Form 6-K/A
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 2006
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
----- -----
If "Yes" is marked, indicate the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
SGL Carbon AG hereby amends its report on Form 6-K filed with the Securities and
Exchange Commission on July 26, 2006 by replacing Exhibit 2 (July 26, 2006
Shareholder Letter - Report on the First Half of 2006) to such report in its
entirety with Exhibit 1 hereto.
Exhibit Index
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1. July 26, 2006 Shareholder Letter - Report on the First Half of 2006
(amended)
EXHIBIT
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Report on the First Half of 2006
--------------------------------
Highlights
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- Sales in H1/2006 plus 9%, EBIT before ECJ decision plus 45% compared to
H1/2005
- Return on sales before ECJ decision 14% in H1/2006
- Pre tax profit before ECJ decision more than doubled in H1/2006 to (euro)
56.7 million
- ECJ decision of June 29, 2006 burdens EBIT with (euro) 23.5 million and net
financing costs with (euro) 12.8 million
- Further earnings improvement expected for Q3/2006 and guidance for 2006
before ECJ decision raised
Financial Highlights (unaudited)
1st Half
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(euro) million 2006 2005
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Sales revenue 568.9 521.8
Gross profit 181.2 155.2
EBITDA(1) 104.7 89.4
EBIT(1) 79.2 54.6
Return on sales(1) (2) 13.9% 10.5%
Net profit before minority interests 1.0 14.9
Earnings per share (in (euro)) 0.02 0.26
Cash flow from operations before antitrust payments(3) 42.7 5.3
June 30, Dec 31,
-----------------------------
(euro) million 2006 2005
-----------------------------------------------------------------------------------------
Total assets 1,177 1,183
Shareholders' equity 402 322
Net debt 253 265
Debt ratio (gearing)(4) 0.6 0.8
Equity ratio(5) 34.1% 27.2%
1) Before effect from ECJ decision of (euro)23.5 million
2) Ratio of profit from operations to sales revenue
3) Without currency exchange rate effects
4) Net debt divided by shareholders' equity
5) Shareholders' equity divided by total assets
On June 29, 2006 the European Court of Justice (ECJ) announced its decision in
the "graphite electrodes" case, thus changing the decisions of the European
Court (EC) of April 29, 2004 and the European Commission of July 18, 2001 and
assessed a figure of (euro) 75.7 million. On the basis of this judgment, the
Company made adjustments to its provisions in Q2/2006. As a result, EBIT was
negatively impacted by (euro) 23.5 million and the net financing costs by (euro)
12.8 million. Both measures are non-cash in Q2/2006. As already reported, the
fine and the outstanding interest on the basis of the EC decision were cash
funded with the European Commission at the beginning of the second quarter with
no acknowledgement of legal obligation. Consequently, the ECJ decision will
result in a cash outflow of only (euro) 8.5 million in Q3/2006. With the ECJ
decision and the measures taken in Q2/2006 impacting the balance sheet and
income statement, the effects from the "graphite electrodes" proceedings are
finally concluded.
Retroactive adjustments
For the first time since the consolidated financial statements as at December
31, 2005 all previously non-consolidated subsidiaries are fully included in the
scope of consolidation and two joint ventures are accounted for under the equity
method. For the quarterly representation of the 2005 fiscal year, the reported
data were adjusted to include the previously non-consolidated companies and thus
made comparable.
Business Development in the Group
---------------------------------
Consolidated Income Statement (unaudited)
1st Half
----------------------------------------------------------------------------------
(euro) million 2006 2005
----------------------------------------------------------------------------------
Sales revenue 568.9 521.8
Gross profit 181.2 155.2
Selling, administrative, research and other income/expense -102.0 -100.6
EBIT effect from ECJ decision -23.5 -
Profit from operations 55.7 54.6
Net financing costs -22.5 -27.8
Interest effect from ECJ decision -12.8 -
Profit before taxes 20.4 26.8
Income taxes -19.4 -11.9
Net profit before minority interests 1.0 14.9
Earnings per share 0.02 0.26
Thanks to the favourable development of demand in all three business units,
consolidated sales increased by 9% to (euro) 568.9 million in H1/ 2006, or 7%
after adjusting for foreign currency changes. EBIT before ECJ decision increased
more than expected, by 45% to (euro) 79.2 million. The main reasons for the
earnings growth were the sustained positive development at Carbon and Graphite
and Specialties as well as cost savings amounting to some (euro) 12 million.
