SGL Carbon SE – Specialist for Carbon-Based Materials

Brief summary for investors: SGL Carbon is a German manufacturer of carbon fiber and specialty graphite products for high-tech industries such as automotive, semiconductors, and renewable energies. The company is currently experiencing a period of significant financial volatility following strong performance in previous years.

Development The share price showed a strong upward trend from 2020 to the end of 2021 (from approximately €3 to over €9), driven by solid financial results (strong EBIT and positive EPS in 2021/2022) and the company's strategic positioning in future markets such as e-mobility and lightweight construction. From 2022 onwards, consolidation followed, leading to a significant downward trend to currently around €3.30. This decline directly correlates with the recent deterioration in operating results. The quarterly data shows high volatility: A profitable Q3 2024 (EPS: €0.03) was followed by a massive loss in Q4 2024 (EPS: €-0.92), caused by a slump in EBIT. The most recent reporting quarter (Q2 2025) continues to show negative EBIT (€-6.6 million) and an annual loss of €-25.3 million, despite positive free cash flow.

Opportunities:

• Growth Drivers: Hydrogen & E-Mobility: The company is a key supplier of critical components such as gas diffusion layers for fuel cells and bipolar plates for batteries. The global energy transition and the electrification of transport offer a long-term, structural growth environment.
• Semiconductor Industry: The production of isostatic graphite for chip manufacturing is a niche market with high barriers to entry and stable demand.
• Operating Efficiency: Consistently positive free cash flow despite losses indicates effective working capital management and provides financial flexibility.

Risks:

• Acute Profitability Crisis: Current key figures (negative EBIT, ROE of -5%, ROA of -2%) indicate significant operating difficulties. Profitability has deteriorated dramatically compared to 2022/2023.
• High Debt: A debt-to-equity ratio of 1.47 significantly increases financial risk, especially in a phase of rising interest rates and negative profitability.
• Cyclical Dependence: Performance is closely linked to cyclical industries such as the automotive sector. A macroeconomic slowdown or delays in electric vehicle projects have an immediate impact.
• Sales decline: The declining sales over the past few quarters (from €244.5 million to €218.9 million) confirms weakening demand or competitive pressure.

Additional information: Liquidity is secured in the short term with a current ratio of 2.67. The highly fluctuating quarterly results indicate possible special effects, restructuring costs, or volatile customer orders that must be considered in the analysis.

Conclusion: SGL Carbon finds itself in a fundamental dilemma. While its long-term growth prospects remain intact and attractive due to its exposed future markets, the company faces serious operational challenges in the short term. The current data clearly indicates that its positive market positioning is currently overshadowed by weak profitability and high debt. An investment is highly speculative and requires management to quickly address its operational problems and promptly pick up demand in key markets.

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