EANS-News: WACKER's Sales and Earnings Grow Quarter on Quarter in Q2 2012
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quarterly report
Subtitle: - Group sales reach 1.22 billion in Q2 2012, 2 percent above Q1 2012
and close to 8 percent below the prior-year period
- At 241 million, EBITDA is 14 percent higher than in Q1 2012, but down 26
percent year on year due to price declines
- Net income for Q2 2012 amounts to 61 million
- Investments of 245 million focus on strategic polysilicon-production
expansion
- More cautions full-year forecast: For 2012, WACKER now targets sales slightly
below the prior-year level, with EBITDA still expected to be well below
prior-year figure amid lower prices
München (euro adhoc) - July 25, 2012 - Wacker Chemie AG continued to grow its
business volume during the second quarter of 2012 thanks to good customer demand
outside Europe. Sales and earnings at the Munich-based chemical company were
both higher than in Q1 2012. WACKER was, however, unable to match the strong
second-quarter figures of a year earlier. The Group generated sales of
EUR1,222.5 million from April through June 2012, up 2 percent on Q1 2012
(EUR1,194.3 million) and 8 percent below the prior-year level (EUR1,325.8
million). Favorable exchange-rate effects arising from a stronger US dollar
helped lift the Group's sales in the quarter under review. Sales trends were
dampened by significantly lower prices, especially in the solar-silicon and
semiconductor-wafer businesses. Overall volumes were also slightly down from a
year ago.
Capacity at WACKER's production facilities was utilized at higher rates in the
second quarter of 2012 than during the first three months of the year. This has
improved coverage of fixed costs and helped generate higher earnings for the
Group compared with the first quarter. However, the substantial reduction in
polysilicon prices was the main reason that the Q2 2011 earnings figures could
not be matched in the quarter under review.
In the period from April to June 2012, WACKER achieved earnings before interest,
taxes, depreciation and amortization (EBITDA) of EUR240.5 million (Q2 2011:
EUR324.8 million) - thus down 26 percent on the strong prior-year period. But
when compared with Q1 2012 (EUR211.8 million), EBITDA actually improved by 14
percent. The EBITDA margin for the second quarter of 2012 was 19.7 percent,
compared with 17.7 percent in the preceding quarter and 24.5 percent a year ago.
The EBITDA reported for the quarter under review contains EUR19.4 million in
advance payments that WACKER retained due to the termination of polysilicon
supply agreements. The Group's Q2 2012 earnings before interest and taxes (EBIT)
amounted to EUR110.3 million (Q2 2011: EUR215.1 million), down 49 percent from a
year ago, but up 34 percent on Q1 2012 (EUR82.4 million). This represents an
EBIT margin of 9.0 percent (Q2 2011: 16.2 percent). Net income for the period
amounted to EUR60.6 million (Q2 2011: EUR142.7 million), which corresponds to
earnings per share of EUR1.18 (Q2 2011: EUR2.87).
For the rest of the year, WACKER anticipates a general economic environment that
will be challenging and marked by uncertainty. Europe's financial and
sovereign-debt crisis is intensifying the global economic risks. Moreover,
ongoing consolidation and overcapacity in the solar industry are resulting in an
extremely competitive market environment. Growing supply-chain inventories and
financing difficulties among market participants could cause some polysilicon
customers to not take full delivery or to delay taking delivery, or lead to the
termination of contracts. This is why WACKER does not expect to reach its
previous full-year sales projection of approximately EUR5 billion. 2012 sales
for the Group are now expected to come in slightly below the figure reported for
fiscal 2011 (EUR4.9 billion). EBITDA for fiscal 2012 is still likely to fall
well short of the previous year's figure of EUR1.1 billion.
"In the first half of 2012, the WACKER Group successfully handled both the
economic and industry-specific challenges," said CEO Rudolf Staudigl on
Wednesday in Munich. "We counter the increased risks by, for example, flexibly
managing capacity utilization at our production facilities. By doing so, we
ensure that we can respond quickly and firmly to significant changes in customer
demand. It remains our primary goal to keep WACKER well on track despite the
more difficult underlying conditions."