Net Financing Costs
1st Half
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(euro) million 2006 2005
----------------------------------------------------------------------------------
Interest expense on loans (net) -12.8 -14.6
Interest expense on pensions -6.8 -6.7
Interest expense on antitrust (non-cash) -1.1 -2.6
Total interest expense, net -20.7 -23.9
Currency and hedging valuation adjustments of antitrust
liabilities (non-cash) 0.0 -1.0
Amortization of refinancing costs -1.7 -1.9
Other -0.1 -1.0
Total other financing expenses -1.8 -3.9
Net financing costs -22.5 -27.8
In H1/2006, the net financing costs before ECJ decision improved to minus (euro)
22.5 million compared with minus (euro) 27.8 million in the same six months of
the previous year. This was due primarily to reduced net interest expenses
resulting from the decrease of financial liabilities as well as lower interest
expenses in connection with the antitrust proceedings resulting from the
complete payment of the remaining North American antitrust liabilities in 2005
and the cash funding of the first European antitrust fine in April 2006.
Furthermore, the other financing expenses are impacted by positive
mark-to-market valuations of our interest and currency instruments.
Profit before and after taxes
In the first half-year, pre tax earnings before ECJ decision more than doubled
from (euro) 26.8 million in H1/2005 to (euro) 56.7 million in the reporting
period. Due to the absolute level reached and the minimum taxation regulations
in Germany, we did not book any deferred taxes for the tax-deductible interest
expenses from the antitrust proceedings. Including the charges from the ECJ
decision, a net profit for the period of (euro) 1 million was generated. Based
on an average number of shares of 60.2 million, earnings per share amounted to
(euro) 0.02.
Financial Position
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Consolidated Balance Sheet (unaudited)
Assets June 30, Dec 31,
------------------------------------------------------------------------------
(euro) million 2006 2005
------------------------------------------------------------------------------
Non-current assets
Intangible assets 83 86
Property, plant and equipment 341 346
Long-term investments 14 15
Deferred tax assets 119 129
557 576
Current assets
Inventories 299 281
Trade receivables 199 195
Other current assets 37 34
Cash and cash equivalents 82 93
617 603
Assets held for sale 3 4
Total assets 1,177 1,183
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Equity and Liabilities June 30, Dec 31,
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(euro) million 2006 2005
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Shareholders' equity 402 322
Minority interests 1 1
Total equity 403 323
Non-current liabilities
Financial liabilities 321 336
Provisions for pensions and other employee benefits 160 159
Deferred tax liabilities 32 35
Other liabilities 1 1
Other provisions 15 13
529 544
Current liabilities
Financial liabilities 0 6
Trade payables 89 89
Other liabilities 68 70
Other provisions 88 151
245 316
Total equity and liabilities 1,177 1,183
As at June 30, 2006, total assets at (euro) 1,177 million were almost unchanged
compared to the year-end 2005. The key development in H1/2006 was the cash
funding of the first antitrust fine in April 2006 for which the proceeds from
the capital increase in March 2006 and the existing cash position was used. Cash
and cash equivalents to the amount of (euro) 18 million were used to pay back
bank loans.
Working Capital
June 30, Dec 31,
------------------------------------------------------------------------------
(euro) million 2006 2005
------------------------------------------------------------------------------
Inventories 299 281
Trade receivables 199 195
Less trade payables -89 -89
Working capital 409 387
The increase in working capital of around (euro) 22 million (currency-adjusted
approximately (euro) 33 million) compared to year-end 2005 corresponds to the
typical seasonal development at this time of the year.
Statement of Changes in Shareholders' Equity
Six months Equity
------------------------------------------------------------------------------
(euro) million 2006 Ratio
------------------------------------------------------------------------------
Balance at January 1 322 27.2%
Capital increase 90
Net profit 1
Currency exchange differences and other -11
Balance at June 30 402 34.1%
As a result of the capital increases, shareholders' equity increased as at June
30, 2006 by (euro) 90 million to (euro) 402 million, thus leading to an
improvement in the equity ratio from 27.2% to 34.1%. An equity ratio of 37%
would have resulted without the negative impact from the ECJ decision.
