08-08-2013 Management Board introduces comprehensive cost savings program SGL2015 in response to the weak business development in the first half year 2013 Half-year report 2013 - Sales increased by 2% to 828 million
- EBITDA before extraordinary effects down 38% to 67 million
- Extraordinary charge of 222 million calculated in accordance with IFRS
- Significant improvement in free cash flow from minus 172 million to minus 46 million
- 2013 guidance modified (published on June 27, 2013): EBITDA 50 60% below comparable previous-year figure of 240 million due to increased competitive pressures from Asia and lack of business recovery in second half year
- Management Board introduces a comprehensive cost savings program: SGL2015
Wiesbaden, August 8, 2013.The overall business development in the first half 2013 was weaker than anticipated. Group sales increased slightly by 2% to 828.2 million (H1/2012: 809.8 million). Adjusted for the sales contribution of the Portuguese acrylic fiber producer Fisipe acquired in 2012, a slight decrease would have been recorded. Due to the weak development in all three Business Areas, Group EBITDA decreased by 38% to 67.3 million (H1/2012: 108.2 million). This corresponds to an EBITDA margin of 8.1% after 13.4% in the previous-year period. Group EBIT before extraordinary effects declined accordingly and amounted to 25.6 million (H1/2012: 69.9 million).
Robert Koehler, CEO of SGL Group: The combination of a cyclical downturn in many of our customer industries, temporary overcapacities especially in our graphite electrodes and specialties businesses as well as project delays in development and start-up phases within the Business Area Carbon Fibers & Composites required a quick response to the changed market and competitive environment. Therefore, as already indicated, we have introduced a comprehensive Group-wide cost savings program SGL2015 to take resolute action.
As required by IFRS, impairment tests for fixed assets and goodwill led to negative non-cash extraordinary effects totaling 153.2 million related to write-downs in the Business Area CFC in the second quarter 2013. Result before tax therefore stood at minus 164.3 million (H1/2012: 40.0 million) and net income at minus 243.0 million (H1/2012: 23.0 million), including extraordinary tax expenses of 68.7 million. Based on an average number of shares of 70.8 million, basic earnings per share dropped to minus 3.43 (H1/2012: 0.33).
Free cash flow significantly improved balance sheet marked by extraordinary effects As of June 30, 2013, total assets decreased by 16% to 2,150.7 million compared to the end of 2012 (December 31, 2012: 2,559.7 million) due to the extraordinary effects in the Business Area CFC, currency effects, write-downs on deferred tax assets and the repayment of the convertible bond due in May 2013. The extraordinary effects also led to a decrease in shareholders' equity to 797.0 million (December 31, 2012: 1,067.0 million) and an equity ratio of 37.1% (December 31, 2012: 41.7%). The repayment of the convertible bond in May 2013 also resulted in a significant reduction of total liquidity. Net financial debt increased to a total of 519.8 million (December 31, 2012: 459.3 million). This corresponds to a gearing of 0.65 as of June 30, 2013, which is above the mid-term target of approximately 0.5. Nevertheless, free cash flow in the reporting period improved significantly to minus 46.4 million (H1/2012: minus 171.6 million) due to substantially reduced cash consumption for working capital requirements and lower cash used in investing activities. Last years' free cash flow was also marked by the Fisipe acquisition.
Segment reporting Performance Products (PP): Impacted by unsatisfactory price developments In the first half year 2013, sales in the Business Area PP at 420.1 million remained virtually at the same level as in the same period of the previous year (H1/2012: 413.1 million) primarily due to the unsatisfactory price developments in graphite electrodes. At 74.4 million, EBITDA in the reporting period was 20% lower than in the same period of the previous year ( 93.1 million). The main reason for this development lies in rising factor costs and simultaneous pricing pressure. Accordingly, the EBITDA margin amounted to 17.7% (H1/2012: 22.5%). Savings from the SGL Excellence initiative amounted to approximately 6 million.
Graphite Materials & Systems (GMS): Cyclical downturn affects business Sales in the Business Area GMS decreased by 17% in the first half year 2013 to 210.1 million (H1/2012: 252.8 million). However, the previous-year period partially still benefited from a high order backlog from 2011. While sales in the Business Unit Process Technology reached the previous-year level, the Business Unit Graphite Specialties had to record a 20% decrease in sales. Demand from the solar, semiconductor, and LED industries have been contracting for some time, this development has continued until now. In addition, the order intake in the previously more stable industrial applications now has also weakened substantially, not least due to the overall economic developments. This cyclical downturn significantly impacted earnings, as production was decisively cut as a result of the low order backlog and to reduce inventory levels. Mainly due to the resulting lower fix cost absorption, but also caused by the intensified competition with corresponding pricing pressure, EBITDA decreased to 21.5 million (H1/2012: 49.1 million). The EBITDA margin amounted to 10.2% (H1/2012: 19.4%). Cost savings from the SGL Excellence initiative amounted to 3 million.
Carbon Fibers & Composites (CFC): Sales further increased In the first half year 2013, sales in the Business Area CFC increased by 37% to 195.8 million (H1/2012: 142.9 million); however, 16%-points
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08-08-2013 Management Board introduces comprehensive cost savings program SGL2015 in response to the weak business development in the first half year 2013 Half-year report 2013 - Sales increased by 2% to 828 million