Regions
WACKER's performance in the second quarter of 2012 varied rather widely across
the individual regions. One of the major reasons for this divergence is the
ongoing shift of the solar industry to Asia. In Asia, WACKER generated sales of
EUR489.3 million between April and June 2012 - down only slightly from the
prior-year figure (EUR499.8 million).
In Germany and the other European countries, second-quarter sales were down
substantially from their respective prior-year figures. In Germany,
second-quarter Group sales totaled EUR173.0 million - thus 29 percent lower than
a year earlier (EUR242.8 million). In Europe excluding Germany, sales for the
three months from April through June 2012 fell 11 percent to EUR292.2 million
(Q2 2011: EUR329.5 million).
The Group posted a 6-percent increase in sales in the Americas. The main
contributor here was the polymer business, which benefited from rising customer
demand. Total sales for this region amounted to EUR224.4 million in the quarter
under review (Q2 2011: EUR211.8 million).
In the markets combined under "Other regions," second-quarter 2012 sales totaled
EUR43.6 million, also somewhat higher than a year ago (EUR41.9 million).
Overall, WACKER generated about 86 percent of its second-quarter 2012 sales with
customers outside Germany (Q1 2011: 82 percent).
Investments and Net Cash Flow
In Q2 2012, WACKER continued on its path of strategic production-capacity
expansion, with a total investment of EUR244.9 million, 18 percent more than a
year earlier (EUR208.3 million). Over two-thirds of the investments were for
expanding polysilicon capacity, particularly for ongoing construction of the new
production site in Charleston, Tennessee (USA). At the Nanjing (China) site,
construction of the new facilities for vinyl acetate-ethylene copolymer
dispersions and polyvinyl acetate solid resins progressed as planned in the
quarter under review.
WACKER's net cash flow from April through June 2012 totaled EUR-156.9 million,
compared with EUR-81.3 million a year ago. The causes of this decline were
increased investments, higher inventories, restructuring payments for the
closure of the Hikari site in Japan, and the reduced net income for the period.
Employees
WACKER's workforce declined in Q2 2012. On June 30, 2012, WACKER had 16,759
employees worldwide (March 31, 2012: 17,166). As of the end of the quarter,
WACKER had 12,824 employees in Germany (March 31, 2012: 12,847) and 3,935 at its
international sites (March 31, 2012: 4,319).
Business Divisions
WACKER SILICONES reported total Q2 2012 sales of EUR422.9 million, essentially
matching the prior-year period (EUR421.1 million). Compared to Q1 2012 (EUR401.0
million), sales rose 5 percent. Favorable exchange-rate effects compensated for
lower silicone-product prices in the quarter under review. Since WACKER
SILICONES was able to keep second-quarter 2012 plant utilization high, it
achieved higher fixed-cost coverage than in Q1 2012. Despite persistent price
pres¬sures, this significantly contributed to an increase in the division's
EBITDA, which rose to EUR59.9 million in the quarter under review (Q2 2011:
EUR50.1 million). This 20-percent rise on the prior-year quarter yielded an
EBITDA margin of 14.2 percent (Q2 2011: 11.9 percent). The division beat its Q1
2012 EBITDA of EUR49.4 million by 21 percent.
WACKER POLYMERS further increased its total sales in Q2 2012 mainly thanks to
higher volumes. The division's sales grew 11 percent to EUR276.1 million (Q2
2011: EUR249.7 million). Compared with Q1 2012 (EUR233.8 million), sales climbed
18 percent. Seasonal effects from a springtime upturn in construction-related
business also contributed to this gain. Thanks to favorable product-mix effects
and high plant-capacity utilization, WACKER POLYMERS increased its
second-quarter EBITDA to EUR45.3 million - a 42-percent increase from a year ago
(EUR32.0 million). Compared with the preceding quarter (EUR34.1 million), the
division's EBITDA improved 33 percent. The EBITDA margin rose to 16.4 percent,
compared with 14.6 percent in Q1 2012 and 12.8 percent in Q2 2011.
