Report on the First Quarter 2012 GROWTH PROSPECTS Broad Base. Best Solutions.
2 SGL GROUP Q1 2012 HIGHLIGHTS Sales increased 5% YoY (currency adjusted 3%) EBIT at 36 million and net profit at 14 million on previous year level Equity ratio strengthened further to 47% Gearing at 0.39 within target of plus/minus 0.5 Guidance for H2/2012 continues to be difficult with economic recovery full year 2012 sales and EBIT to grow YoY FINANCIAL HIGHLIGHTS (unaudited) 1st Quarter m 2012 2011 Change Sales revenue 381.6 363.8 4.9% Gross profit 107.1 98.5 8.7% EBITDA 54.2 53.5 1.3% Operating profit (EBIT) 36.2 36.3 0.3% Return on sales 1) 9.5% 10.0% Net profit attributable to shareholders of the parent company 14.1 14.9 5.4% Earnings per share, basic (in ) 0.20 0.23 13.0% m March 31, 2012 Dec. 31, 2011 Change Total assets 2,261.0 2,271.3 0.5% Shareholders equity 1,066.2 1,041.1 2.4% Net financial debt 418.7 343.3 22.0% Debt ratio (Gearing) 2) 0.39 0.33 Equity ratio 3) 47.2% 45.8% 1) Ratio of operating profit to sales revenue 2) Net financial debt divided by shareholders equity 3) Shareholders equity divided by total assets
3 INTERIM GROUP MANAGEMENT REPORT (unaudited) ECONOMIC ENVIRONMENT In its April 2012 World Economic Outlook, the International Monetary Fund (IMF) slightly raised its growth forecast for the global economy and for Germany but the outlook is still very fragile. The IMF projects global growth to be 3.5% in 2012 and 4.1% in 2013. In its January 2012 outlook the IMF originally expected a growth of 3.3% and 4.0%, respectively. The IMF still projects a slight recession for the euro area in 2012 but the expected decline of 0.3% is a 50% improvement from the IMF s previous forecast. For 2013 the IMF estimates a growth of 0.9% for the euro area. The IMF doubled its 2012 forecast for Germany and is now projecting a growth of 0.6%. With a growth of 1.5% for 2013 its forecast for Germany is unchanged. According to the IMF, the two main risks for the world economy in the short term are the European debt crisis and a potential conflict with Iran. Worries with respect to an escalating crisis with Iran could inflate the oil price and as a result have a negative impact on economic growth. BUSINESS DEVELOPMENT Condensed consolidated income statement (Part 1) 1st Quarter m 2012 2011 Change Sales revenue 381.6 363.8 4.9% Gross profit 107.1 98.5 8.7% Selling, administrative, research and other expense/income 70.9 62.2 14.0% Profit from operations (EBIT) 36.2 36.3 0.3% Group sales increased by 5% to 381.6 million in the first quarter 2012 (Q1/2011: 363.8 million) driven by the Business Areas Graphite Materials & Systems (GMS) and Carbon Fibers & Composites (CFC). Currency adjusted sales grew by 3%.
4 SGL GROUP Q1 2012 Gross profit in the reporting period rose more than proportionately to sales by 9% to 107.1 million (Q1/2011: 98.5 million) which corresponds to a gross margin of 28.1% (Q1/2011: 27.1%). This development was mainly the result of high capacity utilization in GMS as well as 6 million savings from our SGL Excellence initiative. Compared to the first quarter of the previous year (Q1/2011: 62.2 million), selling, administrative, research, and other expense/income increased by 14% to 70.9 million due mainly to higher selling expenses (+14%) resulting from higher volumes and increased freight rates as well as higher research and development expenses (+12%). The balance of other expense/income deteriorated by 1.8 million due to adverse currency effects. EBIT at 36.2 million remained virtually unchanged compared to the same period one year earlier (Q1/2011: 36.3 million). The positive development in the established Business Areas Performance Products (PP) and GMS which together increased EBIT by a double-digit percentage was completely offset by the earnings decline in the Business Area CFC. In general, we had anticipated a weaker quarter than the previous year quarter in our internal forecast. Particularly in the Business Area PP, we benefited from customers pulling forward some deliveries especially for cathodes. SEGMENT REPORTING Performance Products (PP) 1st Quarter m 2012 2011 Change Sales revenue 197.7 197.9 0.1% EBITDA 42.9 39.5 8.6% Profit from operations (EBIT) 33.7 30.5 10.5% Return on sales 17.0% 15.4% In the Business Area Performance Products, sales at 197.7 million remained unchanged compared to the same period one year earlier (Q1/2011: 197.9 million). Currency adjusted sales declined only slightly by 1%. As expected, graphite electrode volumes were slightly below the previous year level. This development was,
5 however, compensated by higher selling prices. The mild recovery in cathode volumes, which began in the middle of last year, continued in the reporting period however at expected lower selling prices. EBIT increased by 11% to 33.7 million in the first quarter 2012 compared to 30.5 million in the same period one year earlier mainly due to higher graphite electrode prices and the increased cathode sales volumes. Savings from our SGL Excellence initiative amounted to approximately 2 million. Start up costs for the commissioning of the new Malaysian production facility continued to weigh on earnings in the reporting period. Return on sales improved to 17.0% in the first quarter 2012 (Q1/2011: 15.4%). Graphite Materials & Systems (GMS) 1st Quarter m 2012 2011 Change Sales revenue 128.9 114.6 12.5% EBITDA 27.2 23.6 15.3% Profit from operations (EBIT) 22.9 19.3 18.7% Return on sales 17.8% 16.8% In the first quarter 2012, sales in the Business Area Graphite Materials & Systems grew by 13% to 128.9 million (Q1/2011: 114.6 million). Currency adjusted sales increased by 8%. As a typical late cyclical business, the Business Unit Graphite Specialties still benefited from the high order backlog of the previous year. The Business Unit Process Technology continued its positive development based on a record order backlog at the end of 2011. EBIT improved by approximately 19% from 19.3 million in the first quarter of the previous year to 22.9 million in the reporting period, resulting in a return on sales of 17.8% (Q1/2011: 16.8%). This was primarily due to the strong order intake in the first half year 2011, which led to a high fixed cost absorption in the reporting period. In addition, savings from our SGL Excellence initiative of approximately 2 million as well as some smaller non recurring effects had a positive impact on the first quarter 2012 result.
