CA Cheuvreux 8 th German Corporate Conference

Transcription

1 CA Cheuvreux 8 th German Corporate Conference Frankfurt, January 20, 2009 Robert J. Koehler, CEO

2 Global trends support the carbon and graphite industry and - SGL Group as its largest global player Carbon and graphite industry uniquely positioned to benefit from global trends SGL as the largest global carbon and graphite player to participate in growth opportunities resulting from these trends Global Trends Resources Demand Substitution Process Alternative Energy Unique Properties Performance Products Performance Products Graphite Materials & Systems Advanced Materials Carbon Fibers & Composites -2-

3 Global Trend 1 Ongoing Demand for Resources Growth continues in China, India, Russia and Brazil For instance materials: Infrastructure Capital goods Packaging Transport/Logistics For instance energy: Oil Gas Electricity Estimated GDP Growth Germany EU (15) USA Brazil Russia Source: Deka Bank (Dec 08) India China Means continued growth in steel and aluminum production Carbon where other materials fail -3-

4 Global Trend 1 - Ongoing Demand for Resources Steel and aluminum: Essential for infrastructure in Asia and Eastern Europe High per capita growth potential in steel and aluminum in comparison to Western World Steel consumption Aluminum consumption Crude Steel (kg/capita) Total Aluminum (kg/capita) Spain Italy Japan Canada Germany USA Turkey Russia France China Mexico Argentina South Africa Brazil Philippines India Indonesia Source: International Iron & Steel Institute Steel Statistical Yearbook 2007 Germany Japan USA Canada Source: Alcan Italy France Spain China Mexico Russia Turkey Brazil South Africa Argentina Indonesia India Philippines Infrastructure build up in emerging economies has only just begun. -4-

5 Global Trend 2 Acceleration of Substitution Process Growing demand for raw materials puts pressure on supplies and prices of traditional materials and energy Accelerated substitution by carbon and graphite Example: increased composites content in new aircrafts to reduce fuel consumption and emissions Boeing 747 in service 1970 Titanium 6% Composites 1% Steel 12% Miscellaneous 1% Aluminum 80% 4000 Estimated Carbon Fiber Tow Usage * Boeing 787 expected in service 2009 Titanium 15% Steel 10% Composites 50% Airbus Boeing * Usage in commercial jets worldwide (tonnes) Miscellaneous 5% Aluminum 20% Source: The Carbon Fiber Industry: Global Strategic Market Evaluation

6 Global Trend 3 Alternative Energy Sources Wind turbine installations (MW) Growing demand for energy accelerates demand for alternative energy sources due to scarcity of fossil fuels as well as global warming (CO 2 emission) Example: Wind Wind energy today provides only 1% of electricity generation worldwide Installations postponed not cancelled. After 2009 dip CAGR +30% Source: CAGR 31% E 2009E 2010E 2011E 2012E BTM World Market Update (March 2008), updated by UBS estimates (December 2008) Wind turbine installed base (MW) RoW Asia Americas Europe MW installed base in 2007 to increase approx. 200% by CAGR 25% Installed base CAGR 25% Source: E 2009E 2010E 2011E 2012E BTM World Market Update (March 2008), updated by UBS estimates (December 2008) -6-

7 Global Trend 4 Where other materials fail Unique properties of carbon, graphite and carbon fiber/composites: Stability at very high temperatures (up to 3,000 degrees Celsius) Very light weight Self-lubricating Non-corrosive Resistance to chemical attack High purity and inertness Electrical and thermal conductivity can be varied Highest degree of stiffness and flexural strength Carbon where other materials fail -7-

8 Global Trend 4 Where other materials fail Graphite Examples Special graphite recipes for lithium-ion batteries Specialty graphites for semiconductors Graphite components for solar grade silicon Graphite parts for solar/led production -8-

9 Global Trend 4 Where other materials fail Carbon Fiber Examples Carbon fiber composite materials and components for automotive Carbon fibers for reinforcement of cement and concrete Carbon fiber composite components for aerospace Carbon fibers prepregs for windmill blades -9-