WACKER BIOSOLUTIONS generated total sales of EUR40.1 million in the
April-through-June quarter (Q2 2011: EUR39.0 million). Thus, sales were at about
the prior-year and preceding-quarter level (EUR41.2 million). The division
experienced solid demand for gumbase polymers and for cyclodextrins and cysteine
in the quarter under review. Product-related sales to the pharmaceutical and
agricultural sectors were slightly lower year over year. Due to these lower
sales at its pharmaceutical and agricultural businesses, WACKER BIOSOLUTIONS'
second-quarter 2012 EBITDA of EUR7.1 million was below the comparable prior-year
figure (EUR8.6 million) and the preceding quarter's figure (EUR7.9 million).
This corresponds to an EBITDA margin of 17.7 percent (Q2 2011: 22.0 percent).
At WACKER POLYSILICON, ongoing consolidation in the solar sector and
significantly lower market prices for solar silicon compared with a year earlier
had their impact on the business trend in the second quarter of 2012. At
EUR286.8 million, total sales were down 28 percent on the comparable prior-year
period (EUR399.2 million). Measured against Q1 2012 (EUR366.6 million), sales
were down by close to 22 percent. In the April-through-June 2012 period, some
customers did not take full delivery of contracted quantities. This additionally
held back the sales trend amid lower prices. Despite difficult market
conditions, WACKER POLYSILICON achieved second-quarter 2012 EBITDA of EUR120.3
million (Q2 2011: EUR188.2 million). This contains EUR19.4 million in advance
payments that WACKER retained due to the termination of polysilicon supply
agreements. At 41.9 percent (Q2 2011: 47.1 percent), the EBITDA margin remained
at a high level. In Q1 2012, EBITDA had been EUR150.1 million and the EBITDA
margin 40.9 percent.
In the second quarter of 2012, Siltronic achieved total sales of EUR247.4
million (Q2 2011: EUR276.9 million). Although the division's second-quarter
volumes and sales were close to 11 percent lower year over year, they were,
nonetheless, up 23 percent compared with Q1 2012 (EUR201.1 million). In the 300
mm wafer segment, volumes were some 10 percent higher than a year ago. Smaller
diameters were below the prior-year level. Compared to Q1 2012, volumes rose for
all wafer diameters. Growth by surface area sold was around 25 percent. Prices
remained virtually stable relative to the preceding quarter. As announced,
Siltronic generated positive EBITDA from April through June 2012. It came in at
EUR13.0 million, compared to EUR37.3 million a year earlier. The EBITDA margin
reached 5.3 percent (Q2 2011: 13.5 percent). In Q1 2012, Siltronic had still
posted negative EBITDA of EUR-25.7 million. This included non-recurring expenses
of EUR 14.8 million relating to the forthcoming closure of the 150 mm wafer
production line at Siltronic's Portland site.
Outlook
For the rest of this year, WACKER anticipates a general economic environment
that will be challenging and marked by uncertainty. The second quarter saw an
intensification of the global economic risks arising from Europe's financial and
sovereign-debt crisis.
The photovoltaic market is likely to continue to grow worldwide in the years to
come. That means customer demand for the high-quality solar silicon WACKER makes
will continue to rise. But the solar-sector consolidation currently underway
could also put WACKER customers in economic difficulty. This, in turn, could
lead to the cancellation of individual supply contracts and failure to take full
delivery of, or delayed taking delivery of, contracted quantities. Given the
sustained pressure on prices all along the solar industry's supply chain, WACKER
POLYSILICON's sales at the end of 2012 will fall short of last year's levels.
In the semiconductor business, the slowdown in consumer activity could result in
stagnant wafer volumes for the second half of 2012. From today's perspective,
the principal areas of growth for the division are in the 300 mm wafer segment
and, regionally, in Asia. Accordingly, WACKER is proceeding with the announced
production realignment for smaller wafer diameters and continues to concentrate
on further optimizing its 300 mm wafer business.
At its chemical divisions, WACKER sees opportunities for additional growth this
year, in spite of the economic uncertainties and the endur¬ing high energy and
raw-material costs.
WACKER now expects full-year 2012 sales for the Group to be slightly below the
figure reported for fiscal 2011. Achievement of this goal will largely depend on
developments in the world economy, competitive conditions in the solar industry
and demand in the semiconductor market during the rest of the year. Earnings
will be affected by the lower prices obtained for deliveries of solar silicon
and by persistently high raw-material and energy prices. WACKER therefore
reaffirms its view that earnings before interest, taxes, depreciation and
amortization for full-year 2012 will fall well short of the previous year's
figure.
