SGL CARBON SE — Interim / Quarterly Report 2009

Apr 28, 2009

Report on the first quarter 2009

• • Positive net income of 19 million in Q1/2009 despite global economic crisis (Q1/2008: 145 million)
• • Sales at 1296 million 14% (currency adjusted 16%) below Q1/2008 (1343 million)
• • EBIT at 129 million achieves return on sales of 10% (Q1/2008: 20%)
• • Earnings per share 10.13 compared to s0.70 in Q1/2008
• • Equity ratio at 43%, gearing at 0.49

FINANCIAL HIGHLIGHTS (unaudited)

		1st Quarter
in Fm	2009	2008	∆
Sales revenue	295.6	343.2	−13.9%
Gross profit	85.3	125.3	−31.9%
EBITDA	43.2	82.3	−47.5%
Operating Profit/EBIT	29.2	70.1	−58.3%
Return on sales1	9.9%	20.4%	−
Net profit attributable to equity holders	8.7	44.6	−80.5%
Earnings per share, basic (in D)	0.13	0.70	−81.4%

in Fm	March 31, 2009	December 31, 2008	∆
Total assets	1,771.1	1,795.9	−1.4%
Shareholders' equity	769.6	763.3	0.8%
Net debt	380.8	332.6	14.5%
Debt ratio (gearing)2	0.49	0.44	−
Equity ratio3	43.5%	42.5%	−

¹ Ratio of operating profit to sales revenue

² Net debt divided by shareholders' equity

³ Shareholders' equity divided by total assets

Broad Base. Best Solutions.

Interim Group Management Report (unaudited)

Economic Environment

The state of the global economy continued to gradually deteriorate in the first three months 2009 compared to an already weak fourth quarter 2008. The member states of the OECD are amidst the deepest and most widespread recession for more than 50 years (Source: OECD Economic Outlook Interim Report at March end 2009). For the full year 2009 a 4.3% decline in economic growth is expected for the OECD member states. For the USA and the EU countries the contractions are expected to be slightly less than proportional. According to the OECD Japan is expected to be hit particularly hard. In addition, the growth in non-OECD countries such as Brazil, Russia, India and China is expected to slow down substantially. The International Monetary Fund (IMF) is also expecting a decline in economic growth for this year. While the IMF was still anticipating an increase of 0.5% in global output in January of this year, this forecast was sharply reduced to -1.3% in April.

Business environment

International trade contracted by more than 20% year-on-year in the last six months, the strongest decline for more than forty years. According to the OECD, industrial production was unusually hard hit, affecting particularly the environment for the Business Unit Performance Products, where SGL Group supplies to mainly the steel and aluminum industries. According to the global steel industry association IISI, worldwide crude steel production decreased by 23% year-on-year in the first quarter 2009. The reduction in steel production was considerably higher in the EU and in North America with respective declines of 44% and 52%. The decline in global primary aluminum production however was comparatively moderate with almost minus 9% in the first two months 2009, according to the International Aluminum Institute

The framework for the Business Units Graphite Materials & Systems and Carbon Fibers & Composites presents a rather mixed picture. The German automobile producers have reacted to the strongly decreased foreign demand in the first quarter 2009. According to the German Automobile Association (VDA) production was reduced by about one-third despite strong domestic sales. The state of the chemical industry is also difficult. Cefic – European Chemical Industry Council is giving an account of diminishing confidence and deteriorated sentiment in the first two months 2009. The chemical industry is using this period of reduced demand to idle their production and to perform maintenance acitivities on their production assets. SGL Group is benefiting from this trend with its product offering. On the other hand, SGL Group with its product portfolio is also increasingly generating business in new applications such as the promising market for alternative energies. Despite the financial crisis, both the wind as well as the solar energy industries are expecting growth to continue also in 2009.

Business Development

Condensed consolidated income statement

		1st Quarter
in Fm	2009	2008	∆
Sales revenue	295.6	343.2	−13.9%
Gross profit	85.3	125.3	−31.9%
Selling, administrative, research and other income/expense	−56.1	−55.2	−1.6%
Profit from operations (EBIT)	29.2	70.1	−58.3%
Net financing costs	−15.8	−8.6	−83.7%
Profit before tax	13.4	61.5	−78.2%
Income tax expense	−4.6	−16.8	72.6%
Minority interests	−0.1	−0.1	−
Net profit after minority interests	8.7	44.6	−80.5%
Earnings per share, basic (in D)	0.13	0.70	−81.4%
Earnings per share, diluted (in D)	0.13	0.66	−80.3%

As expected, group sales decreased by 14% (currency adjusted by 16%) from s343 million in the first quarter 2008 to s296 million in the reporting period primarily due to the continued strong destocking activities and dramatic production cuts in the steel industry, which led to a substantially reduced demand for our graphite electrodes in the Business Unit Performance Products. Accordingly, sales in the Business Unit Performance Products declined more than proportionately by 31%, while sales increased in the Business Units Graphite Materials & Systems and Carbon Fibers & Composites by 8% and 35% respectively.

Gross profit decreased more than proportionately by 32% from s125.3 million in the first quarter 2008 to s85.3 million in the reporting period, corresponding to a gross margin of 28.9% (1st quarter 2008: 36.5%). This is primarily due to the reduced production volumes and the associated fix cost charges. Timely introduced cost cutting measures (e.g. short time work in Europe, layoffs of temporary workers) did not yet fully relieve the results in the first quarter 2009.

