Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of: October 2006
SGL CARBON Aktiengesellschaft
(Name of registrant)
Rheingaustrasse 182
65203 Wiesbaden
Germany
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
-------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the SEC
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
----- -----
If "Yes" is marked, indicate the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
Exhibit Index
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1. October 26, 2006 German Press Release - First Nine Months of 2006
2. October 26, 2006 Shareholder Letter - Report on the First Nine Months of 2006
SGL CARBON AG
Corporate Communications, Media Relations
Rheingaustrasse 182, D-65203 Wiesbaden
Tel.: +49 (6 11) 60 29-100, Fax: +49 (6 11) 60 29-101
E-Mail: cpc@sglcarbon.de, Internet: www.sglcarbon.de
First Nine Months 2006
-- Sales after 9M/2006 up 9 % compared to 9M/2005
-- 9M/2006 EBIT before ECJ decision up 41 % on previous year
-- Pre-tax earnings before ECJ decision more than doubled after 9M/2006
-- Strong Q4/2006 expected with EBIT increase of at least 50 % over Q4/2005
Wiesbaden, October 26, 2006. During 9M/2006, ongoing robust demand led to an
increase in consolidated sales of 9 % to EUR858.6 million, 8% after adjusting
for foreign currencies. EBIT before ECJ decision rose more than proportionately
by 41 % to EUR 123.6 million. The main reasons for the increase in earnings
were the continuing positive development of Carbon and Graphite and Specialties
as well as cost savings of some EUR 20 million. Q3/2006 saw growth in
consolidated sales of 10 % to EUR289.7 million accompanied by a more than
proportionate increase in consolidated EBIT before ECJ decision of 35 % to
EUR 44.4 million.
Net Financing Costs
Financing costs prior to the interest effect of the ECJ decision of EUR12.8
million improved during 9M/2006 to minus EUR 37.9 million compared to minus
EUR 45.4 million in the same period of the previous year. This is the result
of a lower net interest expense due to the decreased financial liabilities, the
lower interest expense in connection with the antitrust proceedings due to the
premature payment of the remaining North-American antitrust liabilities in 2005
and the cash funding of the first antitrust fine in April 2006. The other
financing expenses were impacted by the negative mark-to-market valuations of
our derivative interest and currency instruments. The cash portion of the
financing costs decreased from EUR 34.2 million in 2005 to EUR 31.1
million in 2006.
Profit before and after taxes
Earnings before taxes increased from EUR 42.2 million in 9M/2005 by 17 % to
EUR 49.3 million in 9M/2006. Adjusting for the one-time effects from the ECJ
decision amounting to EUR 36.3 million, pre-tax earnings of EUR 85.6
million was achieved, representing a doubling compared to the same period in the
previous year. The cumulative tax rate for 9M/2006 is 65 % (previous year: 43
%). Due to the absolute level achieved and the minimum taxation regulations in
Germany, we have not recognized any deferred taxes on the tax-deductible
interest expenses from the antitrust proceedings. Deducting the ECJ effect, the
adjusted tax rate for 9M/2006 is 37 %, a reduction of 6 % points in comparison
to the same period of the previous year. Including the effects of the ECJ
decision, this results in a net income before minorities of EUR 17.5 million
and earnings per share of EUR0.28 based on an average number of shares of
61.1 million.
Consolidated Balance Sheet
Total assets increased slightly as at September 30, 2006 to EUR1,204 million
compared to EUR1,183 million at the end of 2005. The main development in
9M/2006 was the cash funding of the first antitrust fine in April 2006. Cash and
cash equivalents of EUR18 million were used to pay back bank loans.
Working Capital
The increase in working capital of EUR 38 million (EUR 48 million adjusted
for foreign currencies) compared to year-end 2005 corresponds to the strongly
increased business activities in the first nine months of 2006 (sales revenue
+9%) and high production performance in Q3/2006 for delivery in Q4/2006. The
average days working capital outstanding, however, is unchanged in comparison
with the previous year.
