Sgl Group Ord

Welcome from SEL side as well. You know today we want to present you our financial 2023 and give you more details about our expectations for the upcoming years. Today we have our CEO Thorsten Daer attending the call.

Good morning everyone.

Our CFO Thomas de Paul.

Hello.

And our colleague Jürgen Becker from the accounting, Jürgen, from Investor Relations.

Good morning.

So, thank you. And now I hand over to our CFO, Thomas DePolt.

Good morning. This is Thomas DePolt. I would like to guide you through the full year figures for the year 2023. Apologies for my voice. It should last at least for this call. I suffer a little bit from a cold, but do my very best. to guide you through that. First of all, and most important message, which you can see on this slide, SJL has reached its targets. We once set a beginning of the year for 2023, so we've reached our guidance in a very challenging environment and with some ups and downs, which I would like to show you a little bit through. On the overall performance of SJL, It looks exactly as we described it as a kind of a stabilization year and later on when we look at the investments also into an investment year where we do major investments. And I think this is exactly what we performed. You see our sales declined by 4% and our EBITDA pre declines by 2.5%. This is more or less in line with what we said and is well within our guidance. However, if you take a closer look underneath these general and overall figures, then you would see that three out of four business units that we have in our portfolio, which is GS, graphite solutions, process tech, and also composite solutions, have the highest sales, the highest EBITDA, and the highest EBITDA margin ever. The only thing that hindered that and to show that is the performance of our carbon fiber and I think we touched that throughout the presentation later on. Graphite solutions grew quite a bit. It's 52% of the overall turnover that we have now. Carbon fiber declined heavily and reaches just 20% of the overall sales that we have. And when we look at the profitability and the sales and we just exclude carbon fiber then the businesses, the remaining three businesses, would have grown 10% plus in sales and 20% plus in EBTA. I think that's a remarkable development of our core businesses, which you clearly pointed out. It's just hidden with the poor performance of carbon fiber. And again, we talk about our plans with carbon fiber throughout the core quite a bit. On the next slide, you see the performance of our largest and most, not most, but very profitable business unit, which is Graphite Solutions. Here, in the turnover, we see a sales increase of 10%, now reaching €565 million, coming from €512 million the year before. So it's a remarkable increase, and even more remarkable is the development of our EVGA Pre. This increases by 13% and now reaching €134 million. And when you just calculate what happened in between, the sales goes up by let's say 50 million and our EBDA goes up by 15. Then you see that the incremental increase has reached a 30% margin. Where does it come from? Especially semiconductor business and there in particular our silicon carbide business. You see on the right in our comments, semiconductor business, we will also elaborate later on in the call a little bit on our plans, especially in this business, went up by 40%, the overall driver there. And we are fully utilized with our capacities in this business unit. This is why we invest so heavily in this business. And in order to finance this growth, we collected throughout the year 2023 some 70 million customer down payments from our customers that we now convert into assets in order to make the growth possible. This, as we always said, customer down payments are interest-free, no securities, only some guarantees that we have. So it's a very cheap financing and we like that very much because the customer are also tied to us because they have to order, otherwise they don't get the down payment back. And the performance, especially in the bottom line, is quite remarkable. We now have an EBDA pre-margin of 23.7% in this business. Despite all the other businesses where we have some chemical industry, some normal industrial business, but also some automotive, this was just so-so or stable or maybe just growing with a single-digit margin. And not margin, but growth rate. This had very much this performance for the overall performance of The second one, which is the smallest business unit, participated also in a very good way, which is ProcessTech, which you see here on slide number six, if you just have the printout of our slides. ProcessTech had a remarkable year, 2023. This is just fantastic. The sales went up by more than 20% and they now reach 127.9 million euro, and the profit more than doubled. from roughly 10 million euros the year before to now 22.4. We now reach an EBITDA margin in this business of 17.5%. We will later on also show a little bit the evolution of the margins in the business since 2020, since Thorsten and I, since we joined this company, how these businesses evolve and how they develop. And I think process tech is one of the most remarkable turnaround stories that we have in our portfolio. And this margin is very healthy. And where does it come from? We have a very strong order book. I think we were very successful in acquiring a lot of big projects that will help us also throughout the year 2024. A big contribution also from our service business, which helps quite a bit. And this comes that the profitability is so strong and also the sales growth there. This helped also very much their contribution to reach our goals and to reach the guidance. The business unit, which we will talk later on quite a bit about, and this is especially in Thorsten's part, that we will... show something there that was disappointing the most is our carbon fiber business unit. I think we discussed that throughout the year and this is ongoing also in Q4 and here you see the kind of accident report for the full year that we have in carbon fiber. Sales dropped by 35% coming from roughly €350 million to now €225 million. And I mean a sales drop which comes from especially in particular the wind market where literally nothing could be sold. And we have a lot of idle stock and some inventory in the value chain. So we could hardly sell anything. We started throughout the year to idle capacity. And with that you can't cover the fixed costs anymore. And you see especially in the profitability we have a drop. of roughly 35 million coming from 43 the year before to now seven. But when you slice this result in two slides or in two halves, then you see here also in our comments the result, the equity result of our joint venture BSECB. Sorry for that, we just show, I'm not sure if you see that. Sorry, there was a technical issue of the presentation. Apologies for that, at least here on my slide. You see that the result of contribution from BCCB from our trend venture is even increasing and now reaches 18 million. The year before it was 16 million. And our contribution from the operative business, our carbon fiber business, went down from 27 to minus 10. So we have a 37 decline in operative profitability in this business unit. Now you know why we have some divestiture plans that we at least would like to test the market with. Again, this will be in Torsten's part when we talk about that later. But this major decline in sales going in line with the profitability really hits us hard.

