Quarterly Report • Nov 5, 2019
Quarterly Report
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Report on the first nine months
2
Group sales in 9M/2019 increased 6% compared to the prior year level to Ŷ832 million due to organic growth in the market segments Digitization, Energy and Chemicals. Adjusted for the positive one-time effect in the prior year, Group recurring EBIT at Ŷ54 million was approximately on the comparable level of the prior year
Development of the reporting segments as described in the ad-hoc notifications of August 14 and October 25, 2019: CFM deteriorated substantially in Q3/2019 compared to the first two quarters of this year due to the weak development in the market segments Textile Fibers, Wind Energy and Industrial Applications. In contrast, GMS in Q3/2019 developed better than previously expected on the very good level of the prior quarter and thus reached a historic record level in 9M/2019
As announced in the ad-hoc notification of August 25, 2019, guidance for recurring EBIT at CFM was revised downwards to a negative mid-to-high single digit million Ŷ amount and on the Group level to Ŷ45 to Ŷ50 million due to the weak developments in the market segments Textile Fibers and Industrial Applications. In addition, an impairment charge in the amount of Ŷ75 million was recorded at CFM in Q3/2019
Following CEO Jürgen Köhler's resignation effective August 31, 2019, the Supervisory Board has promptly initiated an external search for a new CEO. Effective October 15, 2019, and until the new CEO assumes his position, Dr. Stephan Bühler has been appointed to the Board of Management responsible for Legal and Compliance and Dr. Michael Majerus, who has been sole executive board member since September 1, 2019, is running the Company as Spokesman of the Board of Management
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| Sales revenue | ƎƉƈƊ | ƍƎƌƉ | ƋƏ |
| EBITDA before non-recurring items | ƇƐƍƈ | ƇƐƋƍ | ƇƊ |
| Operating profit (EBIT) before non-recurring items (recurring EBIT) | ƋƊƈ | ƋƏƈ | –ƎƊ |
| Return on sales (EBIT-margin) 1) | ƌƋ | ƍƋ | - |
| Return on capital employed (ROCE EBIT) 2) |
Ɗƍ | ƌƇ | - |
| Operating loss/profit | –ƈƌƎ | ƍƏƍ | >–ƇƐƐ |
| Result from discontinued operations, net of income taxes | –ƐƇ | –ƊƐ | ƏƍƋ |
| Consolidated net result (attributable to shareholders of the parent company) | –ƍƊƋ | Ɗƍƍ | >–ƇƐƐ |
| Ŷ million | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Total assets | ƇƋƉƏƍ | ƇƋƎƋƇ | –ƈƏ |
| Equity attributable to the shareholders of the parent company | ƊƐƏƊ | ƋƉƇƌ | –ƈƉƐ |
| Net financial debt 3) | ƈƍƏƋ | ƈƊƈƈ | ƇƋƊ |
| Gearing 4) | ƐƌƎ | ƐƊƌ | - |
| Equity ratio 5) | ƈƌƌ | ƉƉƋ | - |
1) Ratio of EBIT before non-recurring items to sales revenue
2) EBIT before non-recurring items for the last twelve months to average capital employed - continuing operations (total of goodwill, other intangible assets, property, plant and equipment, investments accounted for At-Equity and working capital)
3) Financial liabilities (nominal amounts) less liquidity
4) Net financial debt divided by equity attributable to the shareholders of the parent company
5) Equity attributable to the shareholders of the parent company divided by total assets
| News 4 | |
|---|---|
| Interim Group Management Report 5 | |
| Economic environment 5 | |
| Key events of the business development 5 | |
| Business development 7 | |
| Opportunities and Risks 13 | |
| Outlook 14 | |
| Condensed Consolidated Financial Statements 16 | |
| Consolidated Income Statement 16 | |
| Consolidated Statement of Comprehensive Income 17 | |
| Consolidated Balance Sheet 18 |
Consolidated Cash Flow Statement .................................... 20 Condensed Consolidated Statement of Changes in Equity .... 22
| Notes to the Condensed Consolidated Interim Financial | |||
|---|---|---|---|
| Statements 23 | |||
| Responsibility statement 30 | |
|---|---|
| Other information 31 | |
| Financial Calendar 2020 33 | |
| Investor Relations Contact 34 |
4
On July 1, 2019, we launched a voluntary tender offer to the holders of the convertible bond 2015/2020 at 103.50%. The tender offer was open until July 3, 2019 and was accepted by more than 87% of the bond holders. Accordingly, the total nominal amount of the outstanding convertible bonds fell below 20% of the initially issued nominal amount and as a result, we were able to redeem the remaining outstanding convertible bonds at 100% of the nominal value plus accrued interest. The cash used to redeem the convertible bond 2015/2020 prematurely was raised from the corporate bond issue in April.
Ad-hoc notification on August 14: The actual results of July 2019 of the business unit Composites – Fibers & Materials (CFM) showed a significant deviation from our expectations. This resulted in a correction of the 2019 guidance for the business unit CFM and also for the Group. In consideration of these developments, the Group guidance for 2020-2022 is no longer sustainable. We plan to publish the new guidance after completing the new Group plan in January 2020 at the latest. As a consequence of this development, the Chief Executive Officer Dr. Jürgen Köhler informed the Supervisory Board that he has resigned from his mandate as Chief Executive Officer of SGL Carbon SE effective August 31, 2019,
At an extraordinary meeting on 21 August 2019, the Supervisory Board of SGL Carbon SE decided to fill the position of the departing Chief Executive Officer externally. The search begins immediately. Until further notice, the Chief Financial Officer of SGL Carbon, Dr. Michael Majerus, is additionally assuming the responsibilities of the CEO as sole executive board member.
On October 14, 2019, the Supervisory Board of SGL Carbon SE decided to appoint Dr. Stephan Bühler as an additional member to the Board of Management effective October 15, 2019. He will be responsible for Legal and Compliance.
In the October 25 ad-hoc notification, we revised downward the full year guidance for CFM and for the Group due to the weak developments in the market segments Textile Fibers and Industrial Applications and an impairment charge at CFM in the third quarter 2019.
With the delivery of millionth composite leaf spring to Volvo Cars, SGL Carbon has reached a milestone in the history of serial production of fiber composite components. The leaf spring is manufactured at the Innkreis site in Austria.
With this fully automated, scalable serial production of leaf springs based on glass fiber reinforced plastic (GFRP), SGL Carbon offers one of the largest range of composite components in the automotive industry. Compared with standard steel leaf springs, which can weigh up to 15 kg, a similar GFRP spring leaf weighs just 6 kg, making it around 65 percent lighter. Besides a reduction in weight, the composite leaf spring also requires less space and ensures easy handling. Furthermore, the composite design means the leaf spring can be tailored to different models, giving manufacturers a high degree of flexibility while cutting costs at the same time. The leaf spring is part of Volvo Cars' global SPA vehicle platform and is used in different Volvo models. SGL Carbon is also implementing similar concepts together with other car manufacturers from Europe and North America.
SGL Carbon and Elbe Flugzeugwerke, a long-established German aircraft manufacturer, have extended their contract to supply prepregs (impregnated carbon fiber textiles) for use in the Airbus A350 cabin's floor panels by another year, to the end of 2020.
SGL Carbon has been supplying Elbe Flugzeugwerke with carbon fiber prepregs for the floor panels since the A350 was first launched. Due to its low weight and its excellent strength and rigidity, the material is particularly well suited to the lightweight construction required by the aerospace industry.
On August 7, we highlighted our participation at the China Composites Expo in Shanghai. This is one of the important trade fairs for innovative fiber composite solutions in the Asian market. Specifically, SGL Carbon will be presenting smart solutions and materials made of fiber composites for mobility and industrial applications markets from September 3 to 5, 2019. Under the motto "The Weight and Performance Optimizers", the company will present its diverse product portfolio along the entire value chain from carbon fibers and textile semi-finished products to finished components made of carbon and glass fiber-reinforced plastics.
1 For news items before July 1, 2019, we refer to the previous interim reports
(unaudited)
In its latest global economic outlook from October 2019, the International Monetary Fund (IMF) revised its global growth outlook downwards once again. Accordingly, the global economy is in a synchronized downturn and growth for 2019 is projected to return to its slowest pace since the global financial crisis at 3.0% (July forecast: 3.2%). This subdued growth is a consequence of rising trade barriers, elevated geopolitical risks, and specific factors causing macroeconomic strain in several emerging market economies. These include structural factors such as low productivity growth and aging populations in the advanced economies.
Global growth in 2020 is projected to improve modestly to 3.4%, down 0.1% from the July forecast. However, unlike the synchronized slowdown, this recovery is not broad based. Advanced economies are projected to slow to 1.7% in 2019 and 2020, while growth in emerging market and developing economies will increase from 3.9% in 2019 to 4.6% in 2020.
Growth of 1.2% is expected for the euro area in the current year (July forecast: 1.3%). With 0.5% growth, Germany is one of the lower ranks and is only beaten by the stagnation in Italy. With a growth forecast of 1.2% in 2020, Germany is also below the forecast for the entire euro area of 1.4%.
A feature of the sluggish growth in 2019 is the sharp and geographically broad-based slowdown in manufacturing and global trade. This is impacted by the following factors: Higher tariffs and prolonged uncertainty surrounding trade policy have dented investment and demand for capital goods. The registration figures of the automobile industry are shrinking due to industry-specific changes, such as disruptions caused by new emission standards in the euro area and in China, that have had long-lasting effects. In contrast to weak manufacturing and weak trade, the services sector across much of the globe continues to hold up.
With a synchronized slowdown and an uncertain recovery, the global outlook remains uncertain.
Based on these macroeconomic developments, we adjusted the assumptions regarding our business outlook for 2019 for the first time on August 14 and on October 25, 2019.
SGL Carbon SE has successfully placed Senior Secured Notes in the amount of Ŷ250 million with an interest rate of 4.625% due September 2024 (the "Notes") in April 2019.
SGL Carbon used the proceeds, together with cash on hand, to prefund its existing convertible bonds due 2020 (the "2020 Convertible Bonds"), to completely repay the loan related to the BMW Joint Venture and to pay related costs and expenses. SGL Carbon in the first instance has deposited the aggregate amount of principal and interest due under the 2020 Convertible Bonds until maturity into an escrow account for the benefit of the holders of the 2020 Convertible. In July 2019, the convertible bond was repurchased prematurely by using the liquid funds from the escrow account. The early repayment of the convertible bond 2015/2020 had a negative effect of Ŷ6.3 million on the financial result in the third quarter of 2019.
At the end of June 2019, the loans granted by the BMW Group to SGL Composites USA in the amount of Ŷ 87.6 million were repaid completely.
Effective January 1, 2019, SGL Carbon adopted the new accounting standard of IFRS 16 (Leases) and changed its accounting policies. In accordance with the chosen transition method in accordance with IFRS 16, there is no adjustment to prior periods. As a result, changes in net income, assets and liabilities, and cash flow will be affected by the new accounting policies in fiscal year 2019.
The following effects resulted from the first-time adoption of IFRS 16 as of January 1, 2019:
In the first nine months of 2019, we recognized depreciation for rights of use assets in the amount of Ŷ6.5 million and imputed interest expenses for lease liabilities in the amount of Ŷ0.9 million in our consolidated income statement. IFRS 16 also affects the structure of the cash flow statement of SGL Carbon: Cash flow from operating activities and free cash flow increased and cash flow from financing activities decreased by Ŷ7.1 million each.
For further details to the transition effects in the opening balance sheet, please refer to the notes to the condensed consolidated interim financial statements.
As a result of the significant deviations from our expectations in the market segment Wind Energy, Textile Fibers and Industrial Applications in the reporting segment Composites - Fibers & Materials (CFM) communicated in August 2019, the preparation of a new five-year plan was accelerated. For each of the two cash-generating units (CGU) Carbon Fibers & Composite Materials (CF/CM) and Composites DE (SGL ACF), an impairment test was carried out. The impairment test revealed solely a shortfall of the recoverable amount of CF/CM over the carrying amount of the net assets allocated to the CGU and resulted in an impairment loss of Ŷ74.7 million on other intangible assets, buildings, technical equipment and machinery and other property, plant and equipment. The noncurrent assets of the former joint ventures with BMW and Benteler, which were acquired in recent years, are not affected by this impairment.
