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: August 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
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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
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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. Shareholder Letter reporting 2Q 2003 Financial Results.
EXHIBIT 1
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Prepared in accordance with International Financial Reporting Standards, IFRSs
(unaudited)
Report on the First Half of 2003
The report on H1/2003 was prepared in accordance with the International
Financial Reporting Standards (IFRSs) (unaudited). The same accounting policies
were used in this report as in the annual financial statements for 2002.
- Noticeable quarter-on-quarter and year-on-year rise in profit from
operations
- Full capacity utilization for Graphite Electrodes
- No economic recovery in Graphite Specialties and Corrosion Protection
Consolidated sales revenue fell to (euro)518.8 million in H1, a 4% year-on-year
decline; after adjustment for exchange rate effects, sales revenue was up 6%.
This is mainly due to continuing strong growth in graphite electrode sales
volumes.
The profit from operations rose to (euro)18,0 million (H1/2002: (euro)8.1
million) in the period under review. This includes a net positive earnings
contribution from non-operating activities of (euro)4 million, which primarily
relates to the disposal of the Group's electrical contacts business and a closed
plant in the USA. However, additional expenses were incurred in relation to
workforce reduction measures in Grenoble/France. Furthermore, our Polish company
Angraph was included in the consolidated financial statements for the first time
as of June 30, 2003. In Q2, SGL Carbon increased its consolidated profit from
operations in comparison to Q1 by (euro)7.8 million to (euro)12.9 million.
Net financing costs in H1/2003 were (euro)-26.2 million (H1/2002: (euro)-14.8
million). This includes non-cash expenses of (euro)10.2 million. The
year-on-year difference in non-cash items (H1/2002: (euro)-1.5 million) is due
to positive one-time effects in 2002.
The net loss after taxes improved from (euro)-11.5 million in H1/2002 to
(euro)-6.7 million in H1/2003. The figures for Q2/2003 were already slightly
positive ((euro)0.9 million). The loss per share in the first half was
(euro)-0.30 (H1/2002: (euro)-0.50).
After adjustment for sales of receivables, SGL Carbon reduced its net financial
liabilities by (euro)22 million in H1/2003 to (euro)446 million (December 31,
2002: (euro)468 million). We pressed ahead with our restructuring program for
Carbon and Graphite and Graphite Specialties, which was announced in 2001.
Savings of (euro)7 million were already generated in H1, and we are targeting at
savings of (euro)19 million on 2001 for the year as a whole. In addition, the
Group-wide SGL EXCELLENCE initiative resulted in further cost savings and
improvements in efficiency in the first six months of 2003. We are expecting
additional savings of around (euro)10 million by the end of the year.
Despite the muted economic situation, continuing slow demand and ongoing
uncertainty regarding exchange rate developments between the US dollar, the
euro, and the yen, we are expecting an improvement in results for H2.
Financial Highlights ((euro) million)
First Half First Half
(unaudited) 2003 2002
Sales revenue 518.8 538.1
EBITDA 53.1 47.6
Profit from operations 18.0 8.1
Return on sales1 3.5 % 1.5 %
Net loss before minority interests - 6.7 - 11.5
Earnings per share ((euro))2 - 0.30 - 0.50
Operational cash flow3 8.0 129.8
Dec. 31, June 30,
(unaudited) 2003 2002
Total assets 1,318 1,286
Equity 171 196
Net financial liabilities 446 427
Net financial liabilities 446 468
(after adjustment for sales of
receivables)
Debt ratio (gearing)4 2.6 2.2
Equity ratio5 13.0 % 15.2 %
1 Ratio of profit from operations to sales revenue
2 Basic = diluted
3 Without currency exchange rate effects
4 Ratio of net financial liabilities to equity
5 Ratio of equity to total assets
Segment reporting
Carbon and Graphite [CG]
First Half First Half
((euro)million) 2003 2002
Sales revenue 277.6 266.8
EBITDA 50,0 42.2
Profit from operations 33.5 24.0
Return on sales 12.1 % 9.0 %
- Sales revenue rose by 4% year-on-year to (euro)277.6 million. The
continuing positive development in graphite electrode sales volumes was
largely offset by exchange rate effects. After adjustment for exchange rate
effects, sales revenue rose by 16% in the period under review.
- Graphite electrode sales volumes rose by 25% to 96,700 tons (H1/2002:
77,100 tons). At 51,500 tons, sales volumes in Q2 were up 14% on Q1/2003
(45,200 tons), primarily as a result of increases in North America.
- Due to the development of the US dollar, the average revenue for graphite
electrodes per ton declined 12% year-on-year in H1/2003, though it remained
unchanged after adjustment for exchange rate effects. Compared to Q4/2002,
average revenue per ton rose by 4% in order currencies but declined 4% in
Euro.
