Press Releases 2005


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	Press Releases

August 9, 2005

SGL Carbon: First Half of 2005

Q2/2005 sales up by 17% and EBIT by 57% over Q1/2005
Disproportionate 29% improvement in EBIT to €53.8 million in H1/2005,
with a positive after-tax result of €14.5 million
AUDI cooperation agreement goes into effect in Q3/2005
Ongoing favorable developments anticipated in Q3/2005

Wiesbaden, August 09, 2005. SGL Carbon was able to boost consolidated sales due to the strong development of demand in all three business areas by 14.0% from €453.0 million in H1/2004 to €516.4 million in H1/2005. Adjusted for foreign currency changes, sales increased by 15.9%. EBIT increased by a disproportionately higher rate than sales from comparable €41.8 million the previous year to €53.8 million. This corresponds to a 28.7% increase despite a first-time charge due to share-based remuneration of approximately €4 million. The principal causes for the growth in earnings were the ongoing favorable developments in Carbon and Graphite, the earnings turnaround in Process Technology, the breakeven result achieved by SGL Technologies in Q2, and cost savings of approximately €10 million in H1/2005.

Net financing costs
First half-year net financing costs improved from €–31.4 million in 2004 to €–27.8 mil-lion in 2005. The net interest expense decreased during the first half of the year by €0.8 million to €14.6 million over the same period of the previous year due to the lower level of net debt. In addition, non-cash interest expenses in connection with the antitrust proceedings declined from €3.4 million in the first half of 2004 to €2.6 million in H1/2005.

Profit before and after tax
Profit before income taxes amounted to €26.0 million, compared with €10.4 million in H1/2004. With a tax rate of approximately 44%, consolidated net profit in H1/2005 doubled from €7.0 million the previous year to €14.5 million. Taking into consideration the loss from the Surface Protection business, profit after tax rose from €0.3 million in the first half of 2004 to €14.5 million during the same period of 2005. Earnings per share thus amounted to €0.25, compared with the reported figure of €–0.06 and a comparable figure of €0.01 in H1/2004.

Statement of Changes in Consolidated Equity
With equity up by €29 million from €282 million on December 31, 2004 to €311 million on June 30, 2005, the equity ratio improved from 21.4% to 24.3%. Excluding assets and liabilities related to the Corrosion Protection business in the balance sheet as of December 31, 2004, the equity ratio increased from 22.5% to 24.3%. When the €50 million convertible bond issue, which becomes due in September 2005, is deducted from total assets as of the end of June 2005, a 25.3% pro forma equity ratio results.

Corporate Costs
Corporate costs rose from €–9.9 million in the first half of 2004 to €–13.8 million in the first half of 2005. This was primarily attributable to expenses in connection with the implementation of the Sarbanes-Oxley Act as well as the first time inclusion of sharebased remuneration components under the provisions of IFRS 2 beginning on January 1, 2005, which was not undertaken in the previous year.

Employees
The number of employees in the Group remained virtually unchanged at 5,097 compared with a total of 5,091 at the end of March 2005, thereby remaining below the level of 5,109 at the end of December 2004.

Segment Reporting

Carbon and Graphite (CG)
Sales increased by 14.3% to €311.1 million in the first half of 2005. Adjusted for foreign currency changes, the growth was 16.9%. Due to the continuing high demand for graphite electrodes and the high capacity utilization at all the plants as well as to price increases and ongoing cost reduction measures, EBIT amounted to €60.3 million during the reporting period, up by 32.8% over the previous year's figure of €45.4 million. The return on sales improved to over 19%, compared with just under 17% in the first half of 2004 (EBIT margin in Q2/2005: 20.0%; Q1/2005: 18.7%). The average price for graphite electrodes increased by 12% in USD terms and by 4% in EUR terms versus H1/2004. Total shipments amounted to 110,000 metric tons in the first half of 2005,
10% higher than in the first half of the previous year. As expected, raw material and energy costs increased by nearly 10%. Due to seasonally lower volumes, we are projecting the Q3/2005 EBIT slightly lower than in Q2/2005 (€33.6 million), but in excess of the previous year’s Q3 figure of €25.5 million.

Specialties (S)
Due to the integration of Process Technology (PT) into the Graphite Specialties Business Area (GS), we have renamed this area of business “Specialties” (S).