In connection with the impairment test, the related deferred tax assets were also tested for impairment. This resulted in a valuation allowance of Ŷ7.4 million on deferred tax assets in the United Kingdom and Germany. Further details can be found in the Notes.
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| Sales revenue | ƉƈƎƌ | ƉƈƉƏ | ƇƋ |
| EBITDA before non-recurring items 1) | ƈƊƇ | ƊƋƎ | –ƊƍƊ |
| EBIT before non-recurring items | |||
| (recurring EBIT) 1) | –ƇƎ | ƈƐƏ | >–ƇƐƐ |
| Return on sales (EBIT-margin) 1) | –ƐƋ | ƌƋ | - |
| Return on capital employed | |||
| (ROCE EBIT) 2) |
–ƐƉ | Ɗƌ | - |
| Operating loss/profit (EBIT) | –ƎƈƎ | ƉƏƐ | >–ƇƐƐ |
1) Non-recurring items of minus Ŷ81.0 million and Ŷ18.1 million in the nine months 2019 and 2018, respectively
2) EBIT before non-recurring items for the last twelve months to average capital employed (total of goodwill, other intangible assets, property, plant and equipment, investments accounted for At-Equity and working capital)
As expected, sales in the reporting segment CFM at Ŷ328.6 million remained approximately on the prior year level also in the first nine months 2019 (currency adjusted: plus 1%). The first half year already recorded strong growth in the market segment Wind Energy compared to the very weak prior year. This growth even accelerated in the third quarter. In the first nine months 2019, sales in the market segment Automotive remained close to the prior year level, while the market segments Textile Fibers and Industrial Applications declined due to the weakening global economy as well as due to structural issues. The market segment Aerospace also remained below the prior year level due to different timings of project billings.
With the full acquisition of Benteler SGL at the end of 2017, Ceramic Brake Discs (Brembo SGL; development and production of carbon ceramic brake discs) is the major remaining investment accounted for At-Equity and is allocated to the market segment Automotive. In the first nine months 2019, sales of all At-Equity accounted investments increased by approx. 5% to Ŷ190.1 million (9M/2018: Ŷ181.6 million Ŷ, 100% values for companies) and is not included in our Group sales revenue. This development is mainly related to our precursor joint venture with Mitsubishi, where we had positive currency effects, as well as higher sales at the energy joint venture at our Portuguese site.
As already described in the ad-hoc notification published on August 14, 2019, recurring EBIT in the third quarter 2019 significantly declined compared to the first two quarters of the year, due to the deterioration in the market segments Textile Fibers, Wind Energy und Industrial Applications. This is the reason why recurring EBIT in the first nine months 2019 at minus Ŷ1.8 million was substantially below the level of the comparable prior year period of Ŷ20.9 million. Accordingly, the EBITmargin declined to minus 0.5% from 6.5% in this business unit.
This development was the result of the significant earnings decline in the market segment Wind Energy, which did not benefit from higher sales revenues due to the unfavorable product mix. Compared to the prior year, we are supplying much more untreated carbon fiber than value added materials. Despite the temporary stabilization in the second quarter, earnings in the market segment Textile Fibers substantially declined in the reporting period. Demand for acrylic fibers continues to be weak, in addition to the challenging economic environment, the acrylic fiber market is also structurally challenged, Due to the sustained high raw material prices, important end markets have switched over to polyester. The earnings decline in the market segments Automotive and Aerospace was due to a temporarily unfavorable product mix resp. different billing schedules.
As outlined in detail in the chapter "Key Events" and in the Notes, an impairment charge in the amount of Ŷ74.7 million was recorded in CFM in the third quarter 2019 due to the lower starting point in 2019 as well as the ongoing weakness in the market segments Textile Fibers and Industrial Applications.
The impairment charge relates only to the cash generating unit CF/CM. In recent years acquired assets of the former joint ventures with BMW and Benteler are not affected by this impairment.
Further non-recurring items include mainly the additional depreciation of minus Ŷ6.5 million of the identified and capitalized amounts relating to the purchase price allocation of the SGL Composites companies. Non-recurring items from the recognition and release of restructuring provisions nearly balanced each other out. The first nine months of the prior year period included a positive effect from the full consolidation of the former Joint Ventures with the BMW Group (SGL ACF) resulting from the adjustment to the fair value of the proportionate shareholding as of the date of acquisition in the amount of Ŷ28.4 million. Mainly due to this high positive non-recurring item in the prior year and the impairment charge of Ŷ74.7 million in the third quarter 2019, reporting EBIT declined from Ŷ39.0 million in the first nine months 2018 to minus Ŷ82.8 million in the reporting period.
Due to the substantial deterioration in the market segments Industrial Applications and Textile Fibers, we decided on various countermeasures, which include the following aspects:
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| Sales revenue | ƊƍƇƉ | ƊƉƌƎ | ƍƏ |
| EBITDA | ƏƇƈ | ƍƌƋ | ƇƏƈ |
| EBIT before non-recurring items | |||
| (recurring EBIT) 1) | ƍƐƏ | ƋƏƋ | ƇƏƈ |
| Return on sales (EBIT-margin) | ƇƋƐ | ƇƉƌ | - |
| Return on capital employed | |||
| 2) (ROCE EBIT) |
ƇƌƏ | ƇƌƐ | - |
| Operating profit (EBIT) | ƍƐƏ | ƌƐƇ | ƇƎƐ |
1) Non-recurring items of Ŷ0.0 million and Ŷ0.6 million in the nine months of 2019 and 2018, respectively
2) EBIT before non-recurring items for the last twelve months to average capital employed (total of goodwill, other intangible assets, property, plant and equipment, investments accounted for At-Equity and working capital)
In the first nine months 2019, sales in the reporting segment GMS at Ŷ471.3 million increased by approximately 8% (currency adjusted by approx. 6%) year-over-year. Main driver for this strong development was the market segment Automotive & Transport, which grew more than proportionately and was able to increase its sales by more than 30%. The market segments Semiconductors and LED were also able to record a substantial double digit increase in sales. Slight growth was posted in the market segments Industrial Applications and Chemicals. Sales in the market segment Battery & other Energy remained below the prior year level as expected, while we again limited sales to below the prior year level in the market segment Solar to prioritize sales to the Semiconductor and LED industries.
Overall, recurring EBIT increased more than proportionately to sales by 19% to a historic record level of Ŷ70.9 million in the first nine months of 2019 (9M/2018: Ŷ59.5 million), leading to an improved EBIT-margin of 15.0% (9M/2018: 13.6%) due to improved results in the market segments Semiconductors, LED, Chemicals and Industrial Applications. As expected, the startup costs in connection with new projects in the market segment Automotive & Transport were substantially reduced in the third quarter 2019, so that in the reporting period the results were stabilized on the prior year level. Earnings in the market segment Battery & other Energy were also maintained close to the prior year level. Results in the market segment Solar remained slightly below the prior year level.
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| Sales revenue | ƉƈƋ | ƈƋƌ | ƈƍƐ |
| thereof Central Innovation | ƏƊ | Ɖƌ | !ƇƐƐ |
| EBITDA | –ƎƇ | –Ƈƌƌ | ƋƇƈ |
| EBIT before non-recurring items | |||
| (recurring EBIT) 1) | –ƇƊƏ | –ƈƇƈ | ƈƏƍ |
| Operating loss (EBIT) | –ƇƊƏ | –ƇƏƊ | ƈƉƈ |
| thereof Central Innovation | –ƊƐ | –ƌƇ | ƉƊƊ |
1) Non-recurring items of Ŷ1.8 million in the nine months of 2018
Sales in the reporting segment Corporate increased by 27% (no currency effect) year-over-year to Ŷ32.5 million (9M/2018: Ŷ25.6 million) mainly due to higher sales in the market segment Energy. This relates to sales of our central research & development department (Central Innovation) for fuel cell components.
At minus Ŷ14.9 million, recurring EBIT in the reporting segment Corporate improved substantially compared to the prior year period (9M/2018: minus Ŷ21.2 million) despite a positive onetime effect in the prior year period in the amount of Ŷ3.9 million relating to a land sale in Canada. This development was mainly the result of increased earnings contributions from the business with fuel cell components, which reduced the net expenses of our central research and development activities, A further effect came from lower expenses for management incentive plans following the strong earnings decline at CFM and thus also in the Group.
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| Sales revenue | ƎƉƈƊ | ƍƎƌƉ | ƋƏ |
| Cost of sales | –ƌƋƊƈ | –ƌƇƋƊ | –ƌƉ |
| Gross profit | ƇƍƎƈ | ƇƍƐƏ | ƊƉ |
| Selling, administrative and R&D expenses |
–ƇƉƏƇ | –ƇƉƍƊ | –Ƈƈ |
| Other operating income/expenses | ƊƎ | ƇƉƐ | –ƌƉƇ |
| Result from investments accounted for At-Equity |
ƇƐƉ | Ƈƈƍ | –ƇƎƏ |
| Operating profit (EBIT) before non | |||
| recurring items (recurring EBIT) | ƋƊƈ | ƋƏƈ | –ƎƊ |
| Impairment loss | –ƍƊƍ | - | |
| Other non-recurring items | –ƌƉ | ƈƐƋ | >–ƇƐƐ |
| Operating loss/profit (EBIT) | –ƈƌƎ | ƍƏƍ | >–ƇƐƐ |
| EBITDA before non-recurring items | ƇƐƍƈ | ƇƐƋƍ | ƇƊ |
Sales revenue increased by 6% (currency adjusted by 4%) to Ŷ832.4 million (9M/2018: Ŷ786.3 million). The increase in sales revenue is primarily attributable to higher deliveries and price increases at GMS. The gross margin slightly decreased to 21.4% in the reporting period (9M/2018: 21.7%) due to the weaker earnings situation in the reporting segment CFM. Despite the marginally lower gross margin, gross profit rose to Ŷ178.2 million in the reporting period from Ŷ170.9 million in the prior year period, due to the higher sales revenue. Selling, administrative, and R&D expenses increased by 1% to Ŷ139.1 million (9M/2018: Ŷ137.4 million), and thus at a slightly slower rate than sales revenue. On the one hand, higher freight costs led to an increase in selling expenses, while lower expenses for management incentive plans contributed to a significant reduction in administrative expenses.
Although recurring EBIT in the period under review decreased by 8% to Ŷ54.2 million (9M/2018: Ŷ59.2 million), the prior-year period included an income of Ŷ3.9 million from a land sale in the reporting segment Corporate. Adjusted for this effect, recurring EBIT remained on the prior year level. This is attributable to the fact that the significant decline in earnings in the business unit CFM could almost completely be offset by the improvements in operating earnings in the business unit GMS and in Corporate.
Recurring EBIT included, for the first time, depreciation required under IFRS 16 on capitalized lease contracts. Accordingly, recurring EBITDA developed better than recurring EBIT and increased slightly to Ŷ107.2 million (9M/2018: Ŷ105.7 million).
Non-recurring items of minus Ŷ81.0 million in the reporting period mainly include the impairment charge in the reporting segment CFM in the amount of Ŷ74.7 million as well as the additional amortization of identified assets and liabilities resulting from purchase price allocation (PPA) amounting to minus Ŷ6.5 million. In addition, further non-recurring items from recognition and release of restructuring provisions have almost balanced each other out. In the first nine months of the prior year, an adjustment to the fair value of the net assets of the previously proportionally consolidated joint operation with the BMW Group was required. This resulted in a positive impact on non-recurring earnings amounting to Ŷ28.4 million. As a result of this high positive non-recurring item in the previous year and the impairment charge of Ŷ74.7 million in the third quarter 2019, EBIT after non-recurring items decreased from to Ŷ79.7 million in the first nine months of 2018 to minus Ŷ26.8 million in the reporting period.