6 SGL GROUP Q1 2012 Carbon Fibers & Composites (CFC) Consolidated CFC business activities within SGL Group 1st Quarter m 2012 2011 Change Sales revenue 54.4 50.0 8.8% EBITDA 4.9 0.9 > 100.0% Profit from operations (EBIT) 8.0 2.1 > 100.0% Return on sales 14.7% 4.2% Sales in the Business Area Carbon Fibers & Composites increased by 9% to 54.4 million (Q1/2011: 50.0 million) in the first quarter 2012. Currency adjusted sales grew by 7%. The sales growth was attributable to higher sales in the Business Unit Rotor Blades compared to the weak previous year quarter and was partially offset by lower sales in our Business Units Carbon Fibers & Composite Materials (CF/CM) and Aerostructures (AS). EBIT in the Business Area CFC amounted to minus 8.0 million compared to minus 2.1 million in the same period one year earlier. The lower result is due to the continued negative earnings situation of our rotor blade business, the low capacity utilization in the carbon fiber business due to the temporary global oversupply situation as well as the unsatisfactory utilization level in the Business Unit AS, which was caused by delays in shipping orders for the Boeing 787 and the Joint Strike Fighter. Cost savings from our SGL Excellence initiative amounted to approximately 1 million. The return on sales was minus 14.7% compared to minus 4.2% in the same period of the previous year. On March 22, 2012, we announced the signing of a contract to acquire an 86% stake in the listed Portuguese company Fisipe Fibras Sintéticas de Portugal S.A. from the previous principal shareholder, Negofor. We are thus expanding our production network for the supply of raw materials for carbon fiber production to include a production facility for precursors. At the same time, a mandatory public offer was submitted to the Portuguese securities commission for the remaining shares in Fisipe.
7 With this backward integration, we, as the only European integrated manufacturer of carbon fibers, are strengthening our technology base along the entire value chain, from raw materials to carbon fibers through to the finished composite. We currently produce precursor within the framework of our multi-sourcing strategy in joint ventures with Lenzing AG in the Bavarian town of Kelheim (SGL Group stake: 44%) and Mitsubishi Rayon Co. Ltd. (MRC) in Otake, Japan, (SGL Group stake: 33%). These joint ventures focus on industrial grade carbon fibers (50K). With Fisipe, we are tapping into an additional raw materials source to produce further precursor grades, in particular the development of raw materials for lowtow carbon fibers (3K 24K). SGL Group and Fisipe have recently collaborated successfully on development projects. The textile fiber production lines at the site will be converted and gradually expanded to precursor production at low investment costs. Additionally, the facility will continue to manufacture acrylic fibers for special textile and technical applications. Fisipe has a very qualified workforce, its production capacity has scope for expansion and it also offers well-developed logistics. In addition, Fisipe stands out for its high cost efficiency, mainly due to the low energy costs in Portugal. At-Equity accounted business activities within CFC (aggregated results attributable to SGL Group reported under result from investments accounted for At-Equity) 1st Quarter m 2012 2011 2) Change Sales revenue 1) 42.1 24.1 74.7% 1) Aggregated, unconsolidated 100% values for companies 2) Previous year adjusted for PowerBlades (sold effective December 31, 2011) Main investments accounted for At-Equity and operationally assigned to the Business Area CFC are Brembo-SGL (Italy and Germany), Benteler-SGL (Germany and Austria), and SGL Automotive Carbon Fibers (joint ventures with BMW Group, Germany and US). The At-Equity accounted investments within the Business Area Carbon Fibers & Composites represented a total sales volume of 42.1 million in the reporting period (Q1/2011: 24.1 million, 100% values for companies), which is not included in our consolidated Group sales figure.
