Warburg Highlights 2014 Jrgen Muth, CFO Hamburg, 23 May 2014 - PowerPoint PPT Presentation

Warburg Highlights 2014 Jürgen Muth, CFO Hamburg, 23 May 2014

Company profile. SGL Group  One of the world’s largest manufacturers  Sales of ~€ 1.5 bn in 2013 of carbon-based products  Head office in Wiesbaden/Germany  Comprehensive portfolio ranging from  More than 6,000 employees worldwide carbon and graphite products to carbon fibers and composites  MDAX constituent  43 production sites worldwide  Service network covering more than 100 countries Page 2 | Investor Relations Presentation

Introduction to SGL Group’s Businesses Page 3 | Investor Relations Presentation

SGL Group. New streamlined business structure as of February 2014 Graphite & Cathodes Graphite Process Carbon Aero- JVs Carbon & Furnace Specialties Tech- Fibers & structures - SGL ACF Electrodes Linings (GS) nology Composite (AS) - Brembo SGL (GCE) (CFL) (PT) Materials - Benteler SGL (CF/CM) - etc Corporate Functions & Service Centers Joint Technology & Innovation (T&I) Venture Partners SGL Excellence (SGL X) Page 4 | Investor Relations Presentation

Reporting Segment: Performance Products (PP). Business units 2013 Group sales PP sales - 2013  Graphite & Carbon Graphite & Electrodes (GCE) Carbon Cathodes  Cathodes & Furnace Electrodes & Furnace 85% Linings Linings (CFL) PP 15% 51% Key industries served Characteristics Strategic priorities  Steel  Supplying the metal industries  Adjust infrastructure to reduced electrodes demand  Aluminum  Leading competitive position  Increase customer value through  Ferrous and non-ferrous  Ongoing growth in BRIC product quality and consistency metals  Historically high ROS & ROCE  Regular shipment of graphite  Historically strong cash flow electrodes from Malaysian plant Page 5 | Investor Relations Presentation

Graphite & Carbon Electrodes. Graphite electrodes (GE) – steel production in EAFs Worldwide steel production [in mt] 1600  Growth in steel production Blast furnace produces primary (integrated) steel based on iron ore fuelled by infrastructure 1400 Electric arc furnace produces secondary (electric) steel based on scrap demand from emerging countries 1200  Scrap availability limits EAF 1000 growth in emerging countries 800  Due to continued efficiency gains GE demand growth 600 only 1 – 2% p.a. 400  GE critical to EAF furnace efficiency but only ~3% of 200 steel-making conversion 0 cost 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: WSD, IISI, own estimate Page 6 | Investor Relations Presentation

Graphite & Carbon Electrodes. Graphite electrodes for electric steel production Steelmaking in an electric arc furnace (EAF) Graphite electrode Section view through EAF Graphite Electrodes Furnace shell Molten steel 100 – 360 cm Eccentric bottom Rocker tilt tapping (EBT) Tilt cylinder 35 – 80 cm Connecting Pin Teaming ladle Source: steeluniversity.org Page 7 | Investor Relations Presentation

Graphite & Carbon Electrodes. Graphite electrode production process Graphite production  GE critical to EAF furnace efficiency but only ~ 3% of steelmaking conversion cost  GE is a consumable – replaced every 5 to 8h  GE usually sold mostly in annual contracts  Needle coke requirements sourced on basis of multiyear contracts  Production process takes up to 3 months Page 8 | Investor Relations Presentation

Cathodes & Furnace Linings. Cathodes for the aluminum industry Aluminum global production scenarios 80  Aluminum demand driven by: 2003 – 2020 / Above pre-crisis scenarios 67 mio. t − Population growth and urbanization Primary Aluminum Production [in mio. t] 70 − Further industrialization of BRICs − Weight / strength / cost advantages in higher 60 energy cost environment 50  Cathodes essential to aluminum smelters 50 mio. t 39 mio. t  Existing smelters relining 40  Investment good (5 – 7 years lifetime) 36 mio. t 30  New smelter construction leading first to project demand and long-term to higher 20 relining demand 10  Smelters upgrading  Amorphous  graphitized cathodes 2003 2005 2007 2009 2011 2013 e 2015 e 2017 e 2019 e  Few major established producers of graphitized cathodes  Solid fundamentals for aluminum production growth  Cathodes represent only 2 % of production  Various new projects under construction and additional costs for 1 t aluminum feasibility studies for capacity increases underway. Source: IAI, Habor, SGL Group’s own estimates, Hydro; Alcoa, CRU Page 9 | Investor Relations Presentation