But again, the three other business could compensate. On the next slide, slide number eight, you see our composite solutions business.

Composite solution has a stable sales reaching, they were the year before 150, they are now 153, so this is more or less in line. And it's now a pure player automotive business that we have there. But you have to bear in mind, the year before in 2022, we still had our Gardena business in the United States. It's located in the U.S., and this was an aerospace business, and we sold the business. And this business was contributing with $30 million the year before, and as the sales is now even, that means, in fact, you don't see a growth here, but if you exclude Gardena the year before, then you would see a 20% growth of this business unit, which is quite remarkable. And also in the profitability, you hardly see a slight increase by 2 million coming from 20 to 22. But the thing is, also our Gardena business contributed 5 million the year before. So also here, the increase is quite remarkable. And we now reach a very healthy 14.4 EBDA margin in 2023 in this business. On the next slide, I will show you a little bit of a reconciliation between our EBITDA and the EBIT. Throughout the year 2023, and this is maybe worth mentioning, we had one major impairment because of the poor development of our carbon fiber business. You probably remember at half year, we had to impair our carbon fiber business. There was a triggering event because the wind market was performing so poorly. Also, the capital cost, the buck, increased quite a bit because the interest rate was soaring. You see that we hardly have any one-off effects. These are remaining $2 million. They remain of the restructuring project. Our EBDA almost equals our EBDA pre. The normal depreciation that we have is roughly $60 million. This is also, as you know, our guideline for our operative projects. capex and investments and then we had this investment of divestiture or impairment of 45 million euro and some purchase price allocations that come with it. So in the end we had roughly 50 million non-recurring items and then you see still a quite healthy EBIT of 56.6 million euro that we achieved in the year 2023. Coming to other KPIs here on slide number 10, which where we very much focus on, then you see that our balance sheet is super healthy. You see a net result of another 41 million. Yes, there's a huge drop compared to the year before, but here you have to also see that we have this impairment of roughly 50 million, which I just explained. If you add this on top, then this net result in 2023 would have reached roughly 90 million. And in the year, We had a one-off effect with the sale of our Riesheim business where we could release some provisions and this was a one-off that positively impacted our net result. This was exactly 26 million. If we take this out, then also our net result on our operative performance level would roughly be the same. We are very proud of our free cash flow. This was 67 the year before, and we now reach 95. Yes, we guided it on the level of last year, but there are a lot of customer down payments, as I already mentioned in that, and just at the year end, we received quite a bit of customer down payments, which the customer transferred the money to us, and this is why it overshoot quite a bit, but 95 is very strong, and this also contributes that the net financial debt could be decreased so significantly coming from 170 to now 115 that we reached. That means a leverage of 0.7. This is a super healthy relation and our ROSI reaches 11.3% is almost unchanged. Our equity ratio is also at very stable 41.1% despite the higher effects from higher interest rates and the pension. on the equity side of the balance sheet. And I think we can be very proud of this development. SGL is a different company when you look at the balance sheet than it was some four or five years ago. On slide number 11, we would like to show you a little bit where we invest, how we do that, and where future growth strengths for us are allocated. And you see that in the year 2023, we invested roughly 90 million Euro and you see in the total column, you see that roughly 60% is our depreciation amortization level. So 1.5 times our depreciation is what we invest or you can also say 8 to 9% of our sales is what we invest. It depends on with what KPI you like better. and you see that our GS graphite solution business gets a major chunk of the investment with almost 60 million. There we increase the capacity to a large extent. We started that and this will go on through the year 2024 and other years, especially in the increase of our capacities in the semiconductor business and there especially in the silicon carbide business. This is all Gross projects are behind that, some replacements, but most of them are gross projects. We hardly have any capex in process tech. This is more or less a project business there. They hardly need any assets for that. In carbon fiber, we have a project with a biomass plant that we installed in our Labradio site in Portugal. Why that? We would like to replace gas, and we don't like the cyclicity and the consumption of gas there. And Portugal is a wood country. So we're trying to have some renewable effects also there. So this is a kind of a replacement that we have because we find an alternative way to create steam and energy in order to run our production there. Composite Solution has just some 5 million with project tools and some line expansions there. And the other 10 or 11 million that you see are corporate projects. And there, we also touched that, The capacity expansion on our Meitingen site near Augsburg, where our German joint venture part of this BCCB business is located, and they get a 9,000 square meters capacity expansion. I was last week in Meitingen. I think they're making great progress there. And the first 10 billion are also already in this building. The rest will come in 2024. As a summary, as I guided you with the initial slide through sales and EBIT, and now I guided you a little bit through the businesses, how they developed and performed. As a summary, we guided our sales to be on previous year level. I think we reached that to a large extent. As I said, we already anticipated some downturns in carbon fiber, which we could kind of compensate with the other businesses. that then carbon fiber deteriorate even further and the other businesses luckily could compensate that to a large extent makes us very proud. Same in the profitability. I think this is almost a perfect target hit that we had. We had 172 the year before. We now have 168. This is a 2% deviation from that and we are right in the middle of our guidance with 160 to 180 that we gave you. This helps a lot to digest the carbon fiber impact. And with that, I would like to hand over to Torsten, who will talk a little bit about the carbon fiber business and our plans there, and also our growth project that we have in particular. Torsten, please continue.