- As a result of our cost savings and rising volumes, the profit from
operations rose almost 40% to (euro)33.5 million in the period under
review. At (euro)21.3 million, the Q2 profit from operations almost doubled
as against the previous quarter.
- After adjustment for exchange rate effects, we are expecting a further slow
rise in prices for graphite electrodes in H2/2003. With volumes remaining
at a high level, we are forecasting that sales volumes for the whole of
2003 will be up at least 10% on the previous year (2002: 173,000 tons). The
uncertain development of the US dollar/euro exchange rate poses a
particular risk for sales revenue and earnings.
Graphite Specialties [GS]
First Half First Half
((euro)million) 2003 2002
Sales revenue 89.0 101.4
EBITDA 13.4 12.0
Profit from operations 7.1 2.9
Return on sales 8.0 % 2.9 %
- Adjusted for the divestment of the electrical contacts business, sales
revenue was down 6% year-on-year. This was due to exchange rate effects,
declining prices, and a change in the product mix.
- The profit from operations was up (euro)4.2 million on H1/2002 to (euro)7.1
million. The prime factors in this were the one-time contributions
mentioned above and the first-time consolidation of our Polish company
Angraph. The lower sales revenue was offset by cost savings.
- As announced, we have lodged an appeal with the European Court against the
fine in Specialty Graphite imposed by the EU Commission end of 2002, in
particular on the grounds of unlawful double and multiple jeopardy and for
various other procedural defects. Furthermore, in this Business Area there
is still a statement of objections for minor business activities.
- We are assuming that overall economic conditions will not improve in
H2/2003, and do not expect to see a recovery before 2004. We will
consistently continue with our current restructuring program, and extend it
to include further cost-cutting measures.
Corrosion Protection [CP]
First Half First Half
((euro)million) 2003 2002
Sales revenue 83.8 92.1
EBITDA - 2.2 3.7
Profit from operations - 6.4 0.0
Return on sales - 7.6 % 0.0 %
- As a result of the restraint with respect to investment and maintenance
expenditure still being exhibited by our customers in the chemicals, energy
and environmental industries, sales revenue declined 9% year-on-year in
H1/2003.
- The loss from operations was (euro)-6.4 million (H1/2002: (euro)0.0
million). Ongoing rationalization measures were unable to fully offset the
cyclical decline in capacity utilization.
- At present, the Company does not expect to see an economic recovery in H2.
Given the seasonal nature of the CP business and the continuing
implementation of the cost-cutting programs, we expect an improvement in
results for H2/2003.
Established Businesses [CG, GS, CP]
First Half First Half
((euro)million) 2003 2002
Sales revenue 450.4 460.3
EBITDA 61.2 57.9
Profit from operations 34.2 26.9
Return on sales 7.6 % 5.8 %
SGL Technologies [T]
First Half First Half
((euro)million) 2003 2002
Sales revenue 66.8 76.6
EBITDA 2.5 1.6
Losses from operations - 5.4 - 6.9
Return on sales - 8.1 % - 9.0 %
- The 13% decline in sales revenue to (euro)66.8 million is primarily due to
the currency translation effects impacting business by the Company's US
subsidiaries and its fiber business in the UK.
- The loss from operations we were able to reduce by (euro)1.5 million
year-on-year to (euro)-5.4 million. Start-up and certification costs led to
temporary one-time charges in Q2/2003.
- Despite the uncertainty surrounding economic and exchange rate
developments, we are expecting a significant improvement in the loss from
operations in the second half of the year compared with H1/2003.
Corporate Costs
First Half First Half
((euro)million) 2003 2002
Sales revenue 1.6 1.2
Corporate costs - 10.8 - 11.9
Employees
- The number of employees dropped by 201 to 7,159 (December 31, 2002: 7,360)
in H1/2003, as a result of portfolio streamlining and cost-cutting
measures.
Consolidated Income Statement ((euro) million)
First Half First Half
(unaudited) 2003 2002
Sales revenue 518.8 538.1
Gross profit 120.7 111.3
Selling, administrative, research and - 102.7 - 103.2
other costs
Profit from operations 18.0 8.1
Interest expense on loans - 14.2 - 13.2
Interest expense on pensions - 5.2 - 5.4
Imputed interest on antitrust - 3.4 3.2
liabilites (non-cash)
Other - 3.4 0.6
Net financing costs - 26.2 - 14.8
Loss before taxes - 8.2 - 6.7
Income taxes 1.5 - 4.8
Net loss before minority interests - 6.7 - 11.5
Earnings per share - 0.30 - 0.50
((euro); basic = diluted)
- Interest expense on loans for the first six months was slightly up compared
with prior year at (euro)14.2 million; the average interest rate for the
period was 4.8% (H1/2002: 4.5%). The rise in the interest rate was a result
of refinancing.
