Graphite: SGL Carbon profit warning and CEO resignation

SGL Carbon logo

SGL Carbon of Germany has warned this year’s profits could fall short of expectations as the company withdrew its three-year forecasts and its CEO Jürgen Köhler stepped down amid claims of ‘flawed business planning’. It now expects operating profits to be €10M (US$11M) below those of last year’s €65M (US$72M), instead of previous guidance of flat growth. Share prices for the German carbon and graphite producer fell by 32% to a 17-year low last week following the announcements. German carmakers BMW and Volkswagen have small stakes in SGL Carbon, which is 28% owned by German billionaire Susanne Klatten.

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Several problems have led to the current market position. SGL Carbon sold its synthetic graphite electrodes business to Showa Denko of Japan in October 2017 as electrode prices reached their all-time high—a result of closures though the Chinese synthetic graphite supply chain and sudden increased demand from Chinese electric arc furnace (EAF) steelmaking; however, prices have failed to return to their previous lows and SGL exited this market before a period of some of the highest profits ever seen in the sector.

Following the sale of its synthetic graphite electrode business, as well as operations involved with cathodes, furnace linings and carbon electrodes (which together formed the company’s previous Performance Products group), SGL Carbon has shifted its focus towards the carbon fibre and composite materials business.

It had anticipated carbon fibre-reinforced parts to grow rapidly with widespread use in electric vehicles as a weight-saving material. Such high levels of growth in this sector have yet to be realised, however, and the company has now withdrawn its forecasts for the 2020-2022 period. SGL Carbon produces carbon fibre for use in automotive parts and wind turbines. On 14th August, the company reported EBIT for its Composites—Fibers & Materials (CFM) business unit of a ‘mid-single digit million € amount’ compared to previous guidance of approximately €21M (US$23M), close to the level of the previous year.

SGL Carbon reported an overall 6% increase in sales for the first half of 2019 to €562M (US$624M). The company is a major international producer of synthetic graphite products and also supplies some products based on natural graphite. The company’s graphite and carbon products are supplied for use in semiconductors, lithium-ion battery anode material and lightweight parts for BMW electric vehicles.

Roskill’s NEW Natural & Synthetic Graphite: Outlook to 2028 report was published in June 2019 and provides detailed analysis on market trends including forecast growth in lithium-ion batteries and natural/synthetic competition, as well as growth for synthetic graphite in electrodes for the growing EAF steel sector in China. It looks at the on-going impact of changing environmental policy in China and the future balance between Chinese and ROW supply. Roskill is the only consultancy company to cover research of natural graphite, synthetic graphite, petroleum coke, lithium-ion batteries, and a number of complementary raw materials—all under one roof.

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This article was written by Suzanne Shaw. Please get in touch below if you wish to discuss further:

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