SGL Carbon SE · XETR:SGL

SGL Carbon — SGL Group — MM Warburg Highlights 2014

40 slides from SGL Carbon's conference presentation, May 23, 2014

1. Slide 1: Warburg Highlights 2014

   Warburg Highlights 2014 Jürgen Muth, CFO Hamburg, 23 May 2014

2. Slide 2: Company profile. SGL Group

   Company profile. SGL Group  One of the world’s largest manufacturers  Sales of ~€ 1.5 bn in 2013 of carbon-based products  Head office in Wiesbaden/Germany  Comprehensive portfolio ranging from carbon and graphite products to carbon  More than 6,000 employees worldwide fibers and composites  M

3. Slide 3: Introduction to SGL Group's Businesses

   Introduction to SGL Group’s Businesses Page 3 | Investor Relations Presentation

4. Slide 4: New streamlined business structure as of February 2014

   SGL Group. New streamlined business structure as of February 2014 Graphite & Cathodes Graphite Process Carbon Aero- JVs Carbon & Furnace Specialties Tech- Fibers & structures - SGL ACF Electrodes Linings (GS) nology Composite (AS) - Brembo SGL (GCE) (CFL) (PT) Materials - Benteler SGL (CF/CM) - etc

5. Slide 5: Reporting Segment: Performance Products (PP)

   Reporting Segment: Performance Products (PP). Business units 2013 Group sales PP sales - 2013  Graphite & Carbon Graphite & Electrodes (GCE) Carbon Cathodes  Cathodes & Furnace & Furnace Electrodes Linings 85% Linings (CFL) PP 15% 51% Key industries served Characteristics Strategic priorities  St

6. Slide 6: Graphite electrodes (GE) – steel production in EAFs

   Graphite & Carbon Electrodes. Graphite electrodes (GE) – steel production in EAFs Worldwide steel production [in mt] 1600  Growth in steel production Blast furnace produces primary (integrated) steel based on iron ore fuelled by infrastructure 1400 Electric arc furnace produces secondary (electric)

7. Slide 7: Graphite electrodes for electric steel production

   Graphite & Carbon Electrodes. Graphite electrodes for electric steel production Steelmaking in an electric arc furnace (EAF) Graphite electrode Section view through EAF Graphite Electrodes Furnace shell Molten steel 100 – 360 cm Eccentric bottom Rocker tilt tapping (EBT) Tilt cylinder 35 – 80 cm Con

8. Slide 8: Graphite electrode production process

   Graphite & Carbon Electrodes. Graphite electrode production process Graphite production  GE critical to EAF furnace efficiency but only ~ 3% of steelmaking conversion cost  GE is a consumable – replaced every 5 to 8h  GE usually sold mostly in annual contracts  Needle coke requirements sourced o

9. Slide 9: Cathodes for the aluminum industry

   Cathodes & Furnace Linings. Cathodes for the aluminum industry  Aluminum demand driven by: 80 Aluminum global production scenarios − Population growth and urbanization 2003 – 2020 / Above pre-crisis scenarios 67 mio. t Primary Aluminum Production [in mio. t] 70 − Further industrialization of BRICs

10. Slide 10: Cathodes for the aluminum industry

    Cathodes & Furnace Linings. Cathodes for the aluminum industry Aluminum smelter Cathodes 30 – 70 cm 2 30 – 3 50 cm 4 4 1 100 – 380 cm 4 Special Cathode Ramming Sidewall glue blocks pastes blocks Source: SGL Group Page 10 | Investor Relations Presentation

11. Slide 11: Market shares in cathodes

    Cathodes & Furnace Linings. Market shares in cathodes  Increasing cathode demand Market shares in cathodes 2014 due to new projects. CIS 7% SGL 18% SEC 16% Carbone Savoie 18% Various (Chinese & Others) 41% Source: SGL Group’s own estimates, market shares based on volume (excl. China domestic) Vario

12. Slide 12: Reporting segment: Graphite Specialties (GS)

    Reporting segment: Graphite Specialties (GS). Business unit 2013 Group sales Key industries served  Graphite Specialties (GS)*  Energy – Solar / Battery GS  Semiconductor / LED 20%  Metallurgy  Tool manufacturing  Automotive  High-temperature processes Characteristics Strategic priorities  S