Changes in Shareholders' Equity
The increase in shareholders' equity as at September 30, 2006 by EUR101
million to EUR 423 million was largely due to the capital increase and the
net profit. The equity ratio thus improved from 27.2 % to 35.1 %.
Net Debt
As at September 30, 2006 net debt improved significantly due the EUR20
million reduction in financial liabilities. In April 2006, EUR 88.9 million
were utilized to cash fund the EU antitrust fine based on the EC decision dated
April 29, 2004. In the third quarter, an additional EUR8.6 million cash
payment was made. Despite this increased liquidity outflow, we are adhering to
our guidance to reduce net debt to below EUR240 million by the end of the
year thanks to the improved operating cash flow.
ECJ Decision
As previously reported, on June 29, 2006, the European Court of Justice (ECJ)
announced its decision in the "graphite electrodes" case, thus changing the
decisions of the European Court (EC) of April 29, 2004 and the European
Commission of July 18, 2001 and assessed a figure of EUR75.7 million. On the
basis of this judgment, the Company made adjustments to its provisions in
Q2/2006. As a result, EBIT was negatively impacted by EUR23.5 million and the
net financing costs by EUR12.8 million. As already reported, the fine and the
outstanding interest on the basis of the EC decision were cash funded with the
European Commission at the beginning of Q2/2006 with no acknowledgement of legal
obligation. Consequently, the ECJ decision has resulted in a cash outflow of
only EUR8.6 million in Q3/2006. With the ECJ decision and the measures taken
in Q2 impacting the balance sheet and income statement, the effects from the
"graphite electrodes" proceedings are finally concluded.
SEGMENT REPORTING
Carbon and Graphite (CG)
In the first nine months of 2006, sales increased by 9% to EUR511.3 million,
currency-adjusted by 8 %, thanks to successfully implemented price increases for
graphite electrodes and the increased unit sales of cathodes. Despite planned
lower deliveries of graphite electrodes, EBIT increased as a result of price
increases and continued cost reduction measures by 34 % to EUR120.7 million
so that return on sales improved to 23.6% compared with 19.2 % in the same
period of the previous year. In 9M/2006, the average prices for graphite
electrodes increased by 22 % in USD and by 10 % in EUR compared to 9M/2005.
As expected, the reporting period saw a reduction in graphite electrode
shipments of 10 % compared to the exceptionally strong 9M/2005. However, with
150,000 tons, they still reached a level comparable with the nine-month period
of previous years. The increase in factor costs compared with the previous year
was around 15 %. Q3/2006 posted growth in sales of 10 % to EUR172.8 million
and a much more than proportionate EBIT growth of 50 % to EUR 44.6 million.
Specialties (S)
The increase in sales in the reporting period of 13 % to EUR 218.4 million,
currency-adjusted also 13 %, was positively impacted in particular by the demand
from the solar, semiconductor, LED and nuclear energy industries as well as
industrial applications and as a result of a good order book in the Process
Technology business. Due to the sales growth and the resulting improvement in
capacity utilization, EBIT improved by 77 % in comparison with the same period
of the previous year that was still characterized by the weak Q1/2005. As for
the first time in Q1/2006 and again in H1/2006, the return on sales at 11.7 % in
9M/2006 continues to remain within the Company's target corridor of 10 %-15%.
Q3/2006 showed growth in sales of 9 % to EUR 72.5 million and a more than
proportionate EBIT increase of 35 % to EUR8.4 million.
SGL Technologies (T)
Sales increased by 5 % to EUR127.6 million, currency-adjusted by 4 %, as a
result of the good demand for carbon fibers and brake disks, while the
composites business was affected by project-related postponements caused among
others by Airbus. EBIT at EUR0.3 million is positive. The strong 9M/2005 EBIT
of EUR3.4 million was positively influenced by the AUDI cooperation agreement
in Q3/2005. Due to increased development costs in connection with the
accelerated introduction of our carbon ceramic brake disc in five new automobile
models this year, the Brakes business remains the only loss making business
within SGL Technologies.
