SGL Carbon SE's Q1 2025 Results: Navigating Semiconductor Slump and Restructuring Challenges

The first quarter of 2025 brought a stark reality check for SGL Carbon SE (SGLFF), a leading producer of carbon-based materials critical to high-tech industries. While the company has long positioned itself as a supplier to growth sectors like semiconductors and aerospace, its Q1 results reveal vulnerabilities tied to shifting demand dynamics and operational headwinds.

Financial Performance Under Pressure

SGL Carbon reported a 14% year-on-year sales decline to €234.3 million, with currency-adjusted figures showing an even steeper 15% drop. EBITDA plummeted 20.4% to €8.6 million, underscoring the severity of the margin contraction. The primary culprit was a collapse in sales of silicon carbide (SiC) products—a high-margin segment central to the company’s growth strategy. Weakness in the semiconductor industry, particularly for electric vehicle (EV) and 5G infrastructure applications, left SGL struggling to maintain volume targets.

Semiconductor Sector Slump: A Known but Painful Headwind

The earnings call confirmed what had been anticipated: the semiconductor industry’s demand slowdown in 2025 is now reality. SGL’s CEO, Andreas Klein, noted that SiC sales, which typically carry margins exceeding 20%, fell sharply due to delayed EV production timelines and supply chain bottlenecks. This segment’s decline not only hurt profitability but also exposed the company’s reliance on a single high-margin vertical.

The broader challenge lies in the cyclical nature of the semiconductor market. While SGL had hedged its bets by expanding into carbon fiber for aerospace and industrial markets, those divisions now face their own pressures. The CFO, Thomas Dippold, admitted that lower-than-expected aerospace deliveries further strained sales volumes.

Restructuring: A Necessary but Unclear Play

In response, SGL announced cost-cutting measures in its Carbon Fiber business unit, though details like job cuts or facility closures remain undisclosed. This opacity raises questions about the efficacy of the restructuring. Historically, SGL has been cautious with cost adjustments, preferring to weather downturns through operational discipline rather than aggressive layoffs. The lack of specifics suggests the company may be reserving flexibility for an uncertain market recovery.

The data shows EBITDA margins contracting from 18% in early 2023 to just over 3% in Q1 2025—a stark decline that underscores the urgency of these measures.

Forward-Looking Caution and Strategic Gaps

SGL’s management reiterated its 2025 guidance of lower semiconductor demand, implying that the Q1 results were anticipated. However, the transcript lacked clarity on long-term strategies to diversify revenue streams or capitalize on emerging opportunities, such as next-gen SiC applications or green energy infrastructure. Investors will need reassurance that SGL isn’t merely reacting to cyclical downturns but building resilience for the next upturn.

Conclusion: A Mixed Picture for Investors

SGL Carbon’s Q1 2025 results are a reminder of the risks inherent in tech-driven industries. While the semiconductor slump is a known factor, the company’s reliance on a handful of high-margin segments leaves it vulnerable to macroeconomic volatility. The restructuring moves are a positive step, but their execution and impact remain unproven.

The data paints a clear picture:
- Sales have dropped 14% year-on-year, with no immediate rebound in sight.
- EBITDA margins have collapsed by over 15 percentage points since 2023, signaling structural challenges.
- SiC demand, though cyclical, remains critical to SGL’s profitability, and its recovery timeline is uncertain.

For investors, SGLFF presents a high-risk, high-reward proposition. Those willing to bet on a semiconductor recovery and SGL’s ability to execute restructuring could see gains if markets rebound. However, the lack of near-term growth catalysts and the company’s narrow margin profile suggest caution. The stock’s performance will hinge on whether SGL can pivot toward more stable demand drivers or secure long-term contracts in emerging sectors—neither of which were addressed in the Q1 call.

In short, SGL Carbon’s journey in 2025 is one of survival, not growth. The question now is whether its strategic moves can transform survival into resurgence.