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SGL Carbon achieves annual targets for 2023 and invests more in growth markets

22/03/2024

In fiscal year 2023, SGL Carbon achieved the sales and earnings targets set at the beginning of the year despite the drop in demand from the important wind market and an increasingly challenging economic environment. Group sales decreased slightly by 46.8 million (minus 4.1%) to 1,089.1 million (previous year: 1,135.9 million). At 168.4 million, adjusted EBITDA, a key performance indicator for the Group, was also down slightly (minus 2.5%) compared to the previous year ( 172.8 million) but was clearly within the forecast range for 2023 of 160 to 180 million.

While the positive sales development of the Graphite Solutions ( 53.5 million to 565.7 million), Process Technology ( 21.6 million to 127.9 million) and Composite Solutions ( 0.8 million to 153.9 million) business units had a positive effect, the Carbon Fibers business unit had a negative impact on Group sales with a sales decline of 122.3 million to 224.9 million.

Demand for carbon fibers for the wind industry fell dramatically at the beginning of 2023. Construction activities for offshore wind turbines, in which our carbon fibers are needed, almost came to a standstill. High raw material costs and interest rates as well as low acceptance prices and high regulatory barriers are currently making the construction of new wind parks almost unprofitable, particularly in Europe. This has also hit our business unit Carbon Fibers (CF) hard. Accordingly, CFs sales and earnings declined significantly. Nevertheless, the record results of the three other SGL business units almost completely compensated for this downturn, meaning that we still achieved our targets for 2023, explains CEO Dr. Torsten Derr.

Earnings development of SGL CarbonThe contribution of the individual business units to SGL Carbons adjusted EBITDA reflects the sales development already described. Despite the volume-related drop in adjusted EBITDA of the reporting segment Carbon Fibers from 43.2 million in 2022 to 7.2 million in the reporting period (minus 36.0 million), adjusted Group EBITDA decreased by only 4.4 million (minus 2.5%) to 168.4 million. The drop in the adjusted EBITDA of CF was offset by the positive EBITDA development of the three other business units: Graphite Solutions ( 15.5 million to 134.0 million), Process Technology ( 12.5 million to 22.4 million) and Composite Solutions ( 2.2 million to 22.2 million).

Despite the decline in demand and the associated decrease in earnings at Carbon Fibers, the adjusted EBITDA margin even improved slightly year-on-year from 15.2% to 15.5% in 2023 thanks to the good results of the other business units.

The weak business development of Carbon Fibers led to an impairment loss of 44.7 million on the assets of this business unit in the first half of 2023, which accounted for the majority of the one-off effects and special items of minus 52.9 million in 2023. Taking into account the one-off effects and special items as well as depreciation and amortization of 58.9 million (previous year: 60.8 million), reported EBIT amounted to 56.6 million in 2023 (previous year: 120.9 million).

The financial result worsened by 7.4 million year-on-year to minus 34.2 million (previous year: minus 26.3 million). This is due in particular to higher interest expenses for financial liabilities and pensions amounting to minus 30.7 million (previous year: minus 24.3 million). Due to the business development described above as well as the non-operating one-off effects and special items, in particular the impairment in the CF segment ( 44.7 million), consolidated net income decreased to 41.0 million in 2023 (previous year: 126.9 million). It should be noted that the consolidated net income includes tax income of 19.3 million (previous year: 31.3 million). This development is mainly due to valuation adjustments on deferred tax assets in the amount of 31.0 million based on the good business performance combined with positive earnings prospects in the USA (previous year: 41.8 million).

Net financial debt and equityAs in previous years, net financial debt continued to decrease in the 2023 financial year and amounted to 115.8 million as of December 31, 2023 (previous year: 170.8 million), which corresponds to a reduction of 32.2% compared to the previous year. This is due in particular to the increase in free cash flow to 95.6 million (previous year: 67.8 million). The leverage factor was 0.7 after 1.0 in 2022.

At 87.1 million, investments (capex) in intangible assets and property, plant and equipment in 2023 were around 64.7% higher than in the previous year ( 52.9 million) and significantly higher than depreciation and amortization of 58.9 million. Almost two thirds of these investments were allocated to Graphite Solutions and in particular in the expansion of production capacities for specialty graphite products for high-temperature processes, which are required in the semiconductor, LED and solar industries. Equity attributable to shareholders of the parent company increased slightly by 6.3% to 605.3 million in the 2023 financial year (previous year: 569.3 million). The equity ratio increased accordingly to 41.1% (previous year: 38.5%). At 11.3%, the return on capital employed (ROCE calculated on adjusted EBIT) remained constant at the previous years level.

Development of the business unitsIn fiscal year 2023, the largest business unit Graphite Solutions (GS) accounted for 51.9% or 565.7 million of SGL Carbons consolidated sales (previous year: 45.1% I 512.2 million). The 10.4% increase in sales is based on the dynamic development of the important Semiconductor & LED market segment, particularly in the area of silicon carbide-based high-performance semiconductors. Accordingly, sales with customers in the Semiconductor/LED market segment increased by 40.1% compared to the previous year and now ac
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