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IN Q2 2006, WACKER AGAIN BOOSTS EARNINGS
- EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) TOTAL Â€195.7 MILLION - EBITDA MARGIN OF 24 PERCENT - AT Â€830.4 MILLION, GROUP SALES RISE 18 PERCENT YEAR ON YEAR - EARNINGS PER SHARE MORE THAN DOUBLED TO Â€1.35 - STRONG DEMAND AND HIGHER PRICES FOR SILICON WAFERS RAISE WACKERÂ’S EARNINGS ESTIMATES
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Wacker Chemie AG reported year-on-year sales growth and even stronger earnings for Q2 2006. The Munich-based chemical company posted an EBITDA of EUR195.7 million (Q2 2005: EUR182.7m), with an EBITDA margin of 24 percent. Earnings grew 42 percent after adjustment for the special items that boosted 2005Â’s Q2 EBITDA by EUR44.8 million. The main growth driver was semiconductor business. At Siltronic, EBITDA rose by EUR40 million against the prior-year second quarter. WACKER SILICONES and WACKER POLYSILICON also posted earnings gains compared to second quarter 2005. The GroupÂ’s Q2 EBIT rose to EUR111.8 million (Q2 2005: EUR87.0m). The Group net profit reached EUR66.5 million, representing a year-on-year increase of EUR35.6 million. Earnings per share thus amounted to EUR1.35 (Q2 2005: EUR0.59). The ongoing upturn in the chemical and semiconductor sectors and strong volume gains boosted Q2 consolidated sales to EUR830.4 (Q2 2005: EUR701.5m), an increase of 18 percent. All business divisions surpassed prior-yearÂ’s Q2 sales figures. For the full year, WACKER expects to exceed 2005Â’s sales and earnings, driven by sales volume gains for semiconductor silicon wafers, where average revenues are poised to grow in the second half year. According to current estimates, consolidated sales will reach about EUR3.3 billion. EBITDA is forecast at between EUR730 million and EUR750 million.
"Our continued earnings strength during Q2 and the upbeat outlook for the full year are further evidence for the success of our strategy focusing on long-term profitable growth," said CEO Peter-Alexander Wacker.
In terms of regional growth, most of the GroupÂ’s sales gains were made on international markets. WACKER generated 80 percent of Q2 sales outside Germany. The strategically important regions China, the Americas as well as central and eastern European countries showed particularly strong growth. From April through June 2006, Asian sales rose 42 percent to EUR225.5 million (Q2 2005: EUR158.7m). In China, sales growth remained above average, rising 47 percent. At EUR165.7 million, sales in the Americas grew 12 percent from April through June 2006 (Q2 2005: EUR147.6m). In European markets, excluding Germany, sales rose 11 percent to EUR248.5 million (Q2 2005: EUR223.9m). In Germany, sales in Q2 2006 rose 8 percent to EUR163.8 million (Q2 2005: EUR151.5m).
Net cash flow was again positive in the second quarter. However, at EUR15.0 million, it did not meet the prior-year level (Q2 2005: EUR23.7m). One of the reasons for this was a substantial rise in capital expenditures. At EUR96.1 million, investments in intangibles and property, plant and equipment were up 31 percent (Q2 2005: EUR73.3m). The increase was largely due to capital expenditures for projects geared toward strategic growth, particularly at WACKER POLYSILICON. Here, spending more than doubled year-on-year due to expansion of production capacity for hyperpure polycrystalline silicon at Burghausen (Germany). In the period under review, WACKER also pressed ahead with the expansion of its NĂĽnchritz (Germany) silicone site and the construction of production plants for silicone downstream products at Zhangjiagang (China).
On June 30, 2006, WACKER had 14,555 employees worldwide (March 31, 2006: 14,520). So, the number of Group employees rose slightly compared to the end of Q1 2006. The main factors here were strategic-growth projects, especially site expansion at Zhangjiagang (China).
Business Divisions WACKER SILICONES generated total sales of EUR327.3 million in Q2 2006, a year-on-year rise of 11 percent (Q2 2005: EUR295.2m), largely stemming from substantial sales-volume growth. The division also posted double-digit growth on the earnings front. Capacity expansion and improved utilization rates, as well as product-mix effects were the key factors, which more than offset energy and raw-material price increases. In particular, silicone elastomers, silanes and resins delivered substantial growth. EBITDA grew 14 percent to EUR67.0 million (Q2 2005: EUR58.7m).
WACKER POLYMERS achieved second-quarter total sales of EUR147.4 million, a year-on-year increase of 13 percent (Q2 2005: EUR130.2m). Growth was primarily driven by higher sales volumes, especially for dispersible polymer powders. As for earnings, WACKER POLYMERS posted an EBITDA of EUR29.4 million. Eight percent below Q2 2005 (EUR31.9m), EBITDA was weighed down by much higher energy and raw-material prices. To offset their impact, the division announced in early May that it would raise its dispersion and dispersible-polymer-powder prices. The rise applies to quantities not yet contracted and will take effect in the second half of 2006.