Corporate Costs
At EUR 23.0 million, corporate costs increased by EUR2.4 million compared
to 9M/2005 due to higher expenses in connection with the implementation of the
Sarbanes-Oxley Act and for share-based remuneration components as well as
specific project costs in first nine months of 2006. The one-time effect of the
ECJ decision impacts EBIT with EUR 23.5 million and is presented separately.
Employees
The number of employees in the Group was 5,291 as at September 30, 2006 compared
with 5,263 at the end of December 2005. The slight increase affects primarily
SGL Technologies.
Outlook
For Q4/2006, SGL Carbon is again expecting significant improvements in sales and
EBIT: for Carbon and Graphite, Q4/2006 is expected to be the strongest quarter
in 2006 both in sales and EBIT and therefore substantially stronger than
Q3/2006. In Specialties, sales in Q4/2006 is expected to be comparable to the
strong final quarter of 2005, while EBIT is expected slightly higher. For SGL
Technologies, we expect higher sales in Q4/2006 and correspondingly an
improvement in earnings compared to Q4/2005. For the full year 2006 we therefore
expect sales growth of up to 10 %, EBIT before ECJ decision to improve by 40-50
% in comparison with the previous year and earnings before tax as well as net
profit (before ECJ decision) to more than double compared to 2005. Despite the
substantially increased capital expenditure and higher payments for antitrust
fines, net debt will be reduced to below EUR240 million. Group return on
capital employed is again expected to be clearly above Group WACC. For 2007, SGL
Carbon remains confident and anticipates further consolidated sales growth of
5-10 %, with EBIT and net profit increasing more than proportionately to sales.
Financial Highlights SGL Carbon Group
(unaudited / EUR million)
9 Months
--------
2006 2005
---- ----
Sales revenue 858.6 786.2
Gross profit 277.5 235.8
EBITDA(1) 164.5 138.4
EBIT(1) 123.6 87.6
Return on sales(1) + (2) 14.4% 11.1%
Net profit before minority interests(3) 17.5 24.2
Earnings per share (in EUR) 0.28 0.43
Cash flow from operations before antitrust payments (4) 69.5 37.5
1 Before effect from ECJ decision
2 Ratio of profit from operations to sales revenue
3 After EUR 36.3 million once-off charge from ECJ decision
4 Without currency exchange rate effects
Sept 30, Dec 31,
2006 2005
Total assets 1,204 1,183
Shareholders' equity 423 322
Net debt 251 265
Debt ratio (gearing) (5) 0.6 0.8
Equity ratio (6) 35.1% 27.2%
5 Net debt divided by shareholders' equity
6 Shareholders' equity divided by total assets
Important note:
This press release 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 Carbon does not intend to update
these forward-looking statements.
Your contact:
-------------
Corporate Communications / Press Office / Stefan Wortmann
Tel. : +49 611 60 29 105 / Fax : +49 6 11 60 29 101 / Mobil : +49 170 540 2667
e-mail : stefan.wortmann@sglcarbon.de / Internet : www.sglcarbon.de
REPORT ON THE FIRST NINE MONTHS 2006
Highlights
----------
- Sales after 9M/2006 up 9% compared to 9M/2005
- 9M/2006 EBIT before ECJ decision up 41% on previous year
- Pre-tax earnings before ECJ decision more than doubled after 9M/2006
- Strong Q4/2006 expected with EBIT increase of at least 50% over Q4/2005
Financial Highlights (unaudited)
9 MONTHS
-----------------------------------------------------------------------------
EUR million 2006 2005
-----------------------------------------------------------------------------
Sales revenue 858.6 786.2
Gross profit 277.5 235.8
EBITDA1) 164.5 138.4
EBIT1) 123.6 87.6
Return on sales1) 2) 14.4% 11.1%
Net profit before minority interests3) 17.5 24.2
Earnings per share (in EUR) 0.28 0.43
Cash flow from operations before antitrust payments4) 69.5 37.5
Sept 30, Dec 31,
EUR million 2006 2005
-----------------------------------------------------------------------------
Total assets 1,204 1,183
Shareholders' equity 423 322
Net debt 251 265
Debt ratio (gearing)5) 0.6 0.8
Equity ratio6) 35.1% 27.2%
1) Before effect from ECJ decision
2) Ratio of profit from operations to sales revenue
3) After EUR36.3 million once-off charge from ECJ decision
4) Without currency exchange rate effects
5) Net debt divided by shareholders' equity
6) Shareholders' equity divided by total assets
Retroactive Adjustments
For the first time since the consolidated financial statements as at December
31, 2005, all previously non-consolidated subsidiaries are fully included in the
scope of consolidation and additionally two joint ventures are accounted for
under the equity method. For the quarterly representation of the fiscal year
2005, the reported data were adjusted to include the previously non-consolidated
companies and thus made comparable.
