I'm Moritz, Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Claudia Kellert. Please go ahead.
Yes, thank you. A very warm welcome to our today's conference call from our side, from SGL's side. Today, as usual, Andreas Klein, our CEO, and Thomas Dippold, our CFO, will give you a detailed overview about the first quarter 2025 and our expectations for the upcoming months. We will also comment on the restructuring measures already implemented in the carbon fiber business unit. After the presentation, we are looking forward to answering your questions. Now I hand over to our CFO, Thomas Dippold.
Hello, everybody. This is Thomas, Thomas Dippold. It's a pleasure for me to guide you through our key figures for the first three months of this year. As anticipated, and as we also told you the last time when we presented our full-year figures for the year 2024, we expected some lower demand, especially from the semiconductor industries in this year. This is exactly what you can see in our performance over the first three months of this year. Our sales dropped by EUR 38 million, which is - 14%, even though some currencies were even favorable for us. If you adjust it for currencies, it's even almost - 15%. We now reach EUR 234.3 million in our top line. Also, our EBITDA is hit quite a bit by - 20.4%, which is EUR 8.6 million lower than the first three months of last year.
Where does this come from? It is mainly a decline in volume, and especially in high-margin products, and there, in particular, the silicon carbide market. And you know we have a very high margin there. When sales drop so much in this respective area, and you have such a high margin, it is very difficult to compensate that with cost savings. This is the reason why we have to suffer this overproportional decline in the bottom line compared to the top line. When we look at the sales split, which you can see here on the right side, you see that the ratios almost stay the same. We have minor changes. Graphite solution more or less still stands for half of the sale of the group, carbon fiber 20%, and composite solution process tech for roughly 15% each, respectively.
The main reason is not a price decrease that we see; it is mainly a volume decline. It is really the demand that is missing. We are looking desperately also for new markets that we try to acquire and try to penetrate. The thing is, it takes a while until you really gain new customers, until you really make the sales. This is the reason why Q1 was, in this case, - 14% down. As I said, this is what we have expected. When we come to the individual business unit, starting with graphite solution, there you see an overproportional decline in sales and EBITDA drop. Sales went down by 17%. We lose 25% in our top line. Why is that the case? Because our semiconductor and LED business line in this business unit dropped by more than 40%.
This is because of the very low demand from our silicon carbide customers. They still have a lot of stock in their warehouses, and it takes a while until they all have digested this and used it and ordered again. This is thanks to the end market, which is the electric vehicle market. The electric vehicle is still not on the level where we wanted it to be. It takes a while until we get there. This is the time that we simply have to overcome. It is difficult at that time to really make sales in silicon carbide beyond the level that we are there. This is the reason why we try to find new outlets for our production capacities and facilities. Andreas will explain a little bit how our concrete and precise measures in this business unit look like. Our EBITDA is also hit overproportionally.
Again, this is thanks to the high margin that we have there. We have done our homework with cost adjustments and cost savings. The thing is, when the margin is in such a range, it's difficult to cut costs accordingly in order to get to that level, especially when you're in such a capital-intensive industry like graphite production. Our margin, as you can see here, drops to 18.5% as we're losing EUR 15 million in the bottom line, coming from EUR 36.6 million last year and now reaching EUR 21.6 million. We hope for a slight recovery in the second half of the year. That's at least what we foresee and forecast right now. This is also the reason, also to give you a little bit of a preview, why we stick to our guidance for this particular year. Coming to Process Tech, this is exactly the other way around.
Process Tech here on slide number six in this presentation has reached a very good quarter. They are reaching now EUR 36.5 million, coming from EUR 33.0 million in the first three months of last year. This is an increase by 10%. Where does it come from? We still have a very good order book that we are eating up at the moment. We are making use of that. We have profitable orders. We have a good product mix in there. We have good parts and service business. We are also well-balanced development in our markets, which is the Americas, which is Europe, but also Japan and China. We are benefiting from the development in the process tech market, in the heat exchanger market, in each and every market. This is how we grow. When it comes to EBITDA, it looks even more favorable.
There we see an increase by more than EUR 4 million coming from EUR 6.9 million last year in the first three months of the year to now straight EUR 11 million, which is a fantastic development when the profit goes up by another almost 60%. We are now reaching a 30% EBITDA margin in this business. This is just fantastic what we see there. The only bad thing there is that the order book gets a little bit eaten up. Our book-to-bill ratio is below one of what we see. At least in the second half of the year, if nothing major happens or unforeseeable at the moment, we see a little bit declining developments there because the order intake is lower than the sales that we see at the moment. In carbon fiber, we informed you briefly before we published our 2024 full-year figures.
