Higher capital expenditures for organic growth planned in the business unit Graphite Materials & Systems (GMS) to execute on additional growth opportunities
Accordingly, capital expenditures to remain significantly above level of depreciation up to and including 2021
Free Cashflow target postponed by one year
Higher mid term targets for Group sales and EBIT1
Financing to be provided by cash on hand and a potential new corporate bond
Stronger organic growth achievable without additional equity and in alignment with our financial targets for equity ratio and leverage ratio
Board of Management and Supervisory Board of SGL Carbon SE discussed and passed resolution on the new five-year plan in today's Supervisory Board Meeting.
Following strong volume growth in the last few years in the business unit GMS, we are beginning to experience capacity constraints, particularly in the market segments Battery & other Energy (especially in materials for lithium-ion batteries), LED as well as Automotive & Transport. To execute further growth opportunities in the short term, we plan to increase our capital expenditures in the years 2019 to 2021 by 80 million in total compared to prior budgets. Accordingly, capital expenditures in these years will remain substantially above the level of depreciation, and only return to or below the level of depreciation from 2022 onwards.
Due to higher capital expenditures as well as growth-related higher working capital requirements, the target to reach at least a break even free cash flow from 2020 onwards will be postponed by one year to 2021. For the same reason, the ROCE (based on EBIT) target of approx. 9% in the year 2020 will also be postponed by one year, as higher capital expenditures and higher working capital requirements first increase capital employed and the growth only positively impacts EBIT with some time delay.
At the same time, the additional capital expenditures for organic growth increase our mid-term targets for Group sales and EBIT. Group sales in 2022 is now targeted to be a high double digit million amount higher than our previous target of 1.3 billion. Furthermore, the higher sales level leads to an expected additional EBIT contribution target in a low double digit million amount for the year 2022. The EBIT margin in 2022 is targeted to remain within the framework of the communicated target of at least 10%.
While the improved business development mainly benefits the business unit GMS, the business unit Composites Fibers & Materials (CFM) has shown weakness as a result of the business with acrylic fibers and the wind energy industry. We currently anticipate this trend to continue into 2019.
In contrast, we currently expect that the projects in the market segments Automotive, Aerospace and Industrial Applications in the business unit CFM should in certain cases develop even more positively than expected one year ago, so that in the mid term, the previously anticipated profitable growth path remains achievable, even though the earnings level in 2018 and 2019 may be lower than prior expectations. In the fiscal year 2018, this development was substantially more than compensated by the significantly better development in the business unit GMS, so that on Group level we anticipate much higher earnings than at the beginning of the year. Based on current trading, we anticipate that the positive development at GMS will compensate for the weakness in the wind energy and acrylic fiber business at CFM in the fiscal year 2019, so that we in total are targeting a Group recurring EBIT in fiscal year 2019 on approximately the level as fiscal year 2018 and thus as previously expected from us.
The foundation for financing in the coming years, which also includes the maturity of existing debt, particularly the convertible bond 2015/2020 as well the financing of the former joint venture SGL ACF by BMW Group, are cash on hand as well as a potential corporate bond up to an amount of 275 million. The Board of Management and the Supervisory Board today in principle authorized the issue of a bond. Depending on market conditions such an issue could also be launched in the short term.
For this reason and from today's perspective, the planned increase of capital expenditures for growth projects can be funded without additional equity and in alignment with our financial targets of an equity ratio of at least 30% and a leverage ratio based on EBITDA of at most 2.5. We only expect to temporarily exceed our gearing target of approx. 0.5 in the years 2019 and 2020 but expect to be able to meet our gearing target from 2021 onwards.
We expect to publish details on the new capital expenditures program as well as to the guidance for the fiscal year 2019 at the annual press conference on March 27, 2019.
1 The use of KPIs in this notification is aligned to the annual report 2017 which is available under www.sglcarbon.com.
About SGL Carbon
SGL Carbon is a technology-based company and world leader in the development and production of carbon-based solutions. Its high-quality materials and products made from specialty graphite and composites are used in industrial sectors that determine the future: automotive, aerospace, solar and wind energy, semiconductor and LEDs as well as in the production of lithium-ion batteries and other energy storage systems. In addition, SGL Carbon develops solutions for chemical and industrial applications.
In 2017, SGL Carbon generated sales of around 860 million euros. As of December 31, 2017, the company had approximately 4,200 employees worldwide in 34 locations in Europe, North America, and Asia.
Materials, products and solutions from SGL Carbon are embedded in the major topics of the future: sustainable mobility, new energies and cross-industry digitization. Further developments in these areas demand more intelli
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Higher capital expenditures for organic growth planned in the business unit Graphite Materials & Systems (GMS) to execute on additional growth opportunities 
