SGL Group – Solid Development in First Half of 2016
The reporting segment Composites – Fibers & Materials (CFM) made a particularly strong contribution in this regard, with recurring EBIT substantially to EUR 12,2 million – the best result since its inception. Adjusted for one-time effects from the previous year, EBIT of Graphite Materials & Systems (GMS) also saw an increase. SGL Group has adjusted its guidance accordingly: the company now expects Group sales from continuing operations slightly lower than last year, accompanied by a slight increase in recurring EBIT from continuing operations. Group sales from continuing operations amounted to EUR 379,4 million in the first half of the year 2016, nearly matching the previous half-year level. The adjusted guidance for the year 2016 reflects the reclassification of the business unit Performance Products (PP) as held for sale.
Accordingly, SGL Group sales from continuing operations will be slightly lower year-on-year, while recurring Group EBIT is to slightly exceed the previous year’s level. Adjusted for positive one-time effects from the previous year in the business unit GMS and in T&I and Corporate, Group EBIT is expected to increase significantly. In the business unit CFM, higher sales of fibers and materials for composites is anticipated to offset the declining price in the textile acrylic fibers business. Sales will therefore remain close to stable. Due to higher volumes and an improved cost position, recurring EBIT of the business unit will rise significantly. As the good result of the first half-year was attributable to a high level of invoicing in HITCO’s materials business in the first quarter of 2016, the trend cannot be extrapolated to the full year. Sales in the reporting segment GMS are expected to remain stable. This is due above all to a weaker order intake from energy-related industries in North America and overall economic uncertainties. The volume demand from the solar, semiconductor and LED industries is likely to rise and will partially compensate for price decreases. The anode material business for the lithium-ion battery industry is developing at anticipated stable levels. Accordingly, GMS will once again approach the Group’s target ROCE (ratio of EBITDA to capital employed) of 15 %.
The forecast from the first quarter of 2016 is affirmed for the discontinued business unit PP. Business with cathodes, furnace linings and carbon electrodes as well as the higher volume demand for graphite electrodes will not be sufficient to compensate for the negative effect of the further drop in graphite electrode prices. Accordingly, the operating result of discontinued activities will decline considerably. The guidance for net financial debt also remains unchanged. At the end of 2016 it will be significantly higher year-on-year especially due to the cash outflows in connection with the restructuring measures in the discontinued business unit PP. A potential payment for the disposal of the discontinued business unit PP has not been taken into account in this regard. Since a number of investment projects in the business units CFM and GMS have essentially been completed, investment requirements have declined compared to prior years. For this reason, the company plans substantially lower capital expenditures in 2016 than in the prior year, which will then be significantly below the level of depreciation. Moreover, by the end of the year the SGL2015 cost savings program will be successfully concluded. The cumulative savings target compared to the base year 2012 is EUR 240 million. This also includes the savings of the discontinued business unit PP. At the end of June 2016, cumulative savings amounted to EUR 218 million.