Thanks, Thomas. Yeah, here in this diagram, you can see the journey that Thomas and I took with SGL. And Thomas and me, we started our work in 2020, and we focused on the megatrends and innovative products and fast-growing markets. You can see here that three of our four business units achieved record turnover, record results, and record margins. We are particularly proud of the high margin level of almost 24%. in our business unit, the largest business unit, Graphite Solutions, where we have developed a portfolio into the direction of semiconductors. And despite many improvements, our carbon fiber business has developed in the opposite direction. And you can see this in the third bundle of these diagrams here. It went down. And those figures are without our BSCCB joint venture. It has developed in the opposite direction. Currently, we see a weak demand in our main application, which we have in the wind industry. In the wind industry, carbon fibers are used for reinforcement of the wind turbine blades. We are following two routes to solve the problem. First is specialization in attractive niche markets, for example, hydrogen pressure vessels. There we have developed a fiber for, and this is a market which is growing exponentially. Second solution is we are looking for a partner or an investor to provide these businesses the necessary resources which the business carbon fiber deserves. You can see on this slide something which we consolidate at equity and we don't talk about it that much. It's our carbon break business. In the diagram on the left, you can see the business unit CF results with the contribution of exactly this joint venture, BFCCB. And BFCCB is a 50-50 JV between us, SGL, and the Italian brake company Brembo. At BCCB, we produce carbon brake discs and consolidate the result at equity. The carbon fiber results are here shown in petrol, and in gray you can see the additional at equity result of BCCB. And at BCCB, we are trapped in a luxury problem. The customers want more brake discs, And we have to expand our capacity because we are running at our limits. And if you buy your new Lamborghini or Ferrari, it moves from extra equipment into serial equipment. And we will even see a faster growth than we experienced in the past. Currently, and you can see this on the right-hand side, we will invest in the next two years 150 million euros in this business. And 120 million go to our site, which is an SGL site in Meiting. And 30 million go to the site of our partner, to the Brembo site in Stezano. And down in the bar graphs, you can see that alone in Meiting, we expand our capacity from today by 70%. and we will more than double the surface in the production hall which Thomas already mentioned. I already mentioned that our business with carbon fiber is an attractive opportunity and carbon fiber represents a fully integrated carbon fiber business. It's highly attractive and we operate world-scale capacities We expect a recovery of the wind business soon and we have blue ship customers at hand. We are not the right owner for the carbon fiber business because we are always in difficulties where to put our money in and as our graphite solution business is so important for us and so fast growing and offers so high margin, The decision either to invest in carbon fibers or into graphite solutions, the answer is always graphite solutions. So where we are looking for, we are looking for a good partner with a good story who is a better owner than us and who is willing to invest the money into the business which the business deserves. Next slide, Thomas. Due to the persistently weak demand in carbon fibers coming from the wind industry, we give the following guidance for 2024. We see the revenue on prior year's level and EBITDA will be between 160 and 170 million euro. Also on this year, maintain the focus on our semiconductor business and on electromobility, and we are going to expand our capacities in our business unit, GS. If we could resolve the negative earning situation in our business unit, CF, the company would be in an EBITDA frame between 180 and 190%. This is a hypothetical calculation. On the next slide, you can see what we are doing in our semiconductor business. Our biggest growth is driven by the business unit GS. And within this business unit, we were able to increase the share of sales accounted to semiconductors from 36% to 46% in just one year. If we look deeper into the semiconductor business, and you can see this on the right hand side of this chart, you can see that we were able to increase our semi-sales from 123 million in 2021 to 262 in last year. In 2023, the revenue from graphite components used for silicon carbide production accounted for 61% of our total sales in semi. Our semiconductor business is shown here in more detail and also the development which we expect for the coming years. In grey you see the LED business, green is the SI, the silicon semi business, and petrol is the silicon carbide business. which we are focusing on. And you can see that we are aiming to total sales of over 400 million euros in 2028. We were also able to increase the silicon carbide sales by 48% and 44% in the last two years. The diagram which is depicted here, is only based on existing contracts. So there might be additional growth from customers or contracts which we don't know yet. But this is a base case which we took into our calculations. Next slide, please, Thomas. Next slide. Let us now turn to our medium growth plans. In 2028, We plan to grow our sales to 1.6 million euro with an EVDA between 300 and 330 million euro. Due to the strong impact of our high margin semiconductor business, we expect to grow our margin from today 15% in this market segment to 19 to 21%. Sales are expected to grow with a CAGR of 8%. EBITDA will grow with a CAGR of 14%. And the last slide, I want to summarize our midterm strategy, which has not changed at all. So we stick to the strategy which Thomas and me have decided on in 2021. And here you can see a brief summary. One, we focus on businesses on BINELS units, which are in the megatrends, digitization, renewable energies, and climate-friendly mobility. Two, we see an ongoing high demand for special graphite, especially for the production of silicon carbide-based semiconductors. Three, we will invest to increase our capacities. And you see this in carbon brackets. You see this in our graphite. segment we reach the maximum of our capacities and we are going to invest step by step. Most of our capex comes from customer down payment so this is a very cash friendly way to expand our capacities. We focus on innovative and customer focused products and last but not least and this is Point five, I want to remind you we are a portfolio company. We structured our company in four business units and I often refer to companies in a company with an own P&L statement which we report to the capital markets and I want to remind you we can easily adjust the structure of our company either by divestiture or by acquisition. We will continue exactly this strategy And with this word said, I'm going to hand over back to Claudia.