13. Slide 13: Specialty graphites required where other materials fail

    Graphite Specialties. Specialty graphites required where other materials fail Main properties of carbon and graphite materials Mechanical strength Thermal Resistance shock to high resistance temperatures Modifiable to suit require- ments Corrosion Purity resistance Electrical and thermal conductivit

14. Slide 14: Best solutions for our customers

    Graphite Specialties. Best solutions for our customers … ... in the PV / ... in the LED Industry ... in the Chemical and Semiconductor Industry Automotive Industry Iso susceptor, heating elements, heat shields / insulation Flange sealed (soft- and rigid Felt) by a gasket MOCVD reactor Reinforced gra

15. Slide 15: Enabling innovation

    Graphite Specialties. Enabling innovation Examples: Target approx. 1/3 of sales based on new products  Carbon for anode material for lithium-ion introduced over the last 4 years batteries  New application in electronics industry  Thermal management solutions for electronic applications  Expanded

16. Slide 16: Major customer industries 2013

    Graphite Specialties. Major customer industries 2013 % of total GS sales 2013 Energy: Batteries & Nuclear 20% Energy: Solar (including Polysilicon) 11% Semiconductor (incl. LED) 14% Chemicals 11% Tool manufacturing 11% Metallurgical applications 10% Automotive & Transportation 10% High-temperature p

17. Slide 17: Reporting segment: Carbon Fibers & Materials (CFM)

    Reporting segment: Carbon Fibers & Materials (CFM). Business units* 2013 Group sales CFM sales – 2013  Carbon Fibers / SGL ACF Composite Materials CFM 8%  51% SGL ACF (JVs with 17% BMW) Carbon Fibers / Composite Materials Key industries served 92%  Automotive Characteristics Strategic priorities

18. Slide 18: Carbon fiber demand growth delayed but all growth drivers intact

    Carbon Fibers / Composite Materials. Carbon fiber demand growth delayed but all growth drivers intact CF market forecast [January 2014; in thousand mt p.a.] 80 71 63 55 49 39 41 30 34 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: SGL Group market research Page 18 | Investor Relations Presenta

19. Slide 19: JVs with BMW, Mitsubishi exclusively for BMW's demand

    Carbon Fibers / Composite Materials. JVs with BMW, Mitsubishi exclusively for BMW’s demand  Milestone in serial application of carbon fibers in automotive industry – market launch of first serially produced car (BMW i3) with a CFRP passenger cell in November 2013; market launch of BMW i8 in May 201

20. Slide 20: Equity accounted JVs in automotive

    Equity accounted JVs in automotive. Complement our carbon fiber product offering  Benteler-SGL: − 50/50 JV between SGL Group and Benteler AG to develop composite based automotive components − Leading position in developing structural automotive parts and modern, automated production technologies −

21. Slide 21: SGL Group only integrated European carbon fiber producer

    Carbon Fibers / Composite Materials. SGL Group only integrated European carbon fiber producer Carbon Fibers & Composite Materials Composite Components* (Re-)Focus on materials & automotive / other industrial components Automotive & Raw Carbon Composite other Industrial Material Fiber Materials  Ben

22. Slide 22: Carbon Fibers & Materials & Automotive Components

    Carbon Fibers & Materials & Automotive Components. Best solutions for our customers Materials Carbon fiber Fabrics Automotive components Lightweight automotive Brake discs parts Page 22 | Investor Relations Presentation

23. Slide 23: Reporting Segment: Corporate & Others (C&O)

    Reporting Segment: Corporate & Others (C&O). 2013 Group sales C&O sales - 2013 Corporate C&O 3% 13% Process Aero- Techno- structures logy 39% 58% Business units Key industries served  Process Technology (PT)  Chemicals  Aerostructures (AS, HITCO)  Pharma plus  Environmental Corporate T&I  Aero

24. Slide 24: Process Technology. Process solution provider

    Process Technology. Process solution provider for chemical and related industries Product portfolio Core industries served Systems  Chemicals  Syntheses  Pharma  Distillation, purification,  Metals & Mining concentration, dilution  Energy  Absorption, desorption  Solar  Reactors & converter

25. Slide 25: Aerostructures. Composite component manufacturer HITCO

    Aerostructures. Composite component manufacturer HITCO for aerospace & defense industries  Complex multi-contoured hand lay-up expertise augmented by world class automation for carbon fiber reinforced aero structures  Investment into automation technologies AFP (Automated Fiber Placement machine),