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| Interest income | Ƈƈ | Ɛƍ | ƍƇƊ |
| Interest expense | –ƇƊƌ | –ƇƐƇ | –ƊƊƌ |
| Imputed interest convertible bonds | |||
| (non-cash) | –ƊƇ | –ƉƋ | –ƇƍƇ |
| Imputed interest finance lease (non | |||
| cash) | –ƈƌ | –ƇƏ | –ƉƌƎ |
| Carrying amount of current and non | |||
| current financial liabilities | –Ɗƍ | –ƊƇ | –ƇƊƌ |
| Interest expense, net | –ƈƊƎ | –ƇƎƏ | –ƉƇƈ |
| Amortization of refinancing costs | |||
| (non-cash) | –ƈƍ | –ƇƉ | >–ƇƐƐ |
| Foreign currency valuation of Group | |||
| loans (non-cash) | Ɛƈ | –ƐƋ | !ƇƐƐ |
| Other financial income/expenses | –ƋƉ | –Ɛƌ | >–ƇƐƐ |
| Other financing result | –ƍƎ | –ƈƊ | >–ƇƐƐ |
| Net financing result | –Ɖƈƌ | –ƈƇƉ | –ƋƉƇ |
With the issue of the new corporate bond in April 2019, the refinancing measures are now substantially complete, and the maturities profile has comprehensively improved; after the repayment of the financial debt of SGL Composites due to BMW Group at June 30, 2019, the convertible bond 2015/2020 was repaid prematurely in July. As a result of these measures, gross debt further decreased considerably compared to June 30, 2019, leading to a sustainable improvement of the interest expense in the third quarter and over the original residual term of the convertible bond.
After the repayment of the financial debt of SGL Composites due to BMW Group in June 2019 and the repurchase of the convertible bond 2015/2020 (interest rate of 3,5%) in July 2019, interest expense particularly related to the interest on the corporate bond issued in April 2019 (interest rate of 4.625%) as well as the cash interest component (coupon) of the convertible bond 2018/2023 (interest rate 3.0%). The non-cash imputed interest on the convertible bond is recognized in order to adjust the coupon on the convertible bond to comparable interest rates at the time of its issuance.
As a result of the corporate bond issued in April 2019, the convertible bond issued in the third quarter of 2018 and the interest expense from IFRS 16 to be recognized for the first time in 2019 amounting to Ŷ0.9 million, net interest expense for the reporting period increased significantly from minus Ŷ18.9 million to minus Ŷ24.8 million. The other financing result significantly increased year-on-year to minus Ŷ7.8 million (9M/2018: minus Ŷ2.4 million), particularly due to a one-time negative earnings effect from the repurchase of the convertible bond amounting to Ŷ6.3 million in total. Overall, the financial result thus declined to minus Ŷ32.6 million (9M/2018: minus Ŷ21.3 million).
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| Operating loss/profit (EBIT) | –ƈƌƎ | ƍƏƍ | >–ƇƐƐ |
| Net financing result | –Ɖƈƌ | –ƈƇƉ | –ƋƉƇ |
| Result from continuing operations before | |||
| income taxes | –ƋƏƊ | ƋƎƊ | >–ƇƐƐ |
| Income tax expense | –ƇƊƍ | –ƌƊ | >–ƇƐƐ |
| Result from continuing operations | –ƍƊƇ | ƋƈƐ | >–ƇƐƐ |
| Result from discontinued operations, | |||
| net of income taxes | –ƐƇ | –ƊƐ | ƏƍƋ |
| Net result forthe period | –ƍƊƈ | ƊƎƐ | >–ƇƐƐ |
| Attributable to: | |||
| Non-controlling interests | ƐƉ | ƐƉ | ƐƐ |
| Consolidated net result | |||
| (attributable to shareholders of the | |||
| parent company) | –ƍƊƋ | Ɗƍƍ | >–ƇƐƐ |
| Earnings per share - basic and diluted | |||
| (in Ŷ) | –ƐƌƇ | ƐƉƏ | >–ƇƐƐ |
| Earnings per share continuing | |||
| operations, basic and diluted (in Ŷ) | –ƐƌƇ | ƐƊƈ | >–ƇƐƐ |
| Earnings per share - discontinued | |||
| operations, diluted (in Ŷ) | ƐƐƐ | –ƐƐƉ | ƇƐƐ |
Mainly due to the non-recurrence of the positive non-recurring item in the prior year as described above and the recognition of the impairment loss in the current period, the result from continuing operations before income taxes decreased from Ŷ58.4 million in the prior year period to minus Ŷ59.4 million in the reporting period. Income tax expense of Ŷ14.7 million (9M/18: Ŷ6.4 million) was characterized by valuation allowances on deferred tax assets in United Kingdom and Germany in the amount of Ŷ7.4 million as a result from the weaker earnings outlook in the reporting segment CFM, as well as current tax expenses on the positive earnings contributions of group companies.
The result from discontinued operations of the prior year period includes income and expenses incurred by the former business units Performance Products (PP). There was no material impact on earnings in the reporting period. The expense in the prior year period was impacted by additional tax provisions related to the sale of PP.
Consolidated net result of the period amounted to minus Ŷ74.5 million compared to Ŷ47.7 million in the prior year period (after deduction of non-controlling interests of Ŷ0.3 million in the reporting period and Ŷ0.3 million in the nine months 2018).
| ASSETS Ŷm | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Non-current assets | ƎƐƉƊ | ƎƊƇƈ | –ƊƋ |
| Current assets | ƍƉƌƉ | ƍƊƈƈ | –ƐƎ |
| Assets held for sale | - | Ƈƍ | - |
| Total assets | ƇƋƉƏƍ | ƇƋƎƋƇ | –ƈƏ |
| EQUITY AND LIABILITIES Ŷm | |||
| Equity attributable to the shareholders of the parent |
|||
| company | ƊƐƏƊ | ƋƉƇƌ | –ƈƉƐ |
| Non-controlling interests | ƇƐƇ | ƇƐƍ | –Ƌƌ |
| Total equity | ƊƇƏƋ | ƋƊƈƉ | –ƈƈƌ |
| Non-current liabilities | Ǝƍƌƌ | ƍƏƎƐ | ƏƎ |
| Current liabilities | ƈƊƉƌ | ƈƊƊƉ | –ƐƉ |
| Liabilities in connection with | |||
| assets held for sale | - | ƐƋ | - |
| Total equity and liabilities | ƇƋƉƏƍ | ƇƋƎƋƇ | –ƈƏ |
Total assets as of September 30, 2019, decreased by Ŷ45.4 million or 2.9% to Ŷ1,539.7 million compared to December 31, 2018. Non-current assets on one hand decreased by Ŷ74.7 million due to the impairment loss at CFM and on the other hand increased by Ŷ32.2 million as a result of the firsttime adoption of IFRS 16, which requires the capitalization of lease contracts. In addition, current assets decreased slightly. The decrease in cash and cash equivalents in the amount of Ŷ33.9 million was partially compensated by the increase in trade receivables and contract assets in the amount of Ŷ25.2 million and the increase in inventories of Ŷ7.0 million.
The increase in non-current liabilities is mainly attributable to the increase in pension provisions by Ŷ59.2 million to Ŷ352.4 million. This increase is the result of the adjustment of the pension discount rates to the expected long-term interest environment in Germany and in the US by minus 1.1%-points in each case to 0.8% and to 3.1%. Furthermore, a total of Ŷ15.8 million required by the new lease accounting in accordance with IFRS 16 is reported as non-current liabilities. In contrast, current liabilities changed only slightly. On one hand there is a reduction in current provisions of Ŷ11.6 million because of lower additions to bonus provisions for the current fiscal year. In addition, other liabilities also decreased due to the settlement payment to the acquirer of the Aerostructures business in the amount of Ŷ10.6 million. This development was offset by an increase in trade payables of Ŷ5.6 million and by Ŷ17.9 million higher current liabilities recognized for the first time in accordance with IFRS 16 lease accounting.
| Ŷ million | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Inventories | ƉƇƍƊ | ƉƇƐƊ | ƈƉ |
| Trade accounts receivable and | |||
| contract assets 1) | ƈƊƈƐ | ƈƇƌƎ | ƇƇƌ |
| Trade payables | –ƇƇƉƍ | –ƇƐƎƇ | –Ƌƈ |
| Working Capital | ƊƊƋƍ | ƊƇƏƇ | ƌƉ |
Working capital increased by 6% to Ŷ445.7 million as of September 30, 2019, in line with the increase in sales revenue. The nominal increase was mainly due to the increase in trade receivables and contract assets of Ŷ25.2 million, resulting from the increased business volume in the reporting segment GMS. Assigned receivables to a financial institution from a factoring agreement in the amount of Ŷ19.6 million have limited the increase in trade receivables. In addition, the Ŷ7.0 million increase in inventories also contributed to the increase in net working capital in the first nine months of 2019.
As of September 30, 2019, equity attributable to the shareholders of the parent company decreased to Ŷ409.4 million (December 31, 2018: Ŷ531.6 million). The reduction is mainly attributable to the net result of minus Ŷ74.5 million, which was impacted by the impairment loss at CFM. In addition, the lower pension discount rate environment in Germany and the USA resulted in an adjustment of minus Ŷ59.8 million to equity, without an effect on the profit and loss statement. Positive foreign currency changes of Ŷ16.4 million increased equity. Overall, the equity ratio as of September 30, 2019 decreased to 26.6% compared to 33.5% as of December 31, 2018.
| Ŷ million | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Carrying amount of current and | |||
| non-current financial liabilities | ƊƐƋƇ | ƉƏƎƎ | Ƈƌ |
| Remaining imputed interest for | |||
| the convertible bonds | ƇƇƊ | ƈƐƎ | –ƊƋƈ |
| Accrued refinancing cost | Əƍ | Ɗƈ | !ƇƐƐ |
| Total financial debt (nominal | |||
| amount) | Ɗƈƌƈ | ƊƈƉƎ | Ɛƌ |
| Liquidity - continuing operations | ƇƊƌƍ | ƇƎƐƌ | –ƇƎƎ |
| Liquidity - discontinued | |||
| operations | - | ƇƐ | –ƇƐƐ |
| Total liquidity (continuing and | |||
| discontinued) | ƇƊƌƍ | ƇƎƇƌ | –ƇƏƈ |
| Net financial debt - continuing and | |||
| discontinued operations | ƈƍƏƋ | ƈƊƈƈ | ƇƋƊ |
| thereof: SGL Composites | |||
| (formerly SGL ACF) | |||
| Non-current financial liabilities | ƐƐ | ƎƌƊ | –ƇƐƐ |
The financial debt mainly includes the convertible bond 2018/2023, the new corporate bond 2019/2024, the netted amounts of the remaining imputed interest components as well as the refinancing costs. The financial debt of SGL Composites due to the BMW Group and the convertible bond 2015/2020 were both repaid in full as of June 30, 2019 and in July 2019, respectively.