10 SGL Group Business Units Performance Products () Advanced Materials (AM) Performance Products () Graphite & Carbon Electrodes Cathodes & Furnace Linings Graphite Materials & Systems (GMS) Graphite Specialties (GS) Process Technology (PT) Expanded Graphite (EG) Carbon Fibers & Composites (CFC) Carbon Fibers Composite Materials Composite Components Carbon-Ceramic Brake Discs Technology and Innovation (T&I) Six Sigma (SGL Excellence) -10-

11 Ensuring the Future SGL Excellence Enable Productivity and Growth SGL Excellence Operational Excellence Innovation Excellence People Excellence Commercial Excellence started in 2002 the core element of the Company mission an ongoing and Company wide program our philosophy of doing business SIX SIGMA our core methodology focuses on: customer value measurable objectives and results applies to every function in our Company empowers our employees with skills and tools >1,600 SIX SIGMA trained employees > 500 Green Belts > 100 Black Belts -11-

12 Ensuring the Future SGL Excellence Enable Productivity and Growth Since 2002 continuous cost reduction of 159 million in total % 96% 94% 89% 86% 81% 78% 74% 72% 70% 68% 65% Total Cost*/Sales (%) COGS/Sales (%) Annual Net Savings ( m) *) before antitrust -12-

13 Performance Products Performance Products () GMS AM CFC Business Lines Graphite & Carbon Electrodes Cathodes & Furnace Linings 2007 Group Sales Sales & EBIT Margins GMS 27% CFC 12% 61% 14% CAGR* 15% % 24% % Sales m EBIT Margin * Compound Annual Growth Rate in Sales : Carbon & Graphite Business Unit Key industries served Steel Aluminum Ferrous and nonferrous metals Characteristics Supplying the metal industries Leading competitive position Ongoing growth in eastern world High ROCE Strong cash flow Stable growth -13-

14 Performance Products () Performance Products () GMS AM CFC Sales Cathodes & Furnace Linings 17% Medium-term targets ( ) Volume growth: 2-3% p.a. ROS: > 20% Graphite & Carbon Electrodes 83% Highlights 2008 High capacity utilization Investment into 60,000t Malaysian carbon & graphite plant Further increase in profit margins Strategic priorities Pursue further efficiency gains Generate high cash flow Secure quality leadership Optimize global production infrastructure Gain market leadership in cathodes -14-

15 Performance Products Graphite Electrodes (GE) for EAF Steel Production GMS AM CFC Growth in steel production fuelled by infrastructure demand from industrializing countries Scrap availability limits EAF growth to global GDP Due to continued efficiency gains GE demand growth only 1-2% p.a. GE critical to EAF furnace efficiency but only 2-3% of steelmaking conversion cost An electric arc furnace (EAF) is a furnace that heats charged scrap steel material (also known as mini mills) BOF = the steelmaking route that uses iron ore and coking coal to produce primary steel (also known as integrated steel) -15-

16 Performance Products Cathodes for the Aluminum Industry GMS AM CFC Industrialization of BRICs and weight/strength/cost advantages in a higher energy cost environment => quantum leap in aluminum demand from historical 2-3% to 5-7% p.a. Cathodes essential to aluminum smelters Investment good (5-7 years shelf life) New smelter construction Existing smelters relining New smelters upgrading => amorphous cathodes => graphitized cathodes only three producers of graphitized cathodes Cathodes essential for aluminum smelting but representing only 1% of production costs for 1t aluminum SGL Group largest producer worldwide World Aluminum Consumption to Double by : approx ,2 1,1 3,2 7,3 Asia North America 6,8 Increase v ,0 2020: approx. 60 1,7 5,0 Eastern Europe CIS & Other Western Europe Latin America 11,6 10, Source: From Alcoa Annual Report 2006 and McKinsey -16-

17 Advanced Materials Graphite Materials & Systems (GMS) GMS AM CFC Business Lines Graphite Specialties Process Technology Expanded Graphite 2007 Group Sales GMS Sales & EBIT Margins GMS 27% CFC 12% 61% 8% CAGR* 7% 8% % 13% Key industries served Chemical Energy Semiconductor High-temperature processes Automotive Mechanical engineering Characteristics Sales m Supplying the manufacturing industries Focus on innovative applications Sustainable sales growth Solid earnings potential EBIT Margin * Compound Annual Growth Rate in Sales : (Graphite) Specialties Business Unit incl. Expanded Graphite Business Line -17-