Selling, administrative, research and other income/expense at s56.1 million were slightly higher than in the previous year period (1st quarter 2008: s55.2 million) mainly due to the addition of SGL Rotec and in the increase in SGL Malaysia.

Accordingly, EBIT in the first quarter 2009 decreased by 58% or s40.9 million to s29.2 million (1st quarter 2008: s70.1 million). This corresponds to a group return on sales of 9.9% following 20.4% in the comparable quarter of the previous year. Cost savings of s8 million from our SGL Excellence Initiative could only partially compensate for the earnings impact from sales and production declines as well as from the high start up costs associated with our new production facilities in Malaysia, Scotland and the USA in the first quarter 2009.

Net financing costs

		1st Quarter
in Fm	2009	2008	∆
Expense from companies accounted for at-equity	−0.8	−0.2	−
Interest income	0.1	2.9	−96.6%
Interest expense	−3.7	−5.1	27.5%
Imputed interest convertible bond (non-cash)	−1.9	−1.8	−5.6%
Interest expense on pensions	−4.0	−3.5	−14.3%
Interest expense, net	−9.5	−7.5	−26.7%
Expense for refinancing costs (non-cash)	−0.4	−0.4	−
Foreign currency valuation of Group loans (non-cash)	−5.3	−1.2	−
Other	0.2	0.7	71.4%
Other financing expenses	−5.5	−0.9	−
Net financing costs	−15.8	−8.6	−83.7%

Compared to the first quarter 2008, net financial costs deteriorated by s7.2 million to minus s15.8 million primarily due to the non cash mark to market valuations of intercompany loans and the lower interest income. The non cash currency effects from intercompany loans amounted to minus s5.3 million in the first quarter 2009 (1st quarter 2008: minus s1.2 million).

In the first quarter of 2009, interest income declined to only s0.1 million (1st quarter 2008: s2.9 million) due to the dramatically reduced interest rate levels for sight and time deposits as a result of the financial crisis and the lower average level of cash and cash equivalents. The lower interest rate levels also had an impact on our floating rate note. Interest expenses declined from s5.1 million in the first quarter 2008 to s3.7 million in the first quarter 2009. Due to the increased actuarial interest rate in 2008 for the calculation of our pension liabilities, the pension related interest expenses in 2009 recorded in the net financial costs increased and amounted to s4.0 million in the first quarter 2009. This corresponds to an increase of s0.5 million compared to the comparable period of the previous year. Based on the current interest rate level a reduction in the long term actuarial interest rate can be expected in 2009, which would then lead to a decrease in the pension related interest expenses in 2010.

Profit before and after taxes

In the reporting period, profit before taxes decreased substantially by 78% to s13.4 million (1st quarter 2008: s61.5 million). Tax expense in the reporting period amounted to s4.6 million and corresponds to a tax rate of 34.3%. The transitionally higher tax rate in the first quarter 2009 is mainly attributable to individual tax losses (primarily related to start up losses in Scotland and Malaysia) for which we have not capitalized deferred tax assets. Cash taxes amounted to s6.6 million in the first quarter 2009 (1st quarter 2008: s4.4 million), which is related to the remaining tax payments for the previous year. Despite the dramatic magnitude of the economic crisis a positive net profit after minority interests of s8.7 million was achieved in the reporting period compared to s44.6 million in the first quarter 2008.

Based on an average number of 64.8 million shares, basic earnings per share decreased to s0.13 (1st quarter 2008: s0.70). To calculate diluted earnings per share, the shares resulting from conversion of our convertible bonds as well as shares issued as a result of our stock option and stock appreciation right plans have also to be considered. Accordingly, the number of shares increases to 70.4 million. When taking into account the additional shares from the convertible bonds for the calculation of earnings per share, the corresponding net profit is adjusted for the expenses relating to the convertible bonds recorded in the net financial costs. Therefore there is no dilution in earnings per share in the first quarter 2009.

Balance sheet structure

in Fm	March 31, 2009	December 31, 2008	∆
ASSETS
Non-current assets	911.0	897.8	1.5%
Current assets	821.4	898.1	−8.5%
Assets held for sale	38.7	0.0	−
Total assets	1,771.1	1,795.9	−1.4%
EQUITY AND LIABILITIES
Shareholders' equity	769.6	763.3	0.8%
Minority interests	5.0	4.5	11.1%
Total Equity	774.6	767.8	0.9%
Non-current liabilities	697.1	687.7	1.4%
Current liabilities	294.4	340.4	−13.5%
Liabilities associated with assets held for sale	5.0	0.0	−
Total equity and liabilities	1,771.1	1,795.9	−1.4%

On April 2, 2009, SGL Group announced its intention to combine its carbon ceramic brake disc activities in a 50-50 joint venture with Brembo. As a result of this decision, IFRS requires that the assets and liabilities of the subsidiary SGL Brakes GmbH are recorded separately in the balance sheet until they are transferred to the joint venture.

Compared to December 31, 2008, total assets declined by s24.8 million to s1,771.1 million as at March 31, 2009. Currency changes increased total assets slightly by s2.5 million. The increase in intangible assets and property, plant and equipment amounted to s38.0 million, around s24 million more than the expense for depreciation and amortization. Overall, s12.8 million of the capital expenditures were attributable to the progression of our Malaysian plant construction. Besides intangible assets and property, plant and equipment, the item "non-current assets" also includes receivables from long term construction contracts amounting to s22.9 million as at March 31, 2009. This corresponds to an increase of s2.1 million compared to December 31, 2008.