As of September 30, 2019, net financial debt increased by Ŷ37.3 million to Ŷ279.5 million. This development is primarily attributable to a payment made in the first quarter 2019 of Ŷ10.6 million relating to a settlement with the purchaser of the Aerostructures business, within the scope of discontinued operations, the negative free cashflow from continuing operations of minus Ŷ9.6 million and the costs incurred for the issuance of the corporate bond.
| Nine months | ||
|---|---|---|
| Ŷ million | 2019 | 2018 |
| Cash flow from operating activities | ||
| Result from continuing operations before | ||
| income taxes | –ƋƏƊ | ƋƎƊ |
| Restructuring expenses | –Ɛƈ | –ƐƎ |
| Income from business combination | ||
| achieved in stages | - | –ƈƎƊ |
| Impairment loss | ƍƊƍ | |
| Depreciation/amortization expense | ƌƇƈ | ƋƋƉ |
| Changes in working capital | –ƇƌƎ | –ƊƋƍ |
| Miscellaneous items | –ƈƏƌ | –ƉƇƈ |
| Cash flow from operating activities - continuing | ||
| operations | ƈƏƏ | ƍƌ |
| Cash flow from operating activities - | ||
| discontinued operations | ƐƐ | –ƊƐ |
| Cash flow from operating activities - continuing | ||
| and discontinued operations | ƈƏƏ | Ɖƌ |
| Cash flow from investing activities | ||
| Payments to purchase intangible assets | ||
| and property, plant & equipment | –ƋƐƍ | –ƉƎƍ |
| Proceeds from the sale of intangible | ||
| assets and property, plant & equipment | Ƈƍ | ƊƏ |
| Payments for the acquisition of | ||
| subsidiaries, net of cash acquired | - | –ƈƉƇ |
| Dividend payments from investments | ||
| accounted for At-Equity | ƌƏ | ƌƐ |
| Payments received for divestitures | ƈƌ | ƉƊ |
| Cash flow from investing activities - continuing | ||
| operations | –ƉƏƋ | –ƊƍƋ |
| Cash flow from investing activities - | ||
| discontinued operations | –ƏƎ | ƌƈƌ |
| Cash flow from investing activities - continuing | –ƊƏƉ | ƇƋƇ |
| and discontinued operations | ||
| Free cash flow 1) - continuing operations | –Əƌ | –ƉƏƏ |
| Free cash flow 1) - discontinued operations |
–ƏƎ | ƋƎƌ |
1) Defined as cash flow from operating activities minus cash flow from investing activities
Cash flow from operating activities -continuing operations - in the first nine months of 2019 improved significantly by Ŷ22.3 million to Ŷ29.9 million, mainly due to the reduced increase in working capital. Cash flow from investing activities of continuing operations improved from minus Ŷ47.5 million in the prior year period to minus Ŷ39.5 million, mainly because the prior year period included the net cash payment for the acquisition of the SGL Composites company in Wackersdorf (Germany) amounting to Ŷ23.1 million. Capital expenditures in intangible assets and property plant and equipment in the reporting period increased significantly by 31% to Ŷ50.7 million (9M/2018: Ŷ38.7 million). SGL Carbon received further cash proceeds from the sale of SGL Kümpers of Ŷ2.0 million and from the sale of a company in Korea of Ŷ0.6 million. The prior year period included the net proceeds from the sale of SGL Kümpers amounting to Ŷ3.4 million and from a land sale in Lachute (Canada) in the amount of Ŷ3.9 million.
As a result, free cash flow from continuing operations in the reporting period improved significantly to minus Ŷ9.6 million compared to the prior year period (9M/2018: minus Ŷ39.9 million).
Free cash flow from discontinued operations decreased significantly to minus Ŷ9.8 million in the reporting period (9M/2018: Ŷ58.6 million). The amount in the reporting period mainly includes the payment for the final settlement regarding the sale of the Aerostructures business to Avcorp. The prior year period included the proceeds from the remaining purchase price from the sale of the former business unit PP amounting to Ŷ58.6 million.
The following tables provide information on the headcount development according to reporting segments and to geographic regions:
| Headcount | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Composites - Fibers & Materials | ƇƍƐƍ | Ƈƍƈƈ | –ƐƏ |
| Graphite Materials & Systems | ƉƇƈƌ | ƉƐƐƎ | ƉƏ |
| Corporate | Ɖƈƈ | ƉƐƇ | ƍƐ |
| Total SGL Carbon | ƋƇƋƋ | ƋƐƉƇ | ƈƋ |
| Headcount | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Germany | ƈƉƋƏ | ƈƈƍƇ | ƉƏ |
| Europe excluding Germany | ƇƊƎƇ | ƇƊƊƎ | ƈƉ |
| North America | ƎƈƇ | ƎƈƊ | –ƐƊ |
| Asia | ƊƏƊ | ƊƎƎ | Ƈƈ |
| Total SGL Carbon | ƋƇƋƋ | ƋƐƉƇ | ƈƋ |
Regarding existing opportunities and risks, we refer to the detailed statements in the annual report for the financial year ended December 31, 2018. Opportunities and risks have changed from the statements made in the annual report as follows.
In the reporting segment Composites - Fibers & Materials (CFM), the risks from "price and volume development", "future general economic trend" and "raw material risks" have materialized and are included in the 2019 forecast for this reporting segment. In addition, we have introduced measures to improve earnings in the CFM reporting segment, but these should not have a material effect on earnings until the following year. The risks that have materialized at CFM are only partially offset by seizing opportunities in the GMS and Corporate reporting segments. For the remaining months of this fiscal year, we see only a small opportunity and risk profile from the above-mentioned risk categories.
In addition, the outlook for the 2019 net result now includes "assessment risks" and "tax risks". The reduced earnings expectation increases the risk of a possible negative rating impact by the rating agencies. We do not expect any significant negative effects from this, as we are fully financed until 2023 with regard to existing financial debt, with the issue of the 2018/2023 convertible bond in September 2018, the 2019/2024 corporate bond in April 2019 and the Ŷ175 million syndicated loan concluded in January 2019 (which is still undrawn).
The updated Group outlook for financial year 2020 also takes into account the expected occurrence of risks in price and volume developments as well as the updated future general economic trend. A more detailed overview of the risks in the 2020 financial year and subsequent years will be developed with the preparation of the new Group plan and presented in the 2019 Annual Report.
A continuing risk for the European economy is the Brexit, which has been postponed.
The Ŷ250 million corporate bond successfully placed in April 2019 confirms the company's assessment that risks from its financial position can be regarded as low.
In summary, we currently do not see any substantial risks that have an impact on SGL Carbon as a whole. On the basis of information currently available, it is our opinion that no individual material risks exist – neither presently nor in the foreseeable future – that could jeopardize the business as a going concern. Even if the individual risks are viewed on an aggregate basis, they do not threaten SGL Carbon as a going concern.
| Actuals | |||
|---|---|---|---|
| Ŷmillion | KPI | 2018 | Outlook2019 |
| CFM | Sales revenue | ƊƈƈƋ | Slight increase |
| Negative mid to high single | |||
| EBITƇ | ƈƐƎ | digit EURm amount | |
| GMS | Sales revenue | ƋƎƏƏ | Slight increase |
| EBITƇ | ƍƌƐ | Slight increase | |
| Corporate | EBITƇ | – Ɖƈƈ | Significant increase |
1) Before non-recurring items
For the full year 2019, we expect a slight increase in sales yearover-year in the reporting segment CFM, mainly driven by the market segment Wind Energy.
As announced in the ad-hoc notifications of August 14 and October 25, 2019, the market segments Textile Fibers and Industrial Applications are developing substantially weaker than initially expected. Despite the strong growth in the market segment Wind Energy, a substantial year-over-year earnings decline is also expected in this market segment due to the deteriorated product mix. Consequently, we now anticipate a negative mid to high single digit million Ŷ recurring EBIT. The earnings improvement measures introduced predominantly in the market segments Textile Fibers and Industrial Applications are only expected to materially improve results in the next year.
In the prior year, sales and recurring EBIT in the reporting segment GMS were substantially positively impacted by the initial adoption of IFRS 15. In spite of this, we now expect a slight increase in both KPIs in the full year 2019 due to the very good business development in the first nine months 2019 and even though we anticipate a decline in the final quarter of 2019, as we continue to plan lower volumes as well as a targeted reduction of inventory levels, which will lead to lower fixed costs absorption but improve free cash flow.
GMS should therefore once again exceed the target EBIT margin of 12% (before non-recurring items) and thus confirm that this business model is robust even in a weakening global economic environment.
Despite a positive one-time effect from a land sale in the amount of approximately Ŷ4 million, we now expect recurring EBIT in the reporting segment Corporate to improve substantially in fiscal year 2019. This is one hand the result of significantly lower net expenses at Central Innovation, following the very good business development with fuel cell components. In addition, lower expenses for management incentive plans also contribute to the substantial earnings improvement.
| Actuals | ||
|---|---|---|
| Ŷ million | 2018 | Outlook 2019 |
| Mid-single digit percentage | ||
| Sales revenue | ƇƐƊƍƋ | increase |
| EBIT 1) | ƌƊƌ | ƊƋ to ƋƐ (85P |
| Return on capital employed | ||
| (ROCE EBIT)) 1) |
ƋƊ | Significant decrease |
| Consolidated net result – | ||
| continuing operations | ƋƐƉ | \$SSUR[ PLQXV ƇƐƐ (85P |
1) before non-recurring items
The fiscal year 2018 was impacted by positive effects from the initial adoption of IFRS 15 as well as positive non-recurring items resulting from the full consolidation of the former SGL ACF. This high comparative base influences the outlook for the current year. In addition, we acknowledge reports on a global economic slowdown. Nevertheless, we continue to anticipate a mid-single digit percentage Group sales increase for 2019, which will mainly be volume driven.
As described in the ad-hoc notification of August 14, 2019, the better than initially expected business developments in the reporting segments GMS and Corporate will not suffice to compensate for the substantial earnings decline in the market segments Textile Fibers and Wind Energy in the reporting segment CFM. We therefore in August 2019 guided a Group recurring EBIT which is approximately Ŷ10 million lower than the initial guidance of Ŷ65 million.
On October 25, 2019, we published an ad-hoc notification and informed that the weakness in the market segments Textile Fibers and Industrial Applications in the reporting segment CFM will continue into the final quarter of 2019. We therefore now expect a Group recurring EBIT in the range of Ŷ45 to Ŷ50 million.
The earnings decline at CFM, which is mainly attributable to the weakness in the market segments Textile Fibers and Industrial Applications, led to an impairment testing. Consequently, an impairment charge in the amount of approximately Ŷ75 million was recorded in the third quarter 2019. The in recent years acquired assets of the former joint ventures with BMW and Benteler were not affected by this impairment.
This impairment charge is the main reason for the deterioration in the net result, which is now expected at approx. minus Ŷ100 million (previous guidance: net result in a negative high single digit million Ŷ amount). The net result of approximately Ŷ41 million was positively impacted by a non-cash positive non-recurring item in the amount of Ŷ28 million relating to the full consolidation of SGL ACF.
For fiscal year 2019, we continue to expect capital expenditures of approximately Ŷ100 million after Ŷ78 million in the prior year. Net financial debt at year-end 2019 is still anticipated to increase by a mid-double digit million Ŷ amount compared to the year-end 2018 due to higher capital expenditures and increased interest costs. However, the risks to not achieve this target have risen in light of the earnings decline at CFM.
With the issue of the convertible bond 2018/2023 in September 2018, the corporate bond 2019/2024 in April 2019 as well as the syndicated loan agreed in January 2019 in the amount of Ŷ175 million (which remains undrawn) we are financed through to 2023 with respect to existing financial liabilities.
