From the Sector

Second Quarter 2024 Financial Results Compared to Second Quarter 2023:

• Revenue of $138.0 million, compared to $159.8 million ($154.6 million net of divestments).
• GAAP gross margin of 43.8%, compared to 41.5%.
• Non-GAAP gross margin of 49.0%, compared to 48.5%.
• GAAP operating loss of $26.0 million, compared to an operating loss of $33.7 million.
• Non-GAAP operating loss of $3.2 million, compared to non-GAAP operating income of $5.0 million.
• GAAP net loss of $25.7 million, or $0.36 per diluted share, compared to a net loss of $38.6 million, or $0.56 per diluted share.
• Non-GAAP net loss of $3.0 million, or $0.04 per diluted share, compared to non-GAAP net income of $2.5 million, or $0.04 per diluted share.
• Adjusted EBITDA of $2.3 million, compared to $10.6 million.
• Cash used in operating activities of $2.4 million, compared to $23.2 million.

2024 Financial Outlook:
Based on current market conditions and assuming that the impacts of global inflationary pressures, relatively high interest rates and supply chain costs do not impede economic activity further, the Company is updating its outlook for the full year 2024 as follows:

• Revenue of $570 million to $580 million.
• Third quarter revenue slightly higher than second quarter revenue.
• Non-GAAP gross margin of 48.7% to 49.0%.
• Operating expenses of $276 million to $278 million.
• Non-GAAP operating margin of 0.5% to 1.0%.
• GAAP net loss of $106 million to $91 million, or ($1.50) to ($1.29) per diluted share.
• Includes one-time extraordinary costs associated with Stratasys’ strategic alternatives process.
• Non-GAAP net income of $1 million to $4 million, or $0.01 to $0.05 per diluted share.
• Adjusted EBITDA of $24 million to $27 million.
• Capital expenditures of $20 million to $25 million.

• Graphite Solutions with slight sales growth and positive margin development
• Process Technology again improves on good prior-year figures
• Weak demand in Carbon Fibers continues to impact Group sales and profitability
• Despite slight decline in sales (-4.0%), EBITDA margin improves from 15.7% to 16.1% compared to the first half of the previous year
• Outlook for 2024 confirmed

Q2 2024 confirms SGL Carbon's business development in an increasingly volatile market environment. After €272.6 million in Q1 and €265.4 million in Q2, SGL Carbon generated consolidated sales of €538.0 million in the first half of 2024 (H1 2023: €560.5 million). This corresponds to a slight decrease of 4.0% compared to the prior year period; adjusted for currency effects, Group sales decreased by only 2.2%. By contrast, adjusted EBITDA, an important key figure for the Group, remained almost constant year-on-year at €86.5 million (H1 2023: €88.0 million). The adjusted EBITDA margin improved from 15.7% to 16.1%, in particular due to the continued positive sales trend in the Semiconductor market segment and the associated change in the product mix. On the other hand, the persistently weak demand in the Carbon Fibers business unit continued to weigh on the Group's sales and earnings
performance.

Outlook
The current volatile development in some of their sales markets, which in some cases is below expectations, affects the expected sales and earnings performance of the business units. Due to the company's diversified business model, changes in demand for certain products can be largely offset by higher-than-expected sales in other businesses. SGL Carbon therefore continued to expect to achieve the forecast which was issued in March for the SGL Carbon Group at the lower end of the stated range. For fiscal year 2024, SGL Carbon expects Group sales to be at the previous year's level (2023: €1,089.1 million) and adjusted EBITDA at Group level to be between €160 million and €170 million.

Thomas Dippold, CFO of SGL Carbon, explains: “One of our most important market segments is the semiconductor industry and in particular the demand for graphite components for the production of silicon carbide-based semiconductors. These are used primarily in electric vehicles due to their higher efficiency and performance. In the first half of 2024, global demand for electric vehicles slowed compared to the growth in previous quarters, and a return to the previous year's growth rates is not expected in the coming months. In addition, there are high inventory levels in the semiconductor value chain, which are also impacting demand for our products. Even if we assume that the market for high-performance semiconductors for electric vehicles will continue to grow significantly in the future, we expect demand for our specialty graphite components for the production of SiC-based semiconductors to slow down in the second half of 2024. For Graphite Solutions, however, we continue to expect sales and adjusted EBITDA to be above the previous year."