Non-current assets decreased by s76.7 million mainly attributable to the reduction in receivables of s69.9 million. The decline in receivables is due to the lower sales activities in the reporting period und reflects the ongoing destocking efforts in most of our important customer industries. In addition, cash and cash equivalents have also declined by s37.9 million due to the negative free cash flow. In contrast, inventories rose by s39.8 million, reflecting on one hand the restricted purchase activities of our customers and on the other hand, seasonally higher levels as well as factor cost increases.

Total equity including minority interests increased by s6.8 million to s774.6 million mainly due to the positive net income (s8.8 million) in the first quarter 2009 with only minor currency effects of minus s0.4 million. Shareholders' equity increased to s769.6 million as at March 31, 2009. This corresponds to an equity ratio of 43.5%.

Non-current liabilities increased by s9.4 million mainly due to continued investments in Malaysia. Current liabilities decreased by s46.0 million primarily attributable to lower payables, which were reduced by s41.1 million to adjust to current customer behavior. In addition, other provisions decreased by s12.5 million to s68.6 million.

Working Capital

in Fm	March 31, 2009	December 31, 2008	∆
Inventories	479.4	439.6	9.1%
Trade receivables	213.0	282.9	−24.7%
Non-current receivables from long-term construction contracts	22.9	20.8	10.1%
Trade payables	−124.2	−165.3	24.9%
Working Capital	591.1	578.0	6.1%

Working Capital increased slightly by s13.1 million to s591.1 million. SGL Group also experienced lower demand resulting from the significantly slowed global economic activity and the worldwide financial and economic crisis. Accordingly, we have reduced our production in the first quarter 2009. The changes in individual items in the working capital can primarily be seen in this context.

Changes in Equity

		1st Quarter 2009
in Fm	Shareholders' equity	Minority interests	Total equity
Balance at January 1	763.3	4.5	767.8
Capital increase from share-based payment plans	2.1	0.0	2.1
Net profit	8.7	0.1	8.8
Total income and expense recognized directly in equity	−4.5	−0.1	−4.6
Total recognized income and expense	4.2	0.0	4.2
Other changes in equity	0.0	0.5	0.5
Balance at March 31	769.6	5.0	774.6

Shareholders' equity increased by s6.3 million to s769.6 million as at March 31, 2009, mainly due to the positive net income of s8.7 million in the first quarter 2009, corresponding to an equity ratio of 43.5% compared to 42.5% as at December 31, 2008.

Holders of the convertible bonds issued in 2007 could exercise their conversion rights provided the share price is above the conversion price of s36.52, leading to a maximum of 5.5 million new SGL Carbon SE shares being issued.

Subscribed capital increased to s167.2 million as at March 31, 2009 (December 31, 2008: s165.6 million) and is divided into 65,318,861 no-par value ordinary bearer shares at s2.56 per share. During the first quarter 2009, 611,870 new shares were issued, of which 512,485 are attributable to the employee bonus plan in Germany as well as to the Matching Share Plan. Exercise of stock options from the existing stock option plan and SARs from the stock appreciation rights plan did not lead to the creation of any new shares. SGL Carbon SE holds a total of 99,385 own shares as at March 31, 2009.

Net debt

in Fm	March 31, 2009	December 31, 2008	∆
Current and non-current financial liabilities	421.6	408.9	3.1%
Remaining imputed interest for the convertible bond	36.1	38.0	−5.0%
Accrued refinancing cost	8.3	8.8	−5.7%
Cash	−85.2	−123.1	30.8%
Net debt	380.8	332.6	14.5%

Net debt amounted to s380.8 million as at March 31, 2009. Financial liabilities increased by s12.7 million compared to the end of fiscal 2008 mainly due to the investments in Malaysia. Cash and cash equivalents decreased by s37.9 million especially due to the negative free cash flow.

Liquidity and capital resources

		1st Quarter
in Fm	2009	2008	∆
Cash used in/provided by operating activities	−9.4	57.0	−116.5%
Cash used in investing activities	−39.4	−34.5	−14.2%
Free cash flow*	−48.8	22.5	−
Cash provided by financing activities	10.9	1.4	−
Effect of foreign currency rate changes	0.0	−1.0	−
Net change in cash	−37.9	22.9	−

* Defined as cash used in/provided by operating activities minus cash used in investing activities

Cash used in operating activities amounted to s9.4 million in the first quarter 2009 compared to cash provided by operating activities of s57.0 million in the first quarter 2008. This was mainly due to the substantially lower earnings level and continued high capital expenditures. This is also reflected in the negative free cash flow of s48.8 million.

Cash used in investing activities continues to focus on continued capital expenditures for our new plant in Malaysia as well as our carbon Fibers capacity expansion.

Cash provided by financing activities amounted to s10.9 million.

SEGMENT REPORTING

Performance Products (PP)

		1st Quarter
in Fm	2009	2008	∆
Sales revenue	142.1	205.2	−30.8%
EBITDA	45.8	71.2	−35.7%
Profit from operations/EBIT	39.4	65.1	−39.5%
Return on sales	27.7%	31.7%	−

Due to the ongoing global economic and financial crisis, the steel industry as expected also continued its destocking activities and production cuts. This led to a substantially reduced demand for our graphite electrodes. Accordingly, sales in the Business Unit Performance products decreased by 31% to s142.1 million in the first quarter 2009 (1st quarter 2008: s205.2 million) despite all product lines being able to secure higher selling prices. The sales development corresponds to a currency adjusted decrease of 33%. The cathode business continued to develop satisfactorily due to the ongoing strong demand from the aluminum industry.