8 SGL GROUP Q1 2012 As PowerBlades was sold at the end of the fiscal year 2011, the previous year s sales figure was adjusted for the sales revenues of the PowerBlades joint venture ( 19.1 million) to ensure comparability. Brembo-SGL The joint venture with Brembo for the purpose of producing and further developing carbon ceramic brake discs initially experienced slightly lower sales in the course of 2011. As the order intake improved since the end of 2011, our plants in Stezzano (Italy) and Meitingen (Germany) are again running at good capacity utilization. Benteler-SGL In our joint venture with Benteler we continue to develop the usage of carbon fiber reinforced composites in the automotive industry. Several projects with OEMs in the automotive industry are making good progress and should reach commercialization within the next years. In particular, a serial order for specific components of the new i3 was awarded to us by BMW. SGL Automotive Carbon Fibers The joint ventures with BMW Group for the production of carbon fibers and fabrics for use in automobile manufacturing were established at the end of 2009 and began their operations in 2010. With the timely completion of the facility in Moses Lake (USA), carbon fibers have been being shipped to the joint facility in Wackersdorf since summer of 2011 to prepare for serial production. In Wackersdorf (Germany), the carbon fibers are converted into fabrics, which constitute the raw material for the production of carbon fiber reinforced plastic (CFRP) components in BMW Group s facility in Landshut. The initial years leading up to the serial production are characterized by start up costs, which will also be incurred in 2012.
9 Central T&I and corporate costs 1st Quarter m 2012 2011 Change Other revenue 0.6 1.3 53.8% Central T&I costs 3.1 3.2 3.1% Corporate costs 9.3 8.2 13.4% Central T&I Costs at 3.1 million remained virtually unchanged compared to the same period of the previous year (Q1/2011: 3.2 million). Driven by project related expenses (among others the preparations for the acquisition of Fisipe S.A.), Corporate Costs increased 13% to 9.3 million compared to 8.2 million in the first quarter 2011. BUSINESS DEVELOPMENT Condensed consolidated income statement (Part 2) 1st Quarter m 2012 2011 Change Profit from operations (EBIT) 36.2 36.3 0.3% Result from investments accounted for At-Equity 4.1 3.6 13.9% Net financing result 11.0 11.8 6.8% Profit before tax 21.1 20.9 1.0% Income tax expense 7.9 6.7 17.9% Non-controlling interests 0.9 0.7 28.6% Net profit attributable to the shareholders of the parent company 14.1 14.9 5.4% Earnings per share, basic (in ) 0.20 0.23 13.0% Earnings per share, diluted (in ) 0.20 0.23 13.0%
10 SGL GROUP Q1 2012 Result from investments accounted for At-Equity Main investments accounted for At-Equity refer to Brembo-SGL, Benteler-SGL, and SGL Automotive Carbon Fibers. In the reporting period, total result from At-Equity investments was minus 4.1 million, compared to minus 3.6 million in the same period one year earlier mainly due to planned higher start up costs in the joint ventures with BMW Group. These were partially compensated by the earnings turnaround in EPG compared to the same period one year earlier as well as by the fact that PowerBlades is no longer included in these results, as we sold our share in this joint venture effective December 31, 2011. Net financing result 1st Quarter m 2012 2011 Change Interest income 0.6 0.9 33.3% Interest expense 3.8 4.4 13.6% Imputed interest convertible bonds (non-cash) 2.7 3.6 25.0% Imputed interest finance lease (non-cash) 0.3 0.3 0.0% Interest expense on pensions 4.5 4.1 9.8% Interest expense (net) 10.7 11.5 7.0% Amortization of refinancing costs (non-cash) 0.6 0.7 14.3% Foreign currency valuation of Group loans (non-cash) 1.1 0.8 37.5% Other financial income 1.4 1.2 16.7% Other financing result 0.3 0.3 Net financing result 11.0 11.8 6.8% The cash interest expenses and the non cash imputed interest for the convertible bonds decreased due to the partial conversions of our convertible bonds at the end of 2011 and in the beginning of 2012. This effect was partially offset by the higher interest expense on pensions. In summary, net interest expense improved slightly to minus 10.7 million in the reporting period compared to minus 11.5 million in the first quarter 2011.
11 Other financial result of minus 0.3 million remained on the previous year s level. In total, net financing result (excluding result from investments accounted for At- Equity) of minus 11.0 million improved slightly compared to the same period one year earlier (Q1/2011: minus 11.8 million). Profit before and after taxes Based on a virtually unchanged EBIT, the improved net financing result was able to compensate for the reduced result from investments accounted for At-Equity. Accordingly, profit before tax of 21.1 million also remained on the same level as that of the previous year period (Q1/2011: 20.9 million). Tax expense in the reporting period amounted to 7.9 million and resulted in a tax rate of 37.4% (Q1/2011: 32.1%). The higher tax rate was mainly due to non tax deductible expenses and to minimum taxation effects in the USA. Accordingly, net profit attributable to the shareholders of the parent company decreased slightly by 5% to 14.1 million (Q1/2011: 14.9 million). Balance Sheet Structure m March 31, 2012 Dec. 31, 2011 Change ASSETS Non-current assets 1,207.1 1,212.7 0.5% Current assets 1,053.9 1,058.6 0.4% Total assets 2,261.0 2,271.3 0.5% EQUITY AND LIABILITIES Shareholders equity 1,066.2 1,041.1 2.4% Non-controlling interests 13.8 14.0 1.4% Total Equity 1,080.0 1,055.1 2.4% Non-current liabilities 878.4 881.0 0.3% Current liabilities 302.6 335.2 9.7% Total equity and liabilities 2,261.0 2,271.3 0.5% Total assets of 2,261.0 million as well as major line items of the balance sheet as of March 31, 2012 remained virtually unchanged compared to December 31, 2011 ( 2,271.3 million). Currency effects of minus 13 million only had a minor impact on total assets.
