EBITDA (earnings before interest, taxes, depreciation and amortization) totaled €930.0
million in 2018 (2017: €1,014.1 million). That was 8 percent less than the year before
and corresponded to an EBITDA margin of 18.7 percent (2017: 20.6 percent). The decline
was mainly due to business-interruption costs at the Charleston site (USA) and the
fact that insurance compensation for the loss event was still pending. Higher raw-material
and energy costs also dampened earnings significantly.
The Group’s EBIT (earnings before interest and taxes) amounted to €389.6 million in
the past fiscal year (2017: €423.7 million). That was 8 percent lower than a year
earlier and corresponded to an EBIT margin of 7.8 percent (2017: 8.6 percent). The
fact that depreciation continued to decline benefited EBIT. Depreciation amounted
to €540.4 million in 2018 (2017: €590.4 million).
Income from continuing operations climbed 4 percent in 2018 to €260.1 million (2017:
€250.1 million). The Group’s net income for the year was also €260.1 million (2017:
€884.8 million). In 2017, net income included proceeds of €634.7 million from the
deconsolidation of Siltronic as a WACKER segment.
WACKER forecasts continued growth for 2019, despite challenging underlying conditions.
It aims to lift its sales by a mid-single-digit percentage. The Group’s EBITDA is
likely to decline 10 to 20 percent compared with 2018. This is due to lower average
prices for polysilicon, decreasing prices for standard products, and rising energy
costs. Net income is projected to be significantly lower than a year ago.
In the first two months of this year, WACKER’s chemical business performed well. The
chemical divisions’ total sales for the first two months climbed somewhat versus the
same period last year, fueled by volume growth. The two-month sales figure for the
polysilicon division was slightly below the prior-year level. While volume growth
was strong there, average solar-grade polysilicon prices were lower. For Q1 2019,
WACKER expects total Group sales to be at last year’s level (Q1 2018: €1.22 billion).
Group EBITDA in Q1 2019 is likely to contract markedly, as lower average prices for
the company’s products and significantly higher energy prices are weighing on earnings.
“From today’s perspective, 2019 is not going to be an easy year,” said CEO Rudolf
Staudigl in Munich on Tuesday. “For our chemical divi-sions, we are confident that
our excellent products will keep us on our growth path. On the other hand, solar-grade
polysilicon overcapacities in China are slowing the earnings trend at our polysilicon
business – and thus at the Group – despite our leading market and quality position.
A particular challenge facing energy-intensive companies like WACKER is the strong
increase in electricity prices in Germany. Against this background, we are doing our
utmost to cut our costs further. At the same time, we intend to further strengthen
our chemical business with targeted investments in line with market growth.”
In 2018, the Group’s capital expenditures amounted to €460.9 million (2017: €326.8
million). That was 41 percent higher year over year.
Investment activities last year continued to focus on capacity expansion at WACKER’s
three chemical divisions. At its US site in Charleston, WACKER continued construction
work on a pyrogenic-silica facility. It is scheduled to come on stream in mid-2019.
In Ulsan, South Korea, WACKER is currently building new production facilities for
dispersions and dispersible polymer powders. In León, Spain, the expansion and modernization
of a large-scale fermentation plant was completed. Since the middle of last year,
the plant has been producing bioengineered cystine for the food and pharmaceutical
industries. In Amsterdam, the Netherlands, WACKER acquired a production site for manufacturing
biopharmaceuticals in 2018. This acquisition will enable the chemical group to reinforce
its position as a contract manufacturer for pharmaceutical companies. At Holla, Norway,
WACKER is expanding its production capacities for silicon metal. The captive production
of this key starting material makes WACKER more independent of price fluctuations
on raw-material markets and enhances its supply security during times of peak demand.
The Group’s workforce grew, mainly due to high plant utilization and the integration
of the new Amsterdam site. The number of employees rose by around 730 in 2018. As
of December 31, 2018, WACKER had 14,542 employees worldwide (Dec. 31, 2017: 13,811).
Its German sites had 10,291 employees (2017: 9,984) and its international sites 4,251
Net Cash Flow, Net Financial Debt and Equity Ratio
In 2018, WACKER again generated cash inflow in the triple-digit millions. As expected,
net cash flow of €124.7 million (2017: €358.1 million) was clearly positive but substantially
lower than the previous year. The Group’s net financial debt rose year over year.
It totaled €609.7 million as of December 31, 2018 (Dec. 31, 2017: €454.4 million).
That was 34 percent more than the year before. Thus, net financial debt was in the
target corridor WACKER set for debt of between 0.5 and 1 times EBITDA.