Business Development in the Group
---------------------------------
Consolidated Income Statement (unaudited)
9 months
EUR million 2006 2005
-------------------------------------------------------------------------------
Sales revenue 858.6 786.2
Gross profit 277.5 235.8
Selling, administrative, research and other income/expense -153.9 -148.2
EBIT effect from ECJ decision -23.5 -
Profit from operations 100.1 87.6
Net financing costs -37.9 -45.4
Interest effect from ECJ decision -12.8 -
Profit before taxes 49.4 42.2
Income taxes -31.9 -18.0
Net profit before minority interests 17.5 24.2
Earnings per share, basic (in EUR) 0.28 0.43
During 9M/2006, ongoing robust demand led to an increase in consolidated sales
of 9% to EUR858.6 million, 8% after adjusting for foreign currencies. EBIT
before ECJ decision rose more than proportionately by 41% to EUR123.6
million. The main reasons for the increase in earnings were the continuing
positive development of Carbon and Graphite and Specialties as well as cost
savings of some EUR20 million.
Q3/2006 saw growth in consolidated sales of 10% to EUR289.7 million
accompanied by a more than proportionate increase in consolidated EBIT before
ECJ decision of 35% to EUR44.4 million.
Net Financing Costs (unaudited)
9 months
EUR million 2006 2005
-------------------------------------------------------------------------------
Interest expense on loans and deposits (net) -18.7 -21.9
Interest expense on pensions -10.1 -10.1
Interest expense on antitrust (non-cash) -1.4 -5.0
Total interest expense, net -30.2 -37.0
Currency and hedging valuation adjustments of antitrust
liabilities (non-cash) 0.0 -0.9
Amortization of refinancing costs -2.6 -4.4
Other -5.1 -3.1
Total other financing expenses -7.7 -8.4
Net financing costs -37.9 -45.4
Financing costs prior to the interest effect of the ECJ decision of EUR12.8
million improved during 9M/2006 to minus EUR37.9 million compared to minus
EUR45.4 million in the same period of the previous year. This is the result
of a lower net interest expense due to the decreased financial liabilities, the
lower interest expense in connection with the antitrust proceedings due to the
premature payment of the remaining North-American antitrust liabilities in 2005
and the cash funding of the first antitrust fine in April 2006. The other
financing expenses were impacted by the negative mark-to-market valuations of
our derivative interest and currency instruments. The cash portion of the
financing costs decreased from EUR34.2 million in 2005 to EUR31.1 million
in 2006.
Profit before and after taxes
Earnings before taxes increased from EUR42.2 million in 9M/2005 by 17% to
EUR49.3 million in 9M/2006. Adjusting for the one-time effects from the ECJ
decision amounting to EUR36.3 million, pre-tax earnings of EUR85.6 million
was achieved, representing a doubling compared to the same period in the
previous year. The cumulative tax rate for 9M/2006 is 65% (previous year: 43%).
Due to the absolute level achieved and the minimum taxation regulations in
Germany, we have not recognized any deferred taxes on the tax-deductible
interest expenses from the antitrust proceedings. Deducting the ECJ effect, the
adjusted tax rate for 9M/2006 is 37%, a reduction of 6% points in comparison to
the same period of the previous year. Including the effects of the ECJ decision,
this results in a net income before minorities of EUR17.5 million and
earnings per share of EUR0.28 based on an average number of shares of 61.1
million.