The earnings impact from lower sales and production levels could partially be compensated by higher selling prices and cost savings of s3 million. In conjunction with expenses relating to the commissioning of the new Malaysian production facility, EBIT recorded a more than proportionate decline to sales by 40% to s39.4 million (1st quarter 2008: s65.1 million). Despite the stringent destocking activities and the substantial production cuts in the steel industry, which led to a weaker demand for our graphite electrodes, return on sales achieved a high level of 28% (1st quarter 2008: 32%) due to the ongoing satisfactory business with cathodes, furnace linings and carbon electrodes. Despite substantially reduced volumes, return on sales remained above our mid term minimum target of 20%.

On April 15, 2009, we announced commissioning of our integrated carbon and graphite plant in Banting, Malaysia. Accordingly, operations of the first production steps have begun as planned with the graphitization of semi-finished graphite electrodes and their machining. By 2011, the site will be developed into a fully integrated carbon and graphite hub producing graphite electrodes and cathodes with initial annual capacity of 60,000 tons. By 2011, production will fully integrate all stages of graphite electrode and cathode manufacturing – from extrusion to graphitization to machining. The initial electrode investment, which has been under construction since November 2006, has been complemented by the cathode construction since beginning of 2008 to obtain flexibility in production ("swing capability") in order to supply the steel as well as the aluminum market.

Independent of the construction of our new Malaysian plant we have promptly adjusted our graphite electrode production to the reduced demand. Currently annual demand is estimated to be approximately 40% below last year's level. Because we are expecting destocking in the steel industry to come to an end in the second half of 2009, we expect the decline to mainly take place in the first half of this year.

Graphite Materials & Systems (GMS)

		1st Quarter
in Fm	2009	2008	∆
Sales revenue	98.3	90.7	8.4%
EBITDA	14.7	17.7	−16.9%
Profit from operations/EBIT	10.6	14.3	−25.9%
Return on sales	10.8%	15.8%	−

Sales in the Business Unit Graphite Materials & Systems increased by 8% to s98.3 million in the reporting period (1st quarter 2008: s90.7 million). Adjusted for currency effects, sales increased by 2%. Besides the positive currency translation effects, the sales increase was primarily driven by the Business Line Process Technology. New applications such as for lithiumion batteries or the business with the solar industry were able to largely compensate for the decline in the semiconductor and automotive industries.

Despite largely unchanged gross margins and cost savings of s3 million EBIT declined by 26% to s10.6 million (1st quarter 2008: s14.3 million) mainly due to currency losses from hedging transactions. The EBIT corresponds to a return on sales of 11%, which also remains above our mid term minimum target of 10%.

Carbon Fibers & Composites (CFC)

		1st Quarter
in Fm	2009	2008	∆
Sales revenue	49.6	36.6	35.5%
EBITDA	−4.8	4.3	−
Profit from operations/EBIT	−7.7	2.6	−
Return on sales	−15.5%	7.1%	−

With the announcement of April 2, 2009 to transfer our brake disc business into a 50-50 joint venture with the Italian company Brembo, we have retroactively separated the Business Line Brake Discs from the Business Unit Carbon Fibers & Composites. The combination of our brake disc activities is a consistent continuation of our strategy for composites to partner with successful OEMs or tier one suppliers in our target markets aerospace, energy and automotive (e.g. SGL Rotec and Benteler SGL).

The results of the brake disc business will be reported as a separate line item under Corporate Costs until the transfer to the joint venture with Brembo is completed. Previous year figures of the Business Unit Carbon Fibers & Composites have been accordingly adjusted. The Business Unit now consists of Carbon Fibers, Composite Materials, Composite Components (Rotec) und Aerospace Structures (HITCO). The development of our growth business Carbon Fibers & Composites continues to require ongoing high investments and therefore generates significant start up losses. The new state of the art Fibers lines in Evanston, Wyoming, USA, and Muir of Ord, Scotland, possess a very high degree of technological complexity and are highly sophisticated in design, construction and operation.

In the first quarter 2009, sales in the Business Unit Carbon Fibers & Composites increased by 36% to s49.6 million (1st quarter 2008: s36.6 million). This corresponds to a currency adjusted increase of 35%. The strong sales increase is attributable to increased unit sales in Composite Components relating to the consolidation of SGL Rotec.

The earnings of the Business Unit Carbon Fibers & Composites were impacted by increased depreciation and start up costs for the new carbon Fibers lines, high research and development expenses as well as acquisition related writedowns from purchase price allocation and integration costs. This led to an EBIT decline to minus s7.7 million (1st quarter 2008: s2.6 million). Cost savings from our SGL Excellence Initiative amounted to s1 million in the reporting period.

On February 2, 2009, Benteler-SGL-Automotive-Composite GmbH & Co. KG, which SGL Group has a 50% share of, acquired the Austrian company Composite Technology GmbH. Fischer Composite Technology GmbH is an established supplier of composite components for the automotive industry. The objective of the acquisition is to expand the process and product portfolio as well as direct market access to new customer groups for composite components. The bundling of know how offers excellent growth opportunities in the future market for automotive lightweight construction.