End of February, we informed you that we do not see a high likelihood for a complete sale of this business unit and therefore start restructuring and also shrink it to a profitable [kernel] in the end. This is exactly the first measures are really reflected here in this development. You see that sales dropped by almost 20%, coming from EUR 57.6 million in Q1 2024 to now EUR 46.7 million, which is a drop in the EUR 11 million. The reason for that is because of the high inventory that we still have. We have idled a lot of capacity out there. We have cut our headcount down. We have cut the cost down and really terminated very unfavorable contracts. The benefit from that, the savings from that, is what you see in the bottom line. We see an improvement by EUR 4 million in four months.
We are now reaching an EBITDA, which is just -EUR 1.2 million. Yes, it is negative, but the improvement compared to the first quarter last year is quite remarkable. It is still not a super business. That is clearly what you can see there when you make out of roughly EUR 50 million, more or less a - EUR 1.2 million result, which is negative. It is also influenced by the contribution from our joint venture, BSCCB, where all these net profits also are being shown in this business unit. Their contribution is [EUR 1.7 million]. This is also in there. It is at least a very good development and cost saving when you compare it to the quarter last year, to the first quarter last year. We will continue with this way forward.
You have probably read at the beginning of this week that we have announced in a corporate news the closure of our Lavradio site. This is the next big measure in restructuring our carbon fiber business unit. Andreas will also elaborate a little bit in his section and give you some details on where we are, how this process looks like, and how we move on in this particular case. Last but not least, our composite solutions business. They also see an overproportional drop in sales and also profitability. Why is that the case? Because you probably remember that, and this was very openly announced and published by us over the last year. We have lost a very profitable contract with a U.S. American OEM who terminated the contract with us prematurely. We got a breakup fee in Q4.
Since Q1 2024 onwards, we do not have the sales with this customer anymore. Now you have the comparison where last year, in the first quarter, we still had the sales with this customer and reached EUR 37.1 million in the top line. Now, without the customer, we are reaching roughly EUR 30 million in the top line in the first quarter. You see the impact of this, as we call it, profitable contract also in the bottom line. Last year, [EUR 5.5 million] in the first three months. This year, [EUR 2.7 million]. The EBITDA almost halved, which is a sharp decline in our profitability. However, we still have a 9% EBITDA pre-margin in this business. This is pure automotive supply that you see there. Therefore, I think a 9% margin is not so bad.
However, the other part of the truth is we were not successful in the last 12 months to find any compensating project that we can incorporate in such a dimension in order to cut the shortfall further. This is where we are. Automotive is difficult. You know that we're making battery cases and other underbody panels, in particular, in this business unit. We're suffering from the same end market with electric vehicles where new models are being postponed or put on hold. This is the reason why the acquisition of new contracts and new orders there is very difficult at the moment. Last but not least, a look at the bottom line of the P&L, but also some cash flow and balance sheet figures, which you can see here on slide number nine.
Our net result is negative for the first three months of the year with -EUR 6 million compared to +EUR 12 million last year. Why is this the case? Why are we EUR 18 million worse than the respective time frame of 2024? The reason for that is that with the closure and the announcement of the closure of carbon fiber, we impaired another EUR 3 million assets and also some working capital, some inventories. We also made a kind of a provision for a contract which is about to be terminated or solved. We are still negotiating that. We have assumed our measures is -EUR 8 million as an impact from the termination of this contract. All in all, the one-off items sum up to EUR 17.3 million, which is in the net result, of course.
If you exclude the -EUR 17 million from the - EUR 6 million that you see there and you put it there and you just look at the operative performance and the operative result, then it would be roughly on the level of last year. This is just how it happened. However, we are just honest with you. This is the impact that you see from these one-off items that come in there. The free cash flow is more or less on the level of last year, [EUR 5.9 million] last year, [EUR 5.1 million] this year. You have to bear in mind that in this particular year, we have hardly received any customer down payments anymore. This went down to a single-digit million level. And almost in the same level as we received some customer down payments, we also paid back the other ones. This came to an end, I would say.
You can say that this is almost over, this process where we can collect the monies from our customers there in order to increase capacities. Last but not least, you see that the net financial debt is almost unchanged from EUR 108 million to EUR 109 million. This is just a negligible increase that you see there. You see that our balance sheet and our cash flow is healthy, and we can maintain our financial debt on a very healthy level. Our leverage is [0.8]. Also, our equity ratio still stays above 41%. I think this is a very solid balance sheet. With that as a fundament, I think it's a good fundament in order to digest the downturn and the demand crisis that we see in some of our end markets.
With that, I would hand over to my colleague Andreas, who will guide you through the measures and the silicon market update, but also the status of the restructuring of carbon fiber.
