SGL Carbon SE · XETR:SGL

SGL Carbon — FY2020 Earnings Presentation

43 slides from SGL Carbon's earnings presentation, Mar 25, 2021

  1. Slide 1: Investor & Analyst Conference Call

    Investor & Analyst Conference Call Dr. Torsten Derr (CEO) and Thomas Dippold (CFO) Wiesbaden I March 25, 2021

  2. Slide 2: Agenda

    Agenda 1. Recent Developments 2. FY2020 Results 3. Restructuring Program 4. Outlook 2021 5. New Mid-Term Plan 6. Summary 7. Backup 2

  3. Slide 3: 1 Recent Developments

    1 Recent Developments €» sgl carbon

  4. Slide 4: SGL Carbon – Transformation on track!

    SGL Carbon – Transformation on track! Highlights 2020 & Guidance 2021 New Board of Management Our • Business negatively impacted by Covid-19 Environment • Semiconductors, China and carbon fibers for wind industry performed well Our • Covid-19: Limited impact on our employees & no shut-down of sites

  5. Slide 5: Share price more than doubled last 6 months & Regular entry in SDAX

    Share price more than doubled last 6 months & Regular entry in SDAX Share price SGL Carbon (in EUR) Re-Entry on March 22, 2021 8 ~7€/share 7 6 5 4 3 2 ~3€/share 1 0 SDAX is a registered trademark of a subsidiary of Deutsche Börse Group 5

  6. Slide 6: 2 FY2020 Results

    2 FY2020 Results 6

  7. Slide 7: Covid hit topline – Countermeasures helped Operating EBIT to stay slightly positive

    Covid hit topline – Countermeasures helped Operating EBIT to stay slightly positive Key figures 2020 (in mEUR) Key developments Sales Sales EBIT* Operating EBIT** • 15% below 2019 due to Covid -15% 4% -58% downturn and expected lower GAM-business 1,087 50 • Recovery in second half of 2020 48 47 919

  8. Slide 8: SGL Carbon with slightly positive Operating EBIT in 2020

    SGL Carbon with slightly positive Operating EBIT in 2020 EBIT bridge 2020 (in mEUR) 50 -10 -8 -7 20 -5 107 2 25 10 9 -94 29 -132 Net Result Interest Taxes/ EBIT Purchase Restruc- Other Impairment EBIT SDK/ Land One-offs Insurance Operating Other Price turing Restructuring loss before Other sale Pers

  9. Slide 9: Strong cash development due to one-offs, reduced CAPEX & strict working capital management

    Strong cash development due to one-offs, reduced CAPEX & strict working capital management Key figures 2020 (in mEUR) Key developments Net result Net result Free cash flow (FCF)* Net debt • With -132 mEUR at upper end of guidance 74 • Impairment and restructuring 287 289 costs main effects for loss

  10. Slide 10: BU Graphite Materials & Systems suffered from lower GAM business and overall market downturn

    BU Graphite Materials & Systems suffered from lower GAM business and overall market downturn Key figures 2020 (in mEUR) Key developments Sales Sales EBIT* Operating EBIT** • Sales reduction caused by -20% -50% -60% (expected) lower GAM business and overall Covid-related slow 623 market development 8

  11. Slide 11: BU Composites – Fibers & Materials overcame market drop and achieved operative turnaround

    BU Composites – Fibers & Materials overcame market drop and achieved operative turnaround Key figures 2020 (in mEUR) Key developments Sales Sales EBIT* Operating EBIT** • Market downturn in Automotive -9% and Aerospace compensated by market penetration in Wind 432 EBIT 391 19 • Despite low margin Wi

  12. Slide 12: BU Corporate with stable development and strong one-off result

    BU Corporate with stable development and strong one-off result Key figures 2020 (in mEUR) Key developments Sales Sales EBIT* Operating EBIT** • Sales remained stable, SDK exit 0% 61% 4% compensated with SDK settlement payment 33 33 EBIT • One-off EBIT measures and overall cost savings improved EBIT

  13. Slide 13: Net loss at the upper end of the guidance

    Net loss at the upper end of the guidance Group income statement (in mEUR) Key drivers 2020 2019 • Net sales decline by 15%, mainly Sales revenue 919.4 1,086.7 Corona-driven and lower GAM EBITDA before non-recurring items 123.5 120.0 business Operating EBIT before non-recurring items 19.5 46.6 • Ope

