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EANS-News: Wacker Chemie AG
WACKER achieves new record figures in 2008 and
prepares for a difficult year in fiscal 2009
- Net income increases 4 percent in 2008 to Â€438 million (2007: Â€422m) - Earnings per share rise to Â€8.84 (2007: Â€8.49), dividend of Â€1.80 proposed - EBITDA reaches Â€1.06 billion (2007: Â€1.00bn) - Sales up 14 percent to Â€4.30 billion (2007: Â€3.78bn) - For 2009, WACKER is expecting sales and EBITDA below prior-year levels
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Munich (euro adhoc) - March 18, 2009 - For fiscal 2008, Wacker Chemie AG posted new records for both sales and net income. The global economic crisis did, however, increasingly impede sales and earnings in the second half of the year. The result was also impacted by higher energy and raw-material costs, and unfavorable exchange-rate effects. Nevertheless, EBITDA (earnings before interest, taxes, depreciation and amortization) rose by over 5 percent to EUR1.06 billion (2007: EUR1.00bn). The GroupÂ´s net income after taxes totaled EUR438 million (2007: EUR422m) with a tax rate of 32 percent (2007: 33 percent). Earnings per share rose to EUR8.84 (2007: EUR8.49). The GroupÂ´s ROCE (return on capital employed) continued to rise last year and reached 25.7 percent (2007: 25.3 percent).
Consolidated sales climbed 14 percent to EUR4.30 billion in 2008 (2007: EUR3.78bn). The increase is due to the complete takeover of Air Products PolymersÂ´ dispersion business (a former partner company) as well as to volume gains and higher prices. EUR3.35 billion (2007: EUR3.06bn) of WACKERÂ´s total sales were generated outside Germany. As a result, international sales accounted for 78 percent of total sales.
WACKER is preparing for a global downturn in 2009. The Group sees good growth prospects for its polysilicon business this year again, as well as at its WACKER FINE CHEMICALS division. The business trend at the three other divisions will be more difficult. From todayÂ´s vantage point, WACKER will not reach prior-year sales or EBITDA levels. A reliable forecast of the declineÂ´s extent is currently not possible due to economic uncertainties. WACKER already decided on, and implemented, a series of measures to limit the impact of the economic crisis on the company. Measures include short-time work, temporary plant shutdowns, budget cuts, investment-plan modifications and secure operational financing.
"Following a record year in 2008, we are going to experience significantly rougher waters," said CEO Rudolf Staudigl in Munich on Wednesday. "Although 2009 wonÂ´t be an easy year, we will continue our long-term growth strategy. We intend to maintain our high level of investments in 2009 so that we can tap into growth potential, especially in the solar sector. The major megatrends from which we profit remain unchanged. WACKER has a unique product portfolio, particularly for energy conservation and sustainable energy generation. The same goes for WACKERÂ´s myriad cutting-edge products that help to raise the standard of living in emerging economies. This is why I am optimistic that WACKER will resume its growth path once the global economy has come out of recession."
Investments The GroupÂ´s investments grew markedly in fiscal 2008. Asset additions reached EUR916 million (2007: EUR699m) - up 31 percent. Most of the funding flowed into production facilities for polysilicon, siloxane, silicon wafers and dispersible polymer powders.
EUR171 million was spent on the complete acquisition of the two partner companies Air Products Polymers (APP) and Wacker Polymer Systems (WPS). Full consolidation of these activities within the WACKER Group took effect from February 1, 2008. WACKERÂ´s integration of APP sites was successfully completed by year-end 2008.
In October, WACKER decided to further expand its polysilicon production capacity. With a nominal capacity of 10,000 metric tons per year, "Expansion Stage 9" is to be built at the companyÂ´s NĂĽnchritz (Saxony) site. Capital expenditures amount to around EUR760 million. BurghausenÂ´s (Bavaria) "Expansion Stage 8" - already under construction - is to be extended from 7,000 to 10,000 metric tons per year. WACKER is investing around EUR100 million for this.
Employees At year-end 2008, WACKER had 15,922 employees worldwide, 878 more than the prior-year number. The main reason for this increase was the integration of former APP employees. On the reporting date, WACKERÂ´s German sites had 12,110 employees and international sites 3,812.
