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: May 2003
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. Letter to Shareholders issued May 14, 2003 regarding first quarter 2003
financial results.
EXHIBIT 1
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Prepared in accordance with International Financial Reporting Standards, IRFS
(unaudited)
SGL Carbon Report on the First Quarter of 2003
-- Profit from operations up year-on-year
-- Full capacity utilization at Graphite Electrodes
-- Further reduction of losses at SGL Technologies
In Q1/2003, the SGL Carbon Group generated sales revenue of EUR251
million, down 4% on the same quarter of the prior year. This is
primarily the result of the weakness of the US dollar, which more or
less offset the increase in volumes. The figures were also affected by
the structural changes resulting from the divestment of the electrical
contacts business.
SGL Carbon improved its profit from operations from EUR1 million
to EUR5 million in Q1. A key contribution to this was made by Carbon
and Graphite (CG), Graphite Specialties (GS) and SGL Technologies
(SGL T). SGL T reduced its quarterly loss by almost 60% compared
with the previous year.
Net financing costs increased by EUR8 million to EUR -14 million
due to positive, one-time non-cash effects in the prior-year quarter;
interest expense increased only slightly. As a result, the net loss
before taxes was down EUR3 million year-on-year. The net loss after
taxes amounted to EUR -8 million in Q1 (EUR -9 million in the same
quarter of the prior year). The loss per share fell from EUR -0.44 to
EUR -0.34.
Due to lower sales of receivables, net financial liabilities
increased by EUR22 million to EUR449 million compared with December
31, 2002. After adjustment for sales of receivables, net financial
liabilities were reduced by EUR14 million, falling from EUR468 million
to EUR454 million.
Despite the ongoing weakness of the economy, SGL Carbon is forecasting an
improvement in earnings for Q2/2003, both against Q1/2003 and against the same
period of the prior year. It remains difficult to predict how the economy will
develop. However, we intend to generate a significant improvement in our profit
from operations and a net profit for 2003. The positive free cash flow this
generates will be used to reduce our liabilities further.
Financial Highlights (EUR million)
First First
Quarter Quarter
----------------------------------------------------------------------
(unaudited) 2003 2002
----------------------------------------------------------------------
Sales revenue 250.7 261.0
----------------------------------------------------------------------
EBITDA 24.1 21.7
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Profit from operations 5.1 1.0
----------------------------------------------------------------------
Return on sales 2.0% 0.4%
----------------------------------------------------------------------
Net loss before minority interests - 7.6 - 9.3
----------------------------------------------------------------------
Earnings per share (EUR) - 0.34 - 0.44
----------------------------------------------------------------------
Operational cash flow (1) - 1.7 45.2
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March 31, Dec 31,
----------------------------------------------------------------------
(unaudited) 2003 2002
----------------------------------------------------------------------
Total assets 1,329 1,286
----------------------------------------------------------------------
Equity 178 196
----------------------------------------------------------------------
Net financial liabilities 449 427
----------------------------------------------------------------------
Net financial liabilities
(after adjustment for sales
of receivables) 454 468
----------------------------------------------------------------------
Debt ratio (gearing)(2) 2.5 2.2
----------------------------------------------------------------------
Equity ratio(3) 13.4% 15.2%
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(1) Without currency exchange rate effects
(2) Net financial liabilities less cash and cash equivalents divided by
shareholders' equity.
(3) Shareholders' equity divided by total assets.
Carbon and Graphite (CG)
First First
Quarter Quarter
----------------------------------------------------------------------
(EUR million) 2003 2002
----------------------------------------------------------------------
Sales revenue 134.5 127.2
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EBITDA 21.4 20.8
----------------------------------------------------------------------
Profit from operations 12.2 11.7
----------------------------------------------------------------------
Return on sales 9.1% 9.2%
----------------------------------------------------------------------
-- Sales revenue rose by 6% year-on-year to EUR135 million. The
clear growth in volumes was reduced by exchange rate effects
and decreasing prices, which impacted the results.
Nevertheless, profit from operations increased by 4%.
-- The steel industry is continuing its global recovery. Demand
is growing dynamically in Southeast Asia, particularly in
China. As a result of this positive development, quarterly
sales volumes for Graphite Electrodes rose by 29% to 45,200
tons.
-- The average price of graphite electrodes was EUR2,084/ton -a
year-on-year decline of 14%, or 5% adjusted for exchange rate
effects. Compared with Q4/2002, prices were down by 1%; after
adjustment for exchange rate effects, the price level improved
by 2%.
-- SGL Carbon is confident with respect to Q2 and the rest of the
year. With continuing high volumes we are forecasting higher
sales volumes than in the previous year. We expect to see
prices rise over the course of the year.