Particularly the composite materials of the Business Unit Carbon Fibers & Composites continue to be in demand by the growing industries of wind energy and aerospace and have led to the strong sales growth in the first quarter 2009. It is our target to continue to grow our sales by more than 15% in the remainder of this year.

Central T&I, Brake Discs, and corporate costs

		1st Quarter
in Fm	2009	2008	∆
Other revenue (incl. Brake Discs)	5.6	10.7	−47.7%
Central T&I costs	−2.9	−3.3	12.1%
Brake Discs (EBIT)	−3.7	−0.5	−
Corporate costs	−6.5	−8.1	19.8%

Central T&I costs amounted to s2.9 million in the reporting period, slightly below the level of the year earlier period.

On April 2, 2009, SGL Group announced plans to transfer the carbon ceramic brake disc activities into a 50-50 joint venture with Brembo. As a result of this decision, we present the brake disc business separately until the transfer to the joint venture with Brembo is completed. Previous year figures of the Business Unit Carbon Fibers & Composites have been adjusted accordingly. In the reporting period, sales with the automotive industry has almost halved compared to the year earlier period due to the known weak demand especially in the premium car segment. This development led to a loss in the quarter of minus s3.7 million (1st quarter 2008: minus s0.5 million).

Corporate Costs decreased from s8.1 million in the first quarter 2008 to s6.5 million in the reporting period. In addition to stringent expense management relating to purchased services, we also benefited from the partial release of a legal provision amounting to s800T in the first quarter 2009.

Employees

As at March 31, 2009, total number of employees decreased by 140 to 6,360. While the number of employees remained unchanged in the Business Unit Performance Products due to the build up in Malaysia, the Business Units Graphite Materials & Systems and Carbon Fibers & Composites reduced their workforce by 51 and 91 respectively to adjust to current market conditions.

In addition to further adjustments to our permanent staff which will be depending on the general market development and our capacity utilization, we have approximately 800 employees in short time work mainly in Europe from the second quarter 2009 onwards. Furthermore, there were around 200 layoffs of temporary employees.

At March end, 2,606 of our employees were based in Germany, 1,952 in Europe excluding Germany, 1,239 in North America and 563 in Asia.

Opportunities and risks

Regarding existing opportunities and risks we refer to the statements made in the annual report for the business year ending December 31, 2008 as well as the outlook statement in this interim report. For the period under review, SGL Group's risk situation did not change materially from year end 2008. Consequently, there were no material risks as at March 31, 2009.

Outlook

Due to the worldwide financial and economic crisis and the resulting lack of visibility we have had to abstain from our usual practice of providing a quantitative outlook at the beginning of fiscal 2009. On the occasion of our annual press conference on March 18, 2009, we were only able to guide to lower sales and a corresponding disproportionate decline in EBIT. Since we continue to expect the dramatic destocking in the steel industry to end and a technical correction to follow in the second half of 2009, we will update our guidance within the framework of our quarterly reporting as the year progresses.

However, in the last five weeks, demand from our customer industries has not materially changed, so we remain unable to further substantiate our outlook for fiscal 2009. The current order backlog and order intake let us expect a second quarter 2009 on a comparable level to the first quarter 2009. This development is also explained by further adjustments in our own working capital as well as ongoing high start up costs associated with the new production facilities for graphite electrodes and carbon fibers. As the year progresses, we expect a successive reduction of these start up costs.

Top priority remains with the gearing target of approximately 0.5 which will also be the performance indicator defining our investment program. As announced at our annual press conference, capital expenditure will be below the record year 2008 (s240 million) but remain on a high level, which will be determined by the gearing target of 0.5 and the cash provided by operating activities.

Declaration of the Board of Management

We confirm, to the best of our knowledge, that the Condensed Consolidated Interim Financial Statements and the Interim Group Management Report have been prepared in accordance with the generally accepted accounting principles for interim financial reporting under IFRS and give a fair presentation of SGL Group's net assets, financial position and results of operations. The Interim Group Management Report presents a true and fair view of the actual operations of the Group, including the results of operations and the position of the Group, and material prospects and risks of the Group's future development in the remainder of the fiscal year are described.

Wiesbaden, April 28, 2009

SGL Carbon SE

The Board of Management

Condensed consolidated income statement

		1st Quarter
in Fm	2009	2008	∆
Sales revenue	295.6	343.2	−13.9%
Cost of sales	−210.3	−217.9	3.5%
Gross profit	85.3	125.3	−31.9%
Selling, administrative, research and other income/expense	−56.1	−55.2	1.6%
Profit from operations/EBIT	29.2	70.1	−58.3%
Expense from companies accounted for at-equity	−0.8	−0.2	−
Interest income	0.1	2.9	−96.6%
Interest expense	−9.6	−10.4	7.7%
Other financing costs	−5.5	−0.9	−
Profit before tax	13.4	61.5	−78.2%
Income tax expense	−4.6	−16.8	72.6%
Net profit for the period	8.8	44.7	−80.3%
thereof:
Minority interests	0.1	0.1	−
Equity holders of the parent company	8.7	44.6	−
Earnings per share, basic (in D)	0.13	0.70	−
Earnings per share, diluted (in D)	0.13	0.66	−