Net Cash Flow, Net Financial Debt and Equity Ratio Net cash flow reached EUR22 million in fiscal 2008 (2007: EUR644m). This decline of EUR622 million is essentially based on two factors: whereas investment-activity outflows were some EUR400 million higher than in the prior year, received prepayments dropped by over EUR200 million compared to 2007. 2008 prepayments reached EUR198 million, thus remaining on a high level. For net financial liabilities - taking account of liquidity of EUR305 million - this results in a credit balance of EUR33 million as per the December 31, 2008 reporting date. Moreover, WACKER has sufficient unused credit lines. Effective December 31, 2008, the WACKER GroupÂ´s balance-sheet total made clear gains of 18 percent - up EUR707 million to EUR4.63 billion (2007: EUR3.92bn). Primarily due to the high net income, the GroupÂ´s equity on the reporting date rose EUR217 million to EUR2.08 billion (2007: EUR1.87bn) - an increase of 12 percent. This results in an equity ratio of 45.0 percent (2007: 47.6 percent).
Business Divisions SiltronicÂ´s 2008 sales amounted to EUR1.36 billion (2007: EUR1.45bn) - a 6.3 percent decline. The reason for the sales drop was weak semiconductor-sector demand, which particularly impacted SiltronicÂ´s Q4 business. By selling monocrystals and other materials to the solar industry, Siltronic partially offset its lower semiconductor-sector sales. The divisionÂ´s EBITDA equaled EUR357 million in 2008 (2007: EUR478m) - down 25 percent. Key factors for the earnings trend included declining average wafer prices and high average euro/dollar exchange rates. In contrast, sales of silicon monocrystals substantially bolstered SiltronicÂ´s profitability.
WACKER SILICONESÂ´ total sales rose to EUR1.41 billion in fiscal 2008 (2007: EUR1.36bn) - up 4 percent. Sales volumes grew thanks to increasing demand for silicone products. At the same time, the division achieved higher market prices. Exchange-rate effects, however, impeded its sales development. EBITDA was lower compared to the prior year. At EUR168 million (2007: EUR227m), it was 26 percent lower year on year. Raw-material costs, particularly for silicon metal, were significantly higher on average in 2008 compared to the prior-year period. The same applies to energy and transport expenditures.
At WACKER POLYMERS, total 2008 sales rose appreciably. They increased 37 percent to EUR868 million (2007: EUR633m), primarily due to consolidation of APPÂ´s dispersion business effective February 1, 2008. The construction-sector downturn, in contrast, dampened the sales trend. At WACKER POLYMERS, EBITDA amounted to EUR109 million (2007: EUR107m) - up 2 percent. High raw-material and energy prices, as well as the unfavorable euro/dollar exchange rate restrained the divisionÂ´s profitability.
In 2008, WACKER POLYSILICON forged ahead, building on its prior-year successes. Total sales climbed 81 percent to EUR828 million (2007: EUR457m). Higher volumes stemming from production-capacity expansion fueled sales, as did higher prices. Polysilicon output rose over 40 percent compared to 2007, reaching 11,900 metric tons. Uncontracted volumes available at short notice were sold at attractive terms throughout 2008. For the first time, growth was bolstered by the WACKER SCHOTT Solar joint venture, which - thanks to its new Jena-based production facility for multicrystalline silicon wafers - generated sales in the double-digit millions. Despite higher energy and raw-material costs, EBITDA grew even more than sales. It jumped 132 percent to EUR422 million (2007: EUR182m).
WACKER FINE CHEMICALS generated total 2008 sales of EUR98 million (2007: EUR112m) - down 13 percent year on year due to consolidation measures. WACKER stopped making some of its custom fine chemicals and catalog products. Higher sales of biotech products, such as biologics, cyclodextrins and cysteine, did not quite compensate for the shortfall. WACKER FINE CHEMICALSÂ´ EBITDA was EUR9 million in 2008 (2007: EUR10m), nearly matching the previous yearÂ´s level.
