Sgl Group Ord

A very warm welcome to our conference call about our first half 2023. On behalf of SGL, our CEO, Thorsten Daer, and our CFO, Thomas De Palt, will present our financials and will give you a little bit more insight about our business development, especially in the carbon fiber business unit. After the presentation, we will have enough time to answer your questions. And now I hand over to Dr. Depp.

Claudia, thank you very much. Claudia selected a very nice headline, solid group numbers and on three wheels to the finish. And if you look at our numbers, we were able to increase our top line by 1.9% to 560 million euro. And our EBITDA is stable for the first half year at €88 million. And that shows that three of our four business units ran exceptionally well. And we had slight problems with our business unit, Carbon Fiber. Our equity ratio is at a solid 36.1%. Our net financial debt at €170 million and leverage ratio at one. On the business unit side, and we gave some weeks ago a presentation on semiconductors and especially on silicon carbide, and this business is still with a very, very good demand situation in our business unit. Graphite solutions and also our small business units, PT and CS, process technology and composite solutions, are running well above our assumptions. We are not so happy with our business unit carbon fibers. There we see a temporary downturn of the wind industry, and this resulted in impairment, and Thomas will give you some more information about this. Our capex is, as we explained in our semiconductor call, is higher compared to the last years. and all of the additional capex is going into silicon carbide, into graphite expansions for the silicon carbide segment. So outlook after six months in 2023, we still confirm our sales and our earning forecasts on group level. Our sales, we forecast on previous year level and the EBITDA will be between 160 and 180 million. And with this, I would like to hand over to my colleague, our CFO, Thomas Dippel.