  14. Slide 14: Balance sheet ratios deteriorated mainly due to negative result

    Balance sheet ratios deteriorated mainly due to negative result Key figures and ratios (in mEUR) Key drivers 31.12.2020 31.12.2019 • Equity ratio declined strongly due to impairment Equity ratio (in %) 17.5 27.8 Total liquidity 141.8 137.1 • Liquidity slightly improved Net financial debt 286.5 288.5

  15. Slide 15: First positive Free cash flow since seven years due to one-offs

    First positive Free cash flow since seven years due to one-offs Cash flow (in mEUR) Key drivers continuing operations 2020 2019 • Operating cash flow improved due to working capital reduction Cash flow from operating activities 104.0 61.9 and payment from SDK Capital expenditures in property, plant,

  16. Slide 16: 3 Restructuring Program

    3 Restructuring Program €» sgl carbon

  17. Slide 17: First step in restructuring: The company culture!

    First step in restructuring: The company culture! 17

  18. Slide 18: Decisive initiatives with immediate P&L contribution

    Decisive initiatives with immediate P&L contribution 18

  19. Slide 19: New organization enhances transparency & management rigor

    New organization enhances transparency & management rigor From… …to PRINCIPLES Reporting Reporting Reporting Reporting Reporting Segment Reporting Segment Segment Segment Segment Segment Distinct business model BU BU Homogenous customer Business units Graphite Materials Composites - base & Systems F

  20. Slide 20: SGL Carbon’s transformation slightly ahead of plan

    SGL Carbon’s transformation slightly ahead of plan Status 31.12.2020 Target Implementation >700 Initiatives of Initiatives 37% Recurring >100 mEUR savings Realized Initiated 40 mEUR 56 mEUR Headcount >500 FTE reduction Realized Initiated 53% 85% Versus base year 2019 20

  21. Slide 21: 4 Outlook 2021

    4 Outlook 2021 21

  22. Slide 22: SGL Carbon to report EBIT / EBITDA pre-exceptionals

    SGL Carbon to report EBIT / EBITDA pre-exceptionals Definition of exceptionals (for 2021) • Depreciation in accordance with IFRS: ‒ straight-line depreciation including the effects of impairment (IAS 36) ‒ purchase price allocations (IFRS 3) ‒ depreciation on assets held for sale in accordance with

  23. Slide 23: SGL Carbon with improved market focus in four new business units

    SGL Carbon with improved market focus in four new business units New business unit structure Rationale Until Graphite Materials & Systems Composites – Fibers & Materials Distinct business model FY2020 (GMS) (CFM) Homogenous customer base New Graphite Process Carbon Fibers Composite from Solutions (G

  24. Slide 24: BU Graphite Solutions (GS) – Market to recover in 2021

    BU Graphite Solutions (GS) – Market to recover in 2021 Sales (in mEUR) Key drivers slight increase • Business is late cyclical 516  Semiconductor business remains strong 408  Industrial business still weak • EBITDA impact overproportional compared to sales • Semiconductors & China will drive the b

  25. Slide 25: SGL Carbon – 42.9 mEUR funding for graphite anode materials in batteries

    SGL Carbon – 42.9 mEUR funding for graphite anode materials in batteries What is IPCEI? • Important Project of Common European Interest • Project “European Battery Innovation”  Setup value chain for EV battery infrastructure in EU  2.9 bnEUR funding to 42 direct participants • SGL = European produ

  26. Slide 26: BU Process Technology (PT) – Dependent on chemical industry

    BU Process Technology (PT) – Dependent on chemical industry Sales (in mEUR) Key drivers stable • New business unit head 107 • Production of graphite equipment 88 (i.e. heat exchanger, synthesis systems) • SGL Carbon is technology leader 2019 2020 2021e • Business driven by economic development of ch

  27. Slide 27: BU Carbon Fibers (CF) – Undergoing a technical transformation

    BU Carbon Fibers (CF) – Undergoing a technical transformation Sales (in mEUR) Key drivers stable • New business unit head 341 304 • Management in subclusters  upstream (carbon fiber)  downstream (prepreg, fabrics) • Carbon fiber plants at full capacity to satisfy BMW i3 and 2019 2020 2021e wind de

  28. Slide 28: BU Composite Solutions (CS) – Strong sales increase driven by Automotive

    BU Composite Solutions (CS) – Strong sales increase driven by Automotive results into upside potentials Sales (in mEUR) significant Key drivers increase • New business unit head 91 89 • Turnaround expected in 2021 • High-end automotive business with high volumes • Start of serial production of batte

