SGL Carbon : Quarterly Statement as of March 31, 2024

Quarterly Statement

as of March 31, 2024

2 SGL Carbon Q1 2024

Highlights Q1 2024

Sales in the first quarter of 2024 fell by 3.9% to €272.6 million compared to the same quarter of the previous year, in particular due to the decline in demand in the Carbon Fibers business unit.

----------------------------------------------------------------------------------

Adjusted EBITDA improved by 5.0% quarter-on-quarter to €42.1 million despite weaker business development in Carbon Fibers, primarily due to changes in the product mix in the Graphite Solutions business unit.

----------------------------------------------------------------------------------

The equity ratio increased slightly compared to the end of the previous financial year from 41.1% to 42.0%, while net debt rose slightly by 1.2% to €117.2 million (-32.7% compared to the end of the same quarter of the previous year).

----------------------------------------------------------------------------------

Confirmation of the 2024 annual outlook

3 SGL Carbon Q1 2024

Financial Highlights Q1 2024

€ million		2024
Sales revenue			272.6
EBITDA pre 1)			42.1
EBITDA pre-margin		15.4%
EBIT			26.6
Consolidated net result (attributable to shareholders of the parent company)		12.6
Free cash flow			5.9

€ million			Mar 31, 24
Total assets			1,489.6
Equity (attributable to the shareholders of the parent company)			625.4
Net financial debt			117.2
Return on capital employed (ROCE) 2)			11.4%
Leverage ratio 3)		0.7
Equity ratio			42.0%

1st Quarter

2023 Change

283.7 -3.9%

40.1 5.0%

14.1% +1.3%-points

25.7 3.5%

15.2 -17.1%

10.4 -43.3%

Dec 31, 23		Change
1,472.6		1.2%
605.3		3.3%
115.8	1.2%
11.3%		+0.1%-points

0.7-

41.1% +0.9%-points

Share price in €

High

Low

Closing price at end of period

1st Quarter

2024

7.20

5.86

6.96

Financial Year 2023

9.36

5.72

6.51

Change

-23.1%

2.4%

6.9%

1. Adjusted for one-off effects and non-recurring items. For more details, please refer to the business development section
2. EBIT pre for the last twelve months to average capital employed (total of goodwill, other intangible assets, property, plant and equipment, investments accounted for At-Equity and working capital)
3. Net financial debt divided by EBITDA pre of the last 12 months

4 SGL Carbon Q1 2024

Content

Highlights Q1 2024	2
Financial Highlights Q1 2024	3
Business Review	5
Basis of Preparation	5
Key Events of the Business Development	5
Business Development	6
Group Business Development	6
Balance Sheet Structure	10

Employees	12
Segment Reporting	12
Opportunities and risks	15
Outlook	15
Selected Financial Information	17
Other Information	24

5 SGL Carbon Q1 2024

Business Review

Basis of Preparation

The accounting policies applied in this quarterly statement have remained unchanged compared to December 31, 2023.

Income taxes during the year were calculated on the basis of a planned tax rate for the full year in the respective countries, which was applied to the pre-tax result in the interim financial statements.

The Carbon Fibers sales share in Q1 2024 corresponded to 21.1% of SGL Carbon's consolidated sales (Q1 2023: 22.5%). EBITDA pre for the business unit (excluding the pro rata At-Equity result of Brembo SGL Carbon Ceramic Brakes) amounted to minus €9.8 million in the reporting period (Q1 2023: minus €0.9 million). Due to the persistently unsatisfactory demand from wind industry customers and the associated deterioration in the earnings situation at Carbon Fibers, the Executive Board initiated a restructuring program in this business unit to achieve material and personnel savings in order to improve earnings. In the first quarter of 2024, a total of €1.8 million for personnel measures was recognized as restructuring expenses in the consolidated income statement.

Key Events of the Business Development

SGL Carbon evaluates strategic options for the business unit Carbon Fibers

The Board of Management of SGL Carbon SE decided on February 23, 2024, to evaluate various strategic options for the second largest business unit Carbon Fibers. These also include a possible partial or complete divestment of the business unit.