Yes, thank you. I think now we have enough time to answer your questions. Francie, maybe you can give a short introduction how to use the Q&A tool.

Yes, thank you very much, Claudia. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star and one. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. Our first question today is from Andreas Heine from Stiefel. Please go ahead with your question.

Thanks for giving me the chance to ask the first questions. I have several and asked them one by one. The first is on Q4. I was surprised about the positive outcome and carbon fibers as the operating trends have probably not changed. You might explain why we have seen a positive EBITDA in the final quarter. And in the other direction, it was on the corporate line where there were higher expenses than in the quarters before. In the guidance for 2024, you also expressed that the corporate line will see higher expenses in this year. Maybe you can explain this and then I ask some smaller other questions.

Okay, these were three questions. If I take it right, Andreas, I tried to do my best to answer them all the way you asked them. The first one, you mentioned the relatively good result of carbon fiber in Q4. You are 100% right. What happened there, there was an operative one-off effect, but our auditor confirmed it's an operative effect. It's not a pre-effect, but an operative effect. because we had a reversal of a deferral that we had of roughly 4 million. It's also explained a little bit in our annual report, at least on two. I can show you on the pages where we mentioned that. And we could reverse a deferral, and it's like a kind of a provision, or in German, Passiverrechnungsabgrenzungsposten. And this had a... result effect on our P&L is 4.1 million, and this certainly contributed in Q4, and this is the reason why carbon fiber is relatively good in this quarter. And you're right, if you take it out to see the real operative performance, we wouldn't be at minus 10.9, but at minus 15 if you take this out. 100% right. Second question, it's exactly the opposite on corporate. On corporate, we had two effects that explained that a little bit why Q4 was maybe in this direction. However, I would like to mention Q4 is exactly as promised. Normally, we have about a corporate cost of minus 4.5 million per quarter on a run rate. And if you take the full year, then we're exactly there. So it's more the reason why the first three quarters may be a little bit less, and then everything came on top in Q4. There are two effects. On the one hand side, we gave a true-up to the businesses. So with that, our corporate gets worse, but the operative businesses get better. This is one thing. And it's kind of digested in the operative business unit that we just presented. And the other effect, we had some higher provisions for our bonuses, especially on the corporate level, because the contribution, how the corporate... senior management is affected has not been done throughout the year, but especially in Q4. That's the main effects that are in there. But I would like to mention on the corporate cost overall, they're exactly in line with what they were guided. And your last question was on the guidance, if I remember that correctly, on the guidance for corporate in the year 2024. Yes, we have roughly three, four million higher costs that we guide in this kind of segment, non-operative segment. And these costs, on the one hand side, we have higher personal costs that we see. Second reason is we calculate again with 100% bonus. They don't get 100% bonus, the corporate guys, in this year. And the third reason is also that some of the costs that we have with our market tests with carbon fibers are also collected at the moment in this segment. These are the three effects that contribute to that.