Thanks to a very good development of the U.S. business and PT’s planned project launch in Q2/2005, sales increased by 7.2% to €123.6 million versus H1/2004; growth of 7.7% was posted after adjusting for foreign currency changes. The rise in sales was modest for GS and substantial for PT. Whereas EBIT of GS was still below the strong previous year’s figure, PT already recorded an improved result in the first half-year compared with the year earlier period. EBIT for the overall Specialties Business Area in the first half-year amounted to €7.9 million, which due to the weak Q1/2005 was still €2.3 million below the figure for H1/2004. However, with EBIT of €6.6 million, the Q2/2005 result was already one-third higher than in Q2/2004, with PT contributing to that growth. From Q3/2005 onwards, the ongoing favorable sales trend will be further reflected in the EBIT of S, which will result in a significant double-digit improvement over Q3/2004.

SGL Technologies (SGL T)
Due to strong demand for Fibers, Composites and Brakes, sales rose by 24.8% to €80.5 million. After adjusting for foreign currency changes, growth amounted to 26.2%. EBIT totaled €–0.6 million in the first half of 2005, compared with €–3.9 million in the first half of the previous year, thereby reaching breakeven for the first time in Q2/2005. This satisfying development should continue in Q3/2005, with the increase in sales remaining below the growth in H1/2005 due to the high comparable figure in Q3/2004 but still continuing to exceed 10%.

Since the June 7, 2005 announcement of SGL Carbon entering a cooperation agreement with AUDI for the development of the carbon-ceramic brake disc, the appropriate bodies have since granted the necessary approvals and the agreement has received its notarial certification. With the official cooperation agreement coming into force on July 28, 2005, SGL Carbon will in Q3/2005 receive a low double-digit million amount payment as compensation for product and process development services already rendered and still to be provided. After offsetting these development costs from the received payment, a one-time medium single digit million amount is expected as positive earnings effect on EBIT in Q3.

Outlook
Due to the typical seasonality, SGL Carbon expects slightly weaker sales and EBIT in Q3/2005 versus Q2/2005. Compared with Q3/2004, however, marked growth of ap-proximately 10% is anticipated for sales and a further disproportionate improvement of up to 50% for EBIT. For the year as a whole, the Company is forecasting an increase in consolidated sales of between 5% and 10%, a disproportionate growth in EBIT, and a positive after-tax result. The USD currency risk is hedged for fiscal year 2005 due to existing hedging transactions. Net financial debt should be less than €300 million at year-end 2005 (2004 yearend: €321 million) due to the significant positive free cash flow expected until the end of this year.

Financial Highlights SGL Carbon Group
(in Mio. €)

	First Half
	2005	2004
Sales revenue	516.4	453.0
EBITDA	88.6	71.0
EBIT	53.8	41.8
Return on sales⁽¹⁾	10.4%	9.2%
Net profit (loss) from continuing operations	14.5	7.0
Net loss from discontinued operations	-	-6.7
Net profit before minority interests	14.5	0.3
Earnings per share (in €)	0.25	0.01
Operational cash flow continuing operations⁽²⁾	43.0	45.3

⁽¹⁾ EBIT divided by sales revenue
⁽²⁾ Without currency exchange rate effects

	June 30, 2005	Dez. 31 2004
Total assets	1,278	1,315
Equity	311	282
Net dept	342	321
Debt ratio (gearing)⁽³⁾	1.1	1.1
Equity ratio⁽⁴⁾	24.3%	21.4%

⁽³⁾ Net debt divided by shareholders' equity
⁽⁴⁾ Shareholders' equity divided by total assets

Remark
Effective January 6, 2005, SGL Carbon concluded the sale of its investment in SGL ACOTEC GmbH, which included SGL’s Surface Protection business. The effects resulting from this transaction were already recognized in the annual financial statements for 2004. The Process Technology (PT) business remaining in the Group was integrated within the Specialties (S) Business Area. Only the results of continuing operations are presented in this semiannual report.

According to IFRS 2, since January 1, 2005, share-based payments, such as stock option plans and share bonus programs for employees and members of senior management are included under staff costs. Based on current calculation, this change will burden the results of the segments and corporate costs by a total of approximately €2 million each quarter in 2005.

As we already discussed at the year-end press conference in March, the restructuring measures have now largely been completed. Therefore, profit from operations (EBIT) no longer includes a separate presentation of restructuring expenses.

Important Notice:
This document 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. These risks and uncertainties include, for example, unforeseeable changes in political, economic and business conditions, particularly in the area of electrosteel 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, ongoing restructuring measures and unforeseeable occurrences in conjunction with the reviews to be performed by the European antitrust authorities. SGL Carbon does not intend to update these forward-looking statements.