Net Debt
June 30, Dec 31,
------------------------------------------------------------------------------
(euro) million 2006 2005
------------------------------------------------------------------------------
Financial liabilities 321 342
plus accrued refinancing cost 14 16
Cash and cash equivalents -82 -93
Net financial debt 253 265
As at June 30, 2006, there was a significant improvement in net financial debt
due to a reduction of (euro) 21 million in financial liabilities. In April 2006,
the proceeds from the capital increase in addition to part of the cash and cash
equivalents were used to cash fund the first European antitrust fine on the
basis of the EC decision of April 29, 2004. For this reason, the ECJ decision of
June 29, 2006 only impacts Q3/2006 with a cash outflow of (euro) 8.5 million.
After payment in Q3/2006, a total of approximately (euro) 17 million will have
been deployed in 2006 for making antitrust payments in addition to the funds
from the capital increase. Despite this cash outflow, we are adhering to our
guidance of reducing net financial liabilities to below (euro) 240 million by
year-end due to higher cash flow provided by operating activities.
Financial Condition
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Consolidated Cash Flow Statement (unaudited)
1st Half
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adjusted by currency impacts / (euro) million 2006 2005
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Cash Flows from operating activities
Net income before taxes 20.4 26.8
Add back of net interest expenses 20.7 23.9
Reclassification of the ECJ expense 36.3 -
(Gain) loss on disposal of property, plant and equipment -1.0 -
Depreciation and amortization of fixed assets 25.5 34.8
Amortization of refinancing costs 1.7 1.9
Income taxes paid -10.2 -6.3
Interest income received 2.9 3.0
Interest on financial debt paid -15.7 -17.6
Changes in provisions, net -5.0 -3.1
Changes in Working Capital -32.9 -45.6
Changes in other operating assets and other liabilities 0.0 -12.5
Cash provided by operating activities before
antitrust payments 42.7 5.3
Payments relating to antitrust -89.3 -15.1
Cash used in operating activities -46.6 -9.8
Cash Flows from investing activities
Capital expenditure in property, plant and equipment
and intangible assets -29.0 -17.4
Other investing activities 1.1 -
Cash used in investing activities -27.9 -17.4
Free Cash Flow* 14.8 -12.1
Cash Flows from financing activities
Changes in corporate debt -17.6 -9.1
Net proceeds from capital increase 81.6 1.8
Cash provided by/used in financing activities 64.0 -7.3
Effect of FX-changes -1.1 1.3
Total Cash Flow -11.6 -33.2
Cash and cash equivalents at beginning of period 93.4 195.5
Cash and cash equivalents at end of period 81.8 162.3
(thereof cash escrow account) (0.0) (113.6)
*defined as cash provided by operating activities before antitrust payments
minus cash flows from investing activities
In line with the reporting in the annual report, we have adapted the quarterly
cash flow statements according to the indirect method as defined under IAS 7. To
provide a better presentation of the cash flow statement compared to Q1/2006, we
have now added back net interest expenses. The expenses resulting from the ECJ
decision were also reclassified, as the cash outflow was posted separately under
payments for antitrust proceedings.
In H1/2006, cash provided by operating activities before antitrust payments at
(euro) 42.7 million was considerably improved against the (euro) 5.3 million in
H1/2005 due to the stronger H1/2006 result before ECJ decision of (euro) 56.7
million (PY: (euro) 26.8 million), the lower build up of working capital and
decreased interest payments for financial liabilities.
Despite significantly higher capital expenditure, free cash flow in H1/2006
improved by (euro) 26.9 million to (euro) 14.8 million after minus (euro) 12.1
million in H1/2005.
With the typical normalization of working capital in the course of the year, we
expect a considerably improved free cash flow of at least (euro) 45 million from
today's point of view, which despite (euro) 17 million higher cash outflow for
antitrust payments and higher capital expenditure in property, plant and
equipment of approximately (euro) 65 million (2005: (euro) 45 million), allows
us to maintain our guidance of reducing net financial liabilities to below
(euro) 240 million by the year-end.