Very good. Thanks for that explanation. May I squeeze one more financial question in? How do we have to think about the free cash flow in 2024? So you have received the prepayments of 100 million already. You invest 150 million in 2024. And according to former statements you made is that the prepayments are roughly speaking paid back over three years period. So of the 100 million, then maybe 30 million to be repaid in form of delivery in 2024. Maybe you can help us there a little bit.

I try my best. 95 is something we can't repeat there. And we are also honest with you that the trend that our customers give us, customer down payments, to such a large extent that we see in particular in the year 2023, will slow down. I wouldn't say that it goes down heavily, but we will see a slowdown. And you have to calculate, you're 100% right, we so far received roughly 100 million inflow. And you have to bear in mind, in this particular year, 2023, we already have 10 million reimbursed with the sale of our silicon carbide products to our customers. There will be a net inflow with customer down payments also in 2024. And this is why most of the money will be invested into capex suspension in this year. And I mean, we plan 150 million. This is massive. With our operative performance, we still would like to stick to our rule where we say we invest with our own money on the level of depreciation to also maintain and achieve a healthy cash flow. We would like to maintain that, that we invest on, let's say, 50, 60 million level. The rest is customer down payment. And for the building of the expansion that Torsten mentioned for our turn venture part that we do in Meitingen, For there, we have a special financing, but certainly you will see it in investing cash flow and the financing there and the financing cash flow. This will be around $20 million that we do there. But with that, I think we reached $150 million, which is massive. We haven't done that for many, many, many years to invest so much. And bear in mind, except the $20 million that I just mentioned for the remains of the building with BCCB, It all goes in value creation, machinery, capacity expansion. No new sites, no new buildings. We can all do that in our existing sites. And we do everything. And I like the word that Thorsten is always using there. It's deep bottlenecking, and we have a max out of our sites. This is what we try to achieve. And this is a major plan.

Thanks a lot.

Our next question is from Lars from Claes from Deutsche Bank. Please go ahead with your question.

Yes, thank you very much. Good morning. Thanks for taking my questions. Three quick ones, if I may. The first one, regarding your medium-term guidance on slide 22, I assume both the sales target as well as the EBITDA margin at this stage still includes corporate, not corporate finance, carbon fibers, correct? Correct.

Yes, we haven't excluded. It's not a discontinued operation or asset held for sale. It includes carbon fiber.

Okay, perfect. And then maybe I know you're not giving absolute amounts of your order backlog or order intake, but are you still experiencing a positive momentum or is it declining at this stage?

What we see in Q1 is similar of what we have seen in Q4. So we see positive and negative effects which are balancing out.

Okay. And then maybe the last one regarding process technology. I mean the chemicals industry is still in a difficult position. and in the most recent history it was the case that the chemical industry took the chance to use the lower business volume to do some maintenance and refurbishment from which your process technology division is benefiting. Is this still the case or are you seeing it fading out at this stage?

Yes. Lars, if you cut our process technology business in half, there are two parts of the business. One, we call bread and butter business. These are, for example, heat exchangers, which we sell to chemical industry, and then they are replaced after 10 years, and then we sell new ones. And this business really went down, as you explained, because chemical industry has capex cuts and so on. We have a second business, which we call systems. And in systems we sell, for example, apparatus to produce hydrochloric acid or cleaning of phosphorous acid. And we were lucky that we were able to compensate our bread and butter business in the weak chemical industry with a very, very strong systems business. And we sold a lot of synthesis equipment for phosphoric acid. which goes into lithium iron phosphate batteries, and they need ultra-pure phosphoric acid, and we have a very healthy demand for the systems in PT, and this drove our business. And we are in a lucky situation that that business was balanced out by a very good one.

Perfect.

Thank you very much. I'll go back into the queue. Thomas?

So I think the next question here will Thomas Junghans. So maybe, Francis, you can open the line for him.

Perfect. Can you hear me?

Yes, yes, loud and clear. Perfect. Perfect. Thanks. So the first question is a little bit of a personal question, if I may. We are a little bit surprised by the fact that you don't want to extend the contract, Mr. Depp. So maybe you can give us a little bit more color on this because I think SGI Carbon, yeah, the best CSI head of the company, especially if the company gets rid of carbon fibers. And so my question is, why don't you want to reap the fruits of your fantastic work? And maybe you can go one by one, the question.