STATEMENT OF RECOGNIZED INCOME AND EXPENSE

		1st Quarter
in Fm	2009	2008
Net profit for the period	8.8	44.7
Cash flow hedges	−4.2	−2.5
Currency translation	−0.4	−18.7
Total income and expense recognized directly in equity	−4.6	−21.2
Total recognized income and expense	4.2	23.5
of which attributable to shareholders of the parent company	4.2	23.4
of which attributable to minority interest	0.0	0.1

Interim Condensed Balance Sheet

in Fm	March 31, 2009	December 31, 2008	∆
ASSETS
Non-current assets
Intangible assets	143.8	144.1	−0.2%
Property, plant and equipment	642.9	632.7	1.6%
Other non-currents assets	51.9	49.0	5.9%
Deferred tax assets	72.4	72.0	0.6%
	911.0	897.8	1.5%
Current assets
Inventories	479.4	439.6	9.1%
Trade receivables	213.0	282.9	−24.7%
Other receivables and other current assets	43.8	52.5	−16.6%
Cash	85.2	123.1	−30.8%
	821.4	898.1	−8.5%
Assets held for sale	38.7	0.0	−
Total assets	1,771.1	1,795.9	−1.4%
in Fm	March 31, 2009	December 31, 2008	∆
EQUITY AND LIABILITIES
Shareholders' equity	769.6	763.3	0.8%
Minority interests	5.0	4.5	11.1%
Total Equity	774.6	767.8	0.9%
Non-current liabilities
Non-current financial liabilities	413.2	403.5	2.4%
Provisons for pensions and other employee benefits	223.1	223.3	−0.1%
Deferred tax liabilities	2.4	2.9	−17.2%
Other non current liabilities and provisions	58.4	58.0	0.7%
	697.1	687.7	1.4%
Current liabilities
Current financial liabilities	8.4	5.4	−55.5%
Other provisions	68.6	81.1	−15.4%
Trade payables	124.2	165.3	−24.9%
Other current liabilities	93.2	88.6	5.2%
	294.4	340.4	−13.5%
Liabilities associated with assets held for sale	5.0	0.0	−
Total equity and liabilities	1,771.1	1,795.9	−1.4%

Interim Consolidated Cash Flow Statement

	1st Quarter
in Fm	2009	2008
Cash flows from operating acti vities
Profit before tax	13.4	61.5
Add back of net interest expenses	9.5	7.5
(Gain) Loss on disposal of property, plant and equipment	0.0	0.6
Depreciation and amortization expense	14.0	12.2
Expenses for refinancing (non-cash)	0.4	0.4
Income taxes paid	−6.6	−4.4
Interest received	0.1	3.0
Interest on financial debt paid	−3.4	−4.9
Changes in provisions, net	−9.1	−18.1
Changes in working capital, net	−30.9	−28.8
Changes in other operating assets and other liabilities	3.2	28.0
Cash used in/provided by operating activities	−9.4	57.0
Cash flows from investing acti vities
Capital expenditure in property, plant and equipment and intangible assets	−38.0	−33.6
Cash payments for acquisitions less acquired cash	−1.4	−1.1
Other investing activities	0.0	0.2
Cash used in investing activities	−39.4	−34.5
Free Cash Flow*	−48.8	22.5
Cash flows from financing acti vities
Proceeds from corporate debt	10.9	4.8
Repayment of corporate debt	0.0	−3.4
Cash provided by financing activities	10.9	1.4
Effect of foreign exchange rate changes	0.0	−1.0
Net change in cash and cash equivalents	−37.9	22.9
Cash and cash equivalents at beginning of period	123.1	130.0
Cash and cash equivalents at end of period	85.2	152.9

* Defined as cash used in/provided by operating activities minus cash used in investing activities

Interim Condensed Consolidated Statement of Changes in Equity

	1st Quarter 2008
in Fm	Shareholders' equity	Minority interests	Total equity
Balance at January 1,*	603.9	3.5	607.4
Capital increase from share-based payment plans	5.2	0.0	5.2
Net profit	44.6	0.1	44.7
Total income and expense recognized directly in equity	−21.2	0.0	−21.2
Total recognized income and expense	23.4	0.1	23.5
Other changes in equity	0.0	−0.1	−0.1
Balance at March 31	632.5	3.5	636.0

* Adjusted for IAS 19.93A

	1st Quarter 2009
in Fm	Shareholders' equity	Minority interests	Total equity
Balance at January 1,	763.3	4.5	767.8
Capital increase from share-based payment plans	2.1	0.0	2.1
Net profit	8.7	0.1	8.8
Total income and expense recognized directly in equity	−4.5	−0.1	−4.6
Total recognized income and expense	4.2	0.0	4.2
Other changes in equity	0.0	0.5	0.5
Balance at March 31	769.6	5.0	774.6

Notes to the Condensed Consolidated Interim Financial Statements

Description of business

SGL Carbon SE (hereafter "SGL Carbon SE" or "the Company"), located at Rheingaustrasse 182, Wiesbaden (Germany), together with its subsidiaries (the "SGL Group") is a global manufacturer of carbon products.

Basis of preparation and accounting policies

The consolidated financial statements of the SGL Group are prepared in accordance with the International Financial Reporting Standards (IFRS) and their interpretation by the International Financial Reporting Interpretations Committee (IFRIC), as applicable in the European Union (EU). The interim financial reporting for the first quarter 2009 has been prepared in accordance with IAS 34 (Interim Financial Reporting).