On the other hand, other market segments are developing better than expected and can thus compensate for fluctuations in demand within the SGL Carbon Group. Taking into account the business unit developments in the first half of 2024 and the expected trends for their key sales markets, the Company expects to meet its forecast for sales and adjusted EBITDA in fiscal year 2024 at the lower end of the announced range.

Highlights

• Net sales in Q2 2024 stabilized sequentially reaching €1,194 million.
• Net Sales were down -6.7% organically versus Q2 2023, with a positive impact from volumes for the second consecutive quarter, while prices were down year over year.
• Underlying EBITDA in Q2 2024 increased sequentially by 2.6% reaching €272 million while the EBITDA margin improved sequentially for the second quarter in a row reaching 22.8%.
• Underlying EBITDA in Q2 was -17.2% lower organically compared to a record Q2 2023, with negative Net pricing partially offset by positive volume impact and further fixed costs improvements.
• Structural cost savings initiatives delivered solid results, with €46 million in H1 2024, and are expected to reach €80 million for the full year.
• Underlying net profit from continuing operations was €116 million in Q2 2024 vs. €211 million in Q2 2023.
• Free Cash Flow1 was strong at €120 million in Q2 2024, from solid EBITDA performance combined with continued prudence on Capex and discipline on working capital.
• ROCE was 17.6% in Q2 2024.
• Underlying Net Debt at €1.6 billion, implying a leverage ratio of 1.5x.

2024 outlook
Solvay expects demand to remain broadly flat in the second half. Following the good performance in the first half and the accelerated delivery of cost savings, Solvay tightens its guidance of underlying EBITDA to -10% to -15% organic growth (previously -10% to -20%), which means circa €975 million to €1,040 million, at a 1.10 EUR/USD exchange rate. This is supported by €80 million expected cost savings for the full year.
Solvay upgrades its guidance of Free Cash Flow, which is now expected to be higher than €300 million. That includes an acceleration of the Capex in the second half, which is expected to be between €300 million and €350 million in 2024.

Highlights Q2 2024 (compared with Q2 2023)

• Organic sales up 2%, with volumes up 1%; Revenue up 2%
• Operating income €270 million (2023: €279 million)
• Adjusted EBITDA €400 million (2023: €397 million); Adjusted EBITDA margin 14.4% (2023: 14.5%)
• Net cash from operating activities positive €151 million (2023: positive €305 million)

Highlights half-year 2024 (compared with half-year 2023)

• Organic sales up 2%, driven by higher volumes and positive price/mix; revenue flat
• Operating income €531 million (2023: €461 million)
• Adjusted EBITDA €763 million (2023: €702 million); Adjusted EBITDA margin 14.1% (2023: 13.0%)
• Net cash from operating activities negative €19 million (2023: positive €255 million)

Outlook
Based on current market conditions and constant currencies, AkzoNobel expects to deliver 2024 adjusted EBITDA towards the lower end of its full-year guidance range of €1.5 to €1.65 billion.

In the second quarter of 2024, the order index for Italian textile machinery, as reported by the Economics Department of ACIMIT – the Association of Italian Textile Machinery Manufacturers, showed a decline compared to the period 2023 April-June (-17%). In value terms, the index stood at 49.8 points (base 2021=100).

This result is completely due to the decrease recorded in foreign markets (-22%), where orders represent 86% of the total. Conversely, in Italy, there was a 25% recovery compared to the second quarter of 2023. The absolute value of the index in foreign markets was 48.8 points, while in Italy it was 57.3 points. In the second quarter, the order backlog reached 4.3 months of assured production. Additionally, ACIMIT’s survey shows that in the first six months of 2024 the utilization rate of production capacity by Italian manufacturers was 61%. This percentage is expected to rise to 64% in the second half of the year.