Yes, you are right and I can tell you all rumors which were written in the internet are wrong. I like my friend Thomas very much. I have a very good relation to the supervisory board and you are very right. We cleaned up the company and the company is ready for growth in very attractive segments. So from this point of view, there's no reason to go. And the team which I have here is simply fantastic. It's the best team I worked with. But where I'm good at, I'm a specialist in transforming companies. And I will do this and I stay in the company. You have to suffer from some more conference calls with me in the quarters to come. So, I stay here for quite a while. I will continue and work on the project carbon fibers and will try to find a better owner and then SGL is in very good shape and then it's for me time to move on and use my skills where I'm good in another company and I think there will be a very good successor to drive the growth of SGL forward. This is the story, but nothing behind, nothing which drives me out of the company. SGL is a fantastic company. A fantastic company.

Very well explained. Thank you, Amistad. My second question is with respect to process technology. You are guiding for stable sales, but a slight decline in EBITDA. Is it due to the product shift from the chemical industry products to products for the battery industry, or... Why are you expecting a decline? And for how long does the order backlog provide visibility with respect to the operational development and process technology?

Thomas, maybe, yeah, you're right. But you also have to look at the level of profitability that process tech has. We have reached 22 million and a slight or even a significant or major decline or increase would be 2 million. I think we had a major, major, major increase of profitability coming from the year 2022 to 2023. And you can be sure that Horst and I, that when we have our target setting meetings with the business units, we can be very rigid, very strict. And of course, we would like to drive the positive development. However, we see that their increase was very remarkable. And I think that they kind of consolidate on the level where they are. is just a matter of a conservative planning, which you normally always had. You never had a disappointment. We never, since TOSNET, I am here with the company, you never saw a guidance adjustment in a negative manner, if at all, in the other direction. And I think we would like to give them a year to breathe and to install the little bit of capacity. They want to invest at least 1.5 million there. And if they try to fulfill all the projects that they have in the books, and this goes in line with your second question, how good is the visibility of this business? It remains the same. We have a visibility of six to nine months there. For that, this is exactly in line with the guidance that we gave. Q1 is almost over already, now that we talk with the full year figures, and we meet again in five weeks when we publish our Q1. We are not worried about the performance of process tech. I think they will perform as described.

Thanks. My third question is with respect to the potential divestment of carbon fibers. As I understand it correctly, maybe, both composite solutions and joint ventures run with source carbon fiber materials via the carbon fiber business unit. How would the business be managed if carbon fiber now is being sold? Would the supply commitments be agreed with the potential buyer, or how does it work?

Yes. So, Thomas, what we are doing, we consolidate... the results of BSC-CB at equity in our carbon fiber business unit. But they are managed completely independently by two management teams. And the only connection is that there is a buy and sell relationship. And it's not that large. We produce something which we call carbon chips. And the carbon chips are included in the brake disc. They are one of the raw materials you use in carbon brake discs. And, of course, we secure, because we invest in BCCB that much, this supply relationship for a very long time. And this is a good solution for both parts. For CF, they have long-term customer, and also for our carbon business. But we don't sell our share in BCCB. To make this clear, it's only the carbon fiber business we are talking about.

Yeah, and what about Composite Solutions?

Composite Solutions is another business unit, and this is core, core, core in our company. So currently, we only talk about the pure carbon fiber business.

Okay, okay. Got it. Thanks. I will step back in the queue. Thanks.

Thank you.

Thank you, Thomas. And the next question is from Lucas Spang. Please go ahead with your question.

yes hi good morning um i would like to follow on on the carbon fiber strategic revenue review so do you have already some interesting parties for this business unit and if so can you share a little bit more details and how many parties are interested are these more strategic investors or financial investors anything you can share with us

Lukas, I think that's a nice try. Sorry for that. But we just started the process. And let's put it this way. This kind of target is not so often in the market. We see a certain interest, which we're very happy with. Let's put it this way. But the process has just started, as we announced it We were at the right at the very beginning.

And Thomas, to add, both categories Lucas mentioned are Of course, everybody would like to have a look at that for sure.

And then also thanks for the transparency in terms of last year's capex. Can you also share a little bit more light on the 2024? How much is spending for graphite solutions and how much would be for carbon fiber?

I'm sorry, we also don't disclose that, but carbon fiber, you can imagine, as we have 30%. I'm just trying to help. In fact, I can't answer the question, but the thing is, if you have 30% down in our revenues, or 35% even, that also means that we have idle capacity. So the day the wind market or the pressure vessel market comes back or gets some boost, We will be up and ready and start production again. Do we need capacity expansion there? No. As I said, in this year, we made this biomass plant or biomass unit in order to produce our steam in a more environmentally friendly way. This is what we did. CapEx goes down to a necessary minimum. Look at the profitability. Why should we invest there? This is exactly the dilemma that Torsten has mentioned. Our super attractive market is in graphite and this is where the major chunk, also this is where the customer down payments come and you can expect a lot to be invested in graphite.

And the 20 million you mentioned before is included in the 150 million?

