Sgl Group Ord

Yes, thank you. Welcome and thanks for your participation in our today's conference call about the first nine months, 2024. Our board members, Thorsten Derr and Thomas Dippelt, will give you a detailed overview about our business development and, in particular, a focus on the semiconductor market segment. Then I directly hand over to Thomas Dippelt. Thanks.

Thank you, Claudia. It's my pleasure, on the first hand, to welcome you. Secondly, to present the figures for the first nine months of 2024. And what we can say overall, the nine-month development 2024 is exactly in line with what we guided so far. You know that we made our guidance a little bit more precise at half year, where we said it's going to be at the lower end of our given range when it comes to EBTA pre, and this is exactly the way how we develop. Here on slide number three, you can see the overall sales and EBTA development that we have. And I think this development that we can show you is exactly as we guided it. We are reaching 782 million sales, which is 4.8% down compared to the first nine months of last year. If you take out any currency and also some portfolio effects, we had some smaller divestments beginning of last year. And if you take it out and really compare it like for like, then our sales dropped by 3.6% compared to the first nine months of last year. Our EBITDA pre, however, remains almost stable. with 127.6 million euro compared to 130 last year in the same range of the first nine months, which is just a drop of 1.8%. So what's contributing to that? We have a very strong ongoing performance, and we see that now for the four consecutive years in process tech. GS, which was growing in particular in the first quarter, then a little bit in second, remains flat at the moment, which on the other hand also means that we have some declining effects in Q3. Torsten will elaborate a little bit later on that. We have a special chapter for silicon carbide. And we see some weak developments in our carbon fiber business units. On the one hand side, carbon fiber itself, but also composite solution is burned with some project termination. We come to that when we talk about each and every business unit. In the sales split, you can see that Graphite Solution is still with 53% by far the largest business unit in our portfolio and carbon fiber, which we evaluate some options in either selling it off completely, selling part of it, or even maintaining it stands for 20% of our sales. On slide number four, we come to Graphite Solution. And here the sales remain flat or drop a little bit with 1.4% compared to last year. And this is due to the fact that our semiconductor and LED business grows by 4%. Only automotive is 3%. And all the other business lines that we have in GrabHat Solutions are declining. This is thanks to the overall economic development that we see on the world in general, in Europe maybe in particular, and in Germany. Germany very especially. And you also see when you follow us over the quarters that our analyst calls that our silicon carbide business and semiconductor business overall is significantly calming down and even went negative in Q3. However, we still, thanks to the product mix effects, maintain a very positive EBDA development in this business unit. We reached 104.3, sorry for that, a million euro ebda pre which is almost five percent up compared to last year this is thanks to some product mix effects that we see in there our margin in a graphite solution uh goes up and now reaches some super healthy 25.3 percent this is almost 1.5 percent up compared to last year process tech So far, it's a continuous success story. We now reach €106.2 million in the top line in sales, which is 11% up compared to last year. ProcessTech used to be the smallest business unit that we have. It's now the third biggest or second smallest, either way you want to see it, but they overtook composite solutions. And I think the development that they show over the last couple of years is quite remarkable. on the one hand side in sales, but especially in our profitability. We now reach, after the first nine months of 2024, €25.6 million EBITDA pre, which is up 46.3% compared to last year. There's no special effect, there's no one-off, there's nothing in there. It's just better projects, better service, better margins, And the margin after the first nine months of this year reached some very remarkable 24.1%, which is up almost by six full percentage points compared to last year. This is really an outstanding performance. Yes, we see that the order book is still quite full. And for the next six to nine months, which is normally the lead time for the projects and the orders, Not very much can happen. We don't see any cancellations or anything like that. However, when we look at the order intake, we see a certain slowdown. But we cross the bridge when we get there. But when we look at the first nine months, we are very happy with the development that they have. And we didn't foresee that for certain, yeah. On the other hand, when it comes to carbon fiber, slide number six, there we see exactly the opposite. The sales drop and the sluggish development in our business in carbon fiber continues. We are 12.5% down compared to last year. We are now, our sales reach 157.1 million euro in the first nine months of this year. And we see a decline in almost every carbon fiber