SGL Group Plans to Triple Its Carbon Fiber Production Capacity by 2012

The SGL Group - The Carbon Company - is rigorously continuing on its path to becoming one of the leading suppliers in the area of carbon fibers and carbon fiber composites and plans to triple its carbon fiber production capacity to as much as 12,000 metric tons by 2012. In addition to the announced expansion of the Inverness location (Scotland) to an annual production of approximately 4,000 metric tons by the end of 2008, there are also plans to expand the Evanston location (Wyoming/USA) and to establish a new carbon fiber production site at Meitingen (Germany) with similar production capacities. The Group intends to invest a total of around £á300 million in these measures over the coming five years.

These capacity increases should give even greater impetus to the profitable growth track announced by the company. For the Carbon Fibers & Composites (CFC) business unit, SGL Group plans to increase sales in the four business lines Carbon Fibers, Composite Materials, Composite Components and Brake Disks by considerably more than 15% per annum. The sharp increase in sales is also expected to lead to a significant improvement in return on sales (ROS). Whilst the ROS for the previous fiscal year remained negative at -4% as a result of development and start-up costs, a positive return is already expected in 2007. The company expects an ROS in the high single digits for 2008. An ROS exceeding 10% is expected by 2011.

Against the 2006 figures, total sales of SGL Group should increase by 40% to 50% by 2011. Over the whole period, the ROS should be at least in the range between 12% and 16%.

In years to come, the Carbon Fibers & Composites business unit will profit particularly strongly from the substitution process of basic materials. The carbon fibers and carbon fiber composites produced by CFC are in increasing demand as replacements for traditional materials due to their unique properties such as lightweight and stiffness. As the only European company with own raw material supply, carbon fiber technology and an integrated value added chain right up to the finished component, SGL Group deploys its core competences in hightemperature technology, carbonization and graphitization. The company is currently benefiting particularly from a strong demand upturn in the aerospace industry, the automotive sector and alternative energy sources such as wind power.

There are currently only eight producers of carbon fibers worldwide. SGL Group is the only European producer, three are based in Japan, three in the US and one in Taiwan.

SGL Group's objective is to establish a leading position in raw materials (precursor), carbon fibers and composite materials. With respect to the Composite Components business line, SGL Group strengthening its core competences in the materials field by means of strategic alliances and joint ventures with end component manufacturers. One example of this is the joint venture agreed upon in July 2007 with the automotive supplier Benteler for the development, production and marketing of components for the automotive industry based on carbon fiber reinforced composites. In the field of carbon fiber brake disks, SGL Group has been working successfully with Audi and Porsche for a long time. Thanks to the most recent investments in automation technology, the US subsidiary HITCO is expected to play a similar role with regard to aircraft construction. The order from Boeing for floor beams made of composite materials for the Boeing 787 Dreamliner is an example for this.

With the introduction of a new high-quality carbon fiber, SGL Group has set a milestone during 2005 and 2006 on the path to becoming a leading carbon fiber company. Since then, SGL Group has taken a number of important strategic steps. In the past twelve months, the rate of expansion has picked up significantly. At the end of 2006 one of the most modern facilities worldwide was commissioned at the Meitingen site for the production of 1,000 metric tons of directly processable prepreg. In a joint venture with Lenzing AG, in March, SGL Group exclusively secured its raw material supply for the production of carbon fibers on a long-term basis. This step has also secured the strategic backward integration for manufacturing precursor from own German production in Kelheim.

The high level of investments in the entire carbon fiber and composites value added chain result in a considerable realignment of the Meitingen site near Augsburg, which consequently gains a certain unique positioning. Bundling all of SGL Group's global research and development (R&D) expertise at this location, combined with the construction of the new global research and development center is a further logical milestone here. Together with some 300 guests as well as prominent representatives from business, politics and academia, SGL Group today held the topping out ceremony for the construction of this R&D unit at the Meitingen site. The new center of the Group's research, which goes under the name of Technology and Innovation (T&I) at SGL Group's largest site worldwide, will bundle all the company's R&D activities. The company invests some £á8 million in this project. In the medium term, the number of scientific employees will be increased from 80 at present to approximately 120. The R&D activities will focus mainly on the further development of technology and optimization of the manufacturing process for carbon fibers.

The carbon ceramic brake disk from SGL Brakes GmbH, a subsidiary of the SGL Group, is produced using the innovative composite material carbon fiber reinforced silicon carbide (CSiC) and offers numerous advantages. In addition to the long working life (the working life of a car), innovative features of the carbon ceramic brake system include the fact that it is half the weight of traditional steel brake disks, there is almost no wear (dust emission), driving dynamics are improved and stopping times are shorter.

The SGL Group started developing the brake disk in 1997 in conjunction with Porsche. These brake systems were used from 1999 onwards in various Porsche models. Since 2005, the SGL Group has also provided brake disks to AUDI AG, for the A8 W12, among others. SGL and Audi are also working together in developing carbon ceramic brake systems for luxury class vehicles. In 2007, the SGL Group will equip some 8,000 vehicles for Porsche, Audi, Bentley, Lamborghini and Bugatti. The SGL Group received confirmation of the success of carbon fiber brake disks on June 15 in the form of the "Prof. Ferdinand Porsche Prize" for "groundbreaking innovations in the automotive field" from the Vienna University of Technology.

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