Of course, capex is capex and if you invest also in a building of course this is not so super attractive because in fact we can only get a rent and then later on a contribution from their result. But this is how the joint venture contract goes and we are more than happy to give them their new home that they can start ramping up their production.

But that is included in the 150 million?

Yes, yes, yes, yes, yes, yes, it is, it is. Just to clarify that again. Okay.

And then last question, if we compare the outlook for 2028, now it's one year later, but if you compare the numbers, you are more optimistic than one year before. So you expect now 300 to 330 million instead of 270 to 300. Where does this more optimistic earnings outlook come from? Is it just graphite solutions? Because one year ago you were probably more optimistic about carbon fiber, so where does this come from?

I understand where you're coming from and I understand your problem and at the moment you still see a kind of a back-and-loaded development of carbon fiber. The wind market will come back. We strongly believe that, and everybody is saying that. Otherwise, especially in Europe, our goals to get net zero and everything, there will be a hoax, and we can't do that. So, of course, this is reflected in our plan. The wind market can't stay on the level where we are, and the pressure vessel market in the hydrogen and fuel cell business, this will also need and require carbon fiber. You can't contain the pressure of 700 bars in aluminum tanks and others. They need carbon fiber. And there are many, many companies out there who are developing this and preparing for this market. And this is reflected also, of course, in our business case. And if you are interested or whoever is interested in getting to know want to buy carbon fiber, we'll see that reflected in our business case that we have there. And we believe in that. We just say we're not the right owner. And carbon fiber is also in there. I know that you would like to see how it's our development without carbon fiber, but the big chunk of the growth, to answer this question the other way around, is definitely graphite solutions, for sure. This is absolutely core, and this is the booster of our sales and profitability also in the future, and there in particular, semiconductor, and in super particular, silicon carbon.

Yeah, okay. But yes, you mentioned the right point. It's very back-end. It seems to be very back-end loaded.

It is. It is, for sure.

Thanks. That's from my side. Thank you. Thanks, Lukas.

The next question is from Sven Zawa from Kepler. Please go ahead.

Hello, good morning. Thank you also for my side. I'm going to go through the questions at once because I'm having some connection problems. The first one is, could you share with us why you received 5 million less in dividends this year? Maybe I'm mistaken, but I thought this was a fixed dividend payment. The second question would be if you could maybe explain a bit more the theoretical calculation of the higher guidance I don't fully understand what this would entail. Is it a sale of the business or a recovery? And also, what kind of timing are we looking at here? And the third question would be on slide 20 where you showed the medium-term outlook for the SE and SIC business. It seems that there is a jump in 2026. There's a bit higher growth. But maybe I just saw it wrong. Maybe you could share some info on that. Thanks.

Hello Sven, this is Thomas. And dividends, you are right and you have good eyes. The dividend always has to be mutually agreed with the shareholders. We have Brembo and us and you are 100% right. This former 15 million dividend that we had went down to 10 million, but exactly because of that. Thorsten has shown that and it's shown in the presentation on slide number 15. We invest overall some 150 million in the expansion of the business and only the buildings is being borne by the relevant shareholders. So for us, it's 10 million last year and maybe some 20 million. I don't know when the groundbreaking, of course, already took place, but I think end of the year, beginning of 2025, this site or this expansion in Germany, in Meitingen, should be up and ready. In Stizzano, I think it's faster because they have the building in Stizzano. The Brembo site has a lot of idle space where they can expand their business. And they, of course, have to invest the other monies into the expansion, the machinery of their tools and their sites. And, of course, they can take some loans, which, yeah, can be done. But the start of the capacity expansion, they also did with their own cash flow, and therefore we said we reduce the dividend at least in this year for that reason, that they can achieve that before. They also maybe start their own financing and try to get the right monies from... that they need to cope with that expansion. That's the background. But again, it's not a fixed dividend. We respect that, and it has to be agreed also with our JV partner. None of us has control, but we have a very friendly and a very good JV. This is maybe the only 50-50 JVs in our life that we see that it's really working over a long time. We like that very much, and we all agreed with that dividend adjustment.

And, Sven, the next question was on the growth. And I have here again the slide which you mentioned. And you see this jump from 2025 to 2026. And a very simple answer. We invest into the Semicon business. And a lot of investments are going to our site in St. Mary's in the U.S. What we need is more production hall capacity. So we did the building... construction in the last year, and then we ordered at the same time furnaces. And there are not that many suppliers in the market, and delivery time is up to two years. And they will come when we have all the connections, the utilities, and the buildings ready. Then we hope that the production equipment is coming, and we see a start-up end of 2025 So we will have the sales in 2026. This is a simple reason for it.

Then there was another question. We don't want to drop that or neglect that. But to be honest, I didn't get that. Maybe you can repeat that again.

