Sgl Group Ord

A very warm welcome to our first quarter conference call. As always, our two board members, Dr. Thorsten Daer and Thomas De Pelt, will give you more details about our start in the fiscal year 2024 and our expectations for the upcoming month. After the presentation, you will have enough time to answer your questions. Now I hand over to Dr. Daer.

Thank you very much, Claudia. I would like to open this conference. Good afternoon, everyone. And Q1 was a good start in 2024 for us with a weak business in carbon fibers that we were able to compensate with strong businesses, especially in semiconductors. Our sales were slightly below previous year, And this was mainly due to divestments which we had in our site in Pune in India and Gardena in California, US in 2023. We were able to increase our profit at 42.1 million Euro. Our EBITDA pre-exceptions was 5% higher than in the previous year. We were also able to increase our EBITDA margin once again to now 15.4%. If we come to the outlook, we confirm our guidance for 2024. Sales will be on prior year level. EBITDA pre will be between 160 and 170 million euro. With this, I would like to hand over to my colleague, Thomas Dippold, this year for all of our companies.

Thank you, Torsten. I have the privilege to guide you through the performance, especially of the individual business segments and the business units, how they perform. Here, as Torsten already pointed out, maybe again, the overview how the composition of the individual business unit looks like here on a group level. Sales was down roughly 4%, and we can say 1.2% are coming from FX effects and 0.9% from the already mentioned sale of the business in Gardena and the site in Pune, India. So if you take those two effects into consideration, then the sales would have just dropped by 2% rounded on a like-for-like basis, and EVDA, however, is 5% up, which is really a remarkable achievement that we have there. And as you can see, as graphite solutions, especially thanks to the strong performance in semiconductor in general and silicon carbide in particular, now stand for more than 50%. They accumulate for 51.9% of global sales split, and carbon fiber especially, deteriorates to a little bit more than 20%, whereas the other business segments, composite solutions and process tech, more or less stay the same size. When I come to graphite solutions here on slide number six, then you see sales rather flat. They stay at 141. It was the same the year before, after three months of the year. However, when you look at the profitability, then you see an 18% increase in the profitability. We now reach 25.9% EBDA pre-margin compared to sales, and this is thanks to the very strong performance of our semiconductor, and there especially in the silicon carbide business. Our segment, semiconductor and LED, as we call it, went up by 34% year-on-year, Whereas all the other businesses, which is industrial, graphite or not material, but also automotive and chemical, were rather flat, some also weak and deteriorating. And so we have a wash when it comes to the sales. The strong performance in semiconductor got eaten up by the kind of seasonality or global economic situation that we see. So we suffer from the weak performance in graphite or not materials. industrial business, but also automotive in Q1. We received another $8 million of customer down payments for semiconductor and silicon carbide expansion for capacities there, which is exactly in line with what we assumed should be the run rate for 2024. And with that, we are very happy with the performance of Graphite Solutions despite the shortfalls in some of the Yeah, traditional segments. Process tech on slide number seven, you see the performance of process tech. Process tech went up by 3.4% in sales, now reaching 33 million flat after the first three months of the year 2024. This is 1.1 million up compared to the comparable three months, 2023. We still have our order book, which is well-filled, and normally this takes us for the next six to nine months. So for 2024, we don't see a major, major shortfall, at least not in the project business, in this business unit. It should continue as is. However, bear in mind that we also have a very strong parts and service business, which hasn't got a lead time in the project, as I just mentioned. Book-to-bill is still far above one. So this should carry us through the year 2024. We are very happy with the parts and service business, which is really a driver for our profitability. And look at the profitability that we show there. This went up by 40%, now reaching 6.9% after the first three months, 2024. This stands for a margin of more than 20%. You probably remember that we always said 18% should be the max that can be achieved in this business unit. Now we proved ourselves to be wrong. We reached 21% almost. This is a little bit, yeah, you can take it all through the year. There were a couple of one-offs, operative one-offs in the first quarter. but still a very strong performance, and we're very happy with Process Tech, how they're doing at the moment. On slide number eight, you see our continuous problem child in the group carbon fiber went down in sales, which was somehow expected by almost 10%, 9.6 to be precise, and now reaching 57.6 million in the top line. In the meantime, it's not just the wind industry which is affecting us negatively in the sales job. It's also that textile and acrylic fibers suffer. On the one hand side, regarding the prices, because there are some price variation clauses when it comes to acrylonitrile. Acrylonitrile still is on a comparably low level compared to the years before. And with price variation clauses, it also affects our top line. However, It's also the volume that's missing in this unit, and therefore we intensified our restructuring efforts in the first quarter. We reduced our headcount in our Scottish plant in Muir of Ord near Inverness by 83 employees. This has been implemented. We have some restructuring costs, which we show as pre-exceptionals, So this is an exception by 1.8 million that's in there. These are the kind of severance payment that we had to pay in order to make this cut there. But this will help us a little bit to compensate the losses with the fixed costs that are still there in order to adjust that. When we look at the profitability, this is... went down by, I mean, we cannot calculate a percentage because in the first quarter last year, we were still positive. Also, thanks to the performance of BCCB, which is an equity consolidated JV, where nobody has control. In the prior quarter, 2023, in the first quarter, this stands for 5.2 million euro, the contribution there. And in this quarter, 2024, it stands for 4.4. If you take this into consideration, then the operative performance of carbon fiber would be minus 9.6 million euro, which is not so good, as we all know. But we still stick to our guidance, which we gave for this particular business unit. You know that we have a guidance without carbon fiber and one with carbon