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| March 16, 2004 |
SGL Carbon: Fiscal year 2003
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- Profit from operations up significantly year-on-year
- Net loss widens due to one-time charges in net financing
costs
- Substantial improvement in profit from operations
expected for 2004
WIESBADEN, March 16, 2004. The SGL Carbon Group recorded sales revenue
for fiscal 2003 of €1,046 million, around 6% less than in the
previous year (2002: €1,112 million). Sales revenue was hit
by declining demand in a number of businesses due to economic factors,
as well as the slide of the US dollar against the euro. Adjusted
for currency translation effects, sales revenue increased by 2%.
Profit from operations up sharply
SGL Carbon’s profit from operations before costs relating to
antitrust proceedings and restructuring was up by a good third year-on-year
at €39 million (2002: €29 million). The profit from operations
after restructuring expenses in 2003 also improved by around 40%
on the previous year to approximately €29 million. As part of
its review of all pro-visions for antitrust risks, the Company increased
the provision set up in Q3/2003 for the fine relating to a non-core
activity of its Graphite Specialties business to just under €20
million. This also takes account of legal costs and lawyers’ fees.
SGL Carbon be-lieves that the fine of €23.6 million imposed
on the Company by the European Commis-sion at the end of 2003 is
unjustified and has appealed to the European Court. At €9 million,
profit from operations after all one-time expenses was well up on
the previ-ous year (2002: loss from operations of €2 million).
Net financing costs hit by one-time charges
Interest on borrowings and the interest component of the addition
to pension provisions remained unchanged year-on-year at €37
million in total. All in all, net financing costs for 2003 amounted
to €73 million. The difference of €36 million is largely
due to a number of one-time factors, i.e. the successful refinancing
package concluded at the start of 2004 meant that the costs of the
refinancing measures implemented at the end of 2002 amounting to €16
million had to be de-recognized. A further €20 million in net
financing costs relates to the non-cash accrued interest on liabilities
arising from the North American antitrust proceedings (€6 million)
and interest on the contested Euro-pean antitrust proceedings (€6
million), as well as other net financing costs (€8 million).
Net loss widens
As a result of the increase in one-time charges caused by the refinancing
package and the antitrust liabilities, the net loss widened to €50
million (2002: €24 million).
On the positive side, however, due to the clear turnaround in its
business in the USA, SGL Carbon recognized an initial portion of
the loss carryforwards there on the basis of a conservative estimate.
This resulted in a tax benefit of €10 million.
Carbon and Graphite (CG)
Graphite electrode sales volumes increased by 17% to a record volume
of 202,000 tons (2002: 173,000 tons). This meant that the Company
was operating at full capacity dur-ing the period under review. Average
revenue fell year-on-year due to currency effects. This also negatively
impacted sales revenue, which grew by only 1% to €558 million.
Nevertheless, average prices for graphite electrodes for 2003 rose
by 2% in euros and 7% in US dollars compared to their low in Q4/2002.
In spite of the weak US dollar, profit from operations before restructuring
expenses im-proved at a faster pace in 2003, rising 27% to €66
million (2002: €52 million). This is mainly due to the Company’s
ongoing cost-cutting drive next to the fact that production facilities
were fully utilized.
Graphite Specialties (GS)
2003 sales revenue declined by 11% to €174 million because of
reduced demand in some of SGL Carbon’s customer industries,
the sale of the Electrical Contacts business and the weakness of
the US dollar. At €7 million, profit from operations before
restruc-turing expenses was up €5 million year-on-year. The
proceeds from the sale of the Elec-trical Contacts business, the
first-time consolidation of the Polish company SGL An-graph and further
cost-cutting were the main contributing factors. As part of its restruc-turing
program, the GS production facilities in Grenoble, France were closed.
Corrosion Protection (CP)
CP was hit by ongoing reduction in investment as well as in repair
and maintenance expenditure in the chemical, energy and environmental
industries. Sales revenue fell by 12% to €186 million. Rationalization
measures could only partially offset lower capac-ity utilization.
As a result, CP recorded a loss from operations before restructuring
ex-penses of €4 million, compared to a profit from operations
of €5 million in the previous year.
The globalization of the markets leading to an accelerated transfer
of the production of basic chemicals to low-wage countries, shrinking
domestic markets and falling prices are clear indications of the
dramatic change in industry dynamics in the field of indus-trial
corrosion protection. To meet changed market requirements, SGL Carbon
has re-structured its Corrosion Protection business into two segments – Process
Technology and Surface Protection – which will be run independently
and adjusted to its reduced structural needs. As a result the previous
management of the business decided at the beginning of 2004 to leave
the Company by mutual agreement in context with this stra-tegic and
structural adjustment. The structure of the two independent businesses
is cur-rently being reviewed and optimized. As a first step, the
Surface Protection workforce will be reduced further. SGL Carbon
will report on the further development in the indi-vidual businesses
around mid-year.
