SGL Drops Most in 10 Weeks on Profit Target Cut: Frankfurt Mover

SGL Carbon SE dropped the most in 10 weeks in Frankfurt after the maker of carbon fibers cut its full-year earnings forecast on competition from Asia and said it would take a charge to reduce the value of its assets.

The shares fell as much as 8.8 percent, the biggest intraday drop since April 18. Earnings before interest, taxes, depreciation and amortization may decline as much as 60 percent this year, the Wiesbaden, Germany-based company said yesterday after markets closed. It previously predicted a fall of as much as 25 percent.

Project shifts and continued high development costs at the fibers and composites unit mean SGL will take an impairment charge of as much as 150 million euros ($196 million) in the second quarter, the company said. SGL, partly owned by Bayerische Motoren Werke AG, has now reduced its Ebitda forecast twice this year.

“Over the last weeks, competitive pressure from Asia has significantly increased, intensified by the devaluation of the Japanese Yen,” SGL said in the statement. “Consequently, the anticipated business recovery will not occur either in the second quarter or in the second half of 2013.”

The shares were down 6.8 percent at 25.54 euros as of 11:48 a.m. The volume of shares traded was more than double the three-month daily average.

The lower Ebitda prediction for 2013 means that a target for a positive free cash flow won’t be met, SGL said.

About 16 percent of the company’s sales come from its unprofitable division that makes carbon fibers and composite materials used in airplanes and rotor blades for wind-power generation. The biggest unit, which accounts for about half of revenue, makes electrodes for the steel industry and cathodes for aluminum manufacturers.