Wiesbaden, November 5, 2019
SGL Carbon SE
The Board of Management
(unaudited)
| 3rd Quarter | Nine months | |||||
|---|---|---|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change | 2019 | 2018 | Change |
| Sales revenue | ƈƍƐƏ | ƈƋƍƐ | ƋƊ | ƎƉƈƊ | ƍƎƌƉ | ƋƏ |
| Cost of sales | –ƈƇƏƉ | –ƈƐƍƏ | –ƋƋ | –ƌƌƐƍ | –ƌƈƊƇ | –ƋƏ |
| Gross profit | ƋƇƌ | ƊƏƇ | ƋƇ | ƇƍƇƍ | Ƈƌƈƈ | ƋƏ |
| Selling expenses | –ƈƍƊ | –ƈƋƇ | –Əƈ | –ƎƇƐ | –ƍƊƏ | –ƎƇ |
| Research and development costs | –ƏƋ | –ƍƎ | –ƈƇƎ | –ƈƍƐ | –ƈƊƇ | –ƇƈƐ |
| General and administrative expenses | –ƍƉ | –ƇƉƈ | ƊƊƍ | –ƉƇƇ | –ƉƎƊ | ƇƏƐ |
| Other operating income | ƇƏ | ƉƇ | –ƉƎƍ | Ǝƍ | ƊƊƋ | –ƎƐƊ |
| Other operating expenses | ƐƏ | –ƐƊ | !ƇƐƐ | –ƉƏ | –ƉƇ | –ƈƋƎ |
| Result from investments accounted for At-Equity | ƊƐ | ƊƇ | –ƈƊ | ƇƐƉ | Ƈƈƍ | –ƇƎƏ |
| Restructuring expenses | Ɛƈ | –ƇƇ | !ƇƐƐ | Ɛƈ | ƐƎ | ƍƋƐ |
| Impairment loss | –ƍƊƍ | - | - | –ƍƊƍ | - | - |
| Operating loss/profit | –ƌƐƉ | Ǝƍ | >–ƇƐƐ | –ƈƌƎ | ƍƏƍ | >–ƇƐƐ |
| Interest income | ƐƇ | Ɛƈ | –ƋƐƐ | Ƈƈ | Ɛƍ | ƍƇƊ |
| Interest expense | –ƍƊ | –ƌƉ | –ƇƍƋ | –ƈƌƐ | –ƇƏƌ | –Ɖƈƍ |
| Other financing result | –ƌƌ | –ƇƋ | >–ƇƐƐ | –ƍƎ | –ƈƊ | >–ƇƐƐ |
| Result from continuing operations before income taxes | –ƍƊƈ | ƇƇ | >–ƇƐƐ | –ƋƏƊ | ƋƎƊ | >–ƇƐƐ |
| Income tax expense | –ƇƐƊ | –Ɛƍ | >–ƇƐƐ | –ƇƊƍ | –ƌƊ | >–ƇƐƐ |
| Result from continuing operations | –ƎƊƌ | ƐƊ | >–ƇƐƐ | –ƍƊƇ | ƋƈƐ | >–ƇƐƐ |
| Result from discontinued operations, net of income taxes | ƐƐ | ƐƐ | _- | –ƐƇ | –ƊƐ | ƏƍƋ |
| Net result for the period | –ƎƊƌ | ƐƊ | >–ƇƐƐ | –ƍƊƈ | ƊƎƐ | >–ƇƐƐ |
| Thereof attributable to: | ||||||
| Non-controlling interests | ƐƐ | ƐƐ | - | ƐƉ | ƐƉ | ƐƐ |
| Consolidated net result (attributable to shareholders of the parent | ||||||
| company) | –ƎƊƌ | ƐƊ | >–ƇƐƐ | –ƍƊƋ | Ɗƍƍ | >–ƇƐƐ |
| Earnings per share, basic and diluted, (inŶ) | –ƐƌƏ | ƐƐƐ | - | –ƐƌƇ | ƐƉƏ | >–ƇƐƐ |
| Earnings per share - continuing operations, basic (inŶ) | –ƐƌƏ | ƐƐƐ | - | –ƐƌƇ | ƐƊƈ | >–ƇƐƐ |
| 3rd Quarter | Nine months | |||
|---|---|---|---|---|
| Ŷ million | 2019 | 2018 | 2019 | 2018 |
| Net result for the period | –ƎƊƌ | ƐƊ | –ƍƊƈ | ƊƎƐ |
| Items that may be reclassified subsequently to profit or loss | ||||
| Cash flow hedges 1) | ƐƉ | ƐƇ | Ɛƌ | –ƇƋ |
| Currency translation | ƇƊƇ | Ɛƈ | ƇƌƉ | ƐƏ |
| Items that will not be reclassified subsequently to profit or loss | ||||
| Actuarial gains/losses on pensions and similar obligations 2) | –ƈƇƌ | ƈƇ | –ƋƏƎ | ƇƈƏ |
| Other comprehensive income | –ƍƈ | ƈƊ | –ƊƈƏ | ƇƈƉ |
| Comprehensive income | –ƏƇƎ | ƈƎ | –ƇƇƍƇ | ƌƐƉ |
| Thereof attributable to: | ||||
| Non-controlling interests | ƐƐ | –ƐƇ | Ɛƈ | Ɛƈ |
| Consolidated net result (attributable to shareholders of the parent company) | –ƏƇƎ | ƈƏ | –ƇƇƍƉ | ƌƐƇ |
1) Includes tax effects of Ŷ0.1 million and Ŷ0.4 million in the nine months of 2019 and 2018, respectively
2) Includes tax effects of Ŷ0.0 million and Ŷ0.1 million in the nine months of 2019 and 2018. respectively
| ASSETS Ŷm | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Non-current assets | |||
| Goodwill | Ɗƈƈ | ƊƇƉ | ƈƈ |
| Other intangible assets | ƊƌƊ | ƋƌƋ | –ƇƍƏ |
| Property, plant and equipment | ƌƋƉƇ | ƌƍƋƋ | –ƉƉ |
| Investments accounted for At-Equity | Ƌƌƈ | ƋƈƉ | ƍƋ |
| Other non-currents assets | ƋƇ | ƊƉ | ƇƎƌ |
| Deferred tax assets | ƐƊ | ƇƇƉ | –ƏƌƋ |
| ƎƐƉƊ | ƎƊƇƈ | –ƊƋ | |
| Current assets | |||
| Inventories | ƉƇƍƊ | ƉƇƐƊ | ƈƉ |
| Trade receivables and contract assets | ƈƊƈƐ | ƈƇƌƎ | ƇƇƌ |
| Other financial assets | ƇƐ | ƉƐ | –ƌƌƍ |
| Other receivables and other assets | ƈƏƈ | ƉƇƊ | –ƍƐ |
| Liquidity | ƇƊƌƍ | ƇƎƐƌ | –ƇƎƎ |
| Time deposits | ƊƐ | ƋƎƇ | –ƏƉƇ |
| Cash and cash equivalents | ƇƊƈƍ | ƇƈƈƋ | ƇƌƋ |
| ƍƉƌƉ | ƍƊƈƈ | –ƐƎ | |
| Assets held for sale | - | Ƈƍ | - |
Total assets ƇƋƉƏƍ ƇƋƎƋƇ –ƈƏ
| EQUITY AND LIABILITIES Ŷm | 30. Sep. 19 | 31. Dec. 18 | Change |
|---|---|---|---|
| Equity | |||
| Issued capital | ƉƇƉƈ | ƉƇƉƈ | ƐƐ |
| Capital reserves | ƇƐƊƇƌ | ƇƐƊƌƌ | –ƐƋ |
| Accumulated losses | –ƏƊƋƊ | –ƎƈƎƈ | –ƇƊƈ |
| Equity attributable to the shareholders of the parent company | ƊƐƏƊ | ƋƉƇƌ | –ƈƉƐ |
| Non-controlling interests | ƇƐƇ | ƇƐƍ | –Ƌƌ |
| Total equity | ƊƇƏƋ | ƋƊƈƉ | –ƈƈƌ |
| Non-current liabilities | |||
| Provisions for pensions and similar employee benefits | ƉƋƈƊ | ƈƏƉƈ | ƈƐƈ |
| Other provisions | Ɖƈƈ | ƉƌƉ | –ƇƇƉ |
| Interest-bearing loans | ƊƐƈƇ | ƉƏƌƋ | ƇƊ |
| Other financial liabilities | Ǝƌƍ | ƌƍƏ | ƈƍƍ |
| Deferred tax liabilities | Ɖƈ | ƊƇ | –ƈƈƐ |
| Ǝƍƌƌ | ƍƏƎƐ | ƏƎ | |
| Current liabilities | |||
| Other provisions | ƍƏƋ | ƏƇƇ | –Ƈƈƍ |
| Current portion of interest-bearing loans | ƉƐ | ƈƈ | ƉƌƊ |
| Trade payables | ƇƇƉƍ | ƇƐƎƇ | Ƌƈ |
| Other financial liabilities | ƈƈƈ | ƇƎƎ | ƇƎƇ |
| Other liabilities | ƈƋƈ | ƈƊƇ | Ɗƌ |
| ƈƊƉƌ | ƈƊƊƉ | –ƐƉ | |
| Liabilities in connection with assets held for sale | - | ƐƋ | - |
| Total equity and liabilities | ƇƋƉƏƍ | ƇƋƎƋƇ | –ƈƏ |
| Nine months | ||
|---|---|---|
| Ŷ million | 2019 | 2018 |
| Cash flow from operating activities | ||
| Result from continuing operations before income taxes | –ƋƏƊ | ƋƎƊ |
| Adjustments to reconcile the result from continuing operations to cash flow from operating activities: | ||
| Interest expense (net) | ƈƊƎ | ƇƎƏ |
| Change in value of contract assets (IFRS 15) | –ƇƉ | –ƇƋƉ |
| Result from the disposal of property, plant and equipment | –ƐƉ | –Ɖƌ |
| Depreciation/amortization expense | ƌƇƈ | ƋƋƉ |
| Income from business combination achieved in stages | - | –ƈƎƊ |
| Impairment loss | ƍƊƍ | - |
| Restructuring expenses | –Ɛƈ | –ƐƎ |
| Result from investments accounted for At-Equity | –ƇƐƉ | –Ƈƈƍ |
| Amortization of refinancing costs | ƈƍ | ƇƉ |
| Interest received | Ƈƍ | Ɛƍ |
| Interest paid | –ƇƎƍ | –ƇƐƇ |
| Income taxes paid | – ƊƇ | – ƈƇ |
| Changes in provisions, net | –ƈƊƋ | –ƏƊ |
| Changes in working capital | ||
| Inventories | –ƌƐ | –ƉƎƏ |
| Trade receivables and contract assets | –ƇƋƐ | –ƇƇƍ |
| Trade payables | Ɗƈ | ƊƏ |
| Changes in other operating assets/liabilities | ƐƊ | ƇƇ |
| Cash flow from operating activities - continuing operations | ƈƏƏ | ƍƌ |
| Cash flow from operating activities - discontinued operations | ƐƐ | –ƊƐ |
| Cash flow from operating activities - continuing and discontinued operations | ƈƏƏ | Ɖƌ |
| Nine months | ||
|---|---|---|
| Ŷ million | 2019 | 2018 |
| Cash flow from investing activities | ||
| Payments to purchase intangible assets and property, plant & equipment | –ƋƐƍ | –ƉƎƍ |
| Proceeds from the sale of intangible assets and property, plant & equipment | Ƈƍ | ƊƏ |
| Dividend payments from investments accounted for At-Equity | ƌƏ | ƌƐ |
| Payments for the acquisition of subsidiaries, net of cash acquired | - | –ƈƉƇ |
| Payments received for divestitures | ƈƌ | ƉƊ |
| Cash flow from investing activities - continuing operations | –ƉƏƋ | –ƊƍƋ |
| Changes in time deposits | ƋƊƇ | –Ƌƍƈ |
| Cash flow from investing and cash management activities - continuing operations | ƇƊƌ | –ƇƐƊƍ |
| Cash flow from investing activities and cash management activities - discontinued operations | –ƏƎ | ƌƈƌ |
| Cash flow from investing activities and cash management activities - continuing and discontinued operations | ƊƎ | –ƊƈƇ |
| Cash flow from financing activities | ||
| Proceeds from issuance of financial liabilities | ƈƋƍƊ | ƇƋƏƉ |
| Repayment of financial liabilities | –ƈƋƌƉ | –ƉƐƏƇ |
| Payments in connection with financing activities | –Ǝƍ | –ƉƐ |
| Payments for the redemption portion of lease liabilities | –ƍƇ | - |
| Other financing activities | –ƐƉ | –ƇƇ |
| Cash flow from financing activities - continuing operations | –ƇƋƐ | –ƇƋƉƏ |
| Cash flow from financing activities - continuing and discontinued operations | –ƇƋƐ | –ƇƋƉƏ |
| Effect of foreign exchange rate changes | ƐƋ | –ƐƉ |
| Net change in cash and cash equivalents | ƈƐƈ | –ƇƏƈƍ |
| Cash and cash equivalents at beginning of period | ƇƈƈƋ | ƉƎƈƏ |
| Cash and cash equivalents at end of period | ƇƊƈƍ | ƇƏƐƈ |
| Time deposits at end of period | ƊƐ | Ƌƍƈ |
| Liquidity | ƇƊƌƍ | ƈƊƍƊ |
| Nine months 2019 | |||
|---|---|---|---|
| Equity attributable to | |||
| the shareholders of | Non-controlling | ||
| Ŷ million | the parent company | interests | Total equity |
| %DODQFH DW'HFHPEHU ƉƇ | ƋƉƇƌ | ƇƐƍ | ƋƊƈƉ |
| Cumulative adjustment on initial application of IFRS 16 | ƐƇ | ƐƇ | |
| %DODQFH DW -DQXDU\Ƈ | ƋƉƇƍ | ƇƐƍ | ƋƊƈƊ |
| Equity component of the convertible bondsƇ | –ƋƐ | –ƋƐ | |
| Dividends | ƐƐ | –ƐƉ | –ƐƉ |
| Net result for the period | –ƍƊƋ | ƐƉ | –ƍƊƈ |
| Other comprehensive income | –ƊƈƎ | –ƐƇ | –ƊƈƏ |
| Comprehensive income | –ƇƇƍƉ | Ɛƈ | –ƇƇƍƇ |
| Other changes in equity | –ƐƋ | –ƐƋ | |
| %DODQFH DW6HS ƉƐ | ƊƐƏƊ | ƇƐƇ | ƊƇƏƋ |
1) Effects in connection with the early redemption of the convertible bond 2015/2020
| Nine months 2018 | |||
|---|---|---|---|
| Ŷ million | Equity attributable to the shareholders of the parent company |
Non-controlling interests |
Total equity |
| %DODQFH DW'HFHPEHU ƉƇ | ƊƋƍƐ | ƇƇƉ | ƊƌƎƉ |
| Cumulative adjustment on initial application of IFRS 15 and IFRS 9 (net of income taxes) |
ƇƉƎ | ƇƉƎ | |
| %DODQFH DW -DQXDU\Ƈ | ƊƍƐƎ | ƇƇƉ | ƊƎƈƇ |
| Equity component of the convertible bonds | ƇƉƍ | ƐƐ | ƇƉƍ |
| Dividends | ƐƐ | –ƇƐ | –ƇƐ |
| Net result for the period | Ɗƍƍ | ƐƉ | ƊƎƐ |
| Other comprehensive income | ƇƈƊ | –ƐƇ | ƇƈƉ |
| Comprehensive income | ƌƐƇ | Ɛƈ | ƌƐƉ |
| %DODQFH DW6HS ƉƐ | ƋƊƊƌ | ƇƐƋ | ƋƋƋƇ |
SGL Carbon SE, located at Söhnleinstrasse 8, Wiesbaden (Germany), together with its subsidiaries (the Company or SGL Carbon) is a global manufacturer of products and solutions based on carbon fibers and specialty graphites.