18 Advanced Materials Graphite Materials & Systems (GMS) GMS AM CFC Sales Expanded Graphite 10% Graphite Specialties 69% Process Technology 21% Highlights 2008 Graphite Specialties (GS) Capacity expansion isostatic graphite Process Technology (PT) Production growth in Asia (China, India) and Russia Expanded Graphite (EG) Optimization of global production infrastructure (USA, Germany, China) Medium-term targets ( ) Sales growth: 6-8% p.a. ROS: >10% Strategic priorities Increase production and market share in Asia and Eastern Europe Continue driving growth by innovation and material substitution Continued cost savings and margin improvement -18-

19 Graphite Materials & Systems Innovation Driving New Product Portfolio 2007 GMS AM CFC Examples Graphite for Li-Ion batteries Crucibles and molds for solar production and LEDs Molds for ceramic-armouring applications Heaters for the semicon industry Expanded graphite for thermal (electronics, climate) management Specialty graphite for nuclear power (PBMR) Graphite for particle filter for diesel engines 2/3 established 364 m 1/3 new 1/3 of sales based on new products introduced over the last 4 years -19-

20 Graphite Materials & Systems Major Customer Industries and Market Shares 2007 GMS AM CFC % of Total GMS Sales 2007 Global Market Share 2007 Semiconductor 12% 20% Energy: Batteries & Nuclear 10% 40% Tool Manufacturing 8% 15% Energy: Solar 5% 20% High-temperature Processes 5% 15% Metallurgy 0% 0% 50% 8% 20% Chemicals % 27% 30% Glass and Ceramics % 4% 10% Automotive 5% 15% Source: SGL s own estimates, w/o EC Business -20-

21 Advanced Materials Carbon Fibers and Composites (CFC) GMS AM CFC Business Lines Carbon Fibers Composite Materials Composite Components Carbon Ceramic Brake Discs Key industries served Automotive Aerospace & Defense Energy Mechanical Engineering Sporting Goods Medical Technology 2007 Group Sales CFC Sales & EBIT Margins GMS 27% CFC 12% 61% 21% CAGR* Characteristics New applications in automotive, energy, aeronautics High earnings improvement potential Complete value chain in house Only EU carbon fiber company 93-3% -3% % Sales m EBIT Margin * Compound Annual Growth Rate in Sales SGL Technologies Business Unit excl. Expanded Graphite Business Line -21-

22 Advanced Materials Carbon Fibers & Composites (CFC) GMS AM CFC Highlights 2008 Carbon Fibers (CF) Continued double digit sales growth Own Precursor development (Joint Venture with Lenzing) Integration CFT, Wyoming, USA New carbon fiber lines in UK, USA Composite Materials (CM) Continued growth from wind energy Integration SGL Kümpers and SGL epo Composite Components (CC) Investment into automation technologies at HITCO for growing aerospace & defense business Benteler SGL Joint Venture for automotive composites SGL Rotec Joint Venture for manufacturing of rotor blades fort wind turbines Brake Discs (BD) Expansion of customer/product portfolio Medium-term targets ( ) Sales growth: > 15% p.a. ROS (mid term): > 10% Strategic priorities Secure own raw material supply Expand Carbon Fibers capacities Develop specific applications in Alternative energies Aviation/defense technology Automotive Support organic growth with targeted partnerships and acquisitions -22-

23 Carbon Fibers & Composites Unique Offering of the Complete Value Chain GMS AM CFC Core Business JV-partnering Raw material Carbon fiber Composite Materials Composite Components Aerospace & Defence e.g. HITCO (100%) PAN Precursor Carbon Fiber Prepreg Preform Industrial & Energy e.g. SGL Rotec (51%) EPG (44% JV with Lenzing) Strategic alliance with Mitsubishi Rayon (MRC) Production: approx. 4,000t in Scotland; approx. 2,000t in USA SGL epo (100%) SGL Kümpers (51%) Automotive e.g. SGL Brakes (100%) Benteler SGL (50%) Core Competencies Materials Technology Processes Development of final use/applications Development of finished parts/ manufacturing techniques Marketing Promoting substitution -23-