Graphite Specialties (GS)
First First
Quarter Quarter
----------------------------------------------------------------------
(EUR million) 2003 2002
----------------------------------------------------------------------
Sales revenue 44.9 51.4
----------------------------------------------------------------------
EBITDA 8.1 6.7
----------------------------------------------------------------------
Profit from operations 4.5 1.8
----------------------------------------------------------------------
Return on sales 10.0% 3.5%
----------------------------------------------------------------------
-- Demand stabilized at a low level due to the continuing
recession in the key semiconductor, mechanical and plant
engineering and chemical sectors. In the period under review,
GS generated a slight increase in volumes. Sales revenue
declined by 13 %, primarily due to exchange rate effects and
the divestment of our non-core electrical contacts activities.
Adjusted for this disposal, sales revenue declined by 5 %.
-- The EUR3 million rise in profit from operations is the result
of cost savings and the sale of our electrical contacts
business.
-- SGL Carbon is not forecasting any material changes in the
overall economic conditions for GS in Q2/2003. At present, key
customer industries are not expected to recover until the
second half of the year at the earliest.
Corrosion Protection (CP)
First First
Quarter Quarter
----------------------------------------------------------------------
(EUR million) 2003 2002
----------------------------------------------------------------------
Sales revenue 35.6 45.0
----------------------------------------------------------------------
EBITDA - 2.8 0.3
----------------------------------------------------------------------
Profit from operations - 5.0 - 1.9
----------------------------------------------------------------------
Return on sales - 14.0% - 4.2%
----------------------------------------------------------------------
-- As before, business is dominated by the extremely cautious
policy on investment and maintenance expenditure being pursued
by our customers in the chemical, energy and environmental
industries. Driven by volumes, sales revenue fell 20 % in Q1.
As a result, the loss from operations fell to EUR -5 million.
-- Early in 2003, we won a key contract worth EUR27 million for a
new hydrochloric acid synthesis unit for the Australian
magnesium producer AMO. Delivery is scheduled to begin in
Q4/2003.
-- At present, a sustained economic recovery is not in sight.
Ongoing cost-cutting measures are continuing. However, these
will not take effect until the end of the year.
Established Businesses (CG, GS, CP)
First First
Quarter Quarter
----------------------------------------------------------------------
(EUR million) 2003 2002
----------------------------------------------------------------------
Sales revenue 215.0 223.6
----------------------------------------------------------------------
EBITDA 26.7 27.8
----------------------------------------------------------------------
Profit from operations 11.7 11.6
----------------------------------------------------------------------
Return on sales 5.4% 5.2%
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SGL Technologies (T)
First First
Quarter Quarter
----------------------------------------------------------------------
(EUR million) 2003 2002
----------------------------------------------------------------------
Sales revenue 34.9 36.4
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EBITDA 2.1 - 0.3
----------------------------------------------------------------------
Profit from operations - 1.9 - 4.6
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Return on sales - 5.4% - 12.6%
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-- The upswing is continuing, with volumes rising by 12%.
However, this positive development was offset by exchange rate
effects. As a result, sales revenue declined slightly by 4%
in the period under review.
-- After adjustment for exchange rate effects, the largest
increase in sales revenue, with approximately 35%, was
generated by the Aerospace division of our US subsidiary
HITCO, which won a further key defense technology contract
from Boeing in Q1. This contract continues HITCO's many years
of successful cooperation with Boeing in this area.
-- The sharp improvement in results in Q1/2003 is due to volume
growth and cost savings.
-- We are expecting sales volumes to continue rising in the
coming quarters. In spite of the uncertainty plaguing the
economy, we are still aiming to more or less break even.
Corporate Costs
First First
Quarter Quarter
----------------------------------------------------------------------
(EUR million) 2003 2002
----------------------------------------------------------------------
Sales revenue 0.8 1.0
----------------------------------------------------------------------
Corporate costs - 4.7 - 6.0
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Employees
-- The number of people employed by the SGL Group dropped by 200
to 7,160 in Q1, primarily as the result of the divestment of
the electrical contacts business.
Consolidated Income Statement (EUR million)
First First
Quarter Quarter
----------------------------------------------------------------------
(unaudited) 2003 2002
----------------------------------------------------------------------
Sales revenue 250.7 261.0
----------------------------------------------------------------------
Gross profit 57.0 50.6
----------------------------------------------------------------------
Selling, administrative, research and other costs - 51.9 - 49.6
----------------------------------------------------------------------
Profit from operations 5.1 1.0
----------------------------------------------------------------------
Interest expense on loans - 7.4 - 6.4
----------------------------------------------------------------------
Interest expense on pensions - 2.6 - 2.4
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Currency adjustment of antitrust liabilities
(non-cash) 0.0 - 1.3
----------------------------------------------------------------------
Imputed interest on antitrust liabilites (non-
cash) - 1.8 4.6
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Other - 1.8 - 0.8
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Net financing costs - 13.6 - 6.3
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Loss before taxes - 8.5 - 5.3
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Income taxes 0.9 - 4.0
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Net loss before minority interests - 7.6 - 9.3
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Earnings per share (EUR) - 0.34 - 0.44
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-- The interest expense on loans over the first three months was up
slightly at EUR7.4 million compared with the prior year (EUR6.4
million); the average interest rate for the period was 5.0 % (Q1/2002:
4.4 %). The rise in interest expense and the interest rate was a
result of refinancing.