12 SGL GROUP Q1 2012 Working Capital m March 31, 2012 Dec. 31, 2011 Change Inventories 586.1 507.8 15.4% Trade receivables 267.1 275.3 3.0% Long-term receivables from construction contracts 73.0 72.4 0.8% Trade payables 177.8 181.6 2.1% Working Capital 748.4 673.9 11.1% Working Capital as of March 31, 2012 rose by 11% to 748.4 million (December 31, 2011: 673.9 million) mainly due to 15% higher inventories, which reflect factor cost increases of our key raw materials as well as the expected business recovery in the second half of this year. Changes in Equity Shareholders equity increased slightly by 2% to 1,066.2 million as of March 31, 2012 (December 31, 2011: 1,041.1 million) mainly due to the net profit of 14.1 million, the early partial conversion of our convertible bonds leading to increased equity of 2.2 million and capital increases of 3.1 million related to share-based payment plans. Additionally, positive mark-to-market valuations of our cash flow hedges amounting to 5.0 million also increased shareholders equity. Since total assets as of March 31, 2012 remained almost unchanged compared to December 31, 2011, the equity ratio as of March 31, 2012 improved to 47.2% (December 31, 2011: 45.8%).
13 Net financial debt m March 31, 2012 Dec. 31, 2011 Change Current and non-current financial liabilities 557.0 556.6 0.1% Remaining imputed interest for the convertible bonds 18.9 21.8 13.3% Accrued refinancing cost 5.9 6.6 10.6% Total financial debt 581.8 585.0 0.5% Time deposits 0.0 80.0 100.0% Cash and cash equivalents 163.1 161.7 0.9% Total liquidity 163.1 241.7 32.5% Net financial debt 418.7 343.3 22.0% Total financial debt as of March 31, 2012 consists of our corporate bond, the convertible bonds 2007/2013 and 2009/2016, loans from local banks, imputed interest for the convertible bonds and accrued refinancing expenses. Financial debt is recorded in the balance sheet under the items Bonds and interest-bearing loans. Total liquidity comprises cash and cash equivalents as well as current time deposits with a maturity of less than 12 months from date of acquisition, as stated in the interim condensed consolidated balance sheet. For further details please refer to the interim consolidated cash flow statement within this report. Net financial debt increased by 22% to 418.7 million as of March 31, 2012 (December 31, 2011: 343.3 million) due to the negative free cash flow, which was influenced by the inventory build-up driven increase in working capital. Currency effects of 0.8 million only had a minor impact on net financial debt.
14 SGL GROUP Q1 2012 Free cash flow/ Condensed consolidated cash flow statement 1st Quarter m 2012 2011 Cash flows from operating activities Profit before tax 21.1 20.9 Depreciation and amortization expense 18.1 17.2 Changes in working capital (net) 81.1 39.2 Miscellaneous Items 1.4 2.6 Net cash used in/provided by operating activities 40.5 1.5 Cash flows from investing activities Intangible assets and property, plant and equipment 21.4 17.3 Financial investments and other items 7.9 2.2 Net cash used in investing activities 29.3 19.5 Free cash flow* 69.8 18.0 * Defined as net cash used in/provided by operating activities minus net cash used in investing activities We report the performance indicator free cash flow, defined as cash provided by operating activities after cash interest and taxes paid less investing activities (cash used for additions to intangible assets and property, plant and equipment and financial investments). Due to the higher working capital requirements, cash used by operating activities amounted to 40.5 million in the reporting period after a slightly positive operating cash flow of 1.5 million in the same period one year earlier. The approximately 10 million higher cash used for investing activities was mainly driven by scheduled equity contributions to our investments accounted for At- Equity as well as slightly higher capital expenditures for intangible assets and property, plant, and equipment. In total, free cash flow in the reporting period decreased to minus 69.8 million (Q1/2011: minus 18.0 million).
