SGL Carbon Q1 Earnings Call Highlights

Key Points

• Group sales fell 21.3% to EUR 184m, largely due to discontinued carbon‑fiber activities, but EBITDA pre only declined 11.6% to EUR 29.6m and the company swung to a net profit of EUR 5.9m with positive free cash flow (EUR 6.4m) and a leverage ratio of 0.7.
• Performance was mixed by segment: Process Technology saw the biggest hit (sales -30%, EBITDA pre -62%), Graphite Solutions was weakened by high silicon‑carbide customer inventories and contract renegotiations, while the newly combined Fiber Composites is smaller but profitable with a meaningful equity‑accounted JV contribution.
• Management reiterated full‑year guidance (sales EUR 720–770m; EBITDA pre EUR 110–130m), warned of no recovery in semiconductors and automotive in 2026, and is focusing on SiC customer negotiations, a growing defense project pipeline, and an X‑energy ramp expected to deliver about $100m over three years.

SGL Carbon ETR: SGL reported first-quarter 2026 results showing a sharp decline in revenue driven largely by discontinued operations, while profitability and cash flow held up better than sales amid ongoing weakness in key end markets.

Group results: sales down 21% as discontinued business weighs on comparisons

Chief Financial Officer Thomas Dippold said the company’s top line was “influenced to a large extent by discontinued unprofitable businesses activities,” pointing to carbon fiber operations in Lavradio and Moses Lake that were closed during 2025 following actions taken in 2024. Group sales fell by EUR 50 million, or 21.3%, to EUR 184 million from EUR 234 million a year earlier. Dippold attributed EUR 28 million of the decline to the carbon fiber discontinuations, with additional declines coming from Graphite Solutions and Process Technology.

Despite the revenue drop, Dippold said the company limited the decline in earnings. EBITDA pre decreased by EUR 4 million to EUR 29.6 million from EUR 33.5 million, a decline of 11.6%, which he noted was less severe than the decrease in revenue. He cited lower contributions from high-margin silicon carbide-related business in Graphite Solutions and weaker results in Process Technology, partly offset by ongoing cost discipline.

Business unit performance: mixed trends with sharp downturn in Process Technology

Graphite Solutions posted Q1 sales of EUR 106 million, down 8.8% (EUR 10 million) from EUR 116 million. Dippold said results were pressured by weak demand from silicon carbide customers, whose inventory levels “are still very high.” He added that the company is working with customers “on an individual customer basis” to renegotiate certain CVD contract terms. He also referenced a settlement with one CDP silicon carbide customer that affected sales, EBITDA, and cash flow, describing it as an arrangement that anticipates future sales and includes “a kind of a breakup fee” through adjusted contract conditions.

Graphite Solutions EBITDA pre fell to EUR 18.4 million from EUR 21.6 million, down 14.8%. The EBITDA margin declined to 17.3% from 18.5%, which Dippold called “a remarkable achievement” given the drop in a high-margin business line and broader macroeconomic headwinds.

Process Technology recorded the steepest decline. Sales dropped to EUR 25.5 million from EUR 36.5 million, down 30% (EUR 11 million). Dippold said the unit faced project postponements and uncertainty in the chemical industry, adding that even maintenance and parts-and-service demand “is really declining significantly.” He said larger investment projects have “really came to a standstill” as customers wait for improved visibility.

Process Technology EBITDA pre fell to EUR 4 million from EUR 11 million, a 62% decline. The EBITDA margin was 16.1%. Dippold noted that while this is below the unusually high margins of the last several years, the company has previously characterized 18% as a strong margin level for the segment.

Fiber Composites was presented as a newly combined unit beginning January 1, 2026, following the merger of remaining carbon fiber activities with the prior Composite Solutions business. Sales declined to EUR 47.7 million from EUR 76.6 million, a drop of EUR 29 million that management again linked largely to the discontinued carbon fiber activities. Dippold said this represents a “new normal” for the unit, as the company is now “only left with the profitable remains of the carbon fiber business” alongside a “steady and healthy” composites operation.