SGL Technologies (SGL T)
Sales revenue in SGL T was down 17% to €125 million. The main
cause apart from a cyclical drop in demand in the Fiber business
was the weak US dollar: SGL T produces and invoices around 60% of
its sales revenue in the dollarzone. The drop in orders from the
civil aviation sector due to economic uncertainties also impacted
sales revenue in 2003.
The loss from operations before restructuring expenses of €12
million remained at last year’s level. Lower sales revenue,
additional start-up costs for new orders from the US aviation and
defense industry, and certification costs for its brake disc production
facili-ties made it impossible to achieve the original target of
substantially reducing losses in 2003.
Employees
At the end of 2003, the SGL Carbon Group employed 6,926 people, 434
fewer than in the previous year. This is mainly attributable to portfolio
adjustments, restructuring and cost-cutting measures.
Balance sheet structure
Total assets fell year-on-year by €39 million to €1,247
million, due in particular to ex-change rate effects of €68
million. In addition to currency translation effects and costs relating
to antitrust proceedings and restructuring expenses, the equity was
additionally affected by the high negative financial result. It fell
from €196 million to €117 million in the year under review.
As a result, the equity ratio diminished to 9% (2002: 15%). Net financial
liabilities on December 31, 2003 amounted to €448 million (December
31, 2002: €427 million including €41 million from the sale
of receivables).
Capital expenditures and depreciation
Capital expenditures in property, plant and equipment were further
reduced year-on-year and, at €33 million, were €31 million
lower than depreciation (without amortization). 64% of investments
were attributable to CG, 18% to GS, 6% to CP and 12% to SGL T.
Outlook for 2004
SGL Carbon is expecting a moderate economic upturn in 2004. The increase
in growth in the United States and the economic recovery in Japan
should now be followed by a gradual recovery in the eurozone. The
Company assumes that investment demand in the chemicals, plant and
process technology and semiconductors industries will only pick up
in the second half of 2004. In the steel industry however, SGL Carbon
expects a con-tinuous strong demand throughout the year as in 2003.
On the whole, the Group expects to record a further significant improvement
in profit from operations year-on-year. Cost-cutting measures in
all businesses, higher prices for graphite electrodes and increased
sales revenue at GS and SGLT should all have a posi-tive effect.
Important information:
No offer:
This announcement does not constitute an offer to sell, or a solicitation
of an offer to buy or sell, any securities of SGL Carbon. Securities
may not be offered or sold in the United States absent registration
or an exemption from registration; any public offering of securities
in the United States must be made by means of a prospectus that may
be obtained from the issuer and that contains detailed information
about the company and management as well as finan-cial statements.
Forward-looking statements:
This press release contains forward-looking statements. These statements
reflect the current belief of SGL Carbon's management as well as
assumptions made by, and information available to, the SGL Group.
Forward-looking state-ments are not guarantees of future performance
and involve risks and uncertainties. Actual future results and devel-opments
could differ materially from those set forth in these statements
due to various factors. These factors include changes in the general
economic and competitive situation, particularly in SGL Carbon's
businesses and markets; changes resulting from acquisitions and the
subsequent integration of companies; and changes resulting from restruc-turing
measures. In addition, future results and developments could be affected
by the performance of financial mar-kets; fluctuations in exchange
rates; changes in national and supranational law, particularly with
regard to tax regula-tions; and other risks and uncertainties, including
those detailed in SGL Carbon's filings with the U.S. Securities and
Exchange Commission. SGL Carbon assumes no obligation to update forward-looking
statements.
SGL Carbon Group: Key figures
(€ million, except for earnings per share)
|
Fiscal year
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2003 |
2002 |
| Sales revenue |
1,046 |
1,112 |
| Profit from operations before depreciation
and amortization (EBITDA) (1) |
111 |
110 |
Profit from operations before costs relating
to antitrust proceedings and restructuring
|
39 |
29 |
| Costs relating to antitrust proceedings |
-20 |
-22 |
| Restructuring expenses |
-10 |
-8 |
| Loss from operations after costs relating
to antitrust proceedings and restructuring |
9 |
-2 |
| Net financing costs |
-73 |
-26 |
| Loss before tax |
-64 |
-27 |
| Income tax benefit |
14 |
4 |
Net loss for the period
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-50 |
-24 |
Earnings per share
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-2.27 |
-1.08 |
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December 31, 2003 |
December 31, 2002 |
| Total assets |
1,247 |
1,286 |
| Equity |
117 |
196 |
| Net financial liabilities |
448 |
427 (2) |
| Gearing |
3.8 |
2.2 |
| Equity ratio (%) |
9 |
15 |
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(1) Before costs relating to antitrust proceedings and
restructuring expenses
(2) Including €41 million from the sale of receivables
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