6 SGL Carbon Q1 2024

Business Development

Group Business Development

Sales by reporting segment Q1 2024 (Q1 2023)

Condensed consolidated income statement

€ million	2024
Sales revenue	272.6
Cost of sales	-209.6
Gross profit	63.0

Selling, administrative and R&D expenses			-40.5
Other operating income/expenses			2.2
Result from investments accounted for At-Equity			4.4
EBIT pre			29.1
One-offeffects/Non-recurring items			-2.5
EBIT			26.6

1st Quarter

2023 Change

283.7 -3.9%

-224.8-6.8%

58.9 7.0%

-42.7-5.2%

4.4 -50.0%

5.2 -15.4%

25.8 12.8%

-0.1-

25.7 3.5%

	1.3% (2.6%)
		Corporate
13.6% (14.0%)			51.9% (49.7%)
Composite Solutions							Graphite Solutions

21.1% (22.5%) Carbon Fibers

12.1% (11.2%) Process Technology

Group sales were negatively impacted above all by the weak demand in almost all market segments in the business unit Carbon Fibers. As a result, sales fell by 9.6% or € 6.1 million in Carbon Fibers. In addition, sales in the reporting segments Corporate and Composite

Weak demand for carbon fibers dominates sales development

SGL Carbon generated consolidated sales revenue of €272.6 million in the first quarter of 2024 (Q1 2023: €283.7 million). This corresponds to a slight decline of €11.1 million or minus 3.9% compared to the prior-year period (currency-adjusted minus 2.7%). Adjusted for the activities sold in Gardena, USA and Pune, India in 2023 and currency effects, the decline in sales amounted to € 2.6 million or 0.9%.

The business units with the largest share of Group sales are Graphite Solutions with 51.9% (previous year: 49.7%) and Carbon Fibers with 21.1% (previous year: 22.5%). The Composite Solutions and Process Technology business units contributed 13.6% (previous year: 14.0%) and 12.1% (previous year: 11.2%) respectively to Group sales. Sales in the Corporate segment fell to 1.3% (previous year: 2.6%).

Solutions also declined quarter-on-quarter by €3.8 million (-51.4%) and €2.7 million (-6.8%) respectively. In contrast, Process Technology (€+1.1 million or 3.4%) and Graphite Solutions (€+0.4 million or 0.3%) were able to slightly increase their sales compared to the first quarter of 2023.

The decline in Group sales is mainly due to negative volume and currency effects. Looking at the individual market segments, sales with customers from the semiconductor industry continued to rise. This also meant that the digitization market segment now represents 26.6% of Group revenue (Q1 2023: 22.1%). The other market segments in Graphite Solutions were unable to escape the weak market growth and indicated significant declines in some cases. This also affected the business with anode materials for the battery industry as well as the business with components for fuel cells.

Sales in the Carbon Fibers business unit fell by 9.6% to € 57.6 million in the first quarter of 2024 (Q1 2023: € 63.7 million). This is mainly due to the weak demand in many of the market segments supplied by Carbon Fibers.

7 SGL Carbon Q1 2024

Further details on the sales performance of the business units can be found in the segment reporting in this quarterly statement.

Group sales development

• million

300				272.6	283.7			Corporate
			3.6	7.4
						Composite Solutions
				37.1	39.8			Carbon Fibers
						Process Technology
200				57.6	63.7			Graphite Solutions
			33.0	31.9
100
			141.3	140.9

0

Q1 2024

Q1 2023

Earnings situation of the Group

Earnings performance - EBITDA pre

• million

50			42.1				Composite Solutions
		5.5	40.1
			5.9			Carbon Fibers
			6.9			Process Technology
			4.3			Graphite Solutions
						Corporate
30				4.9
	36.6	30.9
10
			-5.2	-5.9
-10			-1.7
		Q1 2024	Q1 2023

Despite the slight decline in sales, SGL Carbon's adjusted EBITDA increased by 5.0% to €42.1 million (Q1 2023: €40.1 million). The adjusted EBITDA margin improved accordingly from 14.1% to 15.4%.