Yeah, sure. Thanks for the answers so far. The theoretical calculation of the higher guidance, I think it was 180 to 190. I'm not sure. I don't know the numbers. I'm wondering what would this entail? I mean, are you referring to if you would sell the carbon fiber business or if there was a recovery? And what kind of timing are you assuming for this guidance?

Much easier, just take carbon fiber out. No rationale behind. This is why I called it a hypothetical calculation. There was no sales value or anything connected to it. Just taking it out, then you come to 180. This was the answer to it.

Okay, that's clear then. And I'm just going to sneak a final question in the end. The battery material business in the graphite solution segment was also a bit down in 2023. Could you maybe share some color on that?

Yes, it was down and we don't see that much recovery on that market. And this is a special effect. You see a lot of battery manufacturing projects in Europe just disappearing because of the Inflation Reduction Act in the US. They all move to the US or stay in China. And I see this as a big mistake for Europe because taking this into account, no battery plants, there will be no graphite for batteries, and this is why our demand is down. We still have the same set of customers, which are more customers coming from Asia, and they will buy a similar amount this year as last year. So not a big change, but we are not satisfied with the development.

Thank you for your answers.

Thank you, Sven.

Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star and 1. And we have a follow-up question from Mr. Heine. Mr. Heine, please go ahead with your question.

Thanks. Only a small one. Maybe you can update also on the trends on the composite solutions. I've seen that you expect slightly lower sales. The business unit had a strong performance, basically independent from what the global car production was, but now it seems that there is a link. Maybe you can a little bit what you expect from this division for 2024 and also mid-term in your 2028 guidance.

Andreas, the short answer is this is project business. And we had a global leadership conference, which we did exactly at the site of CF. And they brought some samples. CF. CF. They brought some samples and some cars where the samples are built in, and we talk about Ferrari cars, so in the high luxury segment. And this is highly independent of everything you know about cars. It's still performant, and I asked Mr. Gee, who is the business head of this business unit, and he says order intake is still good. We just lost one project, which was one of the bigger ones, but we have a lot in our pipeline and we will compensate this pretty soon.

So it's still that your trend is strong and independent from what we see in a global car market?

Yes, yes. And same with the carbon brake disc. They also go in the luxury segment and we see an uncontinued growth since three or four years. And even Corona accelerated the business in both parts of the segment. We look at people who can buy the cars where our parts go in and they need to have 10 million wealth at least. And this share was growing after Corona. So the demand for this class is going up and we are benefiting from this in both in the carbon break disc and in our CS business.

Thanks. That were my last question.

The next question comes from Davio Dickman from HSBC. Please go ahead with your question.

Hello, thanks for taking my question. I would have a last question on the carbon fiber sale or potential sale. I'm sure that a lot of Chinese companies would love to buy your carbon fiber business, but how is it from a regulatory perspective? Could we exclude it since it will not be allowed or could they still be in for potential sale?

We have to check that. But again, we're at the very beginning of the process. Let's see how far we get. Let's see who is the best owner for that. And we also have the last say in to whom we may sell it if there are some regulatory cartel or whatever restrictions. I think we cross the bridge when we get there. It's too early to talk about that right now.

Okay, thank you very much. And maybe this last question, you mentioned that carbon fiber business would require additional resources going forward, which you obviously prefer to put in your graphite business. But what type of investments would be the most critical for the carbon fiber business?

You cannot say most critical, but it's very fixed cost intense, this business. That means if you invest into extension of capacity, you can dilute the fixed cost very easy. For example, we could build additional precursor manufacturing lines in Lavradio or extend the number of lines in our big site in Moses Lake in the US. These were investments which we could do and they would bring the cost position of the carbon fibers forward. This is what we have in mind as a clear investment plan to the front, but Thomas and me always decided more for the Semicon business in the business unit GS. This is why another owner or a different owner would be beneficial for the business unit.

Yes, makes sense. Thank you.

And we have a follow-up from Mr. Junghans. Please go ahead.

Yeah, thanks again. One last question from my side with respect to CapEx. Are there any plans to purchase another isostatic press?

Hello? Thomas, thanks for the question. Not short term because I like low-cost debottlenecking very much. To do a brownfield investment is always better then to go into another site. And our current carbon fiber graphite press is in Bonn. And in Bonn, we have very limited space situation. That means we have to go to another site. And if you build a site from scratch with all the utilities, this is never the best solution. So short term, we will go exactly for low-cost bottlenecking like we did in the past. And there's a lot of potential still.

Perfect. Thank you. And that was our last question for today, and I hand back to Claudia for closing comments.

Yeah, thanks for your participation. Have a fantastic weekend, and you know, I will find all the documents on our webpage, and if you have additional questions, please call Jürgen or myself. Thank you, and have a nice weekend. Bye-bye.

Have a nice weekend.