The condensed consolidated interim financial statements of SGL Carbon have been prepared in accordance with International Financial Reporting Standards (IFRS) applicable to interim financial reporting (IAS 34) as issued by the International Accounting Standards Board and as adopted by the European Union (EU) and should be read in conjunction with the SGL Carbon Consolidated Financial Statements as of December 31, 2018. The condensed consolidated interim financial statements as of September 30, 2019, apply the same accounting principles and practices as well as the same estimates and assumptions as those used in the 2018 annual financial statements, except for the adoption of the new standard IFRS 16 Leases effective as of January 1, 2019.
These condensed consolidated interim financial statements contain all of the information that is required for a fair presentation of the results of operations and the financial position of the Company.
The condensed consolidated interim financial statements were authorized by the Board of Management on November 5, 2019. The condensed consolidated interim financial statements and interim group management report have not been audited, neither have they been subject to an auditor's review.
IFRS 16 provides that in general, all leases and the associated contractual rights and duties must be reflected in the lessee's balance sheet, unless the term does not exceed 12 months or it constitutes a low-value asset. The classification required under IAS 17 into operating or finance leases therefore does not apply to the lessee. As for leases, the lessee recognizes a liability for lease obligations incurred in the future. Correspondingly, a right to use the leased asset is capitalized, which in principle is equivalent to the present value of the future lease payments plus directly attributable costs and is amortized over the useful life.
SGL Carbon has applied IFRS 16 for the first time as of January 1, 2019, using the modified retrospective approach, i.e. the previous' year figures are not restated. The cumulative effects from the first-time application are recorded in retained earnings/accumulated losses as of January 1, 2019.
First-time application within SGL Carbon to date has affected leases that previously had been classified as operating leases. Short-term leases with a term not exceeding 12 months (and no purchase option) as well as leases where the underlying asset is of minor value, were not accounted for according to the option under IFRS 16.5 and not under IFRS 16. In addition, SGL Carbon is using the option under IFRS 16.15 and recognizes all lease and non-lease components according to IFRS 16.
For the first-time application of IFRS 16 on operating leases, the right to use the leased asset was in principle valued at the amount of the lease liability, using the interest rate at the time of the first-time application. The average interest rate as of January 1, 2019 was approx. 3.4%. For the valuation of the right of use at the time of first-time application, the initial direct costs were not taken into account. The following categories of leases were identified, where as a consequence of the change to IFRS 16 as of January 1, 2019, contracts that previously had been recognized as operating leases, now qualify as leases within the meaning of the new standard: buildings, plant and machinery and office equipment.
The off-balance sheet obligations as of December 31, 2018 are reconciled as follows to the recognized lease liabilities as of January 1, 2019:
| Ŷ million | Jan 1, 19 |
|---|---|
| Transition lease liabilities | |
| Off-balance sheet lease obligations as of December 31, 2018 | ƊƊƈ |
| Relief option for short-term leases | –ƐƋ |
| Relief option for low value asset leases | –Ɛƍ |
| Operating lease obligations as of January 1, 2019 (gross, without discounting) | 43.0 |
| Operating lease obligations as of January 1, 2019 (net, discounted) | 38.2 |
| Present value of finance lease liabilities at January 1, 2019 | ƇƌƏ |
| Total lease liabilities as of January 1, 2019 | 55.1 |
The quantitative impact of the first-time application of IFRS 16 on the consolidated balance sheet as of December 31, 2018 or January 1, 2019 is shown in the following table:
| IFRS 16 | ||||
|---|---|---|---|---|
| Ŷ million | Dec. 31, 18 | adjustments | Netting | Jan 1, 19 |
| Assets | ||||
| Property, plant and equipment | ƌƍƋƋ | ƉƌƏ | ƍƇƈƊ | |
| Other receivables and other assets | ƇƊ | ƇƊ | ||
| Deferred tax assets | ƇƇƉ | ƇƐƍ | –ƇƐƍ | ƇƇƉ |
| Liabilities | ||||
| Other financial liabilities | Ǝƌƍ | ƉƎƈ | ƇƈƊƏ | |
| thereof: non-current liabilities | ƌƍƏ | ƈƎƏ | ƏƌƎ | |
| thereof: current liabilities | ƇƎƎ | ƏƉ | ƈƎƇ | |
| Deferred tax liabilities | ƊƇ | ƇƐƍ | –ƇƐƍ | ƊƇ |
| Equity | ||||
| Accumulated losses | –ƎƈƎƈ | ƐƇ | –ƎƈƎƇ | |
| Equity ratio | ƉƉƋ | ƉƈƎ |
The following table illustrates the impact of the application of the new IFRS 16 on the consolidated interim income statement as of September 30, 2019:
| Nine months 2019 | |||||
|---|---|---|---|---|---|
| Amounts without adoption of |
IFRS 16 | ||||
| Ŷ million | IFRS 16 | adjustments | As reported | ||
| Cost of sales | –ƌƌƇƉ | Ɛƌ | –ƌƌƐƍ | ||
| thereof: depreciation and amortization | ƊƌƋ | –ƌƋ | ƋƉƐ | ||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) before non-recurring items | ƇƐƐƇ | ƍƇ | ƇƐƍƈ | ||
| Net financing result | –ƉƇƍ | –ƐƏ | –Ɖƈƌ | ||
| Income tax expense | –ƇƊƍ | –ƇƊƍ | |||
| Net result for the period | –ƍƉƏ | –ƐƉ | –ƍƊƈ | ||
| Other comprehensive income | –Ɗƈƌ | –ƐƉ | –ƊƈƏ |
IFRS 16 also affects the structure of the cash flow statement of SGL Carbon: Cash flow from operating activities and free cash flow increased by Ŷ7.1 million and cash flow from financing activities decreased by Ŷ7.1 million.
Based on the preliminary status of the new five-year plan, and particularly as a result of the lower starting point in 2019 as well as the ongoing weakness in the market segments Textile Fibers, Wind Energy and Industrial Applications within the reporting segment CFM, SGL Carbon conducted event-driven impairment tests of intangible assets and property, plant and equipment for the two CGUs Carbon Fibers & Composite Materials (CF/CM) and Composites DE (former SGL ACF) at September 30, 2019. No goodwill is included in the carrying amount of CF/CM, whereas the carrying amount of Composites DE includes goodwill of Ŷ19.5 million.
The projected cash flows were adjusted accordingly, and a before-tax discount rate of 8.7% was applied for CF/CM and a after tax discount rate of 6.5% was applied to Composites DE.
For the purpose of determining the terminal value for Composites DE, the steady state was derived from objective analyses and the resulting future cash flows were extrapolated using a growth rate that remained unchanged from the last impairment test. Also unchanged to the last impairment test is the extension of the detailed planning period for more than five years for Composites DE to reflect the necessary qualifications of the products with the customer industries.
As a result of the updated analysis, an impairment loss was recognized for plant and equipment and intangible assets of CF/CM in the amount of Ŷ74.7 million (of which Ŷ3.1 million related to intangible assets). No requirement to recognize an impairment loss was identified for Composites DE. i.e. this CGU's recoverable amount determined on the basis of the value in use was estimated to be higher than its carrying amount. The excess of the value in use over its carrying amount would be reduced to zero in case of an increase in the discount rate by 0.6%-points or a reduction of the cash flows in the terminal value by 17%.
Furthermore, due to the earnings deterioration in CFM, a valuation allowance on deferred tax assets in the amount of Ŷ7.4 million was recorded.
During the reporting period, SGL Carbon adjusted the pension discount rate in Germany and the US by 1.1%-points, each, as a consequence of decreased long-term interest rate levels. As of September 30, 2019, the discount rates are 0.8% in Germany (Dec 31, 2018: 1.90%) and 3.10% in USA (Dec 31, 2018: 4.20%). The discount rate adjustment resulted in actuarial losses of Ŷ59.8 million (without tax effect) which have been included in other comprehensive income, thereby decreasing equity by their full amount.
The main joint venture accounted for At-Equity is Brembo SGL Carbon Ceramic Brakes S.p.A (Ceramic Brake Discs), Stezzano, Italy (BSCCB), which is operated together with Brembo and produces and further develops carbon ceramic brake discs. The share of SGL Carbon in the net assets and the share in the net result of the period are allocated to the segment CFM. The table below provides the result of operations and the financial position of BSCCB, as reported in its financial statements (taking into account IFRS 15 effects).
| Nine months | ||
|---|---|---|
| Ŷ million | 2019 | 2018 |
| Ownership interest | ƋƐ | ƋƐ |
| Income statement | ||
| Sales revenue (100%) | ƇƉƈƉ | ƇƉƌƌ |
| Operating profit | ƈƋƏ | ƉƎƎ |
| Net financing result | ƐƊ | ƐƇ |
| Net result for the period (100%) | ƇƎƌ | ƈƊƏ |
| Share of SGL Carbon in the net result for the | ||
| period (50%) | ƏƉ | ƇƈƋ |
| Balance Sheet | 30. Sep. 19 | 31. Dec. 18 |
| Non-current assets | ƌƎƎ | ƊƏƌ |
| Current assets | ƍƌƊ | ƍƇƉ |
| Thereof cash and cash equivalents | ƈƋƇ | ƇƈƋ |
| Non-current liabilities | ƈƋƇ | Ǝƍ |
| Thereof financial liabilities | ƇƋƎ | ƐƐ |
| Current liabilities | ƉƋƈ | ƉƊƇ |
| Thereof financial liabilities | ƈƐ | ƇƐ |
| 1HWDVVHWV ƇƐƐ | ƎƊƏ | ƍƎƇ |
| Share of SGL Carbon in the net assets (50%) | ƊƈƋ | ƉƏƇ |
| Goodwill/customer base | Ɖƌ | Ɖƌ |
The increase of non-current assets and non-current liabilities compared to December 31, 2018 is due to the adoption of IFRS 16.