Financial Position
------------------
Consolidated Balance Sheet (unaudited)
Assets Sept 30, Dec 31,
EUR million 2006 2005
--------------------------------------------------------------------------------
Non-current assets
Intangible assets 84 86
Property, plant and equipment 342 346
Long-term investments 14 15
Deferred tax assets 114 129
554 576
Current assets
Inventories 330 281
Trade receivables 194 195
Other current assets 39 34
Cash and cash equivalents 84 93
647 603
Assets held for sale 3 4
Total assets 1,204 1,183
Equity and Liabilities Sept 30, Dec 31,
EUR million 2006 2005
--------------------------------------------------------------------------------
Shareholders' equity 423 322
Minority interests 1 1
Total equity 424 323
Non-current liabilities
Financial liabilities 322 336
Provisions for pensions and other employee benefits 160 159
Deferred tax liabilities 32 35
Other liabilities 1 1
Other provisions 14 13
529 544
Current liabilities
Financial liabilities 0 6
Trade payables 99 89
Other liabilities 55 70
Other provisions 97 151
251 316
Total equity and liabilities 1,204 1,183
--------------------------------------------------------------------------------
Total assets increased slightly as at September 30, 2006 to EUR1,204 million
compared to EUR1,183 million at the end of 2005. The main development in
9M/2006 was the cash funding of the first antitrust fine in April 2006. Cash and
cash equivalents of EUR18 million were used to pay back bank loans.
Working Capital (unaudited)
Sept 30, Dec 31,
EUR million 2006 2005
----------------------------------------------------------------------------
Inventories 330 281
Trade receivables 194 195
Less trade payables -99 -89
Working capital 425 387
The increase in working capital of EUR38 million (EUR48 million adjusted
for foreign currencies) compared to year-end 2005 corresponds to the strongly
increased business activities in the first nine months of 2006 (sales revenue
+9%) and high production performance in Q3/2006 for delivery in Q4/2006. The
average days working capital outstanding, however, is unchanged in comparison
with the previous year.
Changes in Shareholders' Equity (unaudited)
9 months Equity
EUR million 2006 Ratio
----------------------------------------------------------------------------
Balance at January 1 322 27.2%
Capital increase 90
Net profit 17
Currency exchange differences and other -6
Balance at September 30 423 35.1%
The increase in shareholders' equity as at September 30, 2006 by EUR101
million to EUR423 million was largely due to the capital increase and the net
profit. The equity ratio thus improved from 27.2% to 35.1%.
Net Debt (unaudited)
Sept 30, Dec 31,
EUR million 2006 2005
--------------------------------------------------------------------------------
Financial liabilities 322 342
plus accrued refinancing cost 13 16
Cash and cash equivalents -84 -93
Net financial debt 251 265
As at September 30, 2006 net debt improved significantly due the EUR20
million reduction in financial liabilities. In April 2006, EUR88.9 million
were utilized to cash fund the EU antitrust fine based on the EC decision dated
April 29, 2004. In the third quarter, an additional EUR8.6 million cash
payment was made. Despite this increased liquidity outflow, we are adhering to
our guidance to reduce net debt to below EUR240 million by the end of the
year thanks to the improved operating cash flow.