15 EMPLOYEES As of March 31, 2012, SGL Group employed 6,453 people, 6 more than at the year end 2011. The number of employees in the Business Area Performance Products decreased slightly by 10 to 2,084. The Business Area Graphite Materials & Systems increased the number of employees by 38 and reached a total of 2,849 employees by end of March 2012. The Business Area Carbon Fibers & Composites reduced its workforce slightly by 21 to 1,448 as of March 31, 2012. The headcount at the corporate office decreased from 73 to 72 employees. At the end of March 2012, SGL Group employed 2,555 people in Germany (plus 20 compared to year end 2011), 1,816 in the rest of Europe (plus 1 compared to year end 2011), 1,386 in North America (minus 24 compared to year end 2011), and 669 in Asia (plus 9 compared to year end 2011). OPPORTUNITIES AND RISKS Regarding existing opportunities and risks we refer to the annual report for the financial year ended December 31, 2011 as well as to the Management Report of this interim report. For the period under review, SGL Group s risk situation did not change materially from year end 2011. In our opinion and based upon information currently available, there are no material individual risks that could jeopardize the business as a going concern. Even if the individual risks are viewed on an aggregated basis, they do not threaten the going concern of SGL Group in the foreseeable future based upon present knowledge. Any potential impacts resulting from the current uncertain financial and macroeconomic public framework might adversely impact our businesses.
16 SGL GROUP Q1 2012 OUTLOOK Business Area Performance Products Despite the weak start of the new fiscal year, stable production levels are anticipated for the steel industry for the full year 2012. As already communicated at our annual press conference on March 22, 2012, we expect improved graphite electrode volumes in the second half of 2012 compared to last year as well as compared to the first half 2012 if global growth recovers in the course of the second half of this year. In addition, we are recording higher raw material and other factor cost increases in fiscal year 2012, which we intend to pass on in our sales prices. Since the order patterns from steel producers do not, as of yet, cover the full year, our ability to predict the second half of 2012 is limited at this time. As we do not foresee the need for any significant restocking or destocking in the further course of the year, we expect our shipments to improve in the second half 2012 in line with electric arc furnace steel production Since the middle of last year we are seeing a slight recovery in cathode demand, which should also apply to the full year 2012. We already see higher maintenance and new investments for additional aluminum capacity. However, a noticeable increase in demand primarily related to new investments will only translate into higher capacity utilization of our cathode capacities in the coming years. Therefore, for the time being, we will not yet be able to pass on rising factor costs. Consequently we expect higher sales and comparable margins for the Business Area PP in the full year 2012 compared to the previous year. Business Area Graphite Materials & Systems In the second half 2011 new orders began to slow down for our Business Unit Graphite Specialties, which continued into the first quarter 2012 and is expected to impact sales in the course of this year. In contrast, the Business Unit Process Technology ended fiscal 2011 with a record order backlog, which is likely to have a positive impact on sales in the year 2012. Therefore, on the whole, we expect sales for the Business Area Graphite Materials & Systems to remain on last year s level. Due to the expected slightly lower capacity utilization, particularly in the Business Unit Graphite Specialties, the record EBIT return on sales of 18% in 2011 may not be replicable. Yet we anticipate that the return on sales will be significantly higher than our medium term target of at least 10%.
17 Business Area Carbon Fibers & Composites In 2011, the earnings situation of the Business Area Carbon Fibers & Composites was strongly impacted by the difficult wind energy markets which continues to suffer from the after effects of the financial crisis and in consequence, heavily burdened our Business Unit Rotor Blades. Since this market still shows no signs of a sustained recovery in the immediate future, additional adverse effects on our rotor blades business cannot be ruled out. However, thanks to the acquisition of new customers and our optimization measures, we expect to be able to reduce losses in this Business Unit. The other two Business Units in this Business Area, Carbon Fibers & Composite Materials and Aerostructures, are expected to improve in the course of 2012, despite the slow start into the new fiscal year. However, these developments will not be sufficient to compensate for the losses anticipated for the Business Unit Rotor Blades. Generally, the Business Area CFC continues to be characterized by a strong R&D driven substitution trend, which can lead to delays and to start-up/development expenses, which may partially not be projectable until a certain commercial maturity is reached. Group The expectations outlined above for the individual Business Areas are based on the assumption that the world economy will begin to pick up pace from the second half 2012. However, this assumption is subject to risk. With an improved economic backdrop in the course of the year, we currently anticipate improvements in Group sales and EBIT in 2012 compared to the previous year. In contrast to the usual cyclicality of our business, EBIT in the second quarter 2012 should remain on a comparable level to the first quarter 2012 due to customers having pulled forward deliveries from Q2/2012 to Q1/2012. In total, the first half year 2012 is expected to be within the framework of our internal planning. The mid term gearing target of approximately 0.5 remains our top priority. It will continue to be the governing indicator defining our investment program. The largest projects in this investment program are scheduled to be completed this year. Accordingly, we forecast capital expenditure in plant, property and equipment and intangible assets to be up to 150 million in 2012 which will largely be funded from operational cash flow. We anticipate free cash flow to be up to minus 60 million in fiscal 2012 (before acquisitions and dividend payment for fiscal year 2011). With capital expenditure forecasted to decline from 2013, we seek to again be free cash flow positive (before acquisitions).
