CA Cheuvreux 9 th German Corporate Conference Frankfurt, January 18, 2010 Robert J. Koehler, CEO

Transcription

1 CA Cheuvreux 9 th German Corporate Conference Frankfurt, January 18, 2010 Robert J. Koehler, CEO

2 Carbon and Graphite The carbon, graphite and associated product market is a small, global materials niche Oligopolistic supply structure dominated by 6-10 producers, segmented per area High capital and R&D intensity Accelerating trend favors carbon/graphite products less raw material and energy consuming less environmentally burdening more lightweight, alternative energies Carbon fibers and composites megatrend in materials substitution SGL Group THE globally leading company 2

3 SGL Group Business structure Performance Products () Advanced Materials () Performance Products () Graphite & Carbon Electrodes Cathodes & Furnace Linings Graphite Materials & Systems () Graphite Specialties (GS) Process Technology (PT) Expanded Graphite (EG) Carbon Fibers & Composites () Carbon Fibers/Composite Materials Composite Components Aero Structures Technology and Innovation (T&I) Six Sigma (SGL Excellence) 3

4 Performance Products () Overview : 60% of Group sales in 2008 Sales & EBIT Margins 14% CAGR* 24% 29% 31% Cathodes & Furnace Linings 25% 966 mio. Graphite & Carbon Electrodes 75% 15% % 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 ROS & ROCE Strong cash flow Stable growth Strategic priorities Continued cost reduction projects Major initiative to increase customer value through product quality and consistency Start of first GE production module in Malaysia 4

5 Performance Products Graphite Electrodes (GE) for steel production in EAFs Growth in total steel production accelerated by infrastructure demand from emerging countries EAF steel grows in line with global GDP due to limited scrap availability Growth of GE demand approx. 1-2% p.a. due to continued efficiency gains GE critical to EAF steel production, but only 2-3% of conversion cost An EAF (electric arc furnace) is a furnace that heats charged scrap steel material (also known as mini mills) BOF (blast oxygen furnace) is the steelmaking route that uses iron ore and coking coal to produce primary steel (also known as integrated steel) 5

6 Performance Products Graphite electrode business development 2009 GE industry utilization ±50% due to substantial production cuts and destocking in steel industry Pricing up YoY due to raw material cost inflation Higher raw material costs did not affect margins until Q4/ GE volumes expected to recover double digit due to increasing steel production Volume recovery not yet enough for full capacity utilization Pricing power expected to be moderate under these circumstances 6

7 Performance Products Cathodes for the aluminum industry Quantum leap in aluminum demand from historical 2 3% to 4 6% p.a. Aluminum Smelter Cathodes essential for aluminum smelting but representing only 1% of production costs for 1t aluminum SGL Group largest producer worldwide and one of only three established producers of graphitized cathodes Special glue Cathode blocks Ramming pastes Sidewall blocks Source: SGL Group 7

8 Performance Products Cathodes business development 2009 High sales volume and earnings due to substantial order backlog at end Transitional year as most maintenance projects have been completed and new aluminum smelter projects have been postponed to 2011 ff 8

9 Graphite Materials & Systems () Overview : 26% of Group sales in 2008 Sales & EBIT Margins 9% CAGR* 11% 13% 14% Expanded Graphite 9% Process Technology 23% 412 mio. Graphite Specialties 68% 7% % Sales m EBIT Margin * Compound Annual Growth Rate in Sales : (Graphite) Specialties Business Unit incl. Expanded Graphite Business Line Key industries served Characteristics Strategic priorities Chemical Energy Solar Semiconductor High-temperature processes Automotive Mechanical engineering Supplying the manufacturing industries Focus on innovative applications Sustainable sales growth Solid earnings potential Increase production and market share in Asia and Eastern Europe Continue driving growth by innovation and material substitution Continued cost savings and margin improvement 9

10 Graphite Materials & Systems Innovation driving new product portfolio Examples: Graphite for Li-Ion batteries Crucibles and molds for solar production and LEDs Molds and spacers for ceramic-armoring applications High purity expanded graphite for thermal management and environmental needs Graphites for particle filter for diesel engines and exhaust systems 2008 sales: 412 m 2/3 established 1/3 new 1/3 of sales based on new products introduced over the last 4 years 10

