EANS-News: Growing Chemical Business and Consolidation in the Solar Industry
Mark WACKER's Business Performance in Q3 2012
--------------------------------------------------------------------------------
Corporate news transmitted by euro adhoc. The issuer/originator is solely
responsible for the content of this announcement.
--------------------------------------------------------------------------------
quarterly report
Subtitle: - Group sales reach 1.20 billion in Q3 2012, about 6 percent below
the prior-year period
- EBITDA comes in at 204 million, down 36 percent year on year due to price
declines
- Net income for Q3 2012 amounts to 27 million
- Chemical-business revenue increases by 7 percent thanks to strong demand, with
EBITDA up by 20 percent year on year
- Polysilicon business shows significant declines in sales and earnings
- Investments of 291 million for strategic expansion of polysilicon and
dispersions capacities
- Annual-forecast specified: Group sales of between 4.6 and 4.7 billion
expected for full-year 2012, with EBITDA anticipated at about 750 million due
to price pressure
München (euro adhoc) - October 24, 2012 - In the third quarter of 2012, Wacker
Chemie AG's business performance varied across its individual segments. The
chemical divisions had higher sales and earnings compared with the previous
year, thanks to satisfactory overall customer demand. Sales in the chemical
business rose 7 percent, while earnings before interest, taxes, depreciation and
amortization improved by 20 percent year on year. In contrast, sales and
earnings in the polysilicon business decreased significantly because of
sustained pressure on prices and high inventory levels in the solar industry.
The Munich-based chemical group posted total sales of EUR1,200.9 million between
July and September 2012 - down 6 percent from a year earlier (EUR1,280.6
million). WACKER almost matched its sales level of the preceding quarter
(EUR1,222.5 million). Higher volumes than a year ago and favorable exchange-rate
effects stemming from a stronger US dollar helped lift the Group's sales in the
quarter under review.
In the third quarter of 2012, WACKER generated earnings before interest, taxes,
depreciation and amortization (EBITDA) of EUR204.3 million, 36 percent less than
a year ago (EUR317.6 million) and 15 percent less than in Q2 2012 (EUR240.5
million). The main reasons for this downturn are lower prices for solar silicon
and semiconductor wafers. The EBITDA margin for the third quarter of 2012 was
17.0 percent, compared with 24.8 percent a year ago and 19.7 percent in the
preceding quarter. The Group's earnings before interest and taxes (EBIT) fell to
EUR70.7 million in the third quarter of 2012 (Q3 2011: EUR197.2 million),
thereby yielding an EBIT margin of 5.9 percent (Q3 2011: 15.4 percent). Net
income for the period amounted to EUR26.9 million (Q3 2011: EUR124.9 million),
which corresponds to earnings per share of EUR0.50 (Q3 2011: EUR2.50).
The WACKER Group has specified its forecast for full-year 2012, and now expects
to generate total sales of between EUR4.6 and EUR4.7 billion. EBITDA for this
year is projected at approximately EUR750 million.
"The WACKER Group has performed respectably in a difficult third quarter despite
a number of challenges," said CEO Rudolf Staudigl on Wednesday in Munich. "Our
chemical business developed well, with higher sales and earnings. However, the
continued slowdown in global economic growth and the particular problems in the
solar industry left their mark on our figures for Q3 2012. Sustained price
competition, high inventories, the difficult financial situation of many market
players and the anti-dumping proceedings against Chinese solar manufacturers
currently characterize our polysilicon business. But, on the other hand,
generating solar power is becoming steadily less expensive. We are confident
that the photovoltaic market will continue to grow, and that we will ultimately
benefit from the consolidation in the long term, because WACKER is a quality and
cost leader in this business."
Regions
During Q3 2012, WACKER profited primarily from good customer demand for silicone
and polymer products in the USA and Asia. In Europe, chemical business was
generally weak compared with the previous year. Many customers in Europe are
currently rather cautious and hesitant about placing orders, given the economic
uncertainties. From July through September 2012, the WACKER Group generated
sales of EUR481.5 million in Asia, almost matching the prior-year level
(EUR484.7 million).
In Germany and the rest of Europe, business was down significantly from the
previous year. Third-quarter Group sales in Germany totaled EUR172.2 million -
down almost 28 percent from a year earlier (EUR237.6 million). The ongoing shift
of the solar industry to Asia remains a significant factor for WACKER's lower
sales in Germany. In Europe excluding Germany, sales for the three months from
July through September 2012 fell 6 percent to EUR282.2 million (Q3 2011:
EUR298.7 million).
In the Americas, the growing demand for chemicals completely offset the decline
in polysilicon and semiconductor wafers. At EUR219.9 million, the Group's
third-quarter sales in this region exactly matched the prior-year level.
In the markets combined under "Other regions," third-quarter sales reached
EUR45.1 million, 14 percent higher than a year ago (EUR39.7 million). Overall,
WACKER generated about 86 percent of its third-quarter 2012 sales with customers
outside Germany (Q3 2011:81 percent).