Marco Salvadè, president of ACIMIT, stated: “The order index for the second quarter shows a clear slowdown abroad compared to last year. This decline highlights the high uncertainty due to the difficult geopolitical situation“. The confirmation of what is indicated by the ACIMIT index also comes from Italian export figures, updated to the first quarter of 2024. Excluding China and Egypt, the main foreign markets show a general decline in demand for textile machinery, not just Italian one.

The EREMA Group, based in Ansfelden near Linz, Austria, closes the financial year 2023/24 with total revenues of EUR 380 million. A joint venture with the Lindner Group sees the group of companies expand its portfolio to include washing technology. EREMA Group GmbH now has eight subsidiaries: EREMA, PURE LOOP, PLASMAC, KEYCYCLE, Lindner Washtech, UMAC, plasticpreneur and 3S.

"With our machines and components, we have now reached a recycling volume of more than 25 million tonnes per year worldwide, which makes a significant contribution to the development of a circular economy for plastics," says Manfred Hackl, CEO of the EREMA Group. The group of companies manufactured 290 extruders for recycling plastic in the past financial year, supplemented by over 100 add-on components such as filter systems and ReFresher anti-odour technology. These recycling solutions generated total sales of EUR 380 million. Around 8,500 machines and components from the group are in operation in more than 100 countries. The EREMA Group employs 950 people worldwide.

Strategic investments in all areas of the plastics recycling industry
In recent years, the EREMA Group has invested in developing specific machines, applications and infrastructure. "The opening of the new R&D Centre in Ansfelden last summer and the new machines in the Customer Technology Center at EREMA North America at the beginning of this year, have seen us complete the largest phase of investment in our history to date. We have invested more than EUR 110 million in the expansion and modernization of our international locations over the past five years," emphasizes Horst Wolfsgruber, CFO of the EREMA Group. Another important milestone is the founding in August 2023 of the holding company BLUEONE Solutions together with the Austrian family-owned company Lindner. Incorporating Lindner Washtech means that the EREMA Group's extensive portfolio now also includes washing technology.

Developments in post consumer and PET recycling
The new DuaFil® Compact technology, which EREMA developed specifically for challenging applications with high levels of contamination and moisture, is proving successful. Since the launch at K 2022, around 20 INTAREMA® TVEplus® DuaFil® Compact systems have been sold. In the post consumer segment, ReFresher technology for the production of odour-optimised recycled pellets is also gaining ground and is now in use worldwide with a total capacity of one million tonnes per year for film and regrind applications. Another interesting new component is the DischargePro control system for the EREMA laser filter, which has been nominated for this year's Plastics Recycling Awards Europe. The discharge control system responds automatically to fluctuations in flow rate during the recycling process and reduces melt loss by up to 50 percent. With its new Fast-Track scheme, EREMA is responding to the demand for machines available at short notice at an attractive price-performance ratio.

For bottle applications, VACUREMA® systems have been proving their performance for 25 years. Over 400 EREMA PET systems for food grade are in operation worldwide, notching up a total capacity of more than 4.5 million tonnes per year. PET recycling is also becoming increasingly important in the textile industry. FibrePro:IV technology was developed especially for fibre-to-fibre recycling, which is used together with machine combinations from EREMA or PURE LOOP, who specialise in shredder-extruder technology, depending on the geometry and contamination of the PET fibre waste. For these applications, the EREMA Group has set up a fibre technical centre at its headquarters in Ansfelden.

Big potential for plastics recycling
The amount of plastic produced worldwide is currently around 400 million tonnes per year - and the figure is still rising. Around 9 percent of it is recycled globally. This represents big potential for the EREMA Group, as Manfred Hackl emphasizes.

• Sales Volume rose 3% QoQ and 2% YoY to 3.55MT
• Adjusted EBITDA of $366M, a rise of 32% QoQ and a decline of 2% YoY
• Operating cash flows of $184M
• Net Operating Debt to Equity of 1.12
• Reported EPS of THB0.17

Indorama Ventures Public Company Limited (IVL) reported an improved quarterly performance as the prolonged destocking trend showed further signs of easing. During the quarter, the company progressed its IVL 2.0 evolved strategy to enhance earnings quality and transform its business to emerge stronger from the downturn in global chemical markets.