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the SGL Group's annual financial statements as at December 31, 2008. Accounting and valuation methods have been consistently applied as in our annual consolidated financial statements for financial year 2008. As illustrated in our annual report 2008, SGL Group amended its accounting policy for actuarial gains and losses in connection with the defined benefit plans and similar obligations (IAS 19.93A) in 2008. SGL Group has adjusted comparative figures for the 3 months period ending March 31, 2008 as if the new accpunting policy had always been applied. Other new IFRS standards and interpretations applicable for periods starting January 1, 2009 had no material impact on the interim financial reporting as of March 31, 2009.

The interim financial report was authorized for issue in accordance with a resolution of the Board of Management on April 28, 2009.

These financial statements were not reviewed by our auditors.

New accounting policies

During the fiscal year 2009, the IASB and the IFRIC have published the following pronouncements and interpretations that have not yet been endorsed for use in Europe:

IFRIC 18 Transfers of Assets from Customers was published in January 2009 and must be applied for the first time in the reporting period beginning on or after July 1, 2009. This interpretation provides guidance on how to account for agreements in which an entity receives an item of property, plant and equipment or cash and cash equivalents from a customer that the entity must use to connect the customer, for example to a network and/or provide that customer with ongoing access to a supply of goods or services. This interpretation must be applied prospectively. Since SGL Group did not agree to any transfers, this IFRIC has no effect on the Group.

In March 2009, the IASB has published amendments to IFRIC 9 and IAS 39 to clarify the accounting treatment of embedded derivatives for entities that make use of the Reclassification Amendment issued by the IASB in October 2008. The reclassification amendment allows entities to reclassify particular financial instruments out of the 'fair value through profit or loss' category in specific circumstances. These amendments to IFRIC 9 and IAS 39 clarify that on reclassification of a financial asset out of the 'fair value through profit or loss' category, all embedded derivatives in the reclassified instrument have to be assessed and, if necessary, separately accounted for in financial statements. The amendments apply retrospectively and are effective for annual periods ending on or after June 30, 2009. The impact of the first-time adoption of the changes on SGL Group is currently being investigated.

In March 2009, the IASB has issued Improving Disclosures about Financial Instruments (Amendments to IFRS 7). The amendments require enhanced disclosures about fair value measurements and liquidity risk. Entities are required to apply the amendments for annual periods beginning on or after January 1, 2009, with earlier application permitted. However, an entity will not be required to provide comparative disclosures in the first year of application. The impact of the firsttime adoption of the changes on SGL Group is currently being investigated.

In April 2009, the IASB has issued Improvements to IFRSs – a collection of amendments to twelve International Financial Reporting Standards – as part of its program of annual improvements to its standards. The IASB uses the annual improvements project to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project. The latest amendments were included in exposure drafts of proposed amendments to IFRSs published in October 2007, August 2008, and January 2009. Most of the amendments are effective for annual periods beginning on or after January 1, 2010, although entities are permitted to adopt them earlier. The impact of the first-time adoption of the changes on SGL Group is currently being investigated.

Changes in scope of consolidation

In the first quarter 2009, SGL Group decided to combine its carbon ceramic brake activities for the automotive industry with Brembo SpA in a 50-50 joint venture. This venture will combine the superior expertise from the respective parent companies: carbon Fibers material know-how from SGL Group and high-end carbon ceramic brake system competence from Brembo. It is envisioned that in a few years the carbon ceramic brake business could expand to a larger number of vehicles. The closing of the deal is expected in the second quarter 2009, subject to the finalization of the contracts and the approval of the relevant authorities. As a result of this decision, IFRS dictates that the assets and liabilities of the subsidiary SGL Brakes GmbH will be recorded separately in the balance sheet until they are finally transferred to the joint venture.

There were no further changes in scope of consolidation at March 31, 2009 compared to December 31, 2008.

Seasonality of operations

Our sales revenue from graphite electrodes fluctuates from quarter to quarter due to factors related to our Customers' businesses, such as customer inventory levels, scheduled customer plant shutdowns and vacations, and changes in customer production schedules in response to seasonal changes in customer energy costs, strikes and work stoppages by our customers' employees. In addition, customers may change their order patterns in response to price changes. During the period prior to the effective date of a price increase, customers tend to buy additional quantities of graphite electrodes at the then lower price, which adds to our sales revenue during that period. During the period following the effective date of a price increase, customers tend to use those additional quantities before placing further orders, which reduces our sales revenue during that period. Similarly, customers tend to use up their inventories and delay purchases when they expect price reductions. These ordinary seasonal influences are currently being overridden by the global economic crisis in many customer industries.

Other information

During the first quarter 2009, 611,870 new shares were issued for employees, of which 450,615 shares were issued under the bonus system and 61,870 under the share plan (Matching Share Plan). In these three months, no options or SARs from the existing stock option or stock appreciatiation rights plans were exercised due to the reduced value of the share price. On January 15, 2009, 747,920 new SARs were granted from the SAR Plan approved by the Annual General Meeting 2004 with a strike price of s22.08. In March 2009, members of the Board of Management and the top three management tiers purchased a total of 137,864 shares at a price of s18.53 for the Matching Share Plan.

At March 31, 2009, 2,524,012 SARs, 203,898 Matching Shares and 524,551 stock options are outstanding. The number of outstanding SGL Carbon SE shares at March 31, 2009 is 65,318,861, of which SGL Group holds a total of 99,385 own shares.