11 Graphite Materials & Systems Major customer industries and market shares 2008 Chemicals Energy: Solar Semiconductor Metallurgy Energy: Batteries & Nuclear Tool Manufacturing High-temperature Processes Automotive Glass and Ceramics % of Total Sales % 15% 10% 10% 9% 6% 5% 3% 2% Global Market Share % 25% 20% 20% 40% 15% 15% 15% 5% Source: SGL Group s own estimates, w/o EC Business 11

12 Graphite Materials & Systems Business development 2009 Relatively strong performance in H1/2009 due to record order backlog at end 2008 Weakening in H2/2009 due to late cyclical character Order intake bottoming out on low level in Q4/ Reverse of 2009 expected: weak H1/2010, stronger H2/2010 Trends in major customers industries (semi, solar, lithium-ion battery) support expectations of recovery in H2/

13 Carbon Fibers & Composites Unique offering of the complete value chain Core Business Raw material Carbon Fiber JV-Partnering Composite Components Composite Aerospace & Materials HITCO (100%) Defense PAN Precursor Carbon Fiber Prepreg Preform Industrial & Energy SGL Rotec (51%) EPG (44% JV with Lenzing) JV with Mitsubishi Rayon (MRC, 31%) Prod. capacity ~ 4kt in UK ~ 2kt in USA JV with BMW (51%) SGL epo (100%) SGL Kümpers (51%) JV with BMW (51%) Automotive Benteler SGL (50%) Brembo SGL Carbon Ceramic Brakes (50%) Core Competencies Materials Technology Processes Core Competencies Development of final use/applications Design of finished parts/ manufacturing techniques Marketing Promoting substitution 13

14 Carbon Fibers and Composites () Overview : 14% of Group sales in 2008 Sales & EBIT Margins 25% CAGR* 2% 2% Aero Structure 18% Carbon Fibers 15% -3% -3% 228 Composite Components 9% Brake Discs (until FY 2008) 16% 228 mio. Composite Materials 42% Sales m EBIT Margin * Compound Annual Growth Rate in Sales SGL Technologies Business Unit excl. Expanded Graphite Business Line Key industries served Energy Aerospace & Defense Automotive Mechanical Engineering Sporting Goods Medical Technology Characteristics New applications in automotive, energy, aeronautics High earnings improvement potential Complete value chain in house Only EU carbon fiber company Strategic priorities Secure own raw material supply Expand Carbon Fiber capacities Develop specific applications in: Alternative energies Aviation/defense technology Automotive Support organic growth with targeted partnerships and acquisitions 14

15 Carbon Fibers & Composites Business development 2009 Temporary overcapacities in carbon fibers due to new plants, project postponements and financial crisis leading to price pressure Business line CF loss making due to carbon fiber situation Downstream business (composite materials, composite components for wind and aerospace) satisfactory performance JV with BMW signed for new carbon fiber based car generation 2010 Continued temporary overcapacity situation for carbon fibers Composite components for aerospace (HITCO) expected with higher sales and earnings due to new military contracts and production ramp up of Boeing 787 Composite materials and components for wind facing a transitional year due to funding related project delays 15

16 Ensuring the Future SGL Excellence enables productivity and growth Since 2002 continuous cost reduction of 187 million in total % 96% 94% 78% 74% 72% 89% 86% 70% 81% 81% 63% 65% 66% Total Cost*/Sales (%) COGS/Sales (%) Annual Net Savings ( m) * Before antitrust 16

17 SGL Group Group outlook for 2009 confirmed for operational business* P & L Statement Sales below record 2008 level Corresponding EBIT to decline more than proportionately H2 EBIT roughly on same level as H1 Net financial costs higher than in 2008 Capex and Balance Sheet Key KPI: Gearing level to remain around 0.5 based on today s portfolio Capex substantially below 200 million Gearing ~ 0.5 defines capex level *reported 2009 EBIT will include million non-cash asset impairment charge according to IAS36 *reported 2009 tax expense will include non-cash writedown on deferred tax assets not exceeding medium double digit million amount 17

18 SGL Group Prospects for 2010 Transitional year with following trends: GE: higher volumes but below pre crisis levels, higher raw material costs CA: lower sales due to most maintenance projects completed and new smelter investments postponed Recovery anticipated for H2/2010 Loss situation expected to improve due to better sales and earnings expected for aerospace business (HITCO) 18

19 Post crisis, the long term fundamental trends in favor of Carbon are still intact Examples: Continued demand for resources when growth returns EAF steel Aluminum production Acceleration of substitution Civil aircraft Automotive Alternative energies Wind energy The power of carbon where other materials fail 19