24 Carbon Fibers & Composites Carbon Fiber Market: Expected Demand Development GMS AM CFC Industrial & Energy: 63% market share in 2007 Sporting Goods: 17% market share in % CAGR 9% CAGR 5% CAGR SEC Aerospace & Defense: 20% market share in % CAGR USA Demand for carbon fiber restricted by availability and processing technology 7 U.S. GER GER 10% CAGR Highly concentrated global market: 3 Japanese, 3 US, 1 Taiwanese, 1 European Source: SGL own estimates in kmt (January 2008) -24-

25 Carbon Fibers & Composites Carbon Fiber Capacity GMS AM CFC Capacity in tons Toray (J) Zoltek (US) Name plate capacities* carbon fiber (excl. oxidized fiber): Announced additional capacity until 2012 Current capacity (2008) LT = Low tow fiber 1-24k Precursor own own Toho/ Fortafil (J) own SGL (GER) approx *) Mitsubishi Rayon (J) approx partially own own Formosa Plastic (TW) own HT = High tow fiber k * Actual production tends to be 20-30% below name plate capacity Hexcel (US) own Cytec (US) own Product LT HT LT HT LT LT LT LT Markets Aero/Ind. Ind. Aero/Ind. Ind. Ind. Ind. Aero/Ind. Aero/Ind. Source: SGL s own estimates (as of January 2009) *) SGL capacity from early 2009 on -25-

26 Ensuring the Future Capital Expenditure Major investment projects: Malaysian plant 200m investment for 60kt graphite electrode and cathode plant Capital expenditure 2007 and m* 130m* Carbon fiber expansion 2009: 6kt carbon fiber capacity operational 2012ff: further expansion up to 12kt planned Total investment approx. 300m ff 100 m Carbon fiber expansion Malaysian GE and CA plant Other growth and optimization projects Maintenance capex * Total cap ex for all categories combined -26-

27 Ensuring the Future Malaysia the largest single project in our history First Greenfield development for 25 years Graphite Electrodes and Cathodes plant in South East Asia Lowest cost plant worldwide State of the art technology Optimal logistics Favourable energy and labour costs Integration into global production network Start up end 2008 (GE) Completion 2011 (full integration GE + CA) Combined graphite electrode and cathode capacity 60 kmt cathode production largely booked under long-term supply contracts Target Region Southeast Asia + Taiwan, India, Korea -27-

28 Ensuring the Future Carbon Fiber Capacity already at 6,000t by early 2009 Inverness, Scotland Inverness (UK): Capacity end ,000t Evanston, USA Germany Evanston (USA): Capacity early ,000t Planned up to 4,000t by 2012ff 12,000 t total planned capacity by 2012ff Germany: Planned up to 4,000t by 2012ff -28-

29 SGL Group Group guidance for 2008 unchanged Operational Sales growth 10-15% EBIT growth approx. 20% Financial result approx. minus 40 million Capex and Balance Sheet Capex approx. 220 million in 2008 (2007: 130 million) (to support growth in all business units) Gearing level to remain around 0.5 based on today s portfolio Pre tax and net profit to rise more than proportionately to EBIT growth -29-

30 Mid term Targets (4-5 years) Minimum targets over the cycle Group Sales growth: 5-10% p.a. CAGR organic ROS: > 12% ROCE: >17% Performance Volume growth: 2-3% p.a. Products () ROS: >20% Graphite Materials & Sales growth: 6-8% p.a. Systems (GMS) ROS: >10% Carbon Fibers & Sales growth: >15% p.a. Composites (CFC) ROS: >10% mid term To deliver profitable growth! -30-

31 Thank you for your attention! Questions?

32 Appendix

33 SGL Group History 1878 Gebr. Siemens & Co. (Gesco) Start of Carbon Production 1928 Siemens Plania Werke Merger Gesco and Plania sites in Poland SIGRI GmbH 50% Siemens 50% Hoechst SIGRI GmbH 100% Hoechst SIGRI Great Lakes Carbon GmbH 59% Hoechst 30% Horsehead Industries 11% Pechiney SGL Carbon AG Merger Siemens Plania and Hoechst AG; Griesheim Merger with Ringsdorff, Bonn Merger with Great Lakes Carbon (USA) 1992 and with Pechiney Graphite (F) 1993 IPO Frankfurt/Main, Hoechst remains shareholder 1996 SGL Carbon AG 100% free float Listing on NYSE/USA, full independence 2008 SGL Group The Carbon Company Delisted from NYSE in 2007, independent 100% free float Company with operations in EU, NA, Asia and 3 global Business Units -33-