WACKER FINE CHEMICALS generated total sales of EUR28.0 million from April to June 2006 (Q2 2005: EUR27.0m). Organic intermediates performed particularly well. In contrast, base silanes saw a sales decline. The divisionÂ’s second-quarter EBITDA was EUR3.1 million (Q2 2005: EUR4.1m). Although bioengineered products posted profitability gains, the upturn did not fully offset increasing price pressure in the field of customer syntheses. With consolidation accelerating across customer syntheses markets, the division has decided to combine the Exclusive Synthesis business team with its organic fine chemicals business at year end.
In Q2 2006, WACKER POLYSILICON posted total sales of EUR77.9 million (Q2 2005: EUR68.5m). Sales grew 14 percent while capacity-related constraints continued. The upturn benefited from price increases and process-yield enhancements. Earnings at WACKER POLYSILICON grew, too, though not quite as strongly as sales. This was partly due to the scheduled expense for ramping up new silane production capacities. Another factor was the initial planning cost for the new polysilicon capacity expansion "Stage 7". Second-quarter EBITDA reached EUR23.0 million, up eight percent (Q2 2005: EUR21.2m).
The division continues to press ahead expanding capacity for hyperpure polycrystalline silicon at Burghausen (Germany). An additional 1,000 metric tons are scheduled to become available by the end of 2006. Nominal capacity is expected to reach 6,500 metric tons annually as a result. The new solar-grade silicon plant currently under construction is expected to provide an additional 3,500 metric tons of polysilicon annually from the start of 2008. Burghausen has also just been named as the site for a further polysilicon project - Expansion Stage 7. The decision, which was taken in late June, is scheduled to add another 4,500 metric tons to BurghausenÂ’s capacity, pushing the annual total up to 14,500 metric tons by the end of 2009.
The upturn at Siltronic during 2005 and Q1 2006 continued unabated in the quarter under review. Total Q2 2006 sales increased to EUR300.3 million (Q2 2005: EUR215.8m), a rise of 39 percent. Sales of 300-mm wafers grew substantially, almost three times more than sales of smaller-diameter wafers. Key growth drivers were sales-volume gains and product-mix enhancements. As for earnings, Siltronic posted further gains in the quarter under review. Year-on-year, EBITDA climbed to EUR73.0 million (Q2 2005: EUR33.2m). These figures underscore the sustained success of measures aimed at productivity increase and cost reduction. Substantial volume gains translated into higher production-capacity utilization. Another crucial factor enabling SiltronicÂ’s earnings gains was the successful expansion of 300-mm production at Freiberg to the design capacity of 150,000 wafers per month. As announced earlier, SiltronicÂ’s Freiberg and Burghausen sites (both in Germany) are scheduled to further expand 300-mm wafer capacity - by a total of 110,000 wafers a month. The necessary construction measures are already under way.
Outlook WACKERÂ’s Q2 2006 figures are pretty much in line with the GroupÂ’s estimates, as disclosed after the first quarter. With better visibility for SiltronicÂ’s second-half performance, WACKER now is confident to actually exceed its previous financial targets during the remainder of the year. The GroupÂ’s forecast is based on stronger-than-expected sales volumes for semiconductor silicon wafers, where average revenues are poised to grow in the second half year. According to current estimates, consolidated sales for 2006 will reach about EUR3.3 billion (2005: EUR2.76bn). This would be a rise of some 20 percent. EBITDA is forecast at between EUR730 million and EUR750 million. This would be roughly 30 percent above the adjusted prior-year EBITDA of EUR567 million. Previously, WACKER had forecast full-year 2006 sales growth of slightly more than 10 percent and EBIDTA between EUR640 million and EUR680 million.
Note to editors: The report on 2nd Quarter 2006 is available for download from Wacker Chemie AGÂ’s website (www.wacker.com) under the caption 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.
Key Group Figures
@@start.t2@@EUR million Q2 2006 Q2 2005 % change 6M 2006 6M 2005 % change
Sales 830.4 701.5 18 1,628.9 1,309.7 24
EBITDA1 195.7 182.7 7 379.3 274.7 38
EBITDA margin2 23.6% 26.0% -10 23.3% 21.0% 11
EBIT3 111.8 87.0 29 217.5 96.2 >100%
EBIT margin2 13.5% 12.4% 9 13.4% 7.3% 82
Financial result-17.9 -16.2 10 -28.9 -30.4 -5
Pre-tax result 93.9 70.8 33 188.6 65.8 >100%
Net profit/loss 66.5 30.9 >100% 132.7 10.6 >100%
Net profit/loss per
share in EUR 1.35 0.59 >100% 2.84 0.20 >100%
equipment 96.1 73.3 31 171.1 132.9 29
Net cash flow 15.0 23.7 -37 37.7 -70.1 >100%
EUR million June 30,2006 June 30,2005 Dec. 31,2005
Equity 1,409.3 936.6 934.4
Financial liabilities 546.9 999.3 946.2
Provisions for pensions 358.6 349.4 352.1
Net financial debt 514.3 975.4 911.5
Total assets 3,078.8 2,934.3 2,922.9
end of period) 14,555 14,449 14,434
1 EBITDA is EBIT before depreciation and amortization.
2 Margins are calculated based on sales.
3 EBIT is the result of continuing operations for the period before interest and
other financial results, limited partnership interests and income tax.@@end@@
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ots Originaltext: Wacker Chemie AG
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