WACKER Lifts Sales in 2015 Above €5 Billion for the First Time and Increases its Net Income
Following a generally robust fourth quarter, Wacker Chemie AG achieved its sales target for full-year 2015 and slightly exceeded its earnings expectations. According to preliminary calculations, the Munich-based chemical group posted total sales of €5.3 billion in 2015 (2014: €4.83 billion), some 10 percent above the 2014 figure. This increase was chiefly the result of higher volumes and favorable exchange-rate effects. Every division generated year-over-year sales growth in 2015.
The Group’s preliminary earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to €1.04 billion (2014: €1.04 billion). EBITDA was at the prior-year level despite substantially lower special income from advance payments retained and damages received from solar-sector customers. In full-year 2015, these special-income items amounted to some €137 million (2014: €206 million). Adjusted for this effect, EBITDA increased by 9 percent in the reporting year. The Group’s earnings before interest and taxes (EBIT) grew by 6 percent year over year to €470 million in 2015 (2014: €443 million). WACKER’s preliminary net income for 2015 reached €240 million (2014: €195 million).
“Our chemical business in particular performed well in the fourth quarter,” said Group CEO Rudolf Staudigl on Tuesday in Munich. “Chemical sales were substantially higher than in the comparable final-year quarter. This more than compensated for the fact that polysilicon prices were lower and semiconductor-wafer volumes were down slightly year over year. On the whole, we generated the strongest final-quarter sales to date”
Investments, Net Cash Flow and Net Financial Debt
According to preliminary figures, WACKER’s capital expenditures amounted to €835 million in 2015 (2014: €572 million) – 46 percent higher than a year earlier due to project-related factors. Depreciation totaled €575 million in 2015 (2014: €599 million). Most of the capital expenditures went toward completing the new polysilicon site in Charleston, Tennessee (USA). WACKER started bringing the facilities there on stream at year-end, as planned. Other funds were invested in expanding production capacity for polymer products and silicones.
Net cash flow for the Group was slightly positive, as forecast, although declining significantly year over year. It amounted to €20 million (2014: €216 million). The main reasons for this decrease were substantially higher investment spending and lower cash inflows from damages received from solar customers. Group net financial debt was at the prior-year level, as expected. It amounted to about €1.07 billion as of December 31, 2015 (Dec. 31, 2014: €1.08 billion).
Business Performance in Q4 2015
WACKER closed the fourth quarter of 2015 with moderate gains in sales and earnings. Group sales from October through December 2015 totaled about €1.2 billion (Q4 2014: €1.19 billion), up by 3 percent. EBITDA reached €185 million in Q4 2015 (Q4 2014: €180 million), 2 percent higher than in the year-earlier quarter.
In the final quarter, WACKER’s chemical business benefited from both strong customer demand and favorable exchange-rate effects arising from the euro’s weakness relative to the prior-year period. Sales were above the comparative Q4 2014 figures at every chemical division. Polysilicon and semiconductor-wafer sales, on the other hand, were somewhat lower year over year due to prices and volumes.
WACKER’s three chemical divisions substantially increased their total sales between October and December 2015. Growth stemmed primarily from higher volumes for silicones and polymer products and from favorable exchange-rate effects. At WACKER SILICONES, final-quarter sales came in at €460 million (Q4 2014: €420 million), over 9 percent above the year-earlier period. WACKER POLYMERS generated total sales of €270 million in Q4 2015 (Q4 2014: €252 million), up by 7 percent. At WACKER BIOSOLUTIONS, sales climbed by 2 percent to €45 million (Q4 2014: €44 million).
EBITDA for the chemical divisions grew even more strongly than sales. Alongside higher sales, the EBITDA increase was also prompted by very high plant utilization levels, especially for silicones, and by partially lower costs for raw materials and energy. In addition, ongoing efficiency programs had a positive impact on EBITDA at the chemical divisions. In Q4 2015, WACKER SILICONES posted EBITDA of €45 million (Q4 2014: €34 million), an increase of 32 percent. At WACKER POLYMERS, EBITDA grew by 66 percent to €40 million (Q4 2014: €24 million). WACKER BIOSOLUTIONS reported EBITDA of about €7 million in Q4 2015 (€5 million).
In Q4 2015, WACKER POLYSILICON posted lower sales than in the final quarter of 2014, due primarily to a decline in solar-silicon prices. From October through December 2015, the division generated total sales of €240 million (Q4 2014: €261 million), down by about 8 percent. Volumes, on the other hand, were higher year over year. The division’s EBITDA decreased by 21 percent compared with the year-earlier period, to reach €70 million in Q4 2015 (Q4 2014: €89 million). It included special income of around €28 million from advance payments retained and damages received from solar-sector customers. There was no such special income recorded in Q4 2014. In addition to the impact of lower sales, EBITDA at WACKER POLYSILICON was chiefly dampened by start-up costs for the new Charleston site. Ongoing measures to reduce costs and enhance productivity, on the other hand, had a positive influence on fourth-quarter EBITDA.
Siltronic generated total sales of around €215 million in the quarter to December 2015 (Q4 2014: €223 million), almost 4 percent below the prior-year figure. This sales decline stemmed primarily from lower volumes, since Siltronic’s customers, as expected, reduced their inventories. They were prompted to do so mainly by the fact that volumes for smartphones, tablets and PCs were noticeably below initial projections. Favorable exchange-rate effects could not completely compensate for this. Year over year, prices for semiconductor wafers decreased moderately. In Q4 2015, Siltronic’s EBITDA totaled €23 million (Q4 2014: €38 million), 39 percent below the comparable year-earlier quarter. In addition to lower sales, currency-hedging losses reduced fourth-quarter EBITDA by €10 million. On the other hand, Siltronic’s efforts to cut costs and increase productivity have an ongoing positive effect on its earnings trend.