Cathodes & Furnace Linings. Cathodes for the aluminum industry Aluminum smelter Cathodes 30 – 70 cm 2 30 – 50 cm 3 4 4 1 100 – 380 cm 4 Special Cathode Ramming Sidewall glue blocks pastes blocks Source: SGL Group Page 10 | Investor Relations Presentation

Cathodes & Furnace Linings. Market shares in cathodes Market shares in cathodes 2014  Increasing cathode demand due to new projects. CIS 7% SGL 18% SEC 16% Carbone Savoie 18% Various (Chinese & Others) 41% Source: SGL Group’s own estimates, market shares based on volume (excl. China domestic) Various (Chinese & others): various cathode producers combined in this number, none of them exceeding 5% market share Page 11 | Investor Relations Presentation

Reporting segment: Graphite Specialties (GS). Business unit 2013 Group sales Key industries served  Graphite Specialties (GS)*  Energy – Solar / Battery GS  Semiconductor / LED 20%  Metallurgy  Tool manufacturing  Automotive  High-temperature processes Characteristics Strategic priorities  Sustainable growth potential in  Maintain leading position in all renewable energies, energy core product technologies efficiency and energy storage  Capture opportunities to  Broadest product portfolio disproportionally participate in market recovery  Global footprint  Improve business position in  C-parts supplier to high tech Asia investment goods industry * Former Business Unit New Markets integrated into Business Unit GS as of May 1, 2013 Page 12 | Investor Relations Presentation

Graphite Specialties. Specialty graphites required where other materials fail Main properties of carbon and graphite materials Mechanical strength Thermal Resistance shock to high resistance temperatures Modifiable to suit require- ments Corrosion Purity resistance Electrical and thermal conductivity Page 13 | Investor Relations Presentation

Graphite Specialties. Best solutions for our customers … ... in the PV / ... in the LED Industry ... in the Chemical and Semiconductor Industry Automotive Industry Iso susceptor, heating elements, heat shields / insulation Flange sealed (soft- and rigid Felt) by a gasket MOCVD reactor Reinforced graphite sealing sheet Iso graphite heating element SiC coated iso graphite Mono Flexible susceptor crystalline graphite foil silicon ingot Page 14 | Investor Relations Presentation

Graphite Specialties. Enabling innovation Examples: Target approx. 1/3 of sales based on new products  Carbon for anode material for lithium-ion introduced over the last 4 years batteries  New application in electronics industry  Thermal management solutions for electronic applications  Expanded graphite for environmental new needs and thermal management (JV between SGL Group and Lindner Group for Graphite-based “Green” Air Conditioning) established  Advanced Silicon Carbide coated carriers for LED Page 15 | Investor Relations Presentation

Graphite Specialties. Major customer industries 2013 % of total GS sales 2013 Energy: Batteries & Nuclear 20% Energy: Solar (including Polysilicon) 11% Semiconductor (incl. LED) 14% Chemicals 11% Tool manufacturing 11% Metallurgical applications 10% Automotive & Transportation 10% High-temperature processes 4% Other industrial applications 9% Source: SGL Group’s own estimates Page 16 | Investor Relations Presentation

Reporting segment: Carbon Fibers & Materials (CFM). Business units* 2013 Group sales CFM sales – 2013  Carbon Fibers / SGL ACF Composite Materials CFM 8%  51% SGL ACF (JVs with 17% Carbon BMW) Fibers / Composite Materials Key industries served 92%  Automotive Characteristics Strategic priorities  Energy  New applications in automotive,  Become supplier of choice for  Industrial energy, industrial our focus markets  Recreation  High earnings improvement  Optimize carbon fiber and  Medical Technology potential composite capacities along the  Construction value chain  Complete value chain in house  Convert Fisipe acrylic fiber lines  Pressure Vessels  Only EU carbon fiber company into PAN precursor production * Former Business Unit Rotor Blades sold as of December 31, 2013 Page 17 | Investor Relations Presentation

Carbon Fibers / Composite Materials. Carbon fiber demand growth delayed but all growth drivers intact CF market forecast [January 2014; in thousand mt p.a.] 80 71 63 55 49 41 39 34 30 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: SGL Group market research Page 18 | Investor Relations Presentation