18 SGL GROUP Q1 2012 RESPONSIBILITY STATEMENT To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim Group Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year. Wiesbaden, May 3, 2012 SGL Carbon SE The Board of Management
19 Condensed Consolidated Income Statement 1st Quarter m 2012 2011 Change Sales revenue 381.6 363.8 4.9% Cost of sales 274.5 265.3 3.5% Gross profit 107.1 98.5 8.7% Selling, administrative, research and other expense/income 70.9 62.2 14.0% Profit from operations (EBIT) 36.2 36.3 0.3% Result from investments accounted for At-Equity 4.1 3.6 13.9% Interest income 0.6 0.9 33.3% Interest expense 11.3 12.4 8.9% Other financing costs 0.3 0.3 Profit before tax 21.1 20.9 1.0% Income tax expense 7.9 6.7 17.9% Net profit for the period 13.2 14.2 7.0% thereof: Non-controlling interests 0.9 0.7 28.6% Shareholders of the parent company 14.1 14.9 5.4% Earnings per share, basic (in ) 0.20 0.23 13.0% Earnings per share, diluted (in ) 0.20 0.23 13.0% Consolidated Statement of Comprehensive Income 1st Quarter m 2012 2011 Net profit for the period 13.2 14.2 Changes in the fair value of available for sale securities 0.1 0.0 Cash flow hedges 5.0 0.8 Currency translation 0.4 22.2 Other comprehensive income 5.3 21.4 Comprehensive income 18.5 7.2 of which attributable to the shareholders of the parent company 19.8 6.2 of which attributable to non-controlling interests 1.3 1.0
20 SGL GROUP Q1 2012 Interim Condensed Consolidated Balance Sheet ASSETS m March 31, 2012 Dec. 31, 2011 Change Non-current assets Intangible assets 144.0 144.2 0.1% Property, plant and equipment 859.3 859.8 0.1% Other non-currents assets 141.1 140.9 0.1% Deferred tax assets 62.7 67.8 7.5% 1,207.1 1,212.7 0.5% Current assets Inventories 586.1 507.8 15.4% Trade receivables 267.1 275.3 3.0% Other receivables and other current assets 37.5 33.5 11.9% Liquidity 163.1 241.7 32.5% Time deposits 0.0 80.0 100.0% Cash and cash equivalents 163.1 161.7 0.9% 1,053.8 1,058.3 0.4% Assets held for sale 0.1 0.3 66.7% Total assets 2,261.0 2,271.3 0.5%
21 EQUITY AND LIABILITIES m March 31, 2012 Dec. 31, 2011 Change Shareholders equity 1,066.2 1,041.1 2.4% Non-controlling interests 13.8 14.0 1.4% Total Equity 1,080.0 1,055.1 2.4% Non-current liabilities Bonds and interest-bearing loans 550.4 550.4 0.0% Provisons for pensions and similar employee benefits 278.2 278.7 0.2% Deferred tax liabilities 4.8 4.8 0.0% Other non current liabilities and provisions 45.0 47.1 4.5% 878.4 881.0 0.3% Current liabilities Other provisions 67.8 76.8 11.7% Bonds and interest-bearing loans 6.6 6.2 6.5% Trade payables 177.8 181.6 2.1% Other current liabilities and income tax liabilities 50.4 70.6 28.6% 302.6 335.2 9.7% Total equity and liabilities 2,261.0 2,271.3 0.5%
22 SGL GROUP Q1 2012 Interim Consolidated Cash Flow Statement 1st Quarter m 2012 2011 Profit before tax 21.1 20.9 Add back of net interest expenses 10.7 11.5 Loss/(Gain) on disposal of property, plant and equipment 0.2 0.5 Depreciation and amortization expense 18.1 17.2 Amortization of refinancing costs 0.6 0.7 Interest received 1.0 0.8 Interest paid 2.5 1.7 Income taxes paid 4.4 3.1 Changes in provisions (net) 11.6 15.6 Changes in working capital (net) 81.1 39.2 Changes in other operating assets and other liabilities 7.4 10.5 Net cash used in/provided by operating activities 40.5 1.5 Payments to purchase intangible assets and property, plant and equipment 21.4 17.3 Payments for investments accounted for At-Equity 8.5 7.9 Other investing activities 0.6 5.7 Net cash used for investing activities 29.3 19.5 Free Cash Flow* 69.8 18.0 Change in time deposits 80.0 70.0 Net cash provided by investing and cash management activities 50.7 50.5 Proceeds from corporate debt 0.8 2.9 Repayment of corporate debt 1.7 2.4 Changes in ownership interest in a subsidiary 7.6 0.0 Payments in connection with the refinancing 0.0 1.8 Other financing activities 0.4 0.4 Net cash used for financing activities 8.1 0.9 Effect of foreign exchange rate changes 0.7 0.9 Net change in cash and cash equivalents 1.4 50.2 Cash and cash equivalents at beginning of period 161.7 84.7 Net cash and cash equivalents at end of period 163.1 134.9 Time deposits 0.0 130.0 Total liquidity 163.1 264.9 Net increase/decrease in total liquidity 1.4 19.8 * Defined as cash provided by/used in operating activities minus cash used in investing activities (before cash management activities)
23 Interim Condensed Consolidated Statement of Changes in Equity 1st Quarter 2012 m Shareholders equity Noncontrolling interests Total equity Balance at January 1 1,041.1 14.0 1,055.1 Partial conversion of the convertible bonds 2.2 0.0 2.2 Capital increase from share-based payment plans 3.1 0.0 3.1 Net profit 14.1 0.9 13.2 Other comprehensive income 5.7 0.4 5.3 Total comprehensive income 19.8 1.3 18.5 Other changes in equity* 0.0 1.1 1.1 Balance at March 31 1,066.2 13.8 1,080.0 * In particular in connection with non-controlling interests in subsidiary partnerships 1st Quarter 2011 m Shareholders equity Noncontrolling interests Total equity Balance at January 1 864.4 13.5 877.9 Capital increase from share-based payment plans 7.1 0.0 7.1 Net profit 14.9 0.7 14.2 Other comprehensive income 21.1 0.3 21.4 Total comprehensive income 6.2 1.0 7.2 Other changes in equity* 0.2 0.9 0.7 Balance at March 31 865.1 13.4 878.5 * In particular in connection with non-controlling interests in subsidiary partnerships