Dippold highlighted the contribution from the BSCCB joint venture, which is accounted for at equity and contributed EUR 4 million. Excluding that JV contribution, he said Fiber Composites delivered an operating result of EUR 5 million, or roughly a 10% operating margin; including it, the margin was cited as 18.9%. He characterized the improvement as a result of what he called “a very stringent and consequent restructuring” carried out last year.

Net result, cash flow, and balance sheet: restructuring impact eases

Dippold said the net result improved meaningfully year over year. He attributed the prior-year quarterly loss of EUR 6 million to significant restructuring and one-off costs, citing EUR 60.6 million in Q1 2025, along with purchase price allocation depreciation. In Q1 2026, he reported a net result of EUR 5.9 million, describing it as a roughly EUR 12 million turnaround year over year. Restructuring and one-off costs in Q1 2026 were EUR 1.4 million, which he said supports the company’s message that restructuring is “over to a large extent,” with only smaller remaining items to be addressed during the year.

Free cash flow was positive at EUR 6.4 million, up from EUR 5.1 million a year earlier. Dippold said the company expects free cash flow for the full year to be at about the same level as 2025 and said the company is “on a good way to achieve that.”

On the balance sheet, he said net financial debt declined slightly, supported by cash flow, and the leverage ratio was 0.7. The equity ratio was 39.5%, “getting closer to 40%,” and return on capital employed (ROCE) was “roughly 10%,” which he described as steady and solid.

Outlook: guidance reiterated amid uncertainty; no 2026 recovery expected in auto and semiconductors

Chief Executive Officer Andreas Klein reiterated the company’s guidance given “a couple of weeks ago” of EUR 720 million to EUR 770 million in sales and EBITDA pre of EUR 110 million to EUR 130 million. He emphasized two assumptions that he said had been “particularly reconfirmed in the last couple of weeks”:

• Weak economic development and geopolitical uncertainty, which he said has been underscored by the ongoing Middle East conflict, Strait of Hormuz developments, and “further tariff activities.”
• No recovery in semiconductors and automotive in 2026, which Klein said was confirmed by Q1 developments and customer discussions, with tariff-related uncertainty further weighing on automotive demand.

In discussing current sentiment, Klein said uncertainty in automotive and chemicals is affecting all three business units. He also pointed to raw material and energy availability and pricing as additional negative factors, tied in part to developments in the Middle East. However, he said the company is “quite relaxed on the cost side in the short term,” citing a “nice hedging rate for the year 2026” and customer discussions aimed at passing through cost impacts.

Strategic focus: SiC negotiations, defense pipeline, and X-energy ramp-up

Klein said the company is negotiating with silicon carbide customers to “bridge the situation” of elevated inventories while maintaining long-term cooperation, noting inventories are “continuously decreasing.” He also said SGL Carbon is expanding project development activity in defense, with budgets “feeding slowly through the chains” and networking discussions progressing to pilot steps. Klein said the ramp-up could have potential to impact 2027, adding that the company did not assume “any more significant contributions from defense” in 2026.

On X-energy, Klein referenced an announcement made in January and said the company is working to ramp up the “full value chain” for related projects and orders. He said operations are “well on track” and reconfirmed the expected impact of “the $100 million over the next three years” from those orders.

The call concluded without any analyst questions. Head of Investor Relations Claudia Kellert said she did not see questions in the queue and invited participants to follow up directly if additional information was needed.

About SGL Carbon ETR: SGL

SGL Carbon SE, together with its subsidiaries, engages in the manufacture and sale of special graphite, carbon fibers, and composite products in Germany, rest of Europe, the United States, China, rest of Asia, and internationally. The company operates in four segments: Graphite Solutions, Process Technology, Carbon Fibers, and Composite Solutions. It offers products for automotive industries, including body and main parts; carbon-ceramic brake discs; body shell components; battery solutions; friction materials; chassis components; gas diffusion layers and bipolar plates; vanes and rotors; sealing materials; bearings and mechanical seals; commutator discs and carbon brushes; and temperature management materials, as well as other products.

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