The carrying amount of remaining investments accounted for At-Equity was Ŷ10.1 million (Dec. 31, 2018: Ŷ9.6 million) and their contribution to the result from investments accounted for At-Equity during the nine months 2019 was Ŷ1.0 million (9M/2018: Ŷ0.3 million).
The following table assigns the individual balance sheet items for the financial instruments to classes and measurement categories:
| Measurement | |||
|---|---|---|---|
| category under | Carrying amount | Carrying amount | |
| Ŷ million | IFRS 9 | at Sep. 30, 19 | at Dec. 31, 18 |
| Financial assets | |||
| Cash and cash equivalents | Ƈ | ƇƊƈƍ | ƇƈƈƋ |
| Time deposits | Ƈ | ƊƐ | ƋƎƇ |
| Trade receivables and contract assets | Ƈ | ƈƊƈƐ | ƈƇƌƎ |
| Marketable securities and similar investments | ƈ | ƊƎ | ƊƐ |
| Other financial assets | Ƈ | ƇƐ | ƉƐ |
| Derivative financial assets: Derivatives without a hedging relationship | Ɖ | ƇƐ | ƐƐ |
| Derivative financial assets: Derivatives with a hedging relationship | n.a. | - | ƐƐ |
| Financial liabilities | |||
| Corporate bond | Ɗ | ƈƋƐƐ | - |
| Convertible bonds | Ɗ | ƇƊƍƏ | ƉƐƋƋ |
| Bank loans, overdrafts and other financial liabilities | Ɗ | ƇƌƏ | ƏƍƊ |
| Refinancing costs | Ɗ | –Əƍ | –Ɗƈ |
| Finance lease liabilities | n.a. | ƋƐƈ | ƇƌƏ |
| Trade payables | Ɗ | ƇƇƉƍ | ƇƐƎƇ |
| Miscellaneous other financial liabilities | Ɗ | Ƌƍƈ | ƌƎƏ |
| Derivative financial liabilities: Derivatives without a hedging relationship | Ƌ | ƇƊ | Ɛƈ |
| Derivative financial liabilities: Derivatives with hedging relationship | n.a. | ƐƇ | Ɛƍ |
| Thereof aggregated by measurement category in accordance with IFRS 9 | |||
| 1) Financial assets measured at amortized costs | ƉƎƏƍ | ƊƐƐƊ | |
| 2) Financial assets measured at fair value through profit and loss | ƊƎ | ƊƐ | |
| 3)Other financial assets measured at fair value through profit and loss | ƇƐ | ƐƐ | |
| 4) Financial liabilities measured at amortized costs | ƋƍƌƐ | ƋƍƋƍ | |
| 5)Financial liabilities measured at fair value through profit and loss | ƇƊ | Ɛƈ |
The following table shows the breakdown of the assets and liabilities measured at fair value into the three levels of fair value hierarchy in accordance with IFRS 13:
| Ŷ million | Level1 | Level2 | Level3 | Total |
|---|---|---|---|---|
| Marketable securities and similar |
||||
| investments | ƊƎ | - | - | ƊƎ |
| Derivative financial | ||||
| assets | - | ƇƐ | ƇƐ | |
| Derivative financial | ||||
| liabilities | - | ƇƋ | - | ƇƋ |
| Level1 | Level2 | Level3 | Total |
|---|---|---|---|
| ƊƐ | - | - | ƊƐ |
| - | ƐƐ | - | ƐƐ |
| - | ƐƏ | - | ƐƏ |
| 31. Dec. 18 |
The five and a half-year fixed-rate corporate bond issued by SGL Carbon SE in April 2019 has a principal amount of Ŷ250.0 million and was issued in a denomination of Ŷ100,000 each. The corporate bond has a coupon of 4.625% p.a., payable semi-annually. The issue price was 100% of the principal amount. In case of a change in ownership of the Company, the investors are entitled to redeem early their corporate bonds and to demand repayment at a price of 101% of the principal amount plus accrued interest. The terms of the corporate bond also include normal market provisions with regard to financial covenants and financial restrictions. The corporate bond is admitted to trading in the Open Market of the Frankfurt Stock Exchange. As of September 30, 2019, the market value of the exchange listed corporate bond was Ŷ238.0 million (derived from quoted prices as of September 30, 2019, thus conforms to level 1 of the fair value hierarchy of IFRS 13).
The fair market value of the convertible bond 2018/2023 as of September 30, 2019, was Ŷ143,4 million (December 31, 2018: Ŷ140.1 million). As the fair value is derived from quoted prices in active markets, these financial instruments are allocated to Level 1.
Factoring agreements concluded in the reporting period reduced the carrying amount of receivables. The volume of sales of receivables on the balance sheet date was Ŷ19.6 million (31. December 2018: Ŷ0.0 million).
Customer order patterns within the segments CFM and GMS primarily follow overall global trends (e. g. for lightweight materials) and depend on the availability in connection with the pricing of such materials. The overall economic environment is usually a first indicator for any developments in the customers' demand. In addition, individual large projects can significantly impact the business development and overlap regular seasonality.
Issued capital remained unchanged to December 31, 2018 at Ŷ313.2 million as of September 30, 2019 and is divided into 122,341,478 no-par value ordinary bearer shares at Ŷ2.56 per share. During the nine months 2019, no new shares were issued from authorized capital. As of September 30, 2019, there were 1,616,392 Stock Appreciation Rights (SARs) outstanding. SGL Carbon SE held a total of 70,501 of its own shares (treasury shares) as of September 30, 2019. Based on an average number of 122.3 million shares, basic earnings per share amounted to minus Ŷ0.61 (9M/2018: Ŷ0.39).
The calculation of diluted earnings per share assumes the conversion of outstanding debt securities (convertible bonds) to shares or exercise of other contracts for the issue of common shares such as stock appreciation rights. The abovementioned financial instruments are included in the calculation of diluted earnings per share only if there is a mathematical dilutive effect during the reporting period concerned. Accordingly, EPS diluted is unchanged and amounts to minus Ŷ0.61 (9M/2018: Ŷ0.39). EPS diluted (continuing operations) amounts to minus Ŷ0.61 (9M/2018: Ŷ0.42).
| Consolidation | |||||
|---|---|---|---|---|---|
| Ŷ million | CFM | GMS | Corporate | adjustments | SGL Carbon |
| Nine months 2019 - continuing operations | |||||
| External sales revenue | ƉƈƎƌ | ƊƍƇƉ | ƉƈƋ | ƐƐ | ƎƉƈƊ |
| Intersegment sales revenue | ƉƐ | ƐƋ | ƈƋƋ | –ƈƏƐ | ƐƐ |
| Total sales revenue | ƉƉƇƌ | ƊƍƇƎ | ƋƎƐ | –ƈƏƐ | ƎƉƈƊ |
| Timing of revenue recognition | |||||
| Products transferred at point in time | ƉƈƋƍ | ƊƌƎƎ | ƉƈƋ | ƐƐ | ƎƈƍƐ |
| Products and services transferred over time | ƈƏ | ƈƋ | ƋƊ | ||
| Total sales revenue | 328.6 | 471.3 | 32.5 | 0.0 | 832.4 |
| Sales revenue by customer industry | |||||
| Mobility | ƇƎƐƇ | ƊƌƋ | ƌƊ | ƐƐ | ƈƉƉƐ |
| Energy | ƉƉƏ | ƇƇƐƇ | Ǝƍ | ƐƐ | ƇƋƈƍ |
| Industrial Applications | ƊƋƋ | ƇƊƐƍ | ƇƍƊ | ƐƐ | ƈƐƉƌ |
| Chemicals | - | ƇƐƌƊ | - | ƐƐ | ƇƐƌƊ |
| Digitization | - | ƌƍƌ | - | ƐƐ | ƌƍƌ |
| Textile Fibers | ƌƏƇ | - | - | ƐƐ | ƌƏƇ |
| Total sales revenue | 328.6 | 471.3 | 32.5 | 0.0 | 832.4 |
| Operating profit (EBIT) before non-recurring items (recurring EBIT) | –ƇƎ | ƍƐƏ | –ƇƊƏ | ƐƐ | ƋƊƈ |
| Non-recurring items 1) | –ƎƇƐ | ƐƐ | –ƎƇƐ | ||
| Operating loss/profit (EBIT) | –ƎƈƎ | ƍƐƏ | –ƇƊƏ | ƐƐ | –ƈƌƎ |
| Capital expenditures 2) | ƇƋƋ | ƈƌƇ | ƏƇ | ƐƐ | ƋƐƍ |
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | |||||
| before non-recurring items | ƈƊƇ | ƏƇƈ | –ƎƇ | ƐƐ | ƇƐƍƈ |
| Amortization/depreciation on intangible assets and property, plant and | |||||
| equipment before non-recurring items | ƈƋƏ | ƈƐƉ | ƌƎ | ƐƐ | ƋƉƐ |
| Share in the net result of investments accounted for At-Equity | ƇƐƉ | - | - | - | ƇƐƉ |
| Working Capital 3) | ƇƍƐƉ | ƈƏƌƍ | –ƈƇƊ | ƐƐ | ƊƊƋƌ |
| Capital employed 4) | ƋƏƈƇ | ƋƊƎƏ | ƇƐƈƌ | ƐƐ | ƇƈƊƉƌ |
| Consolidation | |||||
|---|---|---|---|---|---|
| Ŷ million | CFM | GMS | Corporate | adjustments | SGL Carbon |
| Nine months 2018 - continuing operations | |||||
| External sales revenue | ƉƈƉƏ | ƊƉƌƎ | ƈƋƌ | ƐƐ | ƍƎƌƉ |
| Intersegment sales revenue | ƉƉ | Ɛƈ | ƈƈƊ | –ƈƋƏ | ƐƐ |
| Total sales revenue | Ɖƈƍƈ | ƊƉƍƐ | ƊƎƐ | –ƈƋƏ | ƍƎƌƉ |
| Timing of revenue recognition | |||||
| Products transferred at point in time | ƉƈƐƏ | ƊƇƈƍ | ƈƋƌ | ƐƐ | ƍƋƏƈ |
| Products and services transferred over time | ƉƐ | ƈƊƇ | ƈƍƇ | ||
| Total sales revenue | 323.9 | 436.8 | 25.6 | 0.0 | 786.3 |
| Sales revenue by customer industry | |||||
| Mobility | ƇƎƌƈ | ƉƈƎ | ƍƎ | ƐƐ | ƈƈƌƎ |
| Energy | ƌƇ | ƇƇƏƌ | ƇƋ | ƐƐ | Ƈƈƍƈ |
| Industrial Applications | ƋƎƐ | ƇƉƍƐ | ƇƌƉ | ƐƐ | ƈƇƇƉ |
| Chemicals | - | ƇƐƐƋ | - | ƐƐ | ƇƐƐƋ |
| Digitization | - | ƊƌƏ | - | ƐƐ | ƊƌƏ |
| Textile Fibers | ƍƉƌ | - | - | ƐƐ | ƍƉƌ |
| Total sales revenue | 323.9 | 436.8 | 25.6 | 0.0 | 786.3 |
| Operating profit (EBIT) before non-recurring items (recurring EBIT) | ƈƐƏ | ƋƏƋ | –ƈƇƈ | ƋƏƈ | |
| Non-recurring items 1) | ƇƎƇ | Ɛƌ | ƇƎ | ƈƐƋ | |
| Operating loss/profit (EBIT) after non-recurring items | ƉƏƐ | ƌƐƇ | –ƇƏƊ | ƐƐ | ƍƏƍ |
| Capital expenditures 2) | ƎƉ | ƈƊƏ | ƋƋ | ƐƐ | ƉƎƍ |
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | |||||
| before non-recurring items | ƊƋƎ | ƍƌƋ | –Ƈƌƌ | ƐƐ | ƇƐƋƍ |
| Amortization/depreciation on intangible assets and property, plant and | |||||
| equipment | ƈƊƏ | ƇƍƐ | Ɗƌ | ƐƐ | ƊƌƋ |
| Share in the net result of investments accounted for At-Equity | Ƈƈƍ | - | - | - | Ƈƈƍ |
| Working Capital (31.12.) 3) | ƇƋƎƋ | ƈƌƈƏ | –ƈƉ | ƐƐ | ƊƇƏƇ |
| Capital employed (31.12.) 4) | ƌƋƐƊ | ƊƏƎƈ | ƏƋƏ | ƐƐ | ƇƈƊƊƋ |
1) Non-recurring items comprise the impairment loss of Ŷ74.7 million as well as the carryforward of hidden reserves realized as part of the purchase price allocation of SGL Composites DE (former SGL ACF) and SGL Composites (former Benteler SGL) totaling minus Ŷ6.5, and income from the release of restructuring provisions of Ŷ0.2 million (9M/18: income from release of restructuring provisions of Ŷ0.8 million, income from business combination achieved in stages (SGL ACF) of
Ŷ28.4 million, and the carrying forward of the purchase price allocation SGL ACF and Benteler of minus Ŷ8.7 million)
2) Defined as total of capital expenditure in other intangible assets and property, plant and equipment
3) Defined as sum of inventories, trade receivables and contract assets less trade payables
4) Defined as the sum of goodwill, other intangible assets, property, plant and equipment, investments accounted for At-Equity, and working capital
On October 14, 2019, the Supervisory Board of SGL Carbon SE decided to appoint Dr. Stephan Bühler as an additional member to the Board of Management effective October 15, 2019. He will be responsible for Legal and Compliance on a temporary basis until a new Chief Executive Officer has been appointed and taken office. Dr. Michael Majerus, who has been the sole member of the Board of Management of SGL Carbon SE since September 1, will run the Company as Spokesman of the Board of Management going forward.