20 Development of EAF steel production: growth rates in % p.a % China World ex China 20

21 Development of Aluminum production until in mio t to 2008 CAGR: + 5.7% 2009 to 2020 CAGR: + 5.5% e Sources: King, Hydro, RTA, Alcoa, SGL estimate 2010 e 2011 e 2012 e 2013 e 2014 e 2015 e 2016 e 2017 e 2018 e 2019 e 2020 e 21

22 Continued demand for resources when growth returns 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 2007 Crude Steel (kg/capita) 2007 Total Aluminum (kg/capita) Japan Italy Spain Germany Canada Turkey USA Russia China France Mexico Argentina Brazil South Africa India Philippines Indonesia Italy Germany Japan Spain USA Canada France China Turkey Mexico Russia South Africa Brazil India Philippines Source: World Steel Association Steel Statistical Yearbook 2008 Source: European Aluminium Association Aluminium Use in Europe Country Profiles Infrastructure build up in emerging economies has only just begun 22

23 Acceleration of Substitution Process Example: Civil Aircraft Estimated Carbon Fiber Tow Usage* Boeing 747 In service Airbus Boeing Titanium 6% Composites 1% Steel 12% Miscellaneous 1% Aluminum 80% to 2015 * Usage in commercial jets worldwide (tonnes) Source: The Carbon Fiber Industry: Global Strategic Market Evaluation Boeing 787 Expected in service 2011 Titanium 15% Steel 10% Composites 50% Miscellaneous 5% Aluminum 20% 23

24 Alternative energy sources Annual wind turbine installations (GW) Europe NA Asia RoW CAGR 12% E 2010E 2011E 2012E 2013E Source: Strategy Development SGL Group (November 2009) Installed cumulative wind turbine capacity (GW) CAGR 21% E 2010E 2011E 2012E 2013E Source: Strategy Development SGL Group (November 2009) 24

25 The Power of Carbon Synthetic Carbon & Graphite Natural Graphite Carbon Fibers & Composites heat resistant electrically conductive corrosion resistant environmentally safe thermally conductive dense energy storing light strong stiff Carbon enables solutions in hi-tec and green applications where other materials fail due to its unique properties that can be tailor made to customers need 25

26 The Power of Carbon Steel kg* Aluminum 2.7 kg* CFRP 1.6 kg* Specific Strength in km Aramid Fiber Glass Fiber Al-alloys Steel SiC Carbon Fiber * per liter Specific Stiffness in 100 km No other material is lighter or stronger and stiffer Other ceramics would break or fail at temperatures > 1500 C 26

27 Global trends support carbon as material of choice SGL Group largest global player Global Trends Resources Demand Substitution Process Alternative Energy Unique Properties Performance Products () Advanced Materials () Performance Products () Graphite Materials & Systems () Carbon Fibers & Composites () 27

28 Therefore Mid term Minimum Targets Over the Cycle Unchanged Once normality returns after transitional post crisis years Group Sales growth: 5 10% p.a. CAGR organic ROS: > 12% ROCE: > 17% Performance Products () Volume growth: 2 3% p.a. ROS: > 20% Graphite Materials & Systems () Sales growth: 6 8% p.a. ROS: > 10% Carbon Fibers & Composites () Sales growth: > 15% p.a. ROS: > 10% mid term To deliver profitable growth! 28

29 29 Any questions?

30 30 Backup

31 Performance Products Graphite electrodes (GE) for steel production in EAFs Growth in total steel production accelerated by infrastructure demand from emerging countries Scrap availability limits EAF growth in emerging countries 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 GE a consumable replaced every 5 to 8h Raw material requirements sourced on basis of multiyear contracts Production process takes up to 3 months Worldwide steel production: blast oxygen furnace/electric arc furnace [in tm] 1, Blast oxygen furnace Electric arc furnace Source: WSD, IISI, own estimate An EAF (electric arc furnace) is a furnace that heats charged scrap steel material (also known as mini mills) BOF (blast oxygen furnace) is the steelmaking route that uses iron ore and coking coal to produce primary steel (also known as integrated steel) 31

32 Performance Products Graphite electrodes Steel Making An Electric Arc Furnace (EAF) Graphite Electrode SECTION VIEW TROUGH EAF Graphite Electrodes Furnace shell Molten steel Rocker tilt Tilt cylinder Eccentric bottom tapping (EBT) cm Teaming ladle cm Connecting Pin Source: steeluniversity.org 32