The Annual General Meeting on April 25, 2008 voted in favor of converting the SGL Carbon Aktiengesellschaft into a European Company (Societas Europaea, SE) named SGL Carbon SE. The conversion into an SE was completed with the registration into the commercial register on January 23, 2009.

During the first quarter 2009 there have been no material unusual items or changes in estimates except the above mentioned compared to the financial year 2008. Contingent liabilities and contingent assets did not change materially compared to the last annual balance sheet date. The SGL Group did not pay a dividend in the period reported.

Quarterly Sales Revenue and Operating Profit by Segment

	1st Quarter
Sales revenue in Fm	2009	2008	∆
Performance Products	142.1	205.2	−30.8%
Graphite Materials & Systems	98.3	90.7	8.4%
Carbon Fibers & Composites	49.6	36.6	35.5%
Other	5.6	10.7	−47.7%
	295.6	343.2	−13.9%

		1st Quarter
Profit (loss) from operations/EBIT in Fm	2009	2008	∆
Performance Products	39.4	65.1	−39.5%
Graphite Materials & Systems	10.6	14.3	−25.9%
Carbon Fibers & Composites	−7.7	2.6	−
Central T&I Costs	−2.9	−3.3	12.1%
Brake Discs	−3.7	−0.5	−
Corporate costs	−6.5	−8.1	19.8%
	29.2	70.1	−58.3%

Events occurring after the balance sheet date

On April 2, 2009, Brembo SpA and SGL Group have announced that they are in advanced negotiations to merge their carbon ceramin brake disc activities for the automotive industry in a 50-50 joint venture.

Wiesbaden, April 28, 2009

SGL Carbon SE

The Board of Management

Quarterly Sales Revenue and Operating Profit by Segment

		2008			2008	2009
Sales revenue in Fm	Q1	Q2	Q3	Q4	Full Year	Q1
Performance Products	205.2	235.9	240.5	284.0	965.6	142.1
Graphite Materials & Systems	90.7	106.7	101.9	112.6	411.9	98.3
Carbon Fibers & Composites	36.6	37.8	49.7	68.5	192.6	49.6
Other	10.7	11.5	10.6	8.6	41.4	5.6

SGL Group	343.2	391.9	402.7	473.7	1,611.5	295.6

		2008			2008	2009
Profit (loss) from operations/EBIT in Fm	Q1	Q2	Q3	Q4	Full Year	Q1
Performance Products	65.1	76.3	75.6	79.0	296.0	39.4
Graphite Materials & Systems	14.3	15.9	17.4	10.0	57.6	10.6
Carbon Fibers & Composites	2.6	2.3	3.2	0.7	8.8	−7.7
Central T&I Costs	−3.3	−3.5	−4.6	−5.3	−16.7	−2.9
Brake Discs	−0.5	−0.2	−0.6	−3.0	−4.3	−3.7
Corporate costs	−8.1	−8.3	−9.0	−10.2	−35.6	−6.5
SGL Group	70.1	82.5	82.0	71.2	305.8	29.2

Quarterly Consolidated Return on Sales

		2008			2008	2009
ROS in %	Q1	Q2	Q3	Q4	Full Year	Q1
Performance Products	31.7	32.3	31.4	27.8	30.7	27.7
Graphite Materials & Systems	15.8	14.9	17.1	8.9	14.0	10.8
Carbon Fibers & Composites	7.1	6.1	6.4	0.9	4.5	−15.5
SGL Group	20.4	21.1	20.4	15.0	19.0	9.9

Quarterly Consolidated Income Statement

		2008			2008	2009
in Fm	Q1	Q2	Q3	Q4	Full Year	Q1
Sales revenue	343.2	391.9	402.7	473.7	1,611.5	295.6
Cost of sales	−217.9	−250.4	−262.3	−340.8	−1,071.4	−210.3
Gross profit	125.3	141.5	140.4	132.9	540.1	85.3
Selling/administration/research/other	−55.2	−59.0	−58.4	−61.7	−234.3	−56.1
Profit from operations (EBIT)	70.1	82.5	82.0	71.2	305.8	29.2
Net financing costs	−8.6	−7.7	−8.4	−22.4	−47.1	−15.8
Profit (loss) before tax	61.5	74.8	73.6	48.8	258.7	13.4
Income tax expense	−16.8	−20.2	−21.9	−9.4	−68.3	−4.6
Minority interests	−0.1	−0.2	−0.2	−0.3	−0.8	−0.1

Net profit (loss) attributable to equity holders 44.6 54.4 51.5 39.1 189.6 8.7

Important note

This interim report 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. The statements on future developments are not to be understood as guarantees. The future developments and events are dependent on a number of factors. They include various risks and unanticipated circumstances and are based on assumptions that may not be correct. 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 and in the ongoing cost optimization programs. SGL Group does not intend to update these forward-looking statements.

Investor Relations Contact

Calendar 2009

SGL Carbon SE	29. April	Annual General Meeting
Headquarters Investor Relations Rheingaustraße 182	06. August	Report on the First Half Year 2009
D-65203 Wiesbaden	05. November	Report on the Nine Months 2009
Phone: +49 611 60 29-103
Fax: +49 611 60 29-101
E-mail: Investor-Relations@sglcarbon.de

www.sglgroup.com