Investments and Net Cash Flow
During Q3 2012, WACKER continued its expansion of production capacity in
international markets, investing a total of EUR291.4 million, which is 3 percent
less than a year ago (EUR299.1 million) due to project-related reasons, but 19
percent more than in Q2 2012 (EUR244.9 million). Over two-thirds of investments
in the quarter went to the ongoing construction of polysilicon production
facilities at Charleston in the USA. Another investment focus was on the
expansion of production facilities for vinyl acetate-ethylene copolymer
dispersions and polyvinyl acetate solid resins. WACKER is currently constructing
a second reactor line for dispersions, with an annual capacity of 40,000 metric
tons, at its site in Ulsan, South Korea. This will almost double WACKER's South
Korean production capacity. At Nanjing in China, construction of the new
facilities for dispersions and polyvinyl acetate solid resins progressed as
planned during the quarter under review.
WACKER's net cash flow for the July-through-September 2012 period was EUR-90.4
million, compared with EUR23.2 million a year ago. This drop was mainly due to
net income being substantially lower year on year.
Employees
WACKER's workforce declined somewhat during the third quarter of 2012. On
September 30, 2012, there were 16,433 employees worldwide (June 30, 2012,
16,759) at WACKER, 2 percent fewer than at the end of the preceding quarter. As
of September 30, 2012, WACKER had 12,755 employees in Germany (June 30, 2012:
12,824) and 3,678 at its international sites (June 30, 2012: 3,935).
Business Divisions
WACKER SILICONES increased its total sales in Q3 2012. At EUR432.1 million, the
figure was almost 7 percent higher than a year ago (EUR405.2 million). Higher
volumes and favorable exchange-rate effects offset continuing price pressures on
silicone products. Thanks to good customer demand and high plant-utilization
rates, the division achieved EBITDA of EUR57.4 million in Q3 2012 amid lower
prices for some of its products. That is an increase of over 10 percent from
last year (EUR52.0 million), and corresponds to an EBITDA margin of 13.3 percent
(Q3 2011: 12.8 percent).
WACKER POLYMERS increased its total third-quarter sales by over 6 percent to
EUR274.0 million (Q3 2011: EUR257.9 million). Thanks to positive customer
demand, sales volumes for dispersions and dispersible polymer powders were
around 5 percent higher in the period under review than a year earlier. The
division's EBITDA grew 29 percent year on year to EUR50.5 million (Q3 2011:
EUR39.2 million). This increase was supported by higher volumes and good
production capacity utilization. Earnings also benefited from favorable
exchange-rate effects. The third-quarter EBITDA margin rose to 18.4 percent (Q3
2011: 15.2 percent).
WACKER BIOSOLUTIONS generated total third-quarter sales of EUR40.1 million,
posting a rise of close to 18 percent on the prior-year period (EUR34.1
million). Strong customer demand for polymers for gumbase was a key factor
behind this growth. WACKER BIOSOLUTIONS increased its EBITDA to EUR5.5 million
(Q3 2011: EUR3.1 million). The third-quarter EBITDA margin came in at 13.7
percent (Q3 2011: 9.1 percent).
WACKER POLYSILICON posted total sales of EUR269.1 million in Q3 2012, down about
29 percent from a year ago (EUR378.2 million). The division's market environment
remains challenging. Ongoing consolidation pressures in the solar industry, high
inventory levels along the entire photovoltaic supply chain, and the financial
difficulties facing many manufacturers of solar cells and modules are slowing
down sales volumes and impacting prices for hyperpure polysilicon. Third-quarter
solar-silicon prices were around 40 percent below their prior-year level. Sales
volumes, however, were slightly higher both year on year and compared with Q2
2012, thanks to WACKER POLYSILICON's broad-based customer portfolio and helped
by bookings of delayed volumes from Q2. To bring production volumes in line with
customer demand, the division partially curbed production in the third quarter.
Plant utilization was about 80 percent during the July-through-September 2012
period. The situation in the solar market has also made its mark on WACKER
POLYSILICON's earnings development. EBITDA amounted to EUR78.8 million in the
third quarter of 2012. That is a decrease of 56 percent from a year ago
(EUR179.4 million), yielding an EBITDA margin of 29.3 percent (Q3 2011: 47.4
percent).
Siltronic had total sales of EUR234.7 million from July through September 2012,
8 percent lower than a year earlier (EUR255.3 million). Lower prices were the
main factor behind the decrease. Third-quarter plant utilization at Siltronic
ranged from 70 to 90 percent, depending on wafer diameter. As part of its
capacity consolidation for smaller-diameter wafers, Siltronic closed down the
150 mm wafer production line at the Portland site in the USA in the third
quarter, as announced. The 200 mm wafer plant at Hikari (Japan) had already been
shut down in the preceding quarter. The consolidation measures benefited
capacity utilization at the remaining facilities for these wafer diameters.