- The non-cash imputed interest on antitrust liabilities increased net
financing costs by (euro)3.4 million. In H1/2002, the rescheduling of the
payment plan led to a one-time improvement in net financing costs.
- Costs incurred as part of refinancing are amortized over the life time of
the syndicated loan. In H1/2003, this resulted in an expense of (euro)2.8
million.
- As of June 30, 2003, the exchange rate effects from the translation of our
US antitrust liabilities were offset by the corresponding currency hedges.
- The tax income in H1 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 22.1
million shares outstanding (2002: 21.8 million).
Consolidated Balance Sheet ((euro) million)
June 30, Dec. 31,
(unaudited) 2003 2002
Assets
Intangible assets 104 104
Property, plant and equipment 438 477
Long-term investments 29 33
Noncurrent assets 571 614
Inventories 286 288
Trade receivables 228 208
Other current assets including cash 126 83
and cash equivalents
Current assets 640 579
Deferred tax assets 107 93
Total assets 1,318 1,286
June 30, Dec. 31,
(unaudited) 2003 2002
Equity and Liabilities
Equity 171 196
Minority interests 1 1
Provisions for pensions and other 191 191
employee benefits
Other provisions 149 149
Provisions 340 340
Financial liabilities 509 448
Trade payables 101 111
Other liabilities 152 151
Liabilities 762 710
Deferred tax liabilities 44 39
Total equity and liabilities 1,318 1,286
- Total assets rose by (euro)32 million compared to December 31, 2002. The
increase was largely due to a (euro)42 million rise in cash and cash
equivalents to (euro)63 million on the balance sheet date, as loan
repayments can only be made at certain times.
- The decline in noncurrent assets of (euro)43 million was primarily due to
currency translation differences and to depreciation and amortization
levels in excess of capital expenditures.
- After adjustment for sales of receivables, net financial liabilities were
reduced by (euro)22 million to (euro)446 million in H1/2003 (December 31,
2002: (euro)468 million). Net financial liabilities are composed of
financial liabilities (June 30, 2003: (euro)509 million) less cash and cash
equivalents of (euro)63 million.
- The (euro)20 million rise in trade receivables in comparison to December
31, 2002 is primarily due to the complete discontinuation of sales of
receivables (Dec. 31, 2002: (euro)41 million). After adjustment for sale of
receivables and currency effects, receivables were down by (euro)17
million.
- The equity ratio fell to 13% (December 31, 2002: 15%) as a result of the
rise in total assets and negative exchange rate effects.
Consolidated Statement of Changes in Equity ((euro)million)
First Half First Half
(unaudited) 2003 2002
Balance at January 1 196 255
Capital increase 1 1
Net result, net of minority interests - 7 - 11
Currency exchange differences
and other - 19 - 30
Balance at June 30 171 215
Consolidated Cash Flow Statement ((euro) million)
First Half First Half
(unaudited) 2003 2002
Profit from operations 18.0 8.1
Depreciation and amortization 35.1 39.5
EBITDA 53.1 47.6
Increase/decrease in working capital - 45.1 82.2
Operational cash flow 8.0 129.8
Other operating cash uses - 26.3 - 43.3
Cash used in/provided by operating - 18.3 86.5
activities
Capital expenditures - 19.5 - 19.9
Other investing activities 9.8 3.5
Cash used in investing activities - 9.7 - 16.4
Cash provided by/used in financing 70.2 - 44.2
activities
Effect of foreign exchange rate - 0.7 0.2
changes and cash from changes in group
Net increase in cash and cash 41.5 26.1
equivalents
Cash and cash equivalents at 21.5 12.1
beginning of the year
Cash and cash equivalents at end of 63.0 38.2
first half
- During the period under review, working capital (inventories plus trade
receivables minus trade payables) increased by (euro)45.1 million after
adjustment for exchange rate effects, primarily as a result of the complete
discontinuation of sale of receivables ((euro)41.2 million).
- At (euro)9.7 million, net cash used in investing activities in the period
under review was (euro)25.4 million below depreciation and amortization. In
addition to investments in property, plant and equipment of (euro)19.5
million, cash inflows from the disposal of noncurrent assets totalling to
(euro)9.8 million had a positive effect.