-- In Q1, the exchange rate effects from the translation of our US
antitrust liabilities were offset by the currency hedges allocated.
-- The non-cash imputed interest on liabilities from antitrust
proceedings increased net financing costs by EUR2 million. As
previously reported, the rescheduling of the payment plan led to a
one-time improvement in net financing costs of EUR5 million in
Q1/2002.
-- The tax income in Q1 is the result of the recognition of deferred tax
assets in Germany in particular. Deferred tax assets on loss
carryforwards by subsidiaries in the USA and the UK were not
recognized, as in the past.
-- Earnings per share are calculated on the basis of an average of 22.0
million shares outstanding (2002: 21.9 million).
Consolidated Balance Sheet (EUR million)
March 31, Dec. 31,
----------------------------------------------------------------------
(unaudited) 2003 2002
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Assets
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Intangible assets 104 104
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Property, plant and equipment 452 477
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Noncurrent financial assets 32 33
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Noncurrent assets 588 614
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Inventories 281 288
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Trade receivables 220 208
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Other current assets including cash and
cash equivalents 143 83
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Current assets 644 579
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Deferred tax assets 97 93
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Total assets 1,329 1,286
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----------------------------------------------------------------------
March 31, Dec. 31,
---------------------------------------------------------------------
(unaudited) 2003 2002
----------------------------------------------------------------------
Equity and Liabilities
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Equity 178 196
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Minority interests 1 1
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Provisions for pensions and other employee benefits 190 191
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Other provisions 147 149
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Provisions 337 340
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Financial liabilities 518 448
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Trade payables 103 111
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Other liabilities 153 151
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Liabilities 774 710
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Deferred tax liabilities 39 39
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Total equity and liabilities 1,329 1,286
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Total Assets and Equity
-- Total assets rose by EUR43 million compared with December 31, 2002 to
EUR1,329 million. This increase was primarily the result of a
temporary increase in cash and cash equivalents to EUR69 million, as
our loans can only be repaid at certain times. Together with exchange
rate effects, this led to a drop in the equity ratio to 13% on the
balance sheet date.
-- Roughly half of the decline in noncurrent assets of EUR26 million was
due to currency translation differences, and the other half to
depreciation and amortization levels in excess of investments.
-- The reduction in inventories of EUR7 million is primarily due to
exchange rate effects.
-- As a result of lower sales of receivables, net financial liabilities
increased by EUR22 million to EUR449 million compared with December
31, 2002. Adjusted for the sale of receivables, net financial
liabilities fell by EUR14 million from EUR468 million to EUR454
million.
Consolidated Statement of Changes in Equity (EUR million)
(unaudited) 2003 2002
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Balance at January 1 196 255
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Capital increase 1 1
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Net result, net of minority interests - 8 - 9
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Currency exchange differences and other - 11 -
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Balance at March 31 178 247
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Consolidated Cash Flow Statement (EUR million)
First First
Quarter Quarter
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(unaudited) 2003 2002
----------------------------------------------------------------------
Profit from operations 5.1 1.0
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Depreciation and
amortization 19.0 20.7
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EBITDA 24.1 21.7
----------------------------------------------------------------------
Increase (decrease) in
working capital - 25.8 23.5
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Operational cash flow - 1.7 45.2
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Other operating cash uses - 19.9 - 17.3
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Cash used in/provided by
operating activities - 21.6 27.9
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Capital expenditures - 5.6 - 9.2
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Cash used in investing
activities - 5.6 - 9.2
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Cash provided by financing
activities 76.1 8.5
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Effect of foreign exchange
rate changes - 1.4 0.1
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Net increase in cash and
cash equivalents 47.5 27.3
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Cash and cash equivalents
at beginning of first
quarter 21.5 12.1
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Cash and cash equivalents
at end of first quarter 69.0 39.4
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-- Working capital(1) increased by EUR26 million during the period under
review after adjustment for exchange rate effects, primarily due to
reduced sales of receivables (EUR36 million).
-- At EUR6 million, net cash used in investing activities in the period
under review was around EUR13 million below depreciation and
amortization.
(1) Inventories plus trade receivables minus trade payables.
Important note:
Our 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.
