Consistent execution of cost savings program SGL05 in reaction to challenging environment

11-07-2013 Consistent execution of cost savings program SGL2015 in reaction to challenging environment - Sales decreased 4% yoy due to price pressure in graphite electrodes and cyclical downturn in graphite specialties

- EBITDA before non-recurring charges down to 89.5 million

- Non recurring charges of 179.4 million in 9M/2013 consisting of extraordinary effects (Q2/2013) and restructuring expenses (Q3/2013)

- Significant improvement in free cash flow from minus 159.4 million to minus 16.1 million

- Guidance confirmed for FY 2013: EBITDA 50 60% below comparable prior year figure of 240 million

- First measures of Group-wide comprehensive cost savings program SGL2015 in the process of implementation

Wiesbaden, November 7, 2013. The overall business development of SGL Group The Carbon Company in the first nine months of the fiscal year 2013 developed in line with the June guidance. Resulting from the continued price pressure in graphite electrodes and the cyclical downturn in graphite specialties, Group sales declined by 4% to 1,209.7 million. Due to the adverse development in all three Business Areas, Group EBITDA decreased by 52% to 89.5 million (9M/2012: 188.6 million) and the EBITDA margin to 7.4% (9M/2012: 15.0%). Group EBIT before non-recurring charges declined to 28.0 million (9M/2012: 130.3 million). Group-wide savings from SGL2015 amounted to approximately 34 million, of which approximately 19 million were attributable to the SGL Excellence initiative.

Robert Koehler, CEO of SGL Group: The implementation of our Group-wide cost savings program SGL2015, which was initiated in August, is proceeding as planned. Initial measures are already in the process of being implemented. By the end of 2015, we intend to generate savings of approximately 150 million, approximately 50 million of which will already be realized in 2013. Despite the fact that the business development is far below our original expectations, we have been able to improve free cash flow by more than 140 million within the last 12 months."

For the closure of the Canadian plant in Lachute in connection with SGL 2015, restructuring expenses for extraordinary write-downs of 24.9 million have been realized. Already in the second quarter 2013 negative non-cash extraordinary effects totaling 153.2 million were recorded in the Business Area CFC as required by IFRS. Accordingly, Group EBIT including non-recurring charges was minus 151.4 million in the reporting period.

The financial result improved slightly to minus 37.3 million (9M/2013: minus 38.5 million). Result before tax therefore stood at minus 202.6 million (9M/2012: 25.2 million) and net loss at minus 277.8 million (9M/2012: minus 5.6 million), including extraordinary tax expenses of 68.7 million which were already recorded in the first half of 2013. Based on an average number of shares of 70.9 million, basic earnings per share dropped to minus 3.92 (9M/2012: minus 0.08).

Free cash flow improved significantly by 143 million After nine months 2013, total assets decreased by 19% to 2.086.9 million (December 31, 2012: 2,559.7 million). This was caused by extraordinary effects in the Business Area CFC, extraordinary write-downs of the production site in Lachute within PP, the repayment of the convertible bond of 146 million in May 2013 and write-downs on deferred tax assets. These extraordinary effects also led to a decrease in shareholders' equity to 754.1 million (December 31, 2012: 1,067.0 million) and an equity ratio of 36.1% (December 31, 2012: 41.7%). Net financial debt increased slightly to a total of 485.5 million (December 31, 2012: 459.3 million), which was nevertheless more than 30 million below the half-year figure. Correspondingly, gearing was at 0.64 as of September 30, 2013. Free cash flow improved strongly to minus 16.1 million (9M/2012: minus 159.4 million) due to substantially reduced working capital and lower cash used in investing activities.

Segment Reporting Performance Products (PP): First major step of cost savings plan in the process of implementation Primarily due to the unsatisfactory price development in graphite electrodes, sales in the Business Area PP decreased by 12% to 595.9 million (9M/2012: 681.4 million). Accordingly, EBITDA before restructuring expenses went down by 44% to 94.3 million (9M/2012: 168.0 million). The prior-year result included a one-time positive earnings contribution from the settlement of a long-term supply contract amounting to a low double-digit million figure. The EBITDA margin therefore was 15.8% (9M/2012: 24.7%). Savings from SGL2015 amounted to approximately 16 million, of which approximately 9 million were attributable to the SGL Excellence initiative. As the first major measure of SGL2015, the closure of the Canadian graphite electrode plant in Lachute by end of Q1/2014 was announced in mid-October. Therefore restructuring expenses of 24.9 million were incurred as a result of these extraordinary write-downs. Thus, EBIT including restructuring expenses in the first nine months 2013 amounted to 38.8 million.

Graphite Materials & Systems (GMS): Cyclical downturn Sales in the Business Area GMS decreased by 17% to 311.7 million (9M/2012: 374.5 million). While sales in the Business Unit Process Technology (PT) slightly improved, Graphite Specialties (GS) recorded a substantial decline. Demand from industrial applications within the Business Unit GS, which was very stable in the previous year, had already been declining since the end of 2012. However, this trend has stabilized in recent months. Demand from the solar, semiconductor and LED industries, which had been weak since the end of 2011, also seems to have bottomed out recently. The reduced capacity utilization as well as lower prices in some businesses in the Business Unit Graphite Specia

LINK:	http://www.sglgroup.com/cms/international/press-lounge/news/2013/11/11...
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