SGL CARBON AG
Head Office
Investor Relations
Rheingaustrasse 182
D-65203 Wiesbaden
Phone +49 (611) 60 29-0
Fax +49 (611) 60 29-101
e-mail cpc@sglcarbon.de
www.sglcarbon.com
Important note:
This document contains forward-looking statements as defined in the US Private
Securities Litigation Reform Act of 1995 based on currently available
information. Actual future results and trends could differ materially from those
set forth in such statements due to various factors. Such factors include, among
others, changes in economic, political, technical, business and competitive
conditions, unforeseeable alterations in electric steel production, changes of
interest and exchange rates, price developments, unanticipated developments
relating to recently acquired businesses and Group companies, potential
liability in connection with existing or future regulations, unforeseen
difficulties relating to the investigations by the European antitrust
authorities and to the now completed investigation by the Canadian and U.S.
antitrust authorities and the civil actions related thereto and other risks and
uncertainties, including those detailed in the Company's filings with the U.S.
Securities and Exchange Commission. SGL CARBON does not intend to update these
forward-looking statements, and does not assume any obligation to do so.
Sales Revenue & Profit from Operations by Quarter ((euro)million)
2002 2003
Sales revenue Q1 Q2 Q3 Q4 Year Q1 Q2 H1
Carbon and 127.2 139.6 135.5 148.4 550.7 134.5 143.1 277.6
Graphite
Graphite 51.4 50.0 49.5 45.0 195.9 44.9 44.1 89.0
Specialties
Corrosion 45.0 47.1 59.3 61.0 212.4 35.6 48.2 83.8
Protection
Established 223.6 236.7 244.3 254.4 959.0 215.0 235.4 450.4
Businesses
SGL Technologies 36.4 40.2 38.8 35.0 150.4 34.9 31.9 66.8
Other 1.0 0.2 0.7 1.0 2.9 0.8 0.8 1.6
261.0 277.1 283.8 290.4 1,112.3 250.7 268.1 518.8
2002 2003
Profit (loss) Q1 Q2 Q3 Q4 Year Q1 Q2 H1
from operations1
Carbon and 11.7 12.3 18.1 9.8 51.9 12.2 21.3 33.5
Graphite
Graphite 1.8 1.1 0.7 - 1.7 1.9 4.5 2.6 7.1
Specialties1
Corrosion -1.9 1.9 - 4.8 4.8 - 5.0 - 1.4 - 6.4
Protection1
Established 11.6 15.3 18.8 12.9 58.6 11.7 22.5 34.2
Businesses1
SGL Technologies - 4.6 - 2.3 - 2.8 - 2.0 - 11.7 - 1.9 - 3.5 - 5.4
Corporate Costs - 6.0 - 5.9 - 4.9 - 1.5 - 18.3 - 4.7 - 6.1 - 10.8
1.0 7.1 11.1 9.4 28.6 5.1 12.9 18.0
1 2002: before costs relating to antitrust proceedings and restructuring
Consolidated Income Statements by Quarter ((euro)million)
2002 2003
Q1 Q2 Q3 Q4 Year Q1 Q2 H1
Sales revenue 261.0 277.1 283.8 290.4 1,112.3 250.7 268.1 518.8
Cost of sales - 210.4 - 216.4 - 221.2 - 238.5 - 886.5 - 193.7 - 204.4 - 398.1
Gross profit 50.6 60.7 62.6 51.9 225.8 57.0 63.7 120.7
Selling,
administrative,
research
and other costs - 49.6 - 53.6 - 51.5 - 42.5 - 197.2 - 51.9 - 50.8 - 102.7
Profit from 1.0 7.1 11.1 9.4 28.6 5.1 12.9 18.0
operations2
Costs relating to - - - - 22.0 - 22.0 - - -
antitrust proceedings
Restructuring charge - - - - 8.3 - 8.3 - - -
Profit (loss) from 1.0 7.1 11.1 - 20.9 - 1.7 5.1 12.9 18.0
operations
Net financing costs - 6.3 - 8.5 - 7.4 - 3.3 - 25.5 - 13.6 - 12.6 - 26.2
Profit (loss) before - 5.3 - 1.4 3.7 - 24.2 -27.2 - 8.5 0.3 - 8.2
taxes
Income tax - 4.0 - 0.8 1.6 6.8 3.6 0.9 0.6 1.5
expense/benefit
Net profit (loss) - 9.3 - 2.2 5.3 - 17.4 - 23.6 - 7.6 0.9 - 6.7
before minority
interests
2 2002: before costs relating to antitrust proceedings and restructuring
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: August 12, 2003 By: /s/ Robert J. Kohler
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Name: Robert J. Koehler
Title: Chairman of the Board of Management
By: /s/ Dr. Bruno Toniolo
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Name: Dr. Bruno Toniolo
Title: Member of the Board of Management