fiber, and the difference is exactly 25 million. So this is apparently supposed to be the performance of carbon fiber. And we still stick to that, that for the full year, we can achieve that. Slide number nine shows the performance of composite solutions. We already indicated when you remember our last call when we gave our guidance that 2024 will be a rather flat year or declining year for them when it comes to top line but also bottom line. How is that? knew already that we will lose in Q1 a contract, a very favorable contract, which we like very much, with a U.S. American automotive customer. And this OEM terminated the contract that we had there. And therefore, we suffered some downturn in sales by roughly 7%. We now reach 37.1 million euro sales in this business unit. And we could compensate quite a bit of the shortfall of this contract. However, the other effects we will see in the upcoming nine months where we don't have this contract anymore. The good thing is we could somehow keep the profitability on the level as we had before. So sales drop and EBITDA drop go hand in hand with 6.8%. That means in the end that on a lower level, we could keep the EBITDA pre-margin at 14.8%, which is really a fantastic achievement by this business unit. What helps us there, lower energy costs helps us. They are not so energy intensive, but with that saving, they still could compensate on higher costs for salaries, but also raw materials that they have been confronted with. But also the focus on higher margin business, but also some price initiatives that really helped us to stay on the same margin levels, even on a lower level, which we anticipated already when we gave the guidance. Last but not least, our last segment, which we always show here, which is corporate, which stands for all the non-operative fields and areas that SGL Group has. In corporate, you see a decline in sales. Why is that? When we decided to sell Gardena and Pune, we put these entities as kind of held for sale, and we showed the sales contribution from the beginning of 2023 onwards as corporate in order to keep the businesses and the business units clean, so to speak. And their contribution in Q1 2023 can't be compensated in 2024 for that. We anyway have a downturn of roughly 3 million that's coming from that. And with that, that to a large extent explains the sales drop that we have here in this non-operative business unit. And this also goes in line to a large extent with the EBDA contribution. We had 5.9 negative in the first quarter of 2023. And in 2024, we are down at minus 1.7. Where does it come from? We have significantly lower provisions for our short-term incentives. And Q1 last year also included the operating losses from the sale of the sites that we sold. This was the operative performance, so to speak, the top line of the P&L, but also then the EBITDA-3. When we go a little bit further down our P&L, and we have a look at the net results here on slide number 11, then you see that our net result dropped from €15.2 million to €12.6 million. Why is that? There are three effects that go in one direction. One is going in the other. On the one hand side, we have some non-recurring expenses with €2.4 million. €1.8 million out of that is a restriction cost that I just mentioned that we had in Scotland in order to adjust our workforce. to the reduced quantities and capabilities that we have there because we idled a couple of lines. We have higher taxes that we paid because we make especially profits in countries where we have to pay taxes. This is 2 million euro, which is compensating there. Our net financial result is better than last year with 1.3 million. And all in all, these effects stand for roughly 3 million. This is exactly why the net result went down by 3 million. This is, I mean, if you follow us and SGL for more than three, four years, I know that this was maybe not given before Trust there and I started, but this is another positive quarter. I think it's now the 12th or 13th consecutive quarter, leaving out any impairments. and that we have positive net results on a quarterly base. And the same is also true for our free cash flow, which you see here in the middle of this slide. It is positive again with roughly 6 million. It's lower than last year where we had 10.4 million euros, but you have to bear in mind this is also highly affected by customer down payments and repayments, which we already do. So... But it's still positive despite all the heavy capex that we do. I think it's another good result and another good quarter for SGL. And we could do that by keeping our net financial debt roughly on the same level. Our leverage ratio remains at a very healthy 0.7, which I think is super good. Our equity ratio, thanks to the strong performance of the net result, went up by almost one full percentage point. We are now reaching 42%, which is also very good. And the ROSI remains with 11.4% on the level that you know from us, which is, I think, also a very good KPI that we can show here. On the next slide, number 12, we would like to give you a little insight on how we invest in this year. I think when you heard our last call, when we gave our guidance for 2023, you became aware that we would like to invest a lot of money in 2024, especially in the ramp-up of our capacity for silicon carbide. And here on this slide, you see what we did in our first quarter. We invested almost 24 million, whereas our depreciation level is 13 million. So it's almost double that we invest. With our own cash flow, so to speak, our operating cash flow, We stick to our rule that we would like to invest maximum our operating cash flow so that in the end our free cash flow remains slightly positive. This is our guiding principle, how we would like to do business. And everything that comes on top are the already used customer down payments that we received. And this is what we do here. And the first 10 million already are being invested there. So you see for graphite solutions, the big chunk of our capex is in graphite solutions, and we use that for capacity expansions in Bonn and also for our U.S. side in St. Mary's, but also in Miting where we just installed a second set line. The other businesses like ProcessTech and Carbon Fiber, same as composite solutions, use only very little capex in the first quarter. We really concentrate on graphite solutions and As you all became aware, I think we had a highlight slide last time when we were talking about our JV that we have this Brembo or BCCB JV with them, as we call it. We have to invest into a new production building in Meitingen, and the first six million have been already paid out. For that, we're making very good progress with this building and later this year, this should be up that we can also install all the infrastructure and then subsequently all the machinery to start production somewhere in beginning of 2025. And with that, I go to the next section where we come to the outlook and I hand back to Torsten that guides you through the next slide. Thank you.