WACKER’s total assets on December 31, 2018 amounted to €7.12 billion (Dec. 31, 2017:
€6.84 billion). That 4 percent increase chiefly reflected, on the one hand, higher
inventories and investments in joint ventures and associates and, on the one hand,
higher liabilities and pension provisions. Group equity remained virtually unchanged
year over year. On the reporting date, it amounted to €3.15 billion (Dec. 31, 2017:
€3.17 billion). The resulting equity ratio was 44.2 percent (Dec. 31, 2017: 46.4 percent).
WACKER SILICONES generated strong sales growth in 2018. Sales climbed 14 percent to €2.50 billion (2017:
€2.20 billion). Gains were supported by markedly higher volumes for specialty products
– coupled with a correspondingly better product mix – and higher prices. EBITDA outpaced
sales growth year over year. It grew by 39 percent to €616.6 million (2017: €444.9
million), fueled by strong volume growth, higher prices and high plant utilization.
At WACKER POLYMERS, sales rose 3 percent in 2018, reaching €1.28 billion (2017: €1.25 billion). Growth
was driven by higher volumes for dispersions and dispersible polymer powders. EBITDA
of €147.7 million was 28 percent below the year-earlier level (2017: €205.6 million).
A key factor here was the strong increase in raw-material prices.
WACKER BIOSOLUTIONS lifted its 2018 sales by 10 percent to €227.0 million (2017: €205.9 million). The
increase mainly stemmed from volume growth and better prices for some products. EBITDA
of €23.5 million (2017: €37.5 million) was down 37 percent year over year. Factors
here included higher raw-material costs and the integration costs for the new sites
in León and Amsterdam.
At WACKER POLYSILICON, sales decreased 27 percent in 2018, to €823.5 million (2017: €1.12 billion). The
main causes were a marked decline in volumes and the fact that average prices for
polysilicon decreased. This market trend was primarily due to China’s decision in
late May 2018 to curb feed-in tariffs and cap the amount of new photo-voltaic installations.
EBITDA of €72.4 million (2017: €290.4 million) fell 75 percent. Beside lower sales,
earnings were dampened by both business-interruption and ramp-up costs at the US site
Proposal on Appropriation of Profits
In 2018, Wacker Chemie AG posted a retained profit of €1,482.3 million under German
Commercial Code accounting rules. The Executive and Supervisory Boards will propose
a dividend of €2.50 per share at the Annual Shareholders’ Meeting. Based on the number
of shares entitled to dividends on December 31, 2018, the total cash dividend corresponds
to a payout of €124.2 million. Calculated in relation to WACKER’s average share price
in 2018, the dividend yield is 2.1 per-cent.
Economists predict that the global economic upturn will continue in 2019, but at a
For its chemical business, WACKER sees good opportunities for further growth this
year. Sales at all three chemical divisions are projected to climb further. WACKER
SILICONES anticipates a low-single-digit percentage increase. At WACKER POLYMERS and
WACKER BIOSOLUTIONS, sales are likely to grow by a mid-single-digit percentage.
WACKER SILICONES expects EBITDA to decline significantly compared to a year earlier
amid lower costs for some raw materials. The decline reflects lower prices for standard
products. The division forecasts an EBITDA margin of about 20 percent. WACKER POLYMERS
anticipates significantly higher EBITDA versus last year, since raw-material costs
are likely to be lower and prices for its own products higher. The EBITDA margin is
projected at around 14 percent. At WACKER BIOSOLUTIONS, lower integration costs are
expected to lift EBITDA to more than €30 million, which is substantially higher than
a year ago.
For its polysilicon business, WACKER anticipates a strong increase in 2019 volumes
after last year’s contraction. Sales at WACKER POLYSILICON are likely to grow by a
low-double-digit percentage. The division expects EBITDA to be balanced and substantially
below last year, reflecting markedly lower average prices for solar-grade poly-silicon
and the impact of higher energy prices.
Overall, WACKER projects a slight decline in raw-material costs for 2019, but a strong
rise in electricity prices in Germany. Given these underlying conditions, total Group
sales are expected to increase by a mid-single-digit percentage. EBITDA, on the other
hand, will be 10 to 20 percent lower than a year ago. WACKER expects the EBITDA margin
to be substantially lower than last year. Capital expenditures of around €400 million
will be below last year’s level. Depreciation will come in at around €525 million,
also down from last year. For Group net income, WACKER expects a significant decline.
Net cash flow is likely to be clearly positive and substantially higher than last
year. Net financial debt is expected to be higher than last year. Here, the first-time
application of IFRS 16 is having an impact, since it stipulates that lease liabilities
are now also to be included in calculations of financial liabilities.
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