33 Performance Products Graphite electrode production process GE critical to EAF furnace efficiency but only 2 3% of steelmaking conversion cost GE is a consumable replaced every 5 to 8h GE sold mostly in annual contracts Needle coke requirements sourced on basis of multiyear contracts Production process takes up to 3 months 33

34 Performance Products Graphite electrode market Capacity by competitor in 2008* UHP/HP-quality Regional Demand in 2008 In tmt 250 North/Middle East, Africa, Australia 8% Europe 28% 200 Americas 22% 150 Asia 42% SGL (GER) Graftech (U.S.) Showa a Denko (J) Tokai Carbon (J) Graphite India (IN) HEG (IN) Nippon Nippor, Carbon (J) SEC (J) CGE (U.S.) * Russia and China: Potential UHP capacity dependent on equipment, technical capability and needle coke availability Source: SGL Group s own estimates (as of January 2009) 34

35 Performance Products Cathodes for the aluminum industry Industrialization of BRICs & weight/ strength/cost advantages in higher energy cost environment Quantum leap in aluminum demand from historical 2 3% to 4 6% p.a. Cathodes essential to aluminum smelters Existing smelters relining Investment good (5 7 years shelf life) New smelter construction leading to higher relining demand long term Existing smelters upgrading => amorphous cathodes => graphitized cathodes SGL one of only three established producers of graphitized cathodes Cathodes essential for aluminum smelting but representing only 1% of production costs for 1t aluminum SGL Group largest producer worldwide Aluminum Global Production Scenarios /New 2009 will be affected by the inventory cycle. Fundamentals for Al production growth remain solid leaving the original long-term outlook unchanged Primary AL Production in kt/a 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 World Primary AL Prod 3.6 % CAGR 39 mio. tm 49 mio. tm 36 mio. tm E 2012E 2015E 2018E 64 mio. tm 2020E Source: IAI, King, SGL Group s own estimates, Hydro, CRU, Rusal 35

36 Performance Products Cathodes for the aluminum industry Aluminum Smelter Cathodes cm cm cm Special glue Cathode blocks Ramming pastes Sidewall blocks Source: SGL Group 36

37 Performance Products Market shares in cathodes 2008 Western world concentrated, Chinese expected to follow in long term Substantial cathodes growth due to strong aluminum demand and subsequent new greenfield smelter investments and stepchange in relining demand Market Shares in Cathodes 2008 CIS 12% Bawtry 5% NDK 1% SGL 25% Continued substitution with graphitized cathodes where SGL Group s market share is higher (> 30%) Double digit growth for graphitized cathodes due to higher efficiency and yield advantages Graphitized cathodes industry highly concentrated (only 3 4 established players) graphitization capability a bottleneck SEC 13% Alcan 3% Others 1% China 20% Carbone Savoie 20% Source SGL Group s own estimates, market shares based on volume excluding Chinese capacities 37

38 Graphite Materials & Systems Graphite Specialties feedstock production and machining Raw Materials (Pitches & Cokes) High quality raw materials from reliable sources Pre-pressing Processes Breaking, milling, sieving, binding, mixing, homogenizing Pressing Isostatic pressing or Extruding Graphitizing 2,800 C 3,000 C Formation of graphite structure and densification Baking 850 C 1,200 C Carbonizing, Densification Machining Finishing Machining of the feedstock: Sawing, turning, milling, sanding, boring, lapping, polishing Impregnation, coating, purification 38

39 Graphite Materials & Systems Graphite Specialties semiconductor application Extremely pure graphite heater for the semiconductor industry Reaches % C 39

40 Graphite Materials & Systems Process Technology product portfolio Overview Systems HCl Synthesis Sulfuric acid Porous burner FCHC destruction Equipment Heat exchanger Columns Pumps Quenches/Vessels Services Parts Diagnosis Repairs 40

41 Carbon Fibers & Composites Slow down in growth for carbon fibers expected for 2-3 years CF market forecast [in t mt] CF demand forecast 41

