

37 Light weight Composite components for aerospace Carbon Composites substitute other materials reduce weight for less emission 37

38 Post crisis 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) % 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 38

39 Fundamental trends support the carbon and graphite industry Growth opportunities for SGL Group as its largest player Carbon and graphite industry uniquely positioned to benefit from fundamental trends SGL Group as the largest global carbon and graphite player to participate in growth opportunities resulting from these trends Fundamental Trends Demand for Resources: EAF steel Aluminum production Substitution & Innovation: Automotive Civil aircraft Alternative Energy: Solar energy Wind energy Base Materials Advanced Materials Performance Products (PP) Graphite Materials & Systems (GMS) Carbon Fibers & Composites (CFC) 39

40 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! 40

41 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.