  29. Slide 29: SGL Carbon – Focus on profitability rather than sales growth in 2021

    SGL Carbon – Focus on profitability rather than sales growth in 2021 Sales (in mEUR) Key drivers • Restructuring project 1,087  Well on track 919 920 - 970  Pipeline filled with new ideas • EBITDA 2021: One-offs from 2020 replaced by operative improvements 2019 2020 2021e • Uncertainty on overall

  30. Slide 30: Preview Q1/2021 – Positively impacted by one-off effect in BU GS

    Preview Q1/2021 – Positively impacted by one-off effect in BU GS Early contract termination & compensation • Ongoing negotiations with customer to prematurely terminate contract for graphite tubes used in nuclear power plants • SGL Carbon is expecting a one-off payment of a low double- digit mEUR am

  31. Slide 31: 5 New Mid-Term Plan

    5 New Mid-Term Plan €» sgl carbon

  32. Slide 32: SGL Carbon roadmap – Step-by-step approach to create value

    SGL Carbon roadmap – Step-by-step approach to create value Profitability • Considered, once performance improved • Larger organic investments (e.g. GAM) 3. Accelerate • Selective divestments/acquisitions • Analysis of production sites 2. Improve • Selective organic growth in profitable areas • ESG c

  33. Slide 33: Focus on Profitability – Planning excluding larger investment projects

    Focus on Profitability – Planning excluding larger investment projects e.g. in GAM Group Sales & EBITDA margin, 2018 - 2025 Covid-19 CAGR ~6% ~1,200-1,300** 1,048 1,087 919 920-970 Group sales in mEUR Act 2018 Act 2019 Act 2020 Guidance 2021 Target 2025 EBITDApre-margin 12.1% 10.9% 10.1%* 15-18% 11-

  34. Slide 34: Financial mid-term targets resulting from bottom-up planning

    Financial mid-term targets resulting from bottom-up planning Financial targets in new mid-term plan Details • Targeted leverage ratio expected to be reached in next two y figures and ratios ROCE* ≥10% years Leverage ratio** ≤ 2.5 • Sales growth assumption  based on customer analysis in terms of pro

  35. Slide 35: 6 Summary

    6 Summary €» sgl carbon

  36. Slide 36: SGL Carbon‘s transformation right on track – key takeaways

    SGL Carbon‘s transformation right on track – key takeaways 1. Corona year 2020 impacted by restructuring, impairment, acquisition of 49% BMW stake in JV  2. EBITDA & cash 2020 improved by one-offs – recovery of underlying business expected 2021  3. Transformation project on track – more than 100 m

  37. Slide 37: Q&A

    Q&A © Copyright SGL Carbon SE ® Registered trademarks of SGL Carbon SE

  38. Slide 38: Financial calendar and IR contact details

    Financial calendar and IR contact details Financial calendar Contact May 12, 2021 Investor Relations  Report on the first quarter 2021 SGL Carbon SE  Conference call for analysts and investors Söhnleinstrasse 8 May 21, 2021 65201 Wiesbaden/Germany  Annual General Meeting Phone: +49 611 6029-103 F

  39. Slide 39: 7 Backup

    7 Backup €» sgl carbon

  40. Slide 40: New BU structure – strong positioning and promising drivers

    New BU structure – strong positioning and promising drivers Graphite Solutions (GS) Process Technology (PT) Carbon Fibers (CF) Composite Solutions (CS) • Isostatic and extruded graphite • Graphite heat exchangers, • Textiles and precursor • Composites parts & machined parts service and parts • Carbo

  41. Slide 41: Business units impacted by Covid-19 FY2020 vs FY2019

    Business units impacted by Covid-19 FY2020 vs FY2019 Sales (in mEUR) EBITDApre* (in mEUR) Sales • PT, GS strongly impacted due to -15% -21% pandemic economic slow down PT 106.6 -17% • CF: strong wind business could 88.2 compensate partly for slow-down in other business GS 516.0 PT 9.1 -63% 3.4 • CS:

  42. Slide 42: FY2020 KPI’s for modelling purposes in the new structure

    FY2020 KPI’s for modelling purposes in the new structure Retrospective adjustment to new BU structure 2020 2020 Sales Q1 Q2 Q3 Q4 FY EBITDA pre-exeptionals Q1 Q2 Q3 Q4 FY Graphite Solutions 111.7 101.5 94.8 99.5 407.5 Graphite Solutions 20.8 15.4 13.3 13.6 63.1 Process Technology 23.0 21.9 20.4 22.9

  43. Slide 43: Important Note

    Important Note This presentation contains statements relating to certain projections and business trends that are forward-looking, including statements with respect to SGL Group’s outlook and business development, including developments in SGL Group’s Composites - Fibers & Materials and Graphite Mat

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