Cash flow from financing activities resulted in a cash inflow of (euro) 64.0
million (H1/2005: outflows of (euro) 7.3 million), which is mainly due to the
proceeds from the capital increase.
Segment Reporting
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Carbon and Graphite (CG)
1st Half
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(euro) million 2006 2005
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Sales revenue 338.5 311.9
EBITDA 89.8 82.4
Profit from operations 76.1 60.5
Return on sales 22.5% 19.4%
In H1/2006, sales increased by 9% to (euro) 338.5 million, currency-adjusted by
7%. This was due to successfully implemented price increases for graphite
electrodes and higher sales of cathodes. Despite the planned reduction in
graphite electrode shipments, EBIT increased by 26% to (euro) 76.1 million as a
result of price increases and ongoing cost reduction measures. The return on
sales improved to 22.5% in comparison to 19.4% in the same six months of the
previous year. The average prices for graphite electrodes increased by 22% in
USD and 10% in EUR compared to H1/2005. As expected, the reporting period saw a
reduction in graphite electrode shipments of 10% compared to the exceptionally
strong H1/2005. Even so, deliveries reached a level of 99,000 metric tons, which
is comparable to the average first six months of previous years. The factor cost
increase was at the upper end of the indicated range of 10-15%.
Specialties (S)
1st Half
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(euro) million 2006 2005
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Sales revenue 145.9 127.2
EBITDA 23.1 14.8
Profit from operations 17.2 8.3
Return on sales 11.8% 6.5%
Sales increased by 15% to (euro) 145.9 million, currency-adjusted by 14%,
particularly due to demand from the solar and nuclear energy industry as well as
from industrial applications and as a result of the good order book in Process
Technology. Against H1/2005, which included the weak Q1/2005, EBIT more than
doubled owing to the sales growth and the resulting improvement in capacity
utilization. Like in Q1/2006, the 11.8% EBIT margin in H1/2006 remains within
our target range of 10-15%.
SGL Technologies (T)
1st Half
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(euro) million 2006 2005
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Sales revenue 83.7 81.5
EBITDA 5.7 5.9
Profit from operations 0.2 -0.4
Return on sales 0.2% -0.5%
Sales increased by 3% to (euro) 83.7 million, adjusted for currency, sales
remained flat. Higher demand for carbon fibres more than compensated for the
project and development related shift of Composites sales to H2/2006. EBIT at
(euro) 0.2 million is positive despite - as reported in Q1 - the burden
resulting from a receivables writedown of approximately (euro)1 million due to
the Chapter 11 proceedings of Dana Corporation in the USA, one of our customers
in the area of Expanded Graphite.
Corporate Costs
1st Half
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(euro) million 2006 2005
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Other revenue 0.8 1.2
Corporate costs -14.3 -13.8
EBIT effect from ECJ decision -23.5 -
Corporate costs remained virtually unchanged in H1/2006 at (euro) 14.3 million
compared with the same six months of the previous year, despite higher expenses
arising from the implementation of the Sarbanes-Oxley Act as well as share-based
payments. The non-recurring charge from the ECJ decision impacts EBIT by (euro)
23.5 million and is presented separately.
Employees
The number of employees in the Group was 5,280 as at June 30, 2006 compared with
5,263 at the end of December 2005. Although the number of employees in Carbon
and Graphite and Specialties declined slightly, additional employees were taken
on by SGL Technologies due to the planned expansion of business.
Outlook
For Q3/2006, SGL Carbon is anticipating an increase in consolidated sales of at
least 10% and consolidated EBIT of at least 20% compared to Q3/2005. Carbon and
Graphite sales is likely to increase up to 20%, while the improvement in EBIT is
again likely to be stronger with an increase of 30% to 40%. For Specialties, we
expect another solid quarter of sales and EBIT, roughly at the same level as the
strong third quarter of the previous year. At SGL Technologies, sales growth
exceeding 10% and a positive EBIT is expected despite the shortfall of the AUDI
special effect compared to Q3/2005.
After the close of the first half-year, the Company is now raising its guidance
for 2006, expecting sales to increase by 5-10% and an EBIT improvement before
ECJ decision of at least 30%. A financial result before ECJ decision of
approximately minus (euro) 50 million is still planned. As a consequence of the
improved operating development, we anticipate pre tax and net profit before ECJ
decision to more than double against the previous year.
