EANS-News: Polysilicon Prices and Stable Chemical Business Shape WACKER's
Expectations for 2013
--------------------------------------------------------------------------------
Corporate news transmitted by euro adhoc. The issuer/originator is solely
responsible for the content of this announcement.
--------------------------------------------------------------------------------
Subtitle: - Sales of 4.63 billion in 2012 almost 6 percent below previous year,
with EBITDA reaching 787 million
- Group aims to generate full-year 2013 sales at year-earlier level
- Chemical business expected to post further sales and earnings growth in
current year
- 2013 Group EBITDA projected below prior year amid lower polysilicon prices
- Capital expenditures in 2013 will be just under 600 million, after 2012s
record 1.1 billion
Financial Figures/Balance Sheet
Munich (euro adhoc) - March 14, 2013 - Wacker Chemie AG closed 2012 with lower
sales and earnings, as already announced. In its annual report released today,
the Munich-based chemical Group recorded sales of EUR4.63 billion, just under 6
percent below the previous year's EUR4.91 billion. The decline was chiefly due
to weaker prices for solar-grade silicon and semiconductor wafers. Overall,
price effects reduced last year's Group sales by around EUR700 million or over
14 percent. 2012's EBITDA - earnings before interest, taxes, depreciation and
amortization - came in at EUR787 million (2011: EUR1.1 billion). The
corresponding EBITDA margin was 17.0 percent (2011: 22.5 percent). EBITDA
dropped 29 percent against 2011 mainly because of excess solar-sector capacity.
Solar-silicon prices halved within one year. WACKER's chemical divisions,
conversely, grew their EBITDA by some 15 percent relative to 2011, primarily due
to accelerating demand for polymer products. WACKER's bottom line for 2012 shows
net income of EUR107 million, EUR249 million lower than a year earlier (EUR356
million).
During the first two months of 2013, WACKER's chemical divisions continued to
perform soundly, reporting satisfactory demand amid the usual seasonal effects
of winter. At its polysilicon division, WACKER is currently selling much higher
volumes than expected - with prices currently stable at a low level. At
Siltronic, there is no indication yet of any fundamental turnaround. Demand for
semiconductor wafers is still weak, and prices are low. In total, WACKER expects
2013's first-quarter sales to outperform Q4 2012, but to fall short of the 2012
first-quarter figure, since polysilicon prices back then were almost twice as
high as today.
For full-year 2013, WACKER forecasts sales at the year-earlier level - providing
that no major trade barriers are introduced in the solar industry and that
semiconductor demand picks up in the second half. Volumes at every division are
expected to grow further. In the chemical divisions, sales and EBITDA are
projected to be above 2012. At the same time, the Group anticipates a
year-over-year decline in average semiconductor prices. Assuming that
polysilicon prices remain at their Q4 2012 level, WACKER expects Group EBITDA in
2013 to be below last year's figure.
"From today's perspective, 2013 will not be an easy year for WACKER," said CEO
Rudolf Staudigl in Munich on Thursday. "The semiconductor market is currently
moving sideways. Polysilicon prices are low, but have bottomed out. At the same
time, demand growth is strong among our solar customers. Capacity utilization at
our polysilicon plants is climbing fast. If this trend continues, there will be
opportunities for higher prices. Our robust chemical business continues to be a
key stabilizing factor for the Group."
Capital Expenditures
The Group's capital expenditures grew in 2012, up by almost 12 percent to EUR1.1
billion (2011: EUR981 million) - the highest amount in the Group's history.
Funding primarily went toward further capacity expansion for hyperpure
polycrystalline silicon.
In Q2 2012, expansion stage 9 at Nünchritz reached its full capacity of 15,000
metric tons per year. Last year, WACKER made good progress with constructing its
new polysilicon site at Charleston in the US state of Tennessee. Numerous
buildings are ready or are about to be completed. Amid the excess capacities
currently facing polysilicon, however, WACKER decided last fall to slow down the
pace of this project. Charleston's production start-up is now planned for
mid-2015. With this decision, the chemical Group is aligning capacity growth
with market demand and, at the same time, easing the burden on 2013's cash flow
by a euro amount in the triple-digit-million range. Due to the longer timescale,
investments in Charleston are expected to climb some 10 percent to around US$2
billion. At the same time, the site's total capacity will grow at least 10
percent to over 20,000 metric tons per year. WACKER is using the additional time
to optimize production facilities and improve manufacturing processes there, so
that yields are higher.
WACKER is also expanding its capacities for dispersions and polyvinyl acetate
solid resins in Asia and the USA. At Nanjing (China), the Group is building two
new production facilities. It is expanding its existing dispersions capacities
by adding a new reactor with an annual output of 60,000 metric tons. The new
facility is expected to start up in the middle of this year. At Nanjing, WACKER
is also building a new plant to produce polyvinyl acetate solid resins, with an
annual capacity of 20,000 metric tons. It is scheduled to go into operation by
the end of this year. Early February, WACKER started up a new dispersions
reactor - with an annual capacity of 40,000 metric tons - at its Ulsan site in
South Korea. At its US polymers site in Calvert City, WACKER is also adding
30,000 metric tons. Capital expenditures for all four projects totaled some
EUR40 million in 2012. These projects will strengthen the Munich-based Group's
position as the world's leading manufacturer of polymers for dispersions and
gumbase.