Indorama Ventures’ reported Adjusted EBITDA1  of $366 million in 1Q24, a 32% increase QoQ and a 2% decline YoY. Sales volume grew 3% QoQ as the widespread customer destocking that sapped demand through 2023 shows signs of a gradual recovery across all sectors, partially offset by a winter freeze in the U.S. The result was supported by lower utilities costs in Europe, Red Sea-related supply chain disruptions that benefited the company’s import parity advantages, and favorable shale gas economics that bolstered profitability in the U.S.

Indorama Ventures expects the recovery in volumes to continue through 2024, albeit at a gradual pace as destocking normalizes and the approaching summer supports demand. However, the overall landscape for the global chemical industry remains challenging due to excess capacity builds, as well due to persistent inflation and high interest rates which weigh on industry spreads and continue to impair profitability, especially across the polyester value chain. Our HVA segment ‘Indovinya’ is progressing well into the second quarter post the easing of destocking and anticipating a healthy 2024.

The company’s experienced management remains intensely focused on managing costs, optimizing competitiveness, and maintaining high liquidity. Indorama Ventures’ diverse geographical footprint is a key advantage in the current low-margin environment, allowing its businesses to maintain their strong market premium, supported by protection from trade and non-trade barriers.

In 1Q, the company made headway with its IVL 2.0 three-year plan to leverage its global leadership position and forge a new era of opportunity amid significant structural changes in chemical markets. Under the evolved strategy, which the company outlined at its annual Capital Markets Day in March, Indorama Ventures is optimizing assets, reducing debt, and focusing on generating free cash flow to deliver enhanced shareholder returns. Today, 70% of the company's revenue has deployed the SAPS/4HANA ERP and is using the infrastructure to enhance digital procurement, sales excellence, and integration of supply chains across the business. The company believes these AI tools will improve productivity and costs, as well as release working capital in line with its modernization strategy.

As part of IVL 2.0, the company is optimizing 7 sites, including the ongoing evaluation of its PTA/PET operation in the Netherlands. It has also made significant progress in its program to refinance $1.1 billion of debt within the first half of 2024 to ensure ample liquidity. Recent capital raisings include a $255 million ‘Ninja loan’, a THB 10 billion debenture, a $100M bi-lateral loan, and this week’s successful close of a $500 million syndicated loan – achieved at lower-than-average spreads compared to previous issuances.

To unlock value, Indorama Ventures is preparing its packaging and surfactants businesses for IPOs. From 1Q24, the Indovinya segment (previously named ‘Integrated Oxides and Derivatives’) is focused on developing its attractive downstream surfactants operations as a separate segment. The segment’s Intermediate Chemicals business, consisting of shale base integrated Ethylene MEG, MTBE and merchant Purified EO assets, have been moved under the Combined PET (CPET) segment where they are a natural fit.

Segment Performances
In 1Q24, CPET segment (including Intermediate Chemicals) posted Adjusted EBITDA of $249 million, a 34% gain QoQ and 4% YoY as supply chain disruptions and a consequent spike in global ocean freight rates supported high prices and margins, and as Western markets benefited from lower energy costs. The Indovinya segment reported a stable Adjusted EBITDA of $70 million, impacted by the winter freeze in the U.S and a mini turnaround at a PO/PG plant. The Fibers segment achieved a remarkable 73% increase in Adjusted EBITDA to $39 million QoQ, and 2% YoY, as destocking waned across all three business verticals and drove an 8% QoQ increase in volume.

• Continued growth in the semiconductor business
• Weak demand for carbon fibers further impacts Group sales and profitability
• Group sales down slightly at €272.6 million (-3.9%), adjusted EBITDA up 5.0% to €42.1 million
• Adjusted EBITDA margin at 15.4% after 14.1% in the same quarter of the previous year
• Outlook for 2024 confirmed

SGL Carbon had a solid start to the first quarter of 2024. Despite the slight decline in sales of 3.9% to €272.6 million (Q1 2023: €283.7 million), adjusted EBITDA improved by 5.0% to € 42.1 million (Q1 2023: € 40.1 million). Weak demand in the Carbon Fibers business unit in particular have a negative impact on the Group's sales and earnings performance. By contrast, slightly higher sales and, especially, the increase in adjusted EBITDA in the Graphite Solutions and Process Technology business units had a positive effect on the Group's performance.