26. Slide 26: SGL Excellence. Enables productivity and growth

    SGL Excellence. Enables productivity and growth SGL Excellence  Started in 2002  Core element of the Company mission Innovation Excellence  Ongoing and Company wide program  Our philosophy of doing business SIX SIGMA + LEAN Operational Commercial  Our core methodology Excellence Excellence  Fo

27. Slide 27: SGL Excellence savings

    SGL Excellence savings. Since 2002 continuous cost reduction of €310 million in total Annual Net Savings (€m) 55 25 27 28 26 27 21 23 23 24 16 15 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Page 27 | Investor Relations Presentation

28. Slide 28: SGL2015 cost savings program. Three pillars

    SGL2015 cost savings program. Three pillars for improving profitability and market positioning Organizational Asset Portfolio Restructuring Restructuring Restructuring Simplify processes and Adjust asset base to changes Carbon fiber business: focus streamline management in market demand on materials

29. Slide 29: SGL2015. Organizational restructuring

    SGL2015. Organizational restructuring A Reducing personnel costs by streamlining corporate and service functions Board of Management -40% − Affecting approximately 300 jobs Upper Management -22% − Primarily at management levels Middle Management -14% Employees -14% B Substantial reduction in indirec

30. Slide 30: SGL2015. Asset restructuring

    SGL2015. Asset restructuring Adjusting production network to changed demand and market environment  Closure of Canadian facility in Lachute − Production to be phased out by end Q1-2014 − Reducing 30,000 t graphite electrode capacity − 110 jobs cut  Closure of Italian facility in Narni − Reducing 3

31. Slide 31: SGL2015. Portfolio restructuring

    SGL2015. Portfolio restructuring Focusing our carbon fiber business on core activities  Disposal of rotor blade activities − Sale of all shares in SGL Rotec to a strategic investor as per December 31, 2013 − Strong cooperation in carbon and glass material supply to continue  Next steps − Review of

32. Slide 32: Technology & Innovation. Foundation for profitable growth

    Technology & Innovation. Foundation for profitable growth Technology & Innovation: SGL Group’s centralized R&D organization  Market driven R&D ensures best-in-class support for current and future customers.  Industry networks with suppliers and customers are an essential part of our development st

33. Slide 33: Latest Financials Q1/2014

    Latest Financials Q1/2014 Page 33 | Investor Relations Presentation

34. Slide 34: Q1/2014. Results marked by price pressure in graphite electrodes

    Q1/2014. Results for the Group marked by price pressure in graphite electrodes Continuing business in € million Q1/2014 Q1/2013 Sales revenue 336.3 396.7 EBITDA before restructuring expenses 18.9 34.5 EBIT before restructuring expenses -2.3 13.6 Restructuring expenses -2.3 - Results from At-Equity a

35. Slide 35: Q1/2014. Successful refinancing in December 2013

    Q1/2014. Successful refinancing in December 2013 prolongs maturity profile SGL Group established a long  €250 million Corporate Bond at 4.875% (maturity 2021) term financial structure in December 2013  €200 million credit facility, undrawn (maturity 2017)  €134.7 million* Convertible Bond at 3.5%

36. Slide 36: Outlook 2014

    Outlook 2014 Page 36 | Investor Relations Presentation

37. Slide 37: Outlook 2014. Another difficult year operationally

    Outlook 2014. Another difficult year operationally  Group Sales: − Expected virtually stable compared to FY2013 excluding currency effects and potential portfolio adjustments − Includes proportional consolidation of our 51% share in the BMW JVs, SGL ACF  Group EBIT before restructuring expenses: a

38. Slide 38: Outlook 2014. Smaller businesses offset by graphite electrodes

    Outlook 2014. Improvement in smaller businesses will be more than offset by graphite electrode development  Performance Products (PP): Significantly lower sales and EBIT compared to FY2013 expected due to lower graphite electrode prices and volumes  Graphite Specialties (GS): Double digit growth i

39. Slide 39: 2014. We are working hard to regain sustainable profitability

    2014. We are working hard to regain sustainable profitability  Measures as defined in cost savings program SGL2015 will be continued vigorously  Implementation of new corporate culture: − Smaller Board of Management empowers BUs and Corporate Functions: “listen to the experts” − We continue to inc

40. Slide 40: Important note

    Important note. This presentation contains forward looking statements based on the information currently available to us and on our current projections and assumptions. By nature, forward looking statements are associated with known and unknown risks and uncertainties, as a consequence of which actu

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