WACKER's Key Figures
|EUR million |Q2 2012 |Q2 2011 |Change | |6M 2012|6M 2011|Change |
| | | |in % | | | |in % |
|Sales |1,222.5 |1,325.8 |-7.8 | |2,416.8|2,617.5|-7.7 |
|EBITDA1 |240.5 |324.8 |-26.0 | |452.3 |675.8 |-33.1 |
|EBITDA margin2 (%) |19.7 |24.5 |- | |18.7 |25.8 |- |
|EBIT3 |110.3 |215.1 |-48.7 | |192.7 |461.0 |-58.2 |
|EBIT margin2 (%) |9.0 |16.2 |- | |8.0 |17.6 |- |
| | | | | | | | |
|Financial result |-15.5 |-9.7 |59.8 | |-29.2 |-17.6 |65.9 |
|Income before taxes |94.8 |205.4 |-53.8 | |163.5 |443.4 |-63.1 |
|Net income for the |60.6 |142.7 |-57.5 | |100.6 |310.7 |-67.6 |
|period | | | | | | | |
| | | | | | | | |
|Earnings per share (EUR)|1.18 |2.87 |-58.8 | |2.02 |6.26 |-67.7 |
| | | | | | | | |
|Investments (incl. |244.9 |208.3 |17.6 | |431.0 |344.9 |25.0 |
|financial assets) | | | | | | | |
|Net cash flow4 |-156.9 |-81.3 |93.0 | |-204.5 |17.9 |n.a. |
| | | | | |
|EUR million |June 30,|June 30,|Dec. 31,| |
| |2012 |2011 |2011 | |
|Equity |2,630.4 |2,599.7 |2,629.7 | |
|Financial liabilities |1,114.0 |547.4 |777.9 | |
|Net financial |-316.0 |348.3 |95.7 | |
|receivables/liabilities5| | | | |
|Total assets |6,477.6 |5,843.0 |6,237.0 | |
| | | | | |
|Employees (number at end|16,759 |16,834 |17,168 | |
|of period | | | | |
1 EBITDA is EBIT before depreciation and amortization.
2 Margins are calculated based on sales
3 EBIT is the result from continuing operations for the period before interest
and other financial results, and income taxes
4 Sum of cash flow from operating activities (excluding changes in advance
payments) and cash flow from noncurrent investment activities (before
securities), including additions due to finance leases.
5 Sum of cash and cash equivalents, noncurrent and current securities, and
noncurrent and current financial liabilities.
Information for editorial offices: The Q2 2012 report is available for download
on the WACKER website (www.wacker.com) under Investor Relations.
This press release contains forward-looking statements based on assumptions and
estimates of WACKER's Executive Board. Although we assume the expectations in
these forwardlooking statements are realistic, we cannot guarantee they will
prove to be correct. The assumptions may harbor risks and uncertainties that may
cause the actual figures to differ considerably from the forward-looking
statements. Factors that may cause such discrepancies include, among other
things, changes in the economic and business environment, variations in exchange
and interest rates, the introduction of competing products, lack of acceptance
for new products or services, and changes in corporate strategy. WACKER does not
plan to update the forwardlooking statements, nor does it assume the obligation
to do so.
Further inquiry note:
Christof Bachmair
Media Relations & Information
Tel.: +49 (0)89 6279 1830
E-Mail: christof.bachmair@wacker.com
end of announcement euro adhoc
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company: Wacker Chemie AG
Hanns-Seidel-Platz 4
D-81737 München
phone: +49 (0) 89 6279 01
FAX: +49 (0) 89 6279 1770
mail: info@wacker.com
WWW: http://www.wacker.com
sector: Chemicals
ISIN: DE000WCH8881
indexes: MDAX, CDAX, Prime All Share
stockmarkets: free trade: Hannover, München, Hamburg, Düsseldorf, Stuttgart,
regulated dealing: Berlin, regulated dealing/prime standard:
Frankfurt
language: English