24 SGL GROUP Q1 2012 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Description of business SGL Carbon SE, located at Rheingaustrasse 182, Wiesbaden (Germany), together with its subsidiaries ( SGL Group ) is a global manufacturer of carbon and graphite products. Basis of preparation and accounting policies The consolidated financial statements of SGL Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations issued by the International Accounting Standards Board, as adopted by the European Union (EU). The interim financial reporting for the three months period ended March 31, 2012 has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting. In accordance with IAS 34 regulations, a condensed report was chosen compared with the consolidated financial statements as at December 31, 2011. The interim consolidated financial statements should be read in conjunction with SGL Group s annual IFRS consolidated financial statements as of December 31, 2011. In the opinion of management, these interim financial statements contain all of the information that is required for a fair presentation of the results of operations and the financial position of the Group. The accounting policies and consolidation methods used are consistent with those used in the 2011 annual financial statements. The accounting standards applied for the first time in the 2012 financial year do not have any material effect on the presentation of the financial position and financial performance of SGL Group. The consolidated interim financial statements were authorized for publication in accordance with a resolution of the Board of Management on May 3, 2012. These consolidated interim financial statements were not reviewed by our auditors. Changes to the scope of consolidation There were no changes to the scope of consolidation as of March 31, 2012, compared to December 31, 2011. Seasonality of operations Our sales revenue from graphite electrodes fluctuates from quarter to quarter due to factors related to our customers businesses, such as customer inventory levels, scheduled customer plant shutdowns and vacations and changes in customer production schedules in response to seasonal changes in customer energy costs,
25 strikes and work stoppages by our customers employees. In addition, customers may change their order patterns in response to price changes. During the period prior to the effective date of a price increase, customers tend to buy additional quantities of graphite electrodes at the then lower price, which adds to our sales revenue during that period. During the period following the effective date of a price increase, customers tend to use those additional quantities before placing further orders, which reduces our sales revenue during that period. Similarly, customers tend to use up their inventories and delay purchases when they expect price reductions. In GMS and CFC customer order patterns primarily follow overall global trends (i.e. for lightweight materials) and depend on availability in connection with pricing of such materials. The overall economic environment is normally an indicator for any developments in our customers demand. Demand also might be impacted by any changes of governmental regulations (i.e. subsidy policies). Other information Issued capital rose to 180.2 million as of March 31, 2012 (December 31, 2011: 179.1 million) and is divided into 70,411,799 no-par value ordinary bearer shares at 2.56 per share. Issued capital was increased by 0.2 million from the early partial conversion of the convertible bond, representing 79,334 shares. During the first three months of 2012, a total of 260,714 new shares were issued and granted to employees under the employee bonus plan and under the Matching Share Plan. The exercise of SARs from the stock appreciation rights plan resulted in the creation of 8,187 shares. As of March 31, 2012, SGL Carbon SE holds a total of 31,473 of its own shares (treasury shares). On January 13, 2012, a total of 832,545 new SARs were granted from the SAR Plan approved during the 2009 Annual General Meeting with a strike price of 39.50. In March 2012, members of the Board of Management and the top three management tiers purchased a total of 103,838 shares as part of the Matching Share Plan at a price of 35.44. As of March 31, 2012, there are 2,875,819 SARs, 206,527 matching shares and 41,550 stock options outstanding. In March 2012, a total of 253,744 shares on the basis of a capital increase from authorized capital were used to support the employee bonus plan to service the entitlements of the participating employees in Germany, and an additional 60,714 shares were used to service the entitlements of the participants of the Matching Share Plan.