Additional funding flowed into expanding capacity at Siltronic Samsung Wafer,
WACKER's Singapore joint venture for making 300 mm wafers for the semiconductor
industry, as well as into financing its siloxane joint venture with Dow Corning
in China.
Employees
At the end of 2012, WACKER had 16,292 employees worldwide, 876 fewer than a year
earlier (17,168). The decline stems from structural measures in semiconductors.
Last year, Siltronic closed Hikari - its Japanese production site for 200 mm
wafers - and stopped producing 150 mm wafers at Portland. At year-end, WACKER's
German sites had 12,635 employees (2011: 12,813) and its international sites
3,657 (2011: 4,355).
Net Cash Flow, Net Financial Liabilities and Equity Ratio
As announced, 2012's net cash flow was clearly in negative territory due to the
high investment levels. It amounted to EUR-536 million (2011: EUR-158 million).
WACKER financed about one third of its investments from its own cash flow. In
addition, it drew on borrowed funds for its strategic investment program.
Consequently, net financial liabilities increased, as planned, to EUR701 million
on the reporting date (2011: net financial receivables of EUR96 million).
WACKER's total assets rose by EUR93 million last year. On December 31, 2012,
they amounted to EUR6.3 billion (2011: EUR6.2 billion). Increases were primarily
in property, plant and equipment, in loans to associated companies, and in trade
receivables. On the reporting date, Group equity amounted to EUR2.62 billion
(2011: EUR2.63 billion), yielding an equity ratio of 41.4 percent (2011: 42.2
percent).
Business Divisions
Lagging demand for silicon wafers and lower prices weighed on sales at
Siltronic. Sales decreased almost 13 percent to EUR867.9 million (2011: EUR992.1
million). Business for 300 mm silicon wafers grew during full-year 2012, but
there was a slowdown for 200 mm wafers and, above all, for even smaller
diameters. EBITDA of EUR0.7 million was much lower than a year earlier (2011:
EUR49.2 million). It included non-recurring expenses of around EUR15 million for
closing the 150 mm wafer line at Portland. The EBITDA decline was due mainly to
negative price effects and to reduced volumes for smaller-wafer diameters.
In 2012, WACKER SILICONES increased its sales by over 3 percent to EUR1.65
billion (2011: EUR1.59 billion). Higher volumes and positive exchange-rate
effects offset the price pressure on silicone products. EBITDA also edged up to
EUR189.3 million (2011: EUR182.9 million), climbing some 4 percent on the
year-earlier period. Raw-material and energy costs remained high overall,
although pricing factors prevented them from climbing further relative to the
previous year. Price pressure, especially on standard products, dampened the
division's earnings performance. Conversely, earnings were supported by the US
dollar's strength compared with a year earlier.
WACKER POLYMERS continued its upward trend in 2012. For the first time ever, its
sales surpassed the billion-euro mark. At EUR1.0 billion (2011: EUR928.1
million), sales were 8 percent higher than in the previous year. Business was
lifted by increased dispersion and polymer-powder volumes, by partially better
product prices, and by positive exchange-rate effects. Raw-material costs stayed
at the prior-year level. EBITDA grew even more strongly than sales, climbing 32
percent year-over-year to EUR147.4 million (2011: EUR111.8 million). This
increase stemmed from higher volumes, rationalization, and positive product-mix
and exchange-rate effects.
WACKER BIOSOLUTIONS also posted strong sales growth, with sales up 9 percent to
EUR157.6 million (2011: EUR144.5 million). Higher volumes and positive
exchange-rate effects fueled the increase. With the exception of
biopharmaceuticals, every business area generated growth. EBITDA advanced
strongly, too, climbing 20 percent to EUR24.5 million (2011: EUR20.4 million)
amid higher volumes and exchange-rate effects.
As expected, WACKER POLYSILICON's sales declined in 2012, down almost 22 percent
to EUR1.14 billion (2011: EUR1.45 billion). Al¬though the division grew volumes
20 percent to 38,000 metric tons in 2012, year-over-year sales were lower amid
significantly reduced hyperpure-polysilicon prices. This decline was due to the
difficult market environment, marked by excess capacity, high inventories and
ongoing consolidation. To align production output with customer demand, WACKER
POLYSILICON decided - as of the third quarter - to partially curb production and
to introduce reduced working hours at some Burghausen facilities. EBITDA dropped
43 percent to EUR427.5 million (2011: EUR747.3 million), dampened primarily by
significantly lower price levels. EBITDA contained income from terminated supply
contracts. Here, the division retained advance payments and received damages
totaling EUR113.1 million.
Proposal on Appropriation of Profits
In accordance with German Commercial Code accounting rules, Wacker Chemie AG
posted a retained profit of EUR654.3 million in 2012. At the Annual
Shareholders' Meeting, the Executive and Supervisory Boards will propose a
dividend of 60 cents per share (2011: EUR2.20). Based on the number of
dividend-bearing shares as per December 31, 2012, the cash dividend corresponds
to a payout of EUR29.8 million. The resultant distribution ratio - based on the
net income allocable to Wacker Chemie AG shareholders - is 26 per¬cent.