Many thanks, Thomas. Good afternoon from my side as well. Yeah, in addition to the insights on SGL's Q1 performance, I will now talk you through the two main issues we are tackling in this calendar year, 2025. The first thing is the temporary drop in semiconductor market demand. The second thing is indeed the carbon fiber restructuring we are accelerating. When we look at the already mentioned market segment, semi-LED, in a year-on-year comparison, we see a - EUR 30 million sales drop compared to a very strong Q1 2024.
As already commented before, this is due to a slower than expected development in the EV market, plus a slower adoption rate of SiC, especially in smaller battery electric vehicles in China. Also, we see a delay in new car models with especially the Western OEMs. There is some slowdown in growth for SiC compared to the previous expectations. In total, this leads to high inventory levels along the entire value chain. The good thing is we can see our customers already working on that inventory level, bringing it down and enabling a reshuffling and a back-to-normal modus. The back-to-normal is very clear because from our perspective and also from our customers' view, SiC is unchanged in its importance for electric vehicles in the future. It is the technology of choice for fast charging, for long-range driving.
It is clearly said that all the new EV markets, models introduced in the market, build on SiC. That is really set for growth again in the future. We can see, based on the capacities established down the chain, that the industry is ready to go back to growth mode once this inventory management has happened. Nevertheless, as an answer to the situation, we are, of course, taking countermeasures to manage this temporary slowdown. On the sales side, we are choosing a broader market approach as previously, going also into Si and LED applications. We are speeding up the development of new applications, and that also includes the development of defense applications.
We are in discussion with our key accounts, with our key customers, to manage this short-term requirement of inventory management with the long-term growth outlook and also the contracts we have in place to find a mutual way ahead in this calendar year, but also beyond. On the cost side, we intensified measures on the headcount side. We are adjusting headcount on the basis of the utilization level we see in our plants. We apply short-time work in several of our plants, and we delay the ramp-up of new production capacities wherever that is needed. Punctually, we also apply temporary mothballing for production capacity that is not needed in this particular moment. We have also finalized the closure of our loss-making graphite anode material business, and that included the closure of our plant in Racibórz in Poland.
We are taking countermeasures from a graphite solutions perspective to react to the numbers and the market situation we have just seen. At the same time, we are accelerating our carbon fiber restructuring. We executed further worldwide capacity reduction and also reduced personnel and cost accordingly. In total, up until now, we have reduced the headcount of that carbon fiber business by around 100. At the same time, we are, of course, working on the administrative, sales, and R&D setup, and that's mainly affecting our Meitingen sites in southern Germany. Announced on Monday, Thomas already mentioned that we have the first bigger closure of a site in Portugal. Our Lavradio site will be closed, and we have informed all the stakeholders, especially our employees, on Monday this week. The production will be discontinued already in June, and that will cause layoffs of around 190 people.
The further closure process will then be completed by the end of 2026 at the latest. With these activities, both on the graphite solutions and the carbon fibers, we confirm our guidance for 2025, which means slightly below previous year sales level and an EBITDA pre in the range of EUR 130 million-EUR 150 million. Nevertheless, it's not surprising, I think, in current times. This is, of course, on the back of increasing uncertainties in markets, in trade, in geopolitics. We will keep you updated on that development, of course. For the moment, we thank you very much for your attention, and we are now open for your questions. Thank you very much.
Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone.
You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. One moment for the first question, please. As a reminder, if you would like to ask a question, please press star and one at this time.
I see no questions in my list. Reminder from our side as well. If you want to ask a question to CFO or CEO, please. Now we have got the first question.
Yes, we have one question coming from [Uwe Hilgertner] from [Schutzgemeinschaft der Kapitalanleger] . Please go ahead.
Yes, ladies and gentlemen, first of all, thank you very much for your detailed information.
I have a question regarding the carbon fiber restructuring activities. You mentioned that you have implemented the first measures. The production plant in Portugal will be closed. Headcount has come down, I believe, in Germany already. My question is, do you have already an idea about the products that you think you will be able to continue profitably? And what size of the original business would that be?
Mr. [Hilgertner], thank you very much for this question. You know we have announced the restructuring activities around two months ago, and we said we analyze side by side in detail to take the respective individual solutions that are needed. With this big first step around the closure in Portugal, we have taken a very decisive measure because this is a very big loss contributor.
Beyond that, at the moment, we cannot comment on additional analysis and decision status, but we will update you, of course, as soon as we know more.
Okay, thank you very much.
It seems there are no further questions at this time. I would like to turn the conference back over to Claudia Kellert for any closing remarks.
Yes, thanks so much. I did not see further questions. I believe that we explained everything in detail. If you want to ask the investor relations department, please directly contact Juergen Reck or myself. You will find the presentation on the webpage, and maybe we hear some of you at our general annual meeting on the 21st of May. Thanks so much. Goodbye and have a nice afternoon.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining and have a pleasant day.
Goodbye.