Thank you, Thorsten. Warm welcome from my side. This is Thomas Dippel. It's my pleasure and my honor to guide you through the numbers and figures section of this presentation. And as Torsten already said, our H1 2023 overall was really in line with our guidance and our expectation. We clearly said 2023 is going to be a stabilization year and a year of investment, where we ramp up our capacity after two years, where we really scrutinized everything and squeezed our existing production to maximize the output. Now we really invest heavily, especially with the customer down payments into The expansion of our graphite solutions business unit in H1 in the first six months of the year, we invested over 40 million euro into capacity expansion, which is far higher than the numbers we usually invest in the first half of the year. You remember that during the time of the restructuring and transformation, we invested maximum on the level of depreciation. We still do that, and the excess money that we invest comes from customer down payment. So when we look at the sales in the EBDA on a group level, as Thorsten already said, we perfectly can show that we have a stable year. We have in sales just less than 2% up compared to last year, and in EBDA, we more or less matched the figures we had last year. However, as Thorsten was saying, We have a very imbalanced contribution to that. Three out of four business units doing exceptionally well. Graphite solution plus 37 billion contribution to the growth. Process technology plus 15. Composite solutions plus 10, despite the sale and the divestiture of our Gardena business. So if you add up this, then their growth would have been even exceptionally well or better than what you see here with the 10 billion. Our problem child, what's really hurting us very much is the downturn in carbon fibers. In the first half of the year 2023, we have to compare it also with last year, where we still had the so-called BMW take-or-pay contract, which was very favorable given the margins and also the overall production level that we had and the sales. But this year, we no longer have the BMW i3 contract, and we have a really Yeah, very bad market in wind, but we come to that later on. So all in all, these three contributions of the three business units can compensate the downturn in the carbon fibers. Based on the strong improvement in the profitability in three business units, we can compensate also the losses that we make in carbon fiber. And overall, our balance sheet looks quite healthy. With the contribution of Graphite Solutions, the sales split, as you can see on page number five on the right side, Graphite Solutions stands now for more than 50% of our group sales, and Carbon Fiber is down to 23. The other ones are growing slightly. When we come to the business unit, starting with Graphite Solutions first, there we see a 15.3 percent growth to 280 million now, coming from 243 last year at the same time. And it's mainly the semiconductor business that's driving the growth. The semiconductor sales year on year is going up by 51 percent. We clearly show that we focus on semiconductor in general and maybe silicon carbide in particular. This is where we make money. This is where we have a good and decent margin. And this is also what's driving our top line. When it comes to the semiconductor industry, we are fully loaded. We are really on the edge of our capacity. This is what we're trying to expand, and we're investing into that, be it in Germany, be it in China, and be it also in the United States. The other industries that we are serving in Graphite Solutions, at least top line-wise, are either running on a stable level or even a little bit down. Solar is a business we neglected. deliberately because we are rather selling the quantities into semiconductor and chemicals due to some economic and cyclical developments, the sales are down. Our EBITDA rose even higher than the growth rate of our top line with 20.6%. We are now reaching 65.1 million coming from 54 the year before. This is now a 23.2 percent margin EVDA per sales that we show there, which is a full percentage point higher compared to last year. This is really a very remarkable development and a very proud of this development that Grafite solution is showing here. Where does it come from? We are fully utilized. We have a very high utilization rate. We sell a lot in the very, very profitable semiconductor industry and there, especially in silicon carbide industry, And we shift further some resources and capacities that we have from solar into semiconductor. Next one is process technology. And maybe in one of the next presentations, we show maybe also a comparison how they develop, not just compared to last year, but also over the timeframe. We see in the top line a 30.9% growth now reaching 64.4 million Euro in the top line, coming from less than 50 at the same time last year. Where does it come from? We were very good in acquiring projects and new order intakes in the second half last year, so we benefited that always with a time, a lack of six to nine months in the first six months of this year. We see growth in all regions where we are active, be it in Europe, be it in Asia, and also in North America. And when you look at the profitability, then we clearly can say process technology is really our role model when it comes to our slogan that we always, or our philosophy, that we say that margin is more important than growth. And in this year, or in the first six months of the year, they show it in particular how this can be implemented. Their high utilization rate in their production, they continue with a very strict cost management And they really just focus on very profitable orders. And the outcome is, as you can see here, 11.9 million euro EBITDA in the first six months of the year with a sales of 64. This is an 18.5% margin without any one-off effects, no positive ones, no negative ones. And they really could increase the margin by over 10% if you compare it to the first six months last year. Carbon fiber, as we already indicated at first in this introduction, and we will come to that, how the wind market, which is really affecting the top line. It's not that we have quality problems. It's not that we have any disturbances in our production. No, it's really the top line and the market that's given us a hard time. And we see a really tough development in our top line, down with almost 30% coming from 176 million euro last year in the first six months of 2022 to now reaching 125.1 billion euro in H1 2023. Yes, there is a certain price effect in there with the expiry of the BMW i3 supply contract at 30th of June last year. This is true. We know that and we anticipated that. However, that now also the quantity is down so much and this has really given us a hard time. And as a consequence, also our EBITDA pre really went down by almost 80%, coming from 28.2 million euro at half year last year. We are now down to 6.1. And if you also look at the contribution that we get from our equity consolidated joint ventures, like the BACCB, where we make this carbon, carry on to break this, you have to deduct 11.0 million from this 6.1. And then we clearly have to state that carbon fiber, as an operative business, is making losses of 5 million euro EBITDA in the first six months of the year. So how do we react on that? On the one hand side, we have partial production shutdowns that really idle some of the capacity that we see. Yes, this is fixed costs, but on the other hand, we also protect our cash. Second is, and you've seen that last week, we had to impair our assets by €44.7 billion because of the bad business development and also the rising capital costs or VAC that we saw in our H1 report. Both were the triggering events that we had to adjust our valuation on our assets. Composite solution as the last operative business unit that we have is doing exceptionally well. Despite the negative effect from the sale of the Gardena business at the beginning of the year, they can fully overcompensate that and still growing with 14.4% to now reaching almost 80 million euro in the top line coming from almost 70 million last year where Gardena was still included. We have a very strong demand from automotive customers in both segments, in large and also small-scale solutions. And this business unit, Composite Solutions, was able to increase the margin coming from €9.7 million or a 13.9% margin to now €12.3 million EBDA, which is a 15.5% margin. This is really a remarkable development that despite the strong growth that we see, we even can improve our profitability even further. And we are very proud of that development. That really helps. And both the smaller business units, process technology, and composite solutions can really compensate the downturn that we see in carbon fibers. Corporate, our corporate developments, there we see, when it comes to the top line, there we see a slight decrease in our sales, which is, however, neglectable. I mean, 10 billion at half-year. There are still the effects from the asset held for sale business units like Gardena and Pune, which we saw beginning of the year, and then we isolated them from the operatives business units and put them into corporate. There you see some effect. The other ones are just some charges to other parties and joint ventures that we have there that are in the top line. When it comes to the bottom line, we see that the EBDA improves slightly by 0.6 million euro, or 0.7 to be precise, which also shows that we continue with a very strict cost management and keep the costs in order also on a corporate level that we maintain the fixed cost as good as we can. Last but not least, from my side, a look at our major KPI beside the development of the business units. Yes, for the first time since three years, we show at least at half year a negative net result of minus 10 million Euro coming from very strong 48.8 million Euro last year. The main trigger behind that is with 44.7 million Euro, the development or the impairment that we see on the assets in the carbon fiber business unit. And last year, we also had in the first six months of the one-off effect from the sale of our Griesheim site, This contributed positively in the first six months last year to that. We are very confident that throughout the year, at least with our operative and normal development, we will also show a positive net result for the full year 2023 figures, but for the half year, it's minus 10. Our equity ratio with the impairment suffered, of course, with the net result, which is negative slightly. We now have an equity ratio of 36.1 coming from 38.5% at year-end, and our net financial debt more or less remains flat despite the heavy investment and despite the negative development in carbon fiber. Our ROSI remains at 11.0%, which is also still a very good level. If you deduct, we also published that throughout Q2, that we are now completely refinanced as SGL until 2026 or 2027 with all financial instruments that we put in place. And if you include the corporate bond, which we bought back last week on the 28th of July, we bought back the outstanding remains of the 250 million corporate bond. If you include the shorter balance sheet to that, then our equity ratio would be above 40%. So this is nothing to worry. It's still a very healthy development. And with that, I hand back to Thorsten Derr, our CEO, who will explain a little bit more the market of the wind, how we see it, and how we move on with that.