Siltronic's EBITDA was EUR9.9 million in the third quarter of 2012 (Q3 2011:
EUR33.6 million). This is equivalent to an EBITDA margin of 4.2 percent (Q3
2011: 13.2 percent).
Outlook
WACKER believes that the economic situation will continue to be challenging in
the months ahead. The extent to which the world economy will slow remains
uncertain. Nevertheless, the Group sees growth prospects, especially for its
chemical business, in markets outside Europe.
In the polysilicon business, there are particular challenges and risks arising
from the ongoing consolidation process in the solar industry and from the
unpredictable political climate. WACKER expects that new photovoltaic capacity
will exceed 30 gigawatts this year, and that this upward trend will continue
next year toward 40 gigawatts. Inventory levels are very high at every stage of
the supply chain, however. These inventories will first have to be reduced,
which is likely to affect the solar industry's demand for polysilicon. WACKER is
adapting to this market environment, and has therefore made the decision to
delay the completion of the polysilicon facility at its US site in Charleston,
Tennessee. At this time, the company expects to start production at Charleston
by mid-2015, some 18 months later than originally planned. Lower volumes and
lower prices will keep WACKER POLYSILICON's full-year 2012 revenues below the
levels of the previous year, in line with the trend reported for the first nine
months.
In the semiconductor industry, the prospects for the coming months have
deteriorated. Important customers have in recent weeks reduced their own
outlooks through the end of the year. Supply-chain inventories are high, and
weak demand is further pushing down silicon-wafer prices. At Siltronic, this is
expected to result in significantly weaker wafer sales volumes for the fourth
quarter of 2012, with revenues also substantially lower during the remainder of
2012.
In its chemical divisions, WACKER sees good opportunities for further growth in
the remaining months of 2012 and beyond, even though raw-material and energy
costs remain relatively high. Rising living standards, particularly in Asia, are
fueling demand for high-quality products containing silicones. In its polymer
business, WACKER anticipates higher volumes for full-year 2012, with growth for
construction applications driven by the markets of Asia and South America.
Dispersions are experiencing additional demand, especially from the carpeting
and packaging industries in the USA. The WACKER BIOSOLUTIONS division is also
anticipating higher sales for 2012. WACKER intends to continue strengthening
this division's market leadership in polyvinyl acetate solid resins for use in
gumbase.
For full-year 2012, the WACKER Group expects to generate total sales of between
EUR4.6 and EUR4.7 billion. Earnings performance will be affected especially by
the lower prices obtained for deliveries of solar silicon. As a result, the
Group's earnings before interest, taxes, depreciation and amortization in 2012
will fall well short of the 2011 figure and, from today's perspective, are
estimated to come in at EUR750 million.
WACKER's Key Figures
|EUR million |Q3 2012 |Q3 2011 |Change | |9M 2012|9M 2011|Change|
| | | |in % | | | |in % |
|Sales |1,200.9 |1,280.6 |-6.2 | |3,617.7|3,898.1|-7.2 |
|EBITDA1 |204.3 |317.6 |-35.7 | |656.6 |993.4 |-33.9 |
|EBITDA margin2 (%) |17.0 |24.8 |- | |18.1 |25.5 |- |
|EBIT3 |70.7 |197.2 |-64.1 | |263.4 |658.2 |-60.0 |
|EBIT margin2 (%) |5.9 |15.4 |- | |7.3 |16.9 |- |
| | | | | | | | |
|Financial result |-15.3 |-9.3 |64.5 | |-44.5 |-26.9 |65.4 |
|Income before taxes |55.4 |187.9 |-70.5 | |218.9 |631.3 |-65.3 |
|Net income for the |26.9 |124.9 |-78.5 | |127.5 |435.6 |-70.7 |
|period | | | | | | | |
| | | | | | | | |
|Earnings per share (EUR)|0.50 |2.50 |-80.0 | |2.52 |8.76 |-71.2 |
| | | | | | | | |
|Investments (incl. |291.4 |299.1 |-2.6 | |722.4 |644.0 |12.2 |
|financial assets) | | | | | | | |
|Net cash flow4 |-90.4 |23.2 |n.a. | |-294.9 |41.1 |n.a. |
| | | | | |
|EUR million |Sept.30,|Sept.30,|Dec. 31,| |
| |2012 |2011 |2011 | |
|Equity |2,651.5 |2,698.9 |2,629.7 | |
|Financial liabilities |1,177.4 |593.1 |777.9 | |
|Net financial |-411.3 |364.0 |95.7 | |
|receivables/liabilities5| | | | |
|Total assets |6,563.4 |6,125.7 |6,237.0 | |
| | | | | |
|Employees (number at end|16,433 |17,133 |17,168 | |
|of period) | | | | |
1 EBITDA is EBIT before depreciation/appreciation of noncurrent assets.
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 received from polysilicon contracts) 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.
Note to editors: The Q3 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 forward-looking 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 forward-looking 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
--------------------------------------------------------------------------------
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