market that we serve, be it acrylic fibers for textiles, be it Panox, be it everything. All the businesses are going down, especially the wind market is continuously weak. And this is certainly also affecting our margins because we idle more and more capacity there. And if you have this missing fixed cost absorption and the lower prices thanks to the... overcapacity that we see in the market and the low prices that we see from our Chinese competitors, this also affects our bottom line. And we now have, after the first three quarters of 2024, an EBITDA pre of minus 7.9 million euro. This is 11 million down compared to last year in the same time range. And you also have to bear in mind that in the EBITDA pre, there is a at equity result of our joint venture, BFCCB, where we make this carbon ceramic break disc together with Brembo, and some $11.6 million are in the same time. So if you take this out, then our result would be minus $19. This minus 19 was exactly in line with our plan for the year 2024. This was so far in the development for the first nine months of the year exactly what we planned. We knew exactly that this is going to be a bad year. So this development was not unexpected. However, when we started our budgeting process and we saw the first signs how the new midterm planning might look like, Me and my colleagues here had a look at that, and this was the reason why we just came up to you guys at the capital market some one, two weeks ago, where we informed you via a talk message that thanks to the updated market expectation for the next year and the years to follow, we had to write off our assets and our value in use by 60 to 80 million somewhere in this range. We will do that at year end when we know exactly how the VAC looks like and how a real midterm planning looks like. But in this range, we will have an impairment, which is, of course, a non-cash effect, but it's certainly affecting our net result and subsequently our equity. However, with the shorter balance sheet and the reduced equity, our equity ratio will still be around 40%. So it's still a very healthy company that you're talking to at the moment. Last but not least, composite solutions. This business unit is also using carbon fiber and does some composite materials out of it, mainly for automotive applications and automotive parts. There we see a decline in our top line by 16% compared to last year. We now have 95.8 million euro in our sales after the first three quarters of this year. Why did the sales drop in double digits compared to last year? Because a project was terminated by a customer who used a different solution for the same battery case that he bought previously from us. And therefore he terminated the contract. This contract was very favorable for us, had a good margin. And this is the reason why our sales dropped by 60%. We still had this project in the first quarter, at least there's a certain share. But since second and third quarter, our sales also relatively started to drop quite significantly. And also EBDA pre is quite affected by a drop in 35%. We now reach 10.7% EBDA pre in the first nine months of 2024, down from 16.6%. in the same time range last year. However, we still reach an EBITDA pre-margin of 11.2%, which is for a Tier 1 supplier in automotive. I think it's not so bad. After the first nine months of the year, our balance sheet or other key figures or KPIs that we show here on slide number eight, which are very important for us, is on the one hand side the net result. Here, you have to see, I mean, maybe it's not misleading. It's presented in the right way. After nine months, our net result is 32.8 million euro compared to 5.3 last year. Last year, we made an impairment of our carbon fiber business at half year with some 44 million. That's already in there. And here in our nine-month figures for 2024, the impairment for carbon fiber is not yet in. So at year-end, you will see then hopefully also a higher operative net result, but then it's going to be slightly negative if you take out the impairment that I just talked about. Our free cash flow is positive with 15.5 million euro after the first nine months of 2024. However, it came down quite a bit compared to last year. where we reach 35 million at the same point of time. A big chunk of it is the customer down payment that we received at the same time last year. We reached quite a substantial higher number of customer down payment for our graphite products compared to this year, and this is the reason why our free cash flow went down by roughly 20 million compared to last year. However, this is positive, and I think it's a very good achievement because we invest significantly higher amounts than our depreciation level. And last but not least, our net financial debt remains very healthy. It went up by roughly €7 billion, but this is thanks to the fact that we invest so much, and this is affecting our overall cash flow. We still manage our business at a leverage level of 0.7%. And our equity ratio at the moment is 43.3%. After the impairment, it will be roughly 40%. Still a very healthy development. Our ROSI reaches 11.1%. I think it's also a very good figure, and we make our capital costs by ourselves. And with that, I would like to hand over to Torsten, who will describe a little bit more what's going on, especially on the semiconductor business and silicon carbide in particular.