42 Carbon Fibers & Composites Carbon fiber capacity Capacity in t 12,000 Toray (J) 10,000 Toho/ Fortafil (J) Zoltek (US) Name plate capacities* carbon fiber (excl. oxidized fiber) LT = Low tow fiber 1 24k HT = High tow fiber k * Actual production tends to be 20 30% below name plate capacity 8,000 Mitsubishi Rayon (J) 6,000 4,000 2,000 11,000 9,300 9,000 7,000 SGL (GER) approx. 6,000*) Formosa Plastic (TW) 4,000 Hexcel (US) 3,300 Cytec (US) 2,000 0 Precursor Own Own Own Own Partially own Own Own Own Product LT LT HT LT HT LT LT LT Markets Aero/Ind. Aero/Ind. Ind. Ind. Ind. Ind. Aero/Ind. Aero/Ind. Source: SGL Group s own estimates (as of January 2009) *) SGL Group capacity from early 2009 on 42

43 Ensuring the Future SGL Excellence enables productivity and growth SGL Excellence Innovation Excellence Started in 2002 The core element of the Company mission An ongoing and Company wide program Our philosophy of doing business Operational Excellence People Excellence Commercial Excellence 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: > 2,000 SIX SIGMA trained employees > 550 Green Belts > 100 Black Belts 43

44 Latest results reflect destocking and lower demand in key industries 9M/2009: Group in million Sales EBITDA Profit from operations (EBIT) Profit before tax Net profit after minority interests EPS, basic [in ] 9M/ M/2008 1, Sales decrease 22%, thereof price/volume: -24%, currency: +2% mainly due to continued destocking and production cuts in steel industry particularly in H1/2009 Disproportionate reduction in EBITDA (-54%) and EBIT (-65%) due to reduced production volumes and associated fix cost charges as well as high start up costs of new production facilities EBIT margin at 9% Sustainable cost savings 15 million, once-off savings from temporary measures 26 million More than proportionate decrease in profit before tax (-79%) due to higher net financial costs Despite economic crisis positive net profit at 31 million 44

45 Latest results reflect destocking and lower demand in key industries 9M/2009: Performance Products () in million Sales EBITDA Profit from operations (EBIT) Return on sales 9M/ % 9M/ % Sales decrease 36%, thereof price/volume: -37%, currency: +1% Steel industry characterized by destocking activities and production cuts, therefore substantially reduced demand for GE primarily in H1/2009 Cathodes, furnace linings, and carbon electrodes business continued to develop satisfactorily Higher selling prices in all product lines compared to previous year EBIT decrease of 49% due to lower sales and production levels as well as expenses relating to the commissioning of the new Malaysian production facility Cost savings of 8 million 45

46 Latest results reflect destocking and lower demand in key industries 9M/2009: Graphite Materials & Systems () in million Sales EBITDA Profit from operations (EBIT) Return on sales 9M/ % 9M/ % Sales decrease: 5%, thereof price/volume: -9%, currency: +4% Besides positive currency translation effects sales supported by Business Line Process Technology and the invoicing of a large project still benefiting from high order backlog from previous year, which was mainly related to chemical, solar and lithium ion battery business however order intake weak since beginning of year EBIT decrease of 46% due to currency losses from hedging transaction in Q1 and lack of fix cost absorption from declining sales, which were partially offset by the invoicing of a large project in Q2 Cost savings of 4 million 46

47 Latest results reflect destocking and lower demand in key industries 9M/2009: Carbon Fibers & Composites () in million Sales EBITDA Profit from operations (EBIT) Return on sales 9M/ % 9M/ % Sales increase: 26%, thereof price/volume/sgl Rotec: +24%, currency: +2% Strong sales increase mainly driven by consolidation of SGL Rotec On May 28, 2009, we completed the transfer of our brake disc activities into JV with Brembo. Up to this date, brake disc business was still consolidated in SGL Group and reported separately under Corporate Costs. Former Business Line Brake Discs was retroactively separated from Earnings of impacted by weak carbon fiber market, further start up costs and ongoing high R&D expenses Cost savings of 4 million 47

48 Latest results 9M/2009: Central T&I, Brake Discs, and Corporate Costs in million Other sales (incl. Brake Discs) Central T&I Costs Brake Discs (EBIT) Corporate Costs 9M/ M/ On May 28, 2009, we completed the transfer of our brake disc activities into JV with Brembo. Up to this date, brake disc business was still consolidated in SGL Group and reported separately under Corporate Costs. Since end of May, earnings of brakes business reported in financial result Central T&I Costs decreased by 24% reflecting clear focus of our R&D activities given difficult economic environment Corporate Costs decreased by 27% due to stringent cost management relating to purchased services and lower expense level relating to Management Incentive Systems 48

49 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.