Outlook
The risks of the economy remaining weak during 2013 are still present. The
ongoing sovereign-debt crisis in Europe is weighing on EU economies. WACKER,
though, anticipates that economic output in EU countries will not decrease very
much further. In line with most economic experts, the Group expects the world
economy to expand slightly in 2013. Growth will again be strongest in Asia.
In 2013, WACKER's polysilicon business will remain difficult. The consolidation
process in the industry is not yet over, there is still excess capacity, and
polysilicon prices are currently low. Additionally, the market faces the burden
of anti-dumping investigations by the European Union and the Chinese Ministry of
Commerce. If both sides impose punitive tariffs, the global photovoltaic market
could suffer. At WACKER POLYSILICON, sales in 2013 are expected to be below the
prior year. Downward pressure is chiefly due to average polysilicon prices being
lower than a year earlier. Moreover, salt sales are now reported under "Other"
and product responsibility for pyrogenic silicas has been transferred to WACKER
SILICONES. These two structural changes will reduce WACKER POLYSILICON's total
sales by some EUR100 million.
According to market researchers, the semiconductor sector will grow, chiefly in
the second half of 2013. The year has started off sluggishly, though. WACKER
expects Siltronic's sales to decline in full-year 2013 amid persistent price
pressures. Market expansion will be driven mainly by 300 mm business.
The Group's chemical divisions offer good prospects for further growth in 2013.
Sales at WACKER SILICONES are expected to increase, though the price squeeze on
standard products will remain. Additional demand will primarily come from Asia.
WACKER POLYMERS is targeting sales growth, too. The regions with the highest
sales gains are likely to be China, India and the Americas. In Europe,
projections are for only a slight sales increase. WACKER BIOSOLUTIONS also
anticipates higher sales in 2013. The division sees its major growth
opportunities in Asia, and also in Germany.
Overall, WACKER expects sales in 2013 to be at the prior-year level - providing
that trade barriers are not introduced in the solar industry and that
semiconductor demand picks up in the second half. WACKER has planned for an
average US dollar/euro exchange rate of 1.35 in 2013. EBITDA is likely to be
below the prior-year level, primarily due to the lower prices for polysilicon
and semiconductor wafers.
WACKER intends to invest some EUR600 million both in 2013 and 2014, with the
focus on completing its Charleston site (Tennessee, USA). Investments are
unlikely to be covered fully by the anticipated cash flow from operating
activities. Depreciation will amount to around EUR550 million in 2013 and also
in 2014.
"Over the next two years, we will manage capital expenditures dynamically,
aligning them with our earnings strength," said CFO Joachim Rauhut. "Our goal is
that financial liabilities do not exceed EUR1 billion this year."
WACKER's Key Figures
| |2012 |2011 |Change |
| | | |in % |
|Results/Return | | | |
|Sales EUR m |4,634.9 |4,909.7|-5.6 |
|EBITDA1 EUR m |786.8 |1,104.2|-28.7 |
|EBITDA margin2 % |17.0 |22.5 |- |
|EBIT3 EUR m |258.0 |603.2 |-57.2 |
|EBIT margin2 % |5.6 |12.3 |- |
| | | | |
|Financial result EUR m |-64.8 |-35.8 |81.0 |
|Income before taxes EUR m |193.2 |567.4 |-65.9 |
|Net income for the year EUR m |106.8 |356.1 |-70.0 |
| | | | |
|Earnings per share EUR |2.27 |7.10 |-68.0 |
|ROCE % |5.2 |13.9 |- |
| | | | |
|Financial Position/Cash Flows | | | |
|Total assets EUR m |6,329.9 |6,237.0|1.5 |
|Equity EUR m |2,617.8 |2,629.7|-0.5 |
|Equity ratio % |41.4 |42.2 |- |
|Financial liabilities EUR m |1,197.2 |777.9 |53.9 |
|Net financial liabilities/net financial |-700.5 |95.7 |n.a. |
|receivables4 EUR m | | | |
|Capital expenditures (incl. financial |1,095.4 |981.2 |11.6 |
|assets) EUR m | | | |
|Depreciation (incl. financial assets) |528.8 |501.0 |5.5 |
|EUR m | | | |
|Net cash flow5 EUR m |-536.2 |-157.7 |>100 |
| | | | |
|Research and Development | | | |
|Research and development expenses EUR m |174.5 |172.9 |0.9 |
| | | | |
|Employees | | | |
|Personnel expenses EUR m |1,205.3 |1,282.5|-6.0 |
|Employees (December 31) Number |16,292 |17,168 |-5.1 |
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 and cash equivalents, noncurrent and current securities, and
noncurrent and current financial liabilities.
5 Sum of cash flow from operating activities (excluding changes in advance
payments received) and cash flow from noncurrent investment activities (before
securities), including additions due to finance leases.
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 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
--------------------------------------------------------------------------------
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