The Graphite Solutions business unit made the largest contribution to the Group's adjusted EBITDA growth. After €30.9 million in Q1 2023, adjusted EBITDA of €36.6 million was achieved in the quarter under review. This corresponds to an increase of €5.7 million or 18.4% and is in particular due to an improved product mix. The positive earnings trend also continued in the Process Technology business unit. Process Technology significantly increased adjusted EBITDA by €2.0 million to €6.9 million in the first quarter of 2024, which corresponds to an increase of 40.8% (Q1 2023: €4.9 million). In contrast, the adjusted EBITDA of Carbon Fibers decreased from €4.3 million in Q1 2023 to minus €5.2 million in

8 SGL Carbon Q1 2024

the quarter under review. This is in particular due to lower prices (also due to lower raw material prices for acrylonitrile) as well as lower volumes. The expiry of a project-related supply contract with an automotive customer of Composite Solutions had a negative impact on both sales and EBITDA. In a quarter-on-quarter comparison, adjusted EBITDA fell by 6.8% to €5.5 million (Q1 2023: €5.9 million). Further information on the development of adjusted EBITDA for all four operating business units can be found in the segment reporting in this quarterly statement.

The income statement of SGL Carbon shows the following developments:

• Cost of sales fell by 6.8% to €209.6 million (Q1 2023: €224.8 million), which was disproportionately high compared to the decline in sales, mainly due to lower factor costs (in particular raw materials and energy) at Graphite Solutions. The gross margin improved accordingly from 20.8% in Q1 2023 to 23.1% in the reporting period.
• Selling, administrative and R&D costs fell by 5.2% to €40.5 million, which is also a disproportionately large reduction compared to the sales trend. In particular, selling expenses fell due to lower delivery volumes in the Carbon Fibers business unit.
• The balance of other operating income and expenses halved in a three-month comparison from €4.4 million to €2.2 million in Q1 2024. This was due to lower government grants totaling €1.5 million (Q1 2023: €3.6 million) as a result of the expiry of the electricity price cap in Germany.
• The result from investments accounted for using the at equity method decreased quarter-on-quarter to €4.4 million (Q1 2023: €5.2 million) due to lower earnings contributions from all three companies.

The reconciliation of adjusted EBITDA to EBIT is shown in the following table:

				1st Quarter
€ million	2024	2023		Change
EBITDA pre		42.1	40.1	5.0%
Depreciation and amortization		-13.0		-14.3		-9.1%
EBIT pre		29.1		25.8		12.8%
One-offeffects/Non-recurring items		-2.5		-0.1		-
EBIT		26.6		25.7		3.5%

One-off effects and non-recurring items that are not included in adjusted EBITDA or adjusted EBIT amounted to a total of minus €2.5 million (Q1 2023: minus €0.1 million). The one-off effects and non-recurring items in Q1 2024 resulted primarily from the restructuring measures initiated in the Carbon Fibers business unit. In addition, the effects from the amounts capitalized as part of the purchase price allocations of the SGL Composites companies of minus €0.3 million (Q1 2023: minus €0.3 million) and non- recurring items of minus €0.4 million for consulting expenses from a strategy project (Q1 2023: €0.2 million) had a negative impact.

Overall, EBIT improved by 3.5% to € 26.6 million in the reporting period (Q1 2023: € 25.7 million).

9 SGL Carbon Q1 2024

Financial result burdened by higher interest rates

€ million			2024
Interest income		1.4
Interest on financial liabilities and other interest expense			-5.0
Imputed interest convertible bond			-1.4
Imputed interest on lease liabilities/contract liabilities			-2.1
Interest component of additions to provisions for pensions			-1.7
Interest expense, net			-8.8
Amortization of refinancing costs			-0.4
Foreign currency valuation of intercompany loans		0.1
Other operating expense/income			0.0
Other financial result			-0.3
Financial result			-9.1

1st Quarter

2023 Change

0.8 75.0%

-4.5		11.1%
-0.9		55.6%
-0.4		>100%
-1.7		0.0%
-6.7	31.3%
-0.6		-33.3%
-0.7		-

0.2-

-1.1		-72.7%
-7.8		16.7%

Condensed consolidated income statement (continued)

				1st Quarter
€ million		2024		2023		Change
EBIT			25.7		3.5%
	26.6
Financial result		-9.1		-7.8		16.7%
Result before income taxes		17.5		17.9		-2.2%
Income tax expense		-4.6		-2.6		76.9%
Net result for the period		12.9	15.3		-15.7%
Attributable to:
Non-controlling interests		0.3	0.1	>100%
Consolidated net result (attributable to shareholders of
the parent company)		12.6		15.2		-17.1%
Earnings per share - basic and diluted (in €)		0.10		0.12		-16.7%