Financial Condition
-------------------
Consolidated Cash Flow Statement (unaudited)
9 months
---------------------------------------------------------------------------------------------------------------
adjusted by currency impacts / EUR million 2006 2005
---------------------------------------------------------------------------------------------------------------
Cash Flows from operating activities
------------------------------------
Net income before taxes 49.4 42.2
Add back of net interest expenses 30.2 37.0
Reclassification of the ECJ expense 36.3 0.0
(Gain) loss on disposal of property,
plant and equipment -1.0 -5.6
Depreciation and amortization of fixed assets 40.9 50.8
Amortization of refinancing costs 2.6 4.4
Income taxes paid -19.0 -12.1
Interest income received 4.5 4.5
Interest on financial debt paid -28.9 -31.6
Changes in provisions, net 9.7 4.7
Changes in working capital -48.3 -44.4
Changes in other operating assets and other liabilities -6.9 -12.4
Cash provided by operating activities before antitrust payments 69.5 37.5
Payments relating to antitrust -98.8 -69.4
Cash used in operating activities -29.3 -31.9
Cash Flows from investing activities
Capital expenditure in property, plant and equipment and intangible assets -44.2 -27.5
Other investing activities 1.5 10.8
Cash used in investing activities -42.7 -16.7
Free Cash Flow* 26.8 20.8
Cash Flows from financing activities
Changes in corporate debt -18.0 -86.7
Net proceeds from capital increase 81.6 1.9
Other financing activities - -0.8
Cash provided by/used in financing activities 63.6 -85.6
Effect of FX-changes/others -1.0 1.5
Total Cash Flow -9.4 -132.7
Cash and cash equivalents at beginning of period 93.4 195.5
Cash and cash equivalents at end of period 84.0 62.8
*defined as cash provided by operating activities before antitrust payments minus cash flows from investing activities
In line with the reporting in the annual report and as in the previous quarters,
we have adapted the quarterly cash flow statements according to the indirect
method as defined under IAS 7. To provide a clearer presentation of the cash
flow statement, we have added back net interest expenses. The expenses resulting
from the ECJ decision were also reclassified, as the cash outflow was posted
separately under payments for antitrust proceedings.
Cash provided by operating activities before antitrust payments was considerably
higher in the nine-month period of 2006 with EUR69.5 million compared with
EUR37.5 million in the same period of the previous year.
Despite significantly higher capital expenditure of EUR44.2 million in
9M/2006 (9M/2005: EUR27.5 million), free cash flow in the first nine months
of 2006 increased to EUR26.8 million compared with EUR20.8 million in the
same period of 2005.
With the typical normalization of working capital in the course of the year and
despite higher capital expenditure of around EUR68 million (2005: EUR45
million) as well as higher cash outflow for antitrust payments, we expect a free
cash flow for the full year 2006 which, from today's point of view, allows us to
maintain our guidance of reducing net debt to below EUR240 million by the end
of the year.
Cash flow from financing activities resulted in cash inflow of EUR63.6
million (9M/2005: cash outflow of EUR85.6 million) due to the proceeds from
the capital increase and the repayment of bank loans.
ECJ Decision
As previously reported, on June 29, 2006, the European Court of Justice (ECJ)
announced its decision in the "graphite electrodes" case, thus changing the
decisions of the European Court (EC) of April 29, 2004 and the European
Commission of July 18, 2001 and assessed a figure of EUR75.7 million. On the
basis of this judgment, the Company made adjustments to its provisions in
Q2/2006. As a result, EBIT was negatively impacted by EUR23.5 million and the
net financing costs by EUR12.8 million. As already reported, the fine and the
outstanding interest on the basis of the EC decision were cash funded with the
European Commission at the beginning of Q2/2006 with no acknowledgement of legal
obligation. Consequently, the ECJ decision has resulted in a cash outflow of
only EUR8.6 million in Q3/2006. With the ECJ decision and the measures taken
in Q2 impacting the balance sheet and income statement, the effects from the
"graphite electrodes" proceedings are finally concluded.
Segment Reporting
-----------------
Carbon and Graphite (CG)
9 months
EUR million 2006 2005
--------------------------------------------------------------------------
Sales revenue 511.3 469.2
EBITDA 143.8 121.7
Profit from operations 120.7 90.3
Return on sales 23.6% 19.2%
In the first nine months of 2006, sales increased by 9 % to EUR511.3 million,
currency-adjusted by 8%, thanks to successfully implemented price increases for
graphite electrodes and the increased unit sales of cathodes. Despite planned
lower deliveries of graphite electrodes, EBIT increased as a result of price
increases and continued cost reduction measures by 34% to EUR120.7 million so
that return on sales improved to 23.6% compared with 19.2% in the same period of
the previous year. In 9M/2006, the average prices for graphite electrodes
increased by 22% in USD and by 10% in EUR compared to 9M/2005. As expected,
the reporting period saw a reduction in graphite electrode shipments of 10%
compared to the exceptionally strong 9M/2005. However, with 150,000 tons, they
still reached a level comparable with the nine-month period of previous years.