These risks and uncertainties include, for example, unforeseeable changes in
political, economic and business conditions, particularly in the area of
electrosteel production, the competitive situation, interest rate and currency
developments, technological developments and other risks and unanticipated
circumstances. We see other risks in price developments, unexpected developments
relating to acquired and consolidated companies, ongoing restructuring measures
and unforeseeable occurrences in conjunction with the reviews to be performed by
the European antitrust authorities. SGL Carbon does not intend to update these
forward-looking statements.
Sales Revenue & Profit from Operations by Quarter (EUR million)
2002 2003
----------------------------------------------------------------------
Sales revenue Q1 Q2 Q3 Q4 Full Q1
year
----------------------------------------------------------------------
Carbon and
Graphite 127.2 139.6 135.5 148.4 550.7 134.5
----------------------------------------------------------------------
Graphite
Specialties 51.4 50.0 49.5 45.0 195.9 44.9
----------------------------------------------------------------------
Corrosion
Protection 45.0 47.1 59.3 61.0 212.4 35.6
----------------------------------------------------------------------
Established
Businesses 223.6 236.7 244.3 254.4 959.0 215.0
----------------------------------------------------------------------
SGL
Technologies 36.4 40.2 38.8 35.0 150.4 34.9
----------------------------------------------------------------------
Other 1.0 0.2 0.7 1.0 2.9 0.8
----------------------------------------------------------------------
261.0 277.1 283.8 290.4 1,112.3 250.7
----------------------------------------------------------------------
----------------------------------------------------------------------
2002(1) 2003
----------------------------------------------------------------------
Profit (loss) Q1 Q2 Q3 Q4 Full Q1
from year
operations
----------------------------------------------------------------------
Carbon and
Graphite 11.7 12.3 18.1 9.8 51.9 12.2
----------------------------------------------------------------------
Graphite
Specialties 1.8 1.1 0.7 - 1.7 1.9 4.5
----------------------------------------------------------------------
Corrosion
Protection -1.9 1.9 - 4.8 4.8 - 5.0
----------------------------------------------------------------------
Established
Businesses 11.6 15.3 18.8 12.9 58.6 11.7
----------------------------------------------------------------------
SGL
Technologies - 4.6 - 2.3 - 2.8 - 2.0 - 11.7 - 1.9
----------------------------------------------------------------------
Corporate
Costs - 6.0 - 5.9 - 4.9 - 1.5 - 18.3 - 4.7
----------------------------------------------------------------------
1.0 7.1 11.1 9.4 28.6 5.1
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(1) Before provisions for antitrust risks and restructuring
expenses
Consolidated Income Statements by Quarter (EUR million)
2002 2003
----------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Q1
year
----------------------------------------------------------------------
Sales revenue 261.0 277.1 283.8 290.4 1,112.3 250.7
----------------------------------------------------------------------
Cost of sales - 210.4 - 216.4 - 221.2 - 238.5 - 886.5 - 193.7
----------------------------------------------------------------------
Gross profit 50.6 60.7 62.6 51.9 225.8 57.0
----------------------------------------------------------------------
Selling,
administrative,
research and
other costs - 49.6 - 53.6 - 51.5 - 42.5 - 197.2 - 51.9
----------------------------------------------------------------------
Profit from
operations(2) 1.0 7.1 11.1 9.4 28.6 5.1
----------------------------------------------------------------------
Antitrust charge - - - - 22.0 - 22.0 -
----------------------------------------------------------------------
Restructuring
charge - - - - 8.3 - 8.3 -
----------------------------------------------------------------------
Profit (loss)
from operations 1.0 7.1 11.1 - 20.9 - 1.7 5.1
----------------------------------------------------------------------
Net financing
costs - 6.3 - 8.5 - 7.4 - 3.3 - 25.5 - 13.6
----------------------------------------------------------------------
Profit (loss)
before taxes - 5.3 - 1.4 3.7 - 24.2 -27.2 - 8.5
----------------------------------------------------------------------
Income tax
expense/benefit - 4.0 - 0.8 1.6 6.8 3.6 0.9
----------------------------------------------------------------------
Net profit
(loss) before
minority
interests - 9.3 - 2.2 5.3 - 17.4 - 23.6 - 7.6
----------------------------------------------------------------------
(2) 2002: before provisions for antitrust risks and restructuring
expenses
CONTACT: SGL CARBON AG
Investor Relations, +49 (611) 60 29-100;
Fax, +49 (611) 60 29-101; cpc@sglcarbon.de
www.sglcarbon.com
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: May 14, 2003 By: /s/ Robert J. Kohler
------------------------------
Name: Robert J. Koehler
Title: Chairman of the Board of Management
By: /s/ Dr. Bruno Toniolo
-----------------------------
Name: Dr. Bruno Toniolo
Title: Member of the Board of Management