UPDATE 2-SGL lowers outlook as Q3 EBIT slumps
* Q3 EBIT 24.5 mln eur vs 25 mln eur poll avg
* Indicates FY EBIT will be down more than half vs 2008
* Says demand from steelmakers tenuously recovering
* Shares drop 6.4 pct
(Adds CEO comment, shares)
FRANKFURT, Nov 5 (Reuters) - Graphite electrodes maker SGL Group (SGCG.DE) issued a more cautious outlook for the remainder of the year after posting a 70 percent slump in third-quarter operating earnings.
Second-half earnings before interest and taxes (EBIT) would stagnate at the first-half's level, SGL said in a statement on Thursday, indicating that the 2009 figure would fall by more than half year-on-year.
SGL had previously foreseen a gradual pickup in demand in the second half.
"The outlook for the entire year is below our estimates and the market's expectations," UniCredit analyst Christian Obst said.
The shares dropped 6.4 percent to 25.07 euros at 1118 GMT, while Germany's mid-cap gauge .MDAXI edged up 0.2 percent.
SGL also warned that recovery in demand from steelmakers, its main customers, would be tenuous.
"SGL Group anticipates the volume demand situation to improve in the coming year. Considerable uncertainty remains," the company said.
Graphite electrodes, built into electric arc furnaces to recycle scrap metal into steel, make up almost half of SGL's revenue. Electric arc furnaces account for more than a third of global steel output.
While the highly cyclical steel industry would be one of the first to increase orders in 2010, demand for other carbon products, such as for batteries or industrial heat exchangers, has just begun to see the effect of the crisis, SGL said.
"Buoyancy in the manufacturing sector next year should not be overestimated," Chief Executive Robert Koehler told Reuters.
Third-quarter EBIT dropped to 24.5 million euros ($36.12 million), in line with the 25 million euro average estimate by analysts in a Reuters poll. Sales slid to 308.2 million euros, just short of the average estimate.
GrafTech International (GTI.N), its main rival, last month raised its operating profit outlook for the year by more than a quarter, saying steelmakers had ended destocking of electrodes earlier than expected.
According to StarMine, SGL trades at 18.6 times estimated earnings over the coming 12 months, above the multiple of 12.8 for GrafTech, as SGL is seen as benefiting from growing demand for its carbon fibres for cars, aircraft and wind turbines.
StarMine weights forecasts based on analysts' track record.
(Editing by Michael Shields and Elaine Hardcastle)