26 SGL GROUP Q1 2012 Based on an average number of 70.1 million shares, basic earnings per share amounted to 0.20 (Q1/2011: 0.23). To calculate diluted earnings per share, the shares that may potentially be issued under the stock option and stock appreciation rights plans are also taken into account. This increases the average number of shares used for the first three months of 2012 calculation to 70.7 million. Accordingly, diluted earnings per share also amounted to 0.20 (Q1/2011: 0.23). The SGL Group did not pay a dividend during the reporting period. 1st Quarter m 2012 2011 Change Sales revenue Performance Products 197.7 197.9 0.1% Graphite Materials & Systems 128.9 114.6 12.5% Carbon Fibers & Composites 54.4 50.0 8.8% Other 0.6 1.3 53.8% 381.6 363.8 4.9% 1st Quarter m 2012 2011 Change Profit (loss) from operations/ebit Performance Products 33.7 30.5 10.5% Graphite Materials & Systems 22.9 19.3 18.7% Carbon Fibers & Composites 8.0 2.1 > 100.0% Central T&I Costs 3.1 3.2 3.1% Corporate Costs 9.3 8.2 13.4% 36.2 36.3 0.3%
27 Subsequent events On April 11, 2012, SGL Group completed the acquisition of the 86% stake in the listed Portuguese company Fisipe Fibras Sintéticas de Portugal S.A. from the previous principal shareholder, Negofor. On April 18, 2012, SGL Carbon SE issued unsecured convertible notes with an aggregate principal amount of 240 million and a maturity of five years and nine months due January 2018. The convertible notes have a volume of 5.4 million shares, corresponding to 7.7% of SGL Carbon SE s issued capital as of March 31, 2012 and a denomination of 100,000.00. The initial conversion price is 44.10, representing a premium of 30%. The coupon amounts to 2.75% p.a. Wiesbaden, May 3, 2012 SGL Carbon SE The Board of Management
28 SGL GROUP Q1 2012 Quarterly Sales Revenue and Operating Profit by Segment 2011 2012 Sales revenue m Q1 Q2 Q3 Q4 Full Year Q1 Performance Products 197.9 190.2 213.6 244.0 845.7 197.7 Graphite Materials & Systems 114.6 111.4 125.4 117.3 468.7 128.9 Carbon Fibers & Composites 50.0 57.9 53.5 58.8 220.2 54.4 Other 1.3 1.7 2.0 0.6 5.6 0.6 363.8 361.2 394.5 420.7 1,540.2 381.6 2011 2012 Profit from operations/ebit m Q1 Q2 Q3 Q4 Full Year Q1 Performance Products 30.5 32.1 37.4 43.3 143.3 33.7 Graphite Materials & Systems 19.3 20.6 28.2 15.9 84.0 22.9 Carbon Fibers & Composites* 2.1 2.1 4.7 8.0 16.9 8.0 Central T&I Costs 3.2 2.6 3.5 3.6 12.9 3.1 Corporate Costs 8.2 8.1 9.2 11.6 37.1 9.3 36.3 39.9 48.2 36.0 160.4 36.2 Quarterly Consolidated Return on Sales 2011 2012 ROS in % Q1 Q2 Q3 Q4 Full Year Q1 Performance Products 15.4 16.9 17.5 17.7 16.9 17.0 Graphite Materials & Systems 16.8 18.5 22.5 13.6 17.9 17.8 Carbon Fibers & Composites* 4.2 3.6 8.8 13.6 7.7 14.7 SGL Group 10.0 11.0 12.2 8.6 10.4 9.5 * Before reversal of impairment losses and impairment losses of net 5.1 million in 2011
29 Quarterly Consolidated Income Statement 2011 2012 m Q1 Q2 Q3 Q4 Full Year Q1 Sales revenue 363.8 361.2 394.5 420.7 1,540.2 381.6 Cost of sales 265.3 260.0 283.7 312.2 1,121.2 274.5 Gross profit 98.5 101.2 110.8 108.5 419.0 107.1 Selling/administration/ research/other 62.2 61.3 62.6 72.5 258.6 70.9 Profit from operations (EBIT) before impairment losses and reversal of impairment losses 36.3 39.9 48.2 36.0 160.4 36.2 Impairment losses and reversal of impairment losses 0.0 4.1 0.0 1.0 5.1 0.0 Profit from operations (EBIT) 36.3 44.0 48.2 37.0 165.5 36.2 Result from investments accounted for At-Equity 3.6 11.1 2.7 15.2 32.6 4.1 Net financing result 11.8 13.1 14.5 9.8 49.2 11.0 Profit before tax 20.9 19.8 31.0 12.0 83.7 21.1 Income tax expense 6.7 9.9 9.5 3.3 22.8 7.9 Non-controlling interests 0.7 10.2 0.4 1.0 12.3 0.9 Net profit attributable to shareholders of the parent company 14.9 20.1 21.9 16.3 73.2 14.1
30 SGL GROUP Q1 2012 Important note This interim report contains forward-looking statements based on the information currently 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 our interim report. 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 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 adjust or otherwise update these forward-looking statements.
31 FINANCIAL CALENDAR MAY 10, 2012 Annual General Meeting AUGUST 9, 2012 Report on the first half year 2012; Conference call for analysts and investors NOVEMBER 8, 2012 Report on the first nine months 2012; Conference call for analysts and investors
INVESTOR RELATIONS CONTACT SGL CARBON SE Headquarters Investor Relations Rheingaustrasse 182 65203 Wiesbaden /Germany Telephone +49 611 6029-103 Telefax +49 611 6029-101 E-mail Investor-Relations@sglcarbon.de www.sglgroup.com