SGL Carbon (ETR:SGL) reported lower first-half revenue for 2026 as the company’s exit from loss-making carbon fiber operations and weak demand in certain industrial markets weighed on sales. However, the company said profitability, cash flow and its balance-sheet position remained resilient, supported in part by compensation payments tied to renegotiated semiconductor supply contracts.
Total group sales declined 30% to approximately €394 million in the first six months of 2026, from €453 million a year earlier. Chief Financial Officer Thomas Dippold said roughly €50 million of the decline reflected the discontinued Carbon Fiber business, including the closure of the Lavradio site in the prior-year period and the subsequent idling of capacity in Moses Lake, U.S.
EBITDA pre declined by 3.7% to roughly €70 million from €72.5 million in the prior-year period, while the EBITDA pre margin was 17.7%. Results included €29 million in compensation payments received following the renegotiation of take-or-pay and customer down-payment contracts.
Graphite Solutions Supported by Contract Payments
Sales in the Graphite Solutions segment rose 6% to €234 million from €221 million. The increase included the compensation payments associated with adjustments to silicon carbide supply contracts. Excluding those payments, segment sales would have declined about 6%, according to Dippold.
Graphite Solutions EBITDA pre rose 14.2% to €46.6 million, and the segment’s EBITDA pre margin approached 20%. The business was also slightly negatively affected by currency movements, Dippold said.
Chief Executive Officer Andreas Klein said the semiconductor market was showing positive momentum, particularly in China and in silicon carbide, including higher volumes and signs of price stabilization. He cautioned that the durability of that improvement remains uncertain.
“We have to wait a little bit, we have to be a little bit patient how sustainable this is, but the momentum clearly is there,” Klein said.
The company also said its newer coating products continued to receive strong customer feedback, with the potential to contribute more materially in calendar 2027.
Process Technology Faces Weak Order Environment
Process Technology revenue fell 28.2% to a little more than €50 million, compared with €70.2 million in the first half of 2025. EBITDA pre fell to €7.3 million from nearly €20 million, and the margin declined to 14.5% from 28.3%.
Dippold attributed the decline to weak conditions in the chemical industry, where customer investment decisions have been delayed or put on hold. The Middle East conflict has added to uncertainty, he said, while lower asset utilization has led customers to postpone maintenance activity.
During the question-and-answer session, Dippold said the order environment had shown some stabilization, albeit at a low level. Maintenance, parts and service work could support the business in the second half, but newly awarded projects would generally translate into revenue beginning in 2027.
“We see the development of Process Technology in the remaining six months of the year on the level where we are right now, maybe a little bit better, but not a magic turnaround story,” Dippold said.
Fiber Composites Restructuring Lifts Profitability
The Fiber Composites unit, created this year through the combination of the former Carbon Fiber and Composite Solutions businesses, recorded sales of roughly €100 million, down more than one-third from €150 million in the prior-year period. The decline was expected and reflected the discontinued operations, management said.
Despite lower sales, EBITDA pre increased to nearly €19 million from €10.6 million a year earlier. Dippold said the improvement demonstrated the impact of the carbon fiber restructuring, which was completed in less than one year and cost slightly more than €40 million, below the company’s earlier ceiling of €50 million over two years.
The segment also benefited from a higher contribution from BSCCB, SGL Carbon’s equity-accounted joint venture with Brembo. Excluding that contribution, the Fiber Composites EBITDA pre margin was 11.5%, Dippold said.
Management noted that the year-over-year profit improvement cannot be repeated at the same pace in the second half because much of the benefit reflects the absence of losses from operations that were still active in the first half of 2025.
Cash Flow, Debt and 2030 Strategy
SGL Carbon returned to positive net income of €11.8 million, compared with a net loss of €31 million a year earlier, when results were affected by restructuring-related impairments. Free cash flow totaled €31.4 million in the first half, including the contract compensation payments.
Net financial debt declined by nearly €20 million, bringing the leverage ratio to 0.6. The equity ratio increased to nearly 40%, while return on capital employed remained around 10%.
Klein said the company remains on track to meet its 2026 guidance despite weak macroeconomic conditions, geopolitical uncertainty and continued softness in several key markets. He also said the company’s SGL Growth 2030 strategy was progressing toward its target of €1 billion in sales by 2030.
Among growth initiatives, Klein highlighted an expanded agreement with X-energy to increase nuclear graphite production capacity, primarily at SGL Carbon’s Chedde, France site. The company is also expanding customer relationships in space applications, pursuing defense and drone opportunities, and said it doubled production volume for retrofit aircraft floor-panel materials.
Management said further semiconductor-related compensation payments remain possible, although Dippold said “the big chunk” of the contract renegotiations has already been completed.
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.