The increase in factor costs compared with the previous year was around 15%.
Q3/2006 posted growth in sales of 10% to EUR172.8 million and a much more
than proportionate EBIT growth of 50% to EUR44.6 million.
Specialties (S)
9 months
EUR million 2006 2005
--------------------------------------------------------------------------
Sales revenue 218.4 193.5
EBITDA 34.6 24.4
Profit from operations 25.6 14.5
Return on sales 11.7% 7.5%
The increase in sales in the reporting period of 13% to EUR218.4 million,
currency-adjusted also 13%, was positively impacted in particular by the demand
from the solar, semiconductor, LED and nuclear energy industries as well as
industrial applications and as a result of a good order book in the Process
Technology business. Due to the sales growth and the resulting improvement in
capacity utilization, EBIT improved by 77% in comparison with the same period of
the previous year that was still characterized by the weak Q1/2005. As for the
first time in Q1/2006 and again in H1/2006, the return on sales at 11.7% in
9M/2006 continues to remain within the Company's target corridor of 10%-15%.
Q3/2006 showed growth in sales of 9% to EUR72.5 million and a more than
proportionate EBIT increase of 35% to EUR8.4 million.
SGL Technologies (T)
9 Months
EUR million 2006 2005
---------------------------------------------------------------------------
Sales revenue 127.6 121.7
EBITDA 8.5 12.8
Profit from operations 0.3 3.4
Return on sales 0.2% 2.8%
Sales increased by 5% to EUR127.6 million, currency-adjusted by 4%, as a
result of the good demand for carbon fibers and brake disks, while the
composites business was affected by project-related postponements caused among
others by Airbus. EBIT at EUR0.3 million is positive. The strong 9M/2005 EBIT
of EUR3.4 million was positively influenced by the AUDI cooperation agreement
in Q3/2005. Due to increased development costs in connection with the
accelerated introduction of our carbon ceramic brake disc in five new automobile
models this year, the Brakes business remains the only loss making business
within SGL Technologies.
Corporate Costs
9 Months
EUR million 2006 2005
---------------------------------------------------------------------------
Other revenue 1.3 1.8
Corporate costs -23.0 -20.6
EBIT effect from ECJ decision -23.5 0
At EUR23.0 million, corporate costs increased by EUR2.4 million compared
to 9M/2005 due to higher expenses in connection with the implementation of the
Sarbanes-Oxley Act and for share-based remuneration components as well as
specific project costs in first nine months of 2006. The one-time effect of the
ECJ decision impacts EBIT with EUR23.5 million and is presented separately.
Employees
The number of employees in the Group was 5,291 as at September 30, 2006 compared
with 5,263 at the end of December 2005. The slight increase affects primarily
SGL Technologies.
Outlook
For Q4/2006, SGL Carbon is again expecting significant improvements in sales and
EBIT: for Carbon and Graphite, Q4/2006 is expected to be the strongest quarter
in 2006 both in sales and EBIT and therefore substantially stronger than
Q3/2006. In Specialties, sales in Q4/2006 is expected to be comparable to the
strong final quarter of 2005, while EBIT is expected slightly higher. For SGL
Technologies, we expect higher sales in Q4/2006 and correspondingly an
improvement in earnings compared to Q4/2005.
For the full year 2006 we therefore expect sales growth of up to 10%, EBIT
before ECJ decision to improve by 40-50% in comparison with the previous year
and earnings before tax as well as net profit (before ECJ decision) to more than
double compared to 2005. Despite the substantially increased capital expenditure
and higher payments for antitrust fines, net debt will be reduced to below
EUR240 million. Group return on capital employed is again expected to be
clearly above Group WACC.
For 2007, SGL Carbon remains confident and anticipates further consolidated
sales growth of 5-10%, with EBIT and net profit increasing more than
proportionately to sales.
