Composites Fibers & Materials (CFM) generated highest quarterly result since inceptionAdjusted for one-off effects in prior year, Graphite Materials & Systems (GMS) also posted higher EBIT
Recurring Group EBIT and sales below prior year as expected, due to continued price pressure in graphite electrodes
Legal separation of Performance Products (PP) proceeding according to accelerated schedule
Guidance for 2016 confirmed
Wiesbaden, May 12, 2016. SGL Group has started off the new business year according to plan. In the first quarter of 2016, the reporting segment Composites Fibers & Materials (CFM) generated an EBIT of 7.8 million and thus the highest quarterly result since inception of the segment. Return on sales was 9.5% (previous year: minus 0.5%). Adjusted for one-off effects in 2015, the reporting segment Graphite Materials & Systems (GMS) also posted an increase in EBIT compared to the prior-year period. In Performance Products (PP), the business with cathodes, furnace linings and carbon electrodes has developed well within expectations. However, Group sales and EBIT were again affected by the adverse price development in graphite electrodes. The legal separation of the reporting segment PP is proceeding according to the accelerated schedule and will be completed by the middle of the year as planned. The realignment of PP's business model to the changed market conditions is also well under way. Overall, the company confirms its guidance for 2016.
The first quarter is building on the developments in the previous year. We are seeing good results in our growth areas Composites Fibers & Materials (CFM) and Graphite Materials & Systems (GMS) as well as partly in Performance Products (PP). The graphite electrode business was characterized by significant price pressure. First trends of stabilization in the steel markets have not yet provided relief on the tough price situation in graphite electrodes. The legal separation of PP and the process of evaluating our strategic options are making good progress, which is very good news , says Dr. J rgen K hler, CEO of SGL Group.
Group sales was below the previous year's level as expected and amounted to 294.7 million in the first quarter 2016 (Q1/2015: 315.3 million), due to the price pressure in graphite electrodes. Recurring Group EBIT declined to minus 3.3 million in the reporting period after 5.0 million in the prior-year period. Accordingly, the consolidated net result declined to minus 26.4 million (Q1/2015: minus 16.5 million).
Composites Fibers & Materials (CFM) posts highest earnings since inception
Sales in the reporting segment Composites Fibers & Materials increased by 3% to 82.3 million in the first quarter 2016 (Q1/2015: 80.0 million). Sales growth was mainly driven by the structural effect relating to the inclusion of the materials business of HITCO as well as slightly higher volumes with automotive customers. As anticipated, prices in the acrylic fiber business developed in the opposite direction due to lower raw material costs. Recurring EBIT in the first quarter 2016 improved significantly to 7.8 million compared to minus 0.4 million in the comparable period of the prior year. With this result, the business unit generated the highest quarterly earnings since its inception. As anticipated, the highest earnings increase was posted by SGL Automotive Carbon Fibers (SGL ACF), the joint venture with BMW Group. Further positive effects on earnings came from the high level of capacity utilization in SGL Group's own carbon fiber production facilities, high level of invoicing in the materials business of HITCO and the turn-around in the result from At-Equity accounted investments.
Graphite Materials & Systems (GMS) improves adjusted EBIT
Sales in the reporting segment Graphite Materials & Systems at 103.0 million remained more or less on the same level as in the prior year period (Q1/2015: 104.1 million). The business in Europe and volume-wise also in Asia developed favorably, particularly with customers from the solar, LED, and semiconductor industries. In contrast, the North American business was negatively impacted by reduced demand from energy related industries. Demand for anode materials for the lithium-ion battery developed at anticipated stable levels. Recurring EBIT declined by 21% to 7.0 million (Q1/2015: 8.9 million) and is due to the non-recurrence of the positive one-off effects in the prior year. Adjusted for these effects the operating result improved by 2 million in the first quarter 2016.
Performance Products (PP): As anticipated, sales and earnings impacted by price pressure in graphite electrodes continued good demand for cathodes
Sales in the business with cathodes, furnace linings and carbon electrodes increased in the first quarter 2016. Even graphite electrode volumes were slightly above the prior year level. Nevertheless, sales at 107.2 million remained below the previous year's level (Q1/2015: 128.3 million). Recurring EBIT in the reporting period deteriorated substantially to minus 8.8 million due to the graphite electrode price development (Q1/2015: 8.2 million). Lower raw materials prices and cost savings were unable to compensate for the price driven earnings decline.
The legal separation of the business unit PP progresses according to the accelerated schedule. The process is expected to be completed by the middle of the year. The same applies for the legal separation of the business with cathodes, furnace linings and carbon electrodes within PP. The intention is to maximize SGL Group's options in both areas.
In view of the difficult market environment for graphite electrodes, SGL Group decided on restructuring measures in order to achieve site optimizations and capacity reductions, which are being consistently implemented. The measures in
