Graphit Kropfmühl AG: Record turnover in the 1st quarter EUR 30.9 million - EBITDA EUR 4.6 million

Kropfmühl, Germany, 11 May 2011 --- In the first quarter of 2011 the Graphit Kropfmühl group (DEUTSCHE BOERSE: 'GKR') continued the successful development of the last fiscal year and reached a disproportionately high increase both in turnover and in earnings. In a highly dynamic economic environment both business segments were able to clearly improve their operative financial ratios.

In both segments the very strong demand that has been continuing since the last year has resulted in a sustained increase of sales. In view of clearly increased raw material prices GK also was able to achieve higher sales prices. Compared to the same quarter of the previous year this development altogether resulted in an 42.9 % increase in turnover to EUR 30.9 million, which is the highest quarterly turnover in the history of the Graphit Kropfmühl group.

The high utilisation of capacities in both segments cushioned the development of further increased procurement prices, so that the earnings ratios of the Graphit Kropfmühl group showed a disproportionately growth. The adjusted EBITDA amounts to EUR 4.6 million and has more than tripled compared to the previous year's quarter. The EBIT with EUR 3.9 million developed correspondingly and has increased more than tenfold compared to the low value of the previous year of EUR 0.4 million.

The financial ratios for the group are as follows:

 ¹ Adjusted EBITDA before restructuring measures, foreign exchange result, and expenses for recultivation


Silicon-metal segment
Compared to the previous year, turnover of the silicon-metal segment clearly improved by 35.7 % to TEUR 20,173.

The sales volume of silicon-metal increased by 12.4 % to 7,696 t. The chemical industry with a sales volume increase to 5,707 t again was the driving force for growth in this segment, whereas sales to customers in the aluminium industry with 1,989 t decreased compared to the previous year. Compared to the same quarter of the previous year the sales of both standard quality and special quality (Q ₁) of the RW Filler clearly increased to 6,370 t, which compared to the previous year's quarter means an increase of 18.5 %. With 570 t the sales of so-called secondary silicon, however, clearly remained behind the previous year's figure.

Driven by demand the prices for silicon-metal have clearly increased compared to the previous year, and a higher price level also could be realised for the special RW Filler quality Q ₁. Average proceeds for the standard RW Filler quality and for secondary silicon, however, almost remained at the previous year's level.

Increasing material and energy costs could be more than compensated by the price development and by the positive effects of excellent plant capacity utilisation. Earnings and profitability ratios in this segment increased disproportionately despite higher structural costs in production and an increase of selling, general and administrative expenses.

 ¹ Adjusted EBITDA before restructuring measures, foreign exchange result, and expenses for recultivation

Graphite segment
The graphite segment continues to benefit from an ongoing great demand for natural graphite. Compared to the first quarter of the previous year the segment turnover improved by 58.7 % to TEUR 10,725. The sales volume increased by about 34 % to 6,487 t, while average sales prices grew by approximately 19 %.

Compared to the previous year's quarter the customer sectors of dispersions and energy efficiency again made an above-average contribution to the jump in turnover. The field of traditional applications continued the development of 2010 and also reached a clear growth compared to the same quarter of the previous year. The field of customer solutions showed a comparatively moderate increase, whereas sales in the trading customer sector slightly remained behind the previous year's figure.

In the first quarter of 2011 the continuing rise of procurement prices again was somewhat alleviated by achieved efficiency increases. As a result GK was able to improve the gross profit of the graphite segment. Earnings ratios, however, are burdened by higher personnel and project costs relating to raw material securing projects in Mozambique and Brazil, which resulted in a disproportionately low increase in the adjusted EBITDA. 

 ¹ Adjusted EBITDA before restructuring measures, foreign exchange result, and expenses for recultivation

Raw material securing for the graphite segment
The world's biggest producer China remains the driving force on the graphite market. Driven by a still comparatively high domestic growth China's own demand is strongly increasing as well as a continuing high global demand under the aspect of a not least politically motivated shortage of supplies have resulted in continuing raw material price increases. The continuing upward development of raw material prices shows that we are on the right strategic course with our raw material securing projects we started in Mozambique and South America. In addition to our secured deposits in Sri Lanka, Zimbabwe, and Kropfmühl we are greatly committed to making available additional independent raw material sources in the future. In the meantime the main focus of our activities has been placed on the further exploration of the deposits in Mozambique, where after the preparation of a comprehensive feasibility study a decision about the start of mining operations should be made during the second half of the year 2011.

Outlook
On a total year comparison the silicon-metal segment due to implemented price increases will be able to reach clear improvements both in turnover and in earnings in 2011. Because of the initiated modernisation work at a silicon melting furnace the second quarter will presumably not reach the excellent financial ratios of the first quarter.

Despite the expected great total demand for graphite globally, earnings prospects in the graphite segment will be burdened by increasing procurement prices. In the total year the necessary increases of sales prices will result in an additional growth of the segment turnover. The development of profitability, however, due to these burdens will not be able to keep up with the development of turnover.

For the whole group we for the first time expect an annual turnover of more than EUR 100 million, provided that in the next quarters economic risk positions will not lead to unexpectedly strong market influences. Earnings ratios will clearly improve compared to 2010.

Necessary investments that are intended to provide further rationalisation, energy saving, and capacity expansions, were resolved and initiated in the first quarter in order to guarantee the competitiveness of the Graphit Kropfmühl group also in the future by using state-of-the-art production technologies. In Kropfmühl GK started the construction of another energy-efficient micronising line that is planned to be put into operation in autumn 2011. In Pocking the modernisation of another arc furnace has been initiated. With a total investment volume of about EUR 6 million this measure will lead to an increase of capacity and at the same time ensure a reduced specific energy consumption in 2012.

Financial calendar
Annual General Meeting, Munich        15 June 2011
6-month report 2011                             10 August 2011
9-month report 2011                             09. November 2011
German Equity Forum, Frankfurt         21 - 23 November 2011

Forward-looking statements
This press release contains statements about future developments that are based on currently available information and may involve risks and uncertainties, the result of which may be that the actual results may differ from the forward-looking statements. Statements about future developments must not be understood as guarantees. Future developments and events rather depend on a variety of factors, they contain various risks and imponderabilities and are based on assumptions that might turn out to be incorrect. For example, these include unforeseeable changes of the general political, economic, and social conditions.

Information on the company
Graphit Kropfmühl AG is a specialist for the production of silicon-metal and a globally leading supplier of refined natural graphite, with locations in Europe, Asia and Africa. The company that is listed in the Prime Standard (ISIN: DE0005896005) provides its customers with silicon-metal and graphite solutions for the most versatile applications. Silicon-metal is used in the chemical, aluminium, semiconductor and solar cell industries. High-quality graphite among others is used in lubricants, carbon brushes for electric motors, and in the chemical industry, for example for thermal insulation and energy saving programs.