Outlook
In line with the course of business in the first three months of 2024, the company confirms its sales and earnings outlook for the 2024 financial year. Consolidated sales for the 2024 financial year are expected to be at the previous year's level and adjusted EBITDA between €160 million and €170 million.

Highlights Q1 2024 (compared with Q1 2023)

• Organic sales up 2%, driven by volume growth in both Paints and Coatings; revenue down 1%
• Operating income improved to €261 million (2023: €182 million)
• Adjusted EBITDA €363 million (2023: €305 million), adjusted EBITDA margin 13.8% (2023: 11.5%)
• Net cash from operating activities negative €170 million (2023: negative €50 million)

2024 Outlook
Based on current market conditions and constant currencies, AkzoNobel targets to deliver between €1.5 and €1.65 billion adjusted EBITDA in 2024, while reducing its leverage to around 2.3 times net debt/EBITDA by the end of the year.

• Three out of four business units with record sales and results
• Carbon Fibers business weighs on the Group's profitability
• Group sales of €1,089.1 million (-4.1%) and adjusted EBITDA of €168.4 million (-2.5%) in a difficult market environment
• Sales and earnings forecast for 2023 achieved despite drop in demand from key market
• 2024 further capacity expansion in graphite components for silicon carbide-based semiconductors

In fiscal year 2023, SGL Carbon achieved the sales and earnings targets set at the beginning of the year despite the drop in demand from the important wind market and an increasingly challenging economic environment. Group sales decreased slightly by €46.8 million (minus 4.1%) to €1,089.1 million (previous year: €1,135.9 million). At € 168.4 million, adjusted EBITDA, a key performance indicator for the Group, was also down slightly (minus 2.5%) compared to the previous year (€172.8 million) but was clearly within the forecast range for 2023 of €160 to 180 million.

While the positive sales development of the Graphite Solutions (+€53.5 million to €565.7 million), Process Technology (+€21.6 million to €127.9 million) and Composite Solutions (+€0.8 million to €153.9 million) business units had a positive effect, the Carbon Fibers business unit had a negative impact on Group sales with a sales decline of €122.3 million to €224.9 million.

Outlook
The global economy will continue to face comparatively high interest rates and subdued growth prospects in 2024. Tighter financing conditions, weak trade growth and a decline in business and consumer confidence are also weighing on the economic outlook. In addition, heightened geopolitical tensions are contributing to increased uncertainty.

SGL Carbon expects different developments in our key sales markets in 2024. The most important sales and earnings driver will be demand for specialty graphite components for the semiconductor industry. In contrast, all indicators currently suggest that demand for carbon fibers for the wind industry will remain weak in 2024 and that the Carbon Fibers (CF) business unit will therefore continue to record operating losses. Even if demand picks up, SGL Carbon assumes that Carbon Fibers will require additional resources to make the most of market opportunities. With this in mind, teh company announced on February 23, 2024, that they are reviewing all strategic options for Carbon Fibers. These also include a possible partial or complete sale of the business unit.

SGL Carbon's sales forecast for the financial year 2024 takes all four operating business units into account, as the company is only at the beginning of evaluating the strategic options for CF. In line with the assumptions outlined, SGL Carbon is therefore expecting Group sales at the previous year's level (2023: €1,089.1 million).

In the earnings forecast, SGL Carbon has taken into account underutilization of production capacity in the Carbon Fibers business unit and the associated high idle capacity costs. The projected operating loss of CF will have a negative impact on the adjusted EBITDA of the SGL Carbon Group in 2024. Due to the expected positive development of Graphite Solutions, SGL Carbon anticipates an adjusted EBITDA of between €160 million and €170 million for fiscal year 2024, taking into account all four operating business units. Should the process of reviewing all strategic options for the CF business unit result in a sale, the forecast of adjusted EBITDA in 2024 would be between €180 - 190 million.