WACKER Achieves Strong Sales Growth in Q3 2015 with Earnings Below Previous Year due to Lower Special Income
WACKER’s earnings before interest, taxes, depreciation and amortization (EBITDA) in Q3 2015 amounted to €264.3 million (Q3 2014: €347.5 million), corresponding to an EBITDA margin of 19.5 percent (Q3 2014: 28.2 percent).The main reason for this strong, almost 24-percent decline in EBITDA was lower special income from advance payments retained and damages received from solar-sector customers. Whereas special income came in at €92.3 million in Q3 2014, WACKER posted only €17.8 million for this item in the reporting quarter.Compared with the second quarter (€329.0 million), Group EBITDA declined by just under 20 percent, with lower special income again being a key factor in this trend. In Q2 2015, WACKER had recognized €86.7 million for advance payments retained and damages received.
WACKER’s earnings before interest and taxes (EBIT) amounted to €125.5 million in Q3 2015 (Q3 2014: €196.3 million). That was a decrease of 36 percent and yielded an EBIT margin of 9.2 percent (Q3 2014: 15.9 percent). Here, again, the decrease was due to the lower amount of special income recognized at WACKER POLYSILICON. Adjusted for non-recurring effects, the WACKER Group’s EBIT increased by just under 4 percent year over year. Net income for the reporting quarter amounted to €58.2 million (Q3 2014: €119.0 million) and earnings per share came in at €1.21 (Q3 2014: €2.43).WACKER confirmed its forecast for full-year 2015. The company expects Group sales to rise by about 10 percent (2014: €4.83 billion) and thus surpass €5 billion for the first time ever. EBITDA on a comparable basis, i.e. adjusted for special income, is expected to increase slightly. Group net income is likely to be somewhat lower than a year ago because special income will probably not be as high this year as it was in 2014.
“After the first nine months of the year, we are well on track to achieve our targets for 2015,” said CEO Rudolf Staudigl in Munich recently. “Without doubt, the economic environment has become considerably more challenging in the last few months for us as well. However, recent weeks have once again shown that one of WACKER’s greatest strengths lies in its broad portfolio of products and solutions for a large number of key industries. The good performance of our chemical business has been instrumental in compensating for – and cushioning – the impact of the challenges we face in the solar and semiconductor industries.”
In the reporting quarter, Asia was once again by far the largest market for WACKER products, with generating a good 42 percent of total Group sales (Q3 2014: 41 percent) there in the three months to September 2015. At €575.8 million (Q3 2014: €501.1 million), sales were up 15 percent year over year. All of the Group’s business divisions exceeded their respective prior-year figures for sales in Asia, with growth being strongest for polymer products and silicones. The Group as a whole almost matched its sales figure for the preceding quarter (€577.4 million).
In Europe, WACKER achieved third-quarter sales of €316.5 million (Q3 2014: €293.4 million), up just under 8 percent year over year and almost 1 percent quarter over quarter (Q2 2015: €314.1 million). All of the business divisions exceeded their respective prior-year figures, except for WACKER POLYSILICON, where sales in Europe declined.WACKER’s sales in Germany came in at €173.6 million in the reporting quarter (Q3 2014: €174.8 million), nearly 1 percent lower than a year earlier, but almost 1 percent higher than in the preceding quarter (€172.1 million). Whereas business in semiconductor wafers and chemical products in Germany grew slightly overall, sales of polysilicon declined in this region.
Favorable exchange-rate effects continued to have a positive impact on sales in the Americas in Q3 2015. WACKER’s third-quarter sales in that region amounted to €238.9 million (Q3 2014: €215.9 million), almost 11 percent more than a year ago. Compared with the previous quarter (€249.8 million), WACKER Group sales in the Americas declined by just over 4 percent. Somewhat lower volumes in individual product groups were one reason for this.In total, WACKER generated over 87 percent of its third-quarter sales with customers outside Germany (Q3 2014: 86 percent).
Investments and Net Cash Flow
The WACKER Group invested €220.5 million in the third quarter of 2015 (Q3 2014: €152.9 million). That was 44 percent more than a year ago, and was the result of project-related factors and exchange-rate effects. The Group generated net cash flow of €36.2 million in Q3 2015 (Q3 2014: €178.4 million). Higher capital expenditures were the main reason for this decline of around €142 million. In addition to the Group’s good operating performance, damages received at WACKER POLYSILICON had a positive influence on cash flow.
The scheduled expansion of polysilicon production capacities remained the focus of investment activities at the WACKER Group in the third quarter, with projects of this kind accounting for around 70 percent of total investment spending during the quarter. Construction of the new polysilicon site in Charleston, Tennessee (USA) continued throughout the third quarter. WACKER expects the facilities at this site – the biggest single investment project in the company’s history – to start ramping up before the end of this year.The company has expanded its production facilities for dispersions at Calvert City, Kentucky (USA), building a new reactor there with an annual capacity of 85,000 metric tons. Commissioning of the reactor began as planned in the reporting quarter. Capital expenditures for the new facilities and for infrastructure expansion amount to some €50 million.