34 Latest Results Group Highlights Nine Months of 2008 in million 9M/2008 9M/2007 Sales 1, ,005.3 EBITDA Profit from operations (EBIT) Profit before tax Net profit after minority interests EPS, basic (in ) Sales increase by 13%, thereof price/volume: +18%, currency: -5% More than proportionate increase in EBITDA (+22%) and EBIT (+26%) EBIT margin 21% compared to 18% in 9M/2007 Cost savings in 9M/ million Profit before tax up 65%, net profit up 88% -34-

35 Latest Results 9M/2008: Performance Products () in million 9M/2008 9M/2007 Sales EBITDA Profit from operations (EBIT) Return on sales 31.7% 29.2% Sales increase 13%, thereof price/volume: +18%, currency: 5% Strong demand from steel and aluminum industry reflected in selling price increases across all business lines and positive volume effects especially in graphitized cathodes EBIT increase of 23% due to positive price and volume effects as well as cost savings of 10 million and high capacity utilization -35-

36 Latest Results 9M/2008: Graphite Materials & Systems (GMS) in million 9M/2008 9M/2007 Sales EBITDA Profit from operations (EBIT) Return on sales 15.6% 13.6% Sales increase: 10%, thereof price/volume: +13%, currency: -3% Strong demand situation especially from the chemical, solar, and lithium-ionbattery industries EBIT increase of 26% due to positive volume developments, high utilization as well as savings of 4 million -36-

37 Latest Results 9M/2008: Carbon Fibers & Composites (CFC) in million 9M/2008 9M/2007 Sales EBITDA Profit from operations (EBIT) Return on sales 4.5% 1.9% Sales increase: 23%, thereof price/volume: +28%, currency: -5% Sales growth among others fueled by composite materials in connection with the consolidation of SGL Kümpers GmbH & Co. KG and SGL epo GmbH Significant increase in EBIT due to high sales growth and capacity utilization as well as cost savings of 5 million -37-

38 Financial Structure SGL Group has established a solid long term financial structure in May 2007: million Corporate Bond at EURIBOR plus 125 bps (maturity 2015) million Convertible Bond at 0.75%, conversion price of (maturity 2013) million undrawn credit facility (maturity 2012) 75 million revolving credit facility, 125 million acquisition facility SGL Group has no refinancing requirements until

39 Shares in Issue and Shareholder Structure Basic Shares: Security Identification Number: ISIN Number: DE Cusip Number: Number of Shares 64,706,991 Free float: 100 % Reported shareholdings according to 21 ff. WpHG: Fidelity Investments International 2.89% Mackenzie Financial Corporation 3.55% Landesbank Baden-Württemberg 5.07% Voith AG 5.12% 0.75% Convertible Notes (6 year maturity): Principal Amount 200 million Conversion Price Conversion Right 5.48 million Shares Issue Date 16 May

40 Financial Calendar/Contact Details Financial Calendar Annual Report, Year-End Press Conference and Analyst Meeting, Conference Call Report on the First Quarter, Conference Call Annual General Meeting Interim Financial Reporting First Half, Conference Call Report on Nine Months, Conference Call Contact SGL CARBON AG Phone +49 (0) Rheingaustrasse 182 Fax +49 (0) Wiesbaden Germany

41 Important Notice Forward-looking statements: This presentation contains statements on future developments that are based on currently available information and that involve risks and uncertainties that could lead to actual results deviating from these forward-looking statements. The statements on future developments are not intended as guarantees; rather, such developments and results are dependent on a number of factors, they contain various risks and uncertainties and are based on assumptions that may prove to be incorrect. These risks and uncertainties include, for example, unforeseeable changes in political, economic and business conditions, particularly in the area of electric steel production, the competitive situation, interest rate and currency developments, technological developments and other risks and unanticipated circumstances. We see other risks in price developments, unexpected developments relating to acquired and consolidated companies, and ongoing cost optimization programs. SGL Group does not intend to update these forward-looking statements. -41-