Wiesbaden, November 5, 2019
SGL Carbon SE
The Board of Management of SGL Carbon
Dr. Michael Majerus Dr. Stephan Bühler
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim Group Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Wiesbaden, November 5, 2019
SGL Carbon SE
The Board of Management
| Ŷ million | 2019 | 2018 | Change |
|---|---|---|---|
| Sales revenue | |||
| Composites - Fibers & Materials | ƉƈƎƌ | ƉƈƉƏ | ƇƋ |
| Graphite Materials & Systems | ƊƍƇƉ | ƊƉƌƎ | ƍƏ |
| Corporate | ƉƈƋ | ƈƋƌ | ƈƍƐ |
| SGL Carbon | ƎƉƈƊ | ƍƎƌƉ | ƋƏ |
| Nine months | |||
|---|---|---|---|
| Ŷ million | 2019 | 2018 | Change |
| EBIT before non-recurring items (recurring EBIT) 1) |
|||
| Composites - Fibers & Materials | –ƇƎ | ƈƐƏ | < –ƇƐƐ |
| Graphite Materials & Systems | ƍƐƏ | ƋƏƋ | ƇƏƈ |
| Corporate | –ƇƊƏ | –ƈƇƈ | ƈƏƍ |
| SGL Carbon | ƋƊƈ | ƋƏƈ | –ƎƊ |
1) Non-recurring items of minus Ŷ81.0 million and Ŷ20.5 million in the nine months of 2019 and 2018, respectively
| 2018 | 2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ŷ million | Q1 | Q2 | Q3 | Q4 | Full Year | Q1 | Q2 | Q3 | Q1-Q3 |
| Sales revenue | |||||||||
| Composites - Fibers & Materials | ƇƇƋƐ | ƇƐƎƍ | ƇƐƐƈ | ƏƎƌ | ƊƈƈƋ | ƇƇƋƐ | ƇƐƊƊ | ƇƐƏƈ | ƉƈƎƌ |
| Graphite Materials & Systems | ƇƊƐƇ | ƇƊƍƏ | ƇƊƎƎ | ƇƋƉƇ | ƋƎƏƏ | ƇƌƊƈ | ƇƋƌƎ | ƇƋƐƉ | ƊƍƇƉ |
| Corporate | ƎƉ | ƏƉ | ƎƐ | ƏƋ | ƉƋƇ | Əƌ | ƇƇƋ | ƇƇƊ | ƉƈƋ |
| SGL Carbon | ƈƌƉƊ | ƈƌƋƏ | ƈƋƍƐ | ƈƌƇƈ | ƇƐƊƍƋ | ƈƎƎƎ | ƈƍƈƍ | ƈƍƐƏ | ƎƉƈƊ |
| 2018 | 2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ŷ million | Q1 | Q2 | Q3 | Q4 | Full Year | Q1 | Q2 | Q3 | Q1-Q3 |
| EBIT before non-recurring items (recurring EBIT) 1) |
|||||||||
| Composites - Fibers & Materials | ƏƉ | ƎƐ | Ɖƌ | –ƐƇ | ƈƐƎ | ƐƊ | ƈƊ | –Ɗƌ | –ƇƎ |
| Graphite Materials & Systems | ƇƌƎ | ƈƉƈ | ƇƏƋ | ƇƌƋ | ƍƌƐ | ƈƋƏ | ƈƈƌ | ƈƈƊ | ƍƐƏ |
| Corporate | –Ƌƌ | –ƍƋ | –ƎƇ | –ƇƇƐ | –Ɖƈƈ | –ƍƌ | –ƋƏ | –ƇƊ | –ƇƊƏ |
| SGL Carbon | ƈƐƋ | ƈƉƍ | ƇƋƐ | ƋƊ | ƌƊƌ | ƇƎƍ | ƇƏƇ | ƇƌƊ | ƋƊƈ |
1) Non-recurring items of Ŷ16.3 million in 2018 and minus Ŷ81.0 million in the first nine months of 2019
| 2018 | 2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ŷ million | Q1 | Q2 | Q3 | Q4 | Full Year | Q1 | Q2 | Q3 | Q1-Q3 |
| Sales revenue | ƈƌƉƊ | ƈƌƋƏ | ƈƋƍƐ | ƈƌƇƈ | ƇƐƊƍƋ | ƈƎƎƎ | ƈƍƈƍ | ƈƍƐƏ | ƎƉƈƊ |
| Cost of sales | –ƈƇƐƐ | –ƈƐƉƐ | –ƈƐƈƊ | –ƈƇƈƋ | –ƎƈƍƏ | –ƈƈƌƋ | –ƈƇƐƌ | –ƈƇƍƇ | –ƌƋƊƈ |
| Gross profit | ƋƉƊ | ƌƈƏ | ƋƊƌ | ƊƎƍ | ƈƇƏƌ | ƌƈƉ | ƌƈƇ | ƋƉƎ | ƇƍƎƈ |
| Selling, administrative, R&D and other | |||||||||
| operating income/expense | –ƉƍƐ | –ƊƉƍ | –ƊƉƍ | –ƊƍƊ | –ƇƍƇƎ | –Ɗƍƈ | –ƊƋƍ | –ƊƇƊ | –ƇƉƊƉ |
| Result from investments accounted for | |||||||||
| At-Equity | ƊƇ | ƊƋ | ƊƇ | ƊƇ | ƇƌƎ | Ɖƌ | ƈƍ | ƊƐ | ƇƐƉ |
| Operating profit (EBIT) before non recurring items (recurring EBIT) |
ƈƐƋ | ƈƉƍ | ƇƋƐ | ƋƊ | ƌƊƌ | ƇƎƍ | ƇƏƇ | ƇƌƊ | ƋƊƈ |
| Impairment loss/ Fair value adjustment/Effects from |
|||||||||
| purchase price allocations | ƈƌƍ | –ƇƎ | –Ƌƈ | –ƈƋ | Ƈƍƈ | –ƈƌ | –Ƈƍ | –ƍƌƏ | –ƎƇƈ |
| Restructuring expenses | ƇƏ | –ƇƇ | –Ƈƍ | –ƐƏ | Ɛƈ | –Ɛƈ | Ɛƈ | Ɛƈ | |
| Operating loss/profit (EBIT) | Ɗƍƈ | ƈƉƎ | Ǝƍ | Ƈƈ | ƎƐƏ | ƇƌƉ | Ƈƍƈ | –ƌƐƉ | –ƈƌƎ |
| Net financing result | –ƍƐ | –ƌƍ | –ƍƌ | –ƎƉ | –ƈƏƌ | –ƌƈ | –ƇƈƋ | –ƇƉƏ | –Ɖƈƌ |
| Result from continuing operations before income taxes |
ƊƐƈ | ƇƍƇ | ƇƇ | –ƍƇ | ƋƇƉ | ƇƐƇ | Ɗƍ | –ƍƊƈ | –ƋƏƊ |
| Income tax expense | –ƉƎ | –ƇƏ | –Ɛƍ | ƋƎ | –Ɛƌ | –ƇƇ | –Ɖƈ | –ƇƐƊ | –ƇƊƍ |
| Result from continuing operations | ƉƌƊ | ƇƋƈ | ƐƊ | –ƇƉ | ƋƐƍ | ƏƐ | ƇƋ | –ƎƊƌ | –ƍƊƇ |
| Result from discontinued operations, | |||||||||
| net of income taxes | –Ɗƈ | Ɛƈ | ƐƐ | –ƋƐ | –ƏƐ | ƐƐ | –ƐƇ | ƐƐ | –ƐƇ |
| Net result for the period | Ɖƈƈ | ƇƋƊ | ƐƊ | –ƌƉ | ƊƇƍ | ƏƐ | ƇƊ | –ƎƊƌ | –ƍƊƈ |
| Thereof attributable to: | |||||||||
| Non-controlling interests | ƐƐ | ƐƉ | ƐƐ | ƐƇ | ƐƊ | ƐƇ | Ɛƈ | ƐƐ | ƐƉ |
| Consolidated net result (attributable to shareholders of the parent |
|||||||||
| company) | Ɖƈƈ | ƇƋƇ | ƐƊ | –ƌƊ | ƊƇƉ | ƎƏ | Ƈƈ | –ƎƊƌ | –ƍƊƋ |
Annual General Meeting
SGL CARBON SE Head Office | Investor Relations Söhnleinstrasse 8 65201 Wiesbaden (Germany) Telephone: 49 611 6029-103 Telefax: 49 611 6029-101 E-Mail: [email protected] www.sglcarbon.com Produced inhouse with firesys
This interim report contains statements relating to certain projections and business trends that are forward-looking, including statements with respect to SGL Carbon's outlook and business development, including developments in SGL Carbon's Composites - Fibers & Materials and Graphite Materials & Systems businesses, expected customer demand, expected industry trends and expected trends in the business environment, statements related to SGL Carbon's cost savings programs. You can generally identify these statements by the use of words like "may", "will", "could", "should", "project", "believe", "anticipate", "expect", "plan", "estimate", "forecast", "potential", "intend", "continue" and variations of these words or comparable words. These statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about SGL Carbon's businesses and future financial results, and readers should not place undue reliance on them. Forward-looking statements do not guarantee future performance and involve risks and uncertainties. These risks and uncertainties include, without limitation, changes in political, economic, legal and business conditions, particularly relating to SGL Carbon's main customer industries, competitive products and pricing, the ability to achieve sustained growth and profitability in SGL Carbon's Composites - Fibers & Materials and Graphite Materials & Systems businesses, the impact of any manufacturing efficiencies and capacity constraints, widespread adoption of carbon fiber products and components in key end-markets of the SGL Carbon, including the automotive and aviation industries, the inability to execute additional cost savings or restructuring measures, availability of raw materials and critical manufacturing equipment, trade environment, changes in interest rates, exchange rates, tax rates, and regulation, available cash and liquidity, SGL Carbon's ability to refinance its indebtedness, development of the SGL Carbon's pension obligations, share price fluctuation may have on SGL Carbon's financial condition and results of operations and other risks identified in SGL Carbon's financial reports. These forward-looking statements are made only as of the date of this document. SGL Carbon does not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Head Office | Investor Relations Söhnleinstrasse 8 65201 Wiesbaden/Germany Phone +49 611 6029-103 Fax +49 611 6029-101 [email protected] www.sglcarbon.com
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