Quarterly Sales Revenue and Profit from Operations by Business Area (unaudited)
2005 2005 2006 2006
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(euro) million Q1 Q2 Q3 Q4 Full Year Q1 Q2 1st Half
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Sales revenue
Carbon and Graphite 143.3 168.6 157.3 174.5 643.7 152.7 185.8 338.5
Specialties 59.1 68.1 66.3 69.9 263.4 72.3 73.6 145.9
SGL Technologies 38.0 43.5 40.2 37.3 159.0 41.8 41.9 83.7
Other 0.6 0.6 0.6 0.9 2.7 0.5 0.3 0.8
241.0 280.8 264.4 282.6 1,068.8 267.3 301.6 568.9
2005 2005 2006 2006
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(euro) million Q1 Q2 Q3 Q4 Full Year Q1 Q2 1st Half
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Profit (loss) from operations
Carbon and Graphite 26.8 33.7 29.8 31.3 121.6 31.5 44.6 76.1
Specialties 1.5 6.8 6.2 5.3 19.8 8.8 8.4 17.2
SGL Technologies -0.5 0.1 3.8 -3.2 0.2 -0.8 1.0 0.2
Corporate costs -6.5 -7.3 -6.8 -8.2 -28.8 -6.4 -7.9(1) -14.3(1)
21.3 33.3 33.0 25.2 112.8 33.1 46.1 79.2
(1) Excluding charge of (euro)23.5 million resulting from ECJ decision
Quarterly Consolidated Income Statement (unaudited)
2005 2005 2006 2006
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(euro) million Q1 Q2 Q3 Q4 Full Year Q1 Q2 1st Half
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Sales revenue 241.0 280.8 264.4 282.6 1,068.8 267.3 301.6 568.9
Cost of sales -174.7 -191.9 -183.8 -196.3 -746.7 -185.2 -202.5 -387.7
Gross profit 66.3 88.9 80.6 86.3 322.1 82.1 99.1 181.2
Selling/administration
/research/other -45.0 -55.6 -47.6 -61.1 -209.3 -49.0 -53.0 -102.0
EBIT effect from
ECJ decision -23.5 -23.5
Profit from operations 21.3 33.3 33.0 25.2 112.8 33.1 22.6 55.7
Net financing costs -13.1 -14.7 -17.6 -20.2 -65.6 -12.3 -10.2 -22.5
Interest effect from
ECJ decision - -12.8 -12.8
Profit (loss) before
taxes 8.2 18.6 15.4 5.0 47.2 20.8 -0.4 20.4
Income taxes -4.3 -7.6 -6.1 -1.1 -19.1 -8.4 -11.0 -19.4
Net profit (loss) before
minority interests 3.9 11.0 9.3 3.9 28.1 12.4 -11.4 1.0
Important note:
This interim report contains opinions on future developments which are based on
currently available information and do not include the risks and uncertainties
which may result in the actual results deviating from the opinions given on
future developments. The opinions on future developments are not to be taken as
guarantees. Rather, the future developments and occurrences are dependent on a
multitude of factors, they include different risks and imponderables and are
based on assumptions which may prove to be inaccurate. These include, for
example, unforeseeable changes in policy, economic and social conditions,
especially in terms of electric steel production, the competitive situation,
interest rate and currency developments, technological developments and other
risks and imponderables. We see further risks in, amongst other things, price
developments, unforeseeable events in terms of acquired companies and Group
companies, as well as with the current cost optimization programs. SGL Carbon
does not intend to update these opinions on future developments.
Investor Relations Contact
--------------------------
SGL CARBON AG o Head Office o Investor Relations
Rheingaustra(beta)e 182 o D-65203 Wiesbaden
Phone +49 611 60 29-0 o Fax +49 611 60 29-101
e-mail cpc@sglcarbon.de o www.sglcarbon.de
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 4, 2006 By: /s/ Robert J. Kohler
---------------------------------
Name: Robert J. Koehler
Title: Chairman of the Board of
Management
By: /s/ Sten Daugaard
-------------------------------
Name: Mr. Sten Daugaard
Title: Member of the Board of
Management