Quarterly Sales Revenue and Profit from Operations by Business Area (unaudited)
-------------------------------------------------------------------------------
2005 2005 2006 2006
Full
EUR million Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 9M
-----------------------------------------------------------------------------------------------------------------------
Sales revenue
-------------
Carbon and Graphite 143.3 168.6 157.3 174.5 643.7 152.7 185.8 172.8 511.3
Specialties 59.1 68.1 66.3 69.9 263.4 72.3 73.6 72.5 218.4
SGL Technologies 38.0 43.5 40.2 37.3 159.0 41.8 41.9 43.9 127.6
Other 0.6 0.6 0.6 0.9 2.7 0.5 0.3 0.5 1.3
241.0 280.8 264.4 282.6 1,068.8 267.3 301.6 289.7 858.6
2005 2005 2006 2006
Full
Mio. EUR Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 9M
-----------------------------------------------------------------------------------------------------------------------
Profit (loss) from operations
-----------------------------
Carbon and Graphite 26.8 33.7 29.8 31.3 121.6 31.5 44.6 44.6 120.7
Specialties 1.5 6.8 6.2 5.3 19.8 8.8 8.4 8.4 25.6
SGL Technologies -0.5 0.1 3.8 -3.2 0.2 -0.8 1.0 0.1 0.3
Corporate Costs -6.5 -7.3 -6.8 -8.2 -28.8 -6.4 -7.9 1) -8.7 -23.0 1)
21.3 33.3 33.0 25.2 112.8 33.1 46.1 1) 44.4 123.6 1)
1) Excluding charge of EUR23.5 million resulting from ECJ dec.
Quarterly Consolidated Income Statement (unaudited)
---------------------------------------------------
2005 2005 2006 2006
Full
EUR million Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 9M
-----------------------------------------------------------------------------------------------------------------------
Sales revenue 241.0 280.8 264.4 282.6 1,068.8 267.3 301.6 289.7 858.6
Cost of sales -174.7 -191.9 -183.8 -196.3 -746.7 -185.2 -202.5 -193.4 -581.1
Gross profit 66.3 88.9 80.6 86.3 322.1 82.1 99.1 96.3 277.5
Selling/administration/
research/other -45.0 -55.6 -47.6 -61.1 -209.3 -49.0 -53.0 -51.9 -153.9
EBIT effect from
ECJ decision -23.5 -23.5
Profit from operations 21.3 33.3 33.0 25.2 112.8 33.1 22.6 44.4 100.1
Net financing costs -13.1 -14.7 -17.6 -20.2 -65.6 -12.3 -10.2 -15.4 -37.9
Interest effect from
ECJ decision -12.8 -12.8
Profit (loss)
before taxes 8.2 18.6 15.4 5.0 47.2 20.8 -0.4 29.0 49.4
Income taxes -4.3 -7.6 -6.1 -1.1 -19.1 -8.4 -11.0 -12.5 -31.9
Net profit (loss) before
minority interests 3.9 11.0 9.3 3.9 28.1 12.4 -11.4 16.5 17.5
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 Carbon does not intend to update
these forward-looking statements.
Calendar 2007
Mar. 03 Year-End Press Conference, Analyst Meeting, Conference Call
Apr. 25 Report on the First Quarter, Conference Call
Apr. 27 Annual General Meeting
Jul. 25 Report on the First Half, Conference Call
Oct. 25 Fall Press Conference, Analyst Meeting, Report on the First Nine
Months, Conference Call
Investor Relations Contact
SGL CARBON AG o Head Office o Investor Relations
Rheingaustrabe 182 o D-65203 Wiesbaden
Phone +49 611 60 29-0 o Fax +49 611 60 29-101
e-mail cpc@sglcarbon.de o www.sglcarbon.de
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SGL CARBON Aktiengesellschaft
Date: October 26, 2006 By: /s/ Robert J. Kohler
------------------------------
Name: Robert J. Koehler
Title: Chairman of the Board of Management
By: /s/ Sten Daugaard
------------------------------
Name: Mr. Sten Daugaard
Title: Member of the Board of Management