Press Releases 2003


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	Press Releases

August 12, 2003

SGL Carbon: Encouraging First Half 2003

Noticeable quarter-on-quarter and year-on-year rise in profit from operations
Full capacity utilization for Graphite Electrodes
No economic recovery in Graphite Specialties and Corrosion Protection

WIESBADEN, August 12, 2003. Consolidated sales revenue of the SGL Carbon Group fell to €518.8 million in H1, a 4% year-on-year decline. After adjustment for exchange rate effects, sales revenue was up 6%, mainly due to continuing strong growth in graphite electrode volumes.

The profit from operations rose to €18 million (H1/2002: €8.1 million) in the period under review. This includes a net positive earnings contribution from non-operating activities of €4 million, which primarily relates to the disposal of the Group’s electrical contacts business and a closed plant in the USA. However, additional expenses were incurred in relation to workforce reduction measures in Grenoble/France.
Furthermore, the Polish company Angraph was included in the consolidated financial statements for the first time as of June 30, 2003. In Q2, SGL Carbon increased its consolidated profit from operations in comparison to Q1 by €7.8 million to €12.9 million.

Net financing costs, net loss after tax and debt reduction

Net financing costs in H1/2003 were €-26.2 million (H1/2002: €-14.8 million). This includes non-cash items of €-10.2 million. The year-on-year difference in non-cash items (H1/2002: €-1.5 million) is due to positive one-time effects in 2002.
The net loss after tax improved from €-11.5 million in H1/2002 to €-6.7 million in H1/2003. The figures for Q2/2003 were already slightly positive (€0.9 million).

After adjustment for sales of receivables, SGL Carbon reduced its net financial liabilities by €22 million in H1/2003 to €446 million (December 31, 2002: €468 million).

Cost savings

The Company pressed ahead with its restructuring program for Carbon and Graphite and Graphite Specialties, which it announced in 2001. SGL Carbon already generated savings of €7 million in H1, and is targeting at savings of €19 million on 2001 for the year as a whole. In addition, the Group-wide SGL Excellence initiative resulted in further cost savings and improvements in efficiency in the first six months of 2003. SGL Carbon is expecting additional savings of around €10 million by end of the year.

Carbon and Graphite (CG)

Sales revenue rose by 4% year-on-year to €277.6 million. The continuing positive development in graphite electrode sales volumes was largely offset by exchange rate effects. After adjustment for exchange rate effects, sales revenue rose by 16% in the period under review.

Graphite electrode sales volumes rose by 25% to 96,700 tonnes (H1/2002: 77,100 tonnes). At 51,500 tonnes, sales volumes in Q2 were up 14% on Q1/2003 (45,200 tonnes), primarily as a result of increases in North America. Due to the development of the US dollar, average revenue for graphite electrodes per ton declined 12% year-on-year in H1/2003, though it remained unchanged after adjustment for exchange rate effects. Compared to Q4/2002, average revenue by ton rose by 4% in order currencies but declined 4% after adjustment for exchange rate effects.

As a result of cost savings and rising volumes, the profit from operations rose 40% to €33.5 million in the period under review. At €21.3 million, the Q2 profit from operations almost doubled as against the previous quarter.

After adjustment for exchange rate effects, the Company is expecting a further slow rise in prices for graphite electrodes in H2/2003. With orders remaining at a high level, SGL Carbon is forecasting that sales volumes for the whole of 2003 will be up at least 10% on the previous year (2002: 173,000 tonnes). The uncertain development of the US dollar/euro exchange rate poses a particular risk for sales revenue and earnings.

Graphite Specialties (GS)

Adjusted for the divestment of the electrical contacts business, sales revenue was down 6% year-on-year. This was due to exchange rate effects, declining prices, and a change in the product mix.

The profit from operations was up €4.2 million on H1/2002 to €7.1 million. The prime factors in this were the one-time contributions mentioned above and the first-time consolidation of the Polish company Angraph. The lower sales revenue was offset by cost savings.

The Company is assuming that the overall economic conditions for GS will not improve in H2/2003, and does not expect to see a recovery in this area before 2004. The existing restructuring program will be implemented and extended to include further cost-cutting measures.

Corrosion Protection (CP)

As a result of the restraint with respect to investment and maintenance expenditure still being exhibited by customers in the chemicals, energy and environmental industries, sales revenue declined 9% year-on-year in H1/2003.

The loss from operations was €-6.4 million (H1/2002: €0 million). Ongoing rationalization measures were unable to fully offset the cyclical decline in capacity utilization. At present, the Company does not expect an economic recovery in H2. Given the seasonal nature of the CP business and the continuing implementation of the cost-cutting programs, an improvement in results is expect for H2/2003.

SGL Technologies (SGL T)

The 13% year-on-year decline in sales revenue to €66.8 million in H1 is primarily due to the currency translation effects impacting business by the Company’s US subsidiaries and its fiber business in the UK.

The loss from operations we were able to reduce by €1.5 million year-on-year to €-5.4 million. Start-up and certification costs led to temporary one-time charges in Q2/2003.

Despite the uncertainty surrounding economic and exchange rate developments, SGL Carbon is expecting a significant improvement in the loss from operations at SGL T in H2 compared with the first half of the year.

Employees

The number of people employed at SGL Carbon dropped by 201 to 7,159 (December 31, 2002: 7,360) in H1/2003 as a result of portfolio streamlining and cost-cutting measures.

Outlook

Despite the muted economic situation, continuing slow demand and ongoing uncertainty regarding exchange rate developments between the US dollar, the euro, and the yen, SGL Carbon is expecting an improvement in its results for H2.

Important notice:
This press release contains forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. It contains forward-looking statements and information relating to sales and earnings figures, based on currently available information. Actual future results and trends could differ materially from those set forth in such statements due to various factors. Such factors include unforeseeable alterations in electric steel production, the possibility of changing economic and competitive conditions, changes in currency rates, technological developments, unanticipated developments relating to recently acquired businesses and Group companies, unforeseen difficulties relating to the investigations by the European antitrust authorities and to the now completed investigation by the Canadian and U.S. antitrust authorities and the civil actions related to these investigations and other risks and uncertainties, including those detailed in the Company's filings with the U.S. Securities and Exchange Commission. SGL CARBON does not intend to update these forward-looking statements, and does not assume any obligation to do so.

SGL Carbon Group Financial Highlights
(€ million; earnings per share in €)

	H1
	2003	2002
Sales revenue	518.8	538.1
Profit from operations before amortization and depreciation (EBITDA)	53.1	47.6
Profit from operations	18.0	8.1
Loss before taxes	-8.2	-6.7
Taxes	1.5	-4.8
Net loss for the period	-6.7	-11.5
Earnings per share¹	-0.30	-0.50

	June 30, 2003	Dec. 31, 2002
Total assets	1,318	1,286
Equity	171	196
Net financial liabilities	446	427
Net financial liabilities (Adjusted for sales of receivables)	446	468
Gearing²	2.6	2.2
Equity ratio³	13%	15,2%

⁽¹⁾ Diluted = basic
⁽²⁾ Ratio of net financial liabilities to equity
⁽³⁾ Ratio of equity to total assets