Yes, thank you very much, Thomas. I have the pleasure to explain to you our semiconductor exposure a little bit. And as Thomas said, our biggest business unit, Graphite Solutions, or GS, how we call it, makes up a little bit more than 50% of the total turnover of the company. And what you see on this slide is a breakdown of the markets which our biggest business unit, Graphite Solutions, serves. And you can see that the semiconductor segment accounts now for almost 50% of the total turnover. And if we turn to the right-hand side, you can see that our semiconductor market developed quite nicely and we have here the nine months figures of 2022, 2023 and this year. And we were able to grow the business constantly up to now. But you can also see that especially the petrol bar, the top bar, which represents silicon carbide, it doubled from 2022 to 2023. And the growth was minor from last year to this year. And there is one reason, and the reason is a pure volume effect. And here can you see why everything went down? What we are showing you here is the number of electric vehicles sold by quarter. And it went up pretty nicely in the year 2023. There was a growth quarter by quarter. And then the sales slumped by 26% in the first quarter of this year. After the first quarter down, which is depicted here, we still observed a growth. But you can see in a nutshell, there are 2 million sold cars missing every quarter. So in total, we are going to sell 8 to 10 million less cars compared to this year. What happens as silicon carbide, the main application with 70 to 80 percent, is exactly inverters in electric mobility. Also, the demand for wafers and the demand for ZIC ships went down. So we can say we are losing a year or a little bit more than a year to come back on the growth trajectory, which we and our customers expected. But we are still positive about the market development. We read quite some market studies. And if you look especially into China, China had very nice growth rates of 35% plus. And all market surveys say that this growth rate especially in China, will stay on this level. And Germany is in exaggeration to the negative. This will also return to normal. Next slide. What does it mean for us? So according to the market studies, the BEV market is growing with a CAGR of 24%. For our customers, our customers are the wafer manufacturers which produce ZIG wafers or ZIG chips. They suffer currently from inventory because they prepared for a steeper growth rate or more EV cars sold. That means they shift currently from the growth mode to an inventory management. And I can say every region is affected. It's not only a European effect. We have the same conversations currently with customers from China, from the US, and also from Europe. So it's a global effect, and we can say that we expect no growth in the silicon carbon field in the year 2025. So what does it mean for SGL? For us, it's a temporary slowdown, and we serve, I would say, all customers in silicon carbide in the world, and all customers confirm to us. that they stick to their mid-term growth plan. They shifted the volume a little back to the outer years of their growth plan. They are already also in the process to complete their investment. So no investment project I was aware of at our customers was stopped. It was delayed or even completed. What do the customers appreciate about us? We are the undisputed quality leader in this field, and when it comes to high-value chips, they can make better chip quality and better yield with our graphite. We are the only one-stop shop in the market, and we have a nicely distributed production network which can serve the customers local for local. And this might, after the election effect in the U.S., be quite nice because a huge part of our investments went into our Semicon facility in St. Mary's, U.S., so we are prepared for a local-for-local market there. We are protected by good contracts, but almost every of our customers is taking the volumes back, and this was the name of the game in the last three to six months. We agreed on new volume figures with most of our customers. We are going into straight cost management, so we are saving wherever we can, and we also delayed some investments. We complete the investments which were started, but we wait for the market to return until we restart other projects. An opportunity which we see, and this is driven especially from China, is the application of ZIC ships, which were predominantly going into EV industry, in other applications. And right now we see, for example, air-conditioned units. They will be equipped also with ZIC ships, and this is possible because the cost of ZIC ships went down by the effect which I described earlier. And this makes the Zik technology accessible to other applications. I want to stress we have not lost a single customer. And we kept at least the share of wallet which we had at the customers. We even increased the share of wallet due to our strong customers. Contract structure and I talked myself to many of our customers and they already confirmed They all confirmed their midterm growth plan Yeah coming to our guidance We confirm again our guidance for the current year 2024 and our sales guidance is on prior year level and And we also confirm our EBITDA guidance. And we guided the capital markets at an EBITDA between 160 and 170 million euro. We will reach this at the lower end of the corridor. And with this, I would like to conclude my explanations and would like to hand back to Claudia.