Earnings before income taxes and consolidated net result

The financial result amounted to minus €9.1 million in Q1 2024 and worsened by 16.7% compared to the same period of the previous year. This was in particular due to the deterioration in net interest expense of minus €8.8 million (Q1 2023: minus €6.7 million) as a result of increased imputed interest expenses of customer deposits recognized as contract liabilities and the higher imputed interest component for the convertible bonds. Higher interest income from the investment at short-term interest rates compensated for the increase in interest expenses for financial liabilities. The other financial result improved significantly to minus €0.3 million due to better foreign currency valuation effects (Q1 2023: minus €1.1 million).

The slight improvement in EBIT (€+0.9 million) was offset by the deterioration in the financial result (€1.3 million), meaning that the result before income taxes also decreased slightly from €17.9 million in Q1 2023 to €17.5 million in the reporting period. Income tax expenses amounted to €4.6 million (Q1 2023: €2.6 million) and resulted from the increased positive operating earnings contributions of some Group companies, particularly in China.

After taxes, the consolidated net result amounted to €12.6 million in Q1 2024 compared to €15.2 million in the same period of the previous year. Accordingly, lower positive earnings per share of €0.10 are reported in the first quarter of 2024 (Q1 2023: €0.12).

10 SGL Carbon Q1 2024

Balance Sheet Structure

ASSETS € million

Non-current assets

Current assets

Total assets

Working Capital

	Mar 31, 24		Dec 31, 23		Change			€ million		Mar 31, 24
					Inventories		373.0
	729.0		715.6		1.9%			Trade receivables and contract assets		160.6

760.6	757.0	0.5%	Trade payables and contract liabilities	-214.3
1,489.6	1,472.6	1.2%	Working Capital	319.3

Dec 31, 23

Change

373.6 -0.2%

150.9 6.4%

-218.5-1.9%

306.0 4.3%

EQUITY AND LIABILITIES € million
Equity attributable to the shareholders of the parent
company		625.4
Non-controlling interests		9.6
Total equity		635.0
Non-current liabilities		590.7
Current liabilities	263.9
Total equity and liabilities		1,489.6

		Working capital increased to €319.3 million (+4.3%) at March 31, 2024, in particular due to
		higher trade receivables and contract assets (€9.7 million). A slight increase in the existing
605.3	3.3%	factoring volume had the opposite effect in this context. The increase in trade receivables

9.6 0.0% relates in particular to Carbon Fibers and reflects a higher sales volume due to inventory

614.9 3.3% reduction in Q1 2024 compared to a very weak Q4 2023. The decrease in trade payables

583.3 1.3% reflects the reduced production activity at Carbon Fibers and was only partially offset by

274.4 -3.8% the increase in customer deposits at Graphite Solutions.

1,472.6 1.2%

Increase in equity

At March 31, 2024, total assets increased slightly by €17.0 million or 1.2% to €1,489.6 million compared to December 31, 2023. The increase in total assets is in particular due to capital expenditure (€23.9 million) exceeding depreciation on property, plant and equipment (€13.3 million), higher trade receivables and contract assets (€+9.7 million) and positive currency effects of €12.7 million, particularly from the stronger US dollar. In contrast, investments accounted for At-Equity decreased by €5.7 million due to the dividend from Brembo SGL Carbon Ceramic Brakes.

Non-current liabilities also increased slightly by €7.4 million, mainly due to a €6.7 million increase in non-current deposits for customer-specific orders (contract liabilities).

The €10.5 million decrease in current liabilities is on one hand due to the reduction in other provisions as a result of the payment of the STI plan in the amount of €7.7 million, which was partially offset by the addition to the provision for vacation not taken in the amount of €4.7 million. On the other hand, trade payables decreased mainly due to the decline in production activities at Carbon Fibers.

At March 31, 2024, the equity attributable to shareholders of the parent company increased by €20.1 million (+3.3%) to €625.4 million (December 31, 2023: €605.3 million). The increase is mainly due to the positive consolidated net income of €12.6 million. There were also positive currency effects, which led to an increase of €8.7 million. As a result, the equity ratio increased to 42.0% at March 31, 2024 (December 31, 2023: 41.1%).