Proposal on Appropriation of Profits In accordance with German Commercial Code accounting rules, Wacker Chemie AG posted a retained profit of EUR576.9 million in 2008. The Executive and Supervisory Boards will propose a dividend of EUR1.80 at the Annual General Meeting. This proposal lets shareholders participate in the good result that WACKER achieved in 2008, while simultaneously allowing for the expected decline in business in 2009. The payout for fiscal 2007 was EUR2.25, plus there was a special bonus of EUR0.75. Based on the number of dividend-entitled shares as per December 31, 2008, the cash dividend corresponds to a payout of EUR89.4 million. Calculated in relation to WACKERÂ´s average share price in 2008, the dividend yield is 1.5 percent. The Executive and Supervisory Boards will propose to shareholders at the Annual General Meeting that the remaining profit be credited to retained earnings.
Outlook WACKER expects a significant economic downturn in 2009. Global GDP will rise by less than 1 percent. Despite this figure, it is currently very difficult to estimate the effects of the financial crisis on the real economy, since various scenarios could occur. WACKER estimates that its silicon-wafer business will have a particularly difficult time in fiscal 2009. Currently, no reliable forecast is possible for WACKER SILICONES or WACKER POLYMERS. Despite the difficult economic environment, the Group sees growth potential in 2009 at its WACKER POLYSILICON and WACKER FINE CHEMICALS divisions, which will profit from the expansion of plants and product lines. From todayÂ´s vantage point, WACKER expects an overall drop in sales and EBITDA in the current fiscal year. The Group anticipates positive effects from raw-material and energy costs, which will probably be lower than in 2008.
WACKER already decided on a catalog of measures in Q4 2008 to counter and thereby limit the downturnÂ´s impact. Measures include budget cuts, hiring restraints, modified investment planning and secure operational financing. As regards financing, WACKER already extended a EUR300 million syndicated credit facility in 2008 by another year to 2013, among other measures. Furthermore, the Group has secured new three-year credit lines this year, totaling almost EUR200 million.
Due to the difficult global economic situation in 2009, WACKER applied for short-time work in January for Siltronic AG and in February for Wacker Chemie AG. The measure will initially last six months in each case. This means that individual production facilities can adjust employee numbers flexibly to reflect their specific order and capacity-utilization levels. Some 6,000 production employees work at WACKER in Germany.
Regardless of the currently difficult economic situation worldwide, WACKERÂ´s products, global presence, high level of production and plant expertise, employees and seasoned customer relationships represent strengths that will continue to ensure the companyÂ´s long-term success in the future. WACKERÂ´s product portfolio outstandingly serves key megatrends. Thanks to its strong international positioning, the Group sees good opportunities to significantly boost its market share in tomorrowÂ´s key growth regions over the coming years. WACKER also has growth opportunities through production-capacity expansion. Consequently, WACKER expects to show further significant growth in the medium term.
@@start.t2@@WACKER's Key Figures
|EUR million |2008 |2007 |change | |
| | | |in % | |
|Sales |4,298.1 |3,781.3 |13.7 | |
|EBITDA |1,055.2 |1,001.5 |5.4 | |
|EBIT |647.9 |649.6 |-0.3 | |
|Net income |438.3 |422.2 |3.8 | |
|Earnings per share |8.84 |8.49 |4.1 | |
|EUR | | | | |
|ROCE |25.7% |25.3% |- | |
| | | | | |
|Balance Sheet/Cash | | | | |
|Flow | | | | |
| | | | | |
|Total assets |4,625.1 |3,918.1 |18.0 | |
|Equity |2,082.8 |1,865.6 |11.6 | |
|Equity ratio |45.0% |47.6% |- | |
|Investments (incl. | | | | |
|financial assets) |916.3 |699.3 |31.0 | |
|Payments for |171.2 |- |- | |
|acquisitions | | | | |
|Depreciation (incl.| | | | |
|financial assets) |407.3 |351.9 |15.7 | |
|Net cash flow |21.7 |643.7 |-96.6 | |
| | | | | |
|Research and | | | | |
|Development | | | | |
| | | | | |
|Research and |163.2 |152.5 |7.0 | |
|Development | | | | |
|expenses | | | | |
| | | | | |
|Employees | | | | |
| | | | | |
|Personnel expenses |1,086.0 |1,014.9 |7.0 | |
|Employees (December|15,922 |15,044 |5.8 | |
|31) Number | | | | |
| | | | | |
This press release contains forward-looking statements based on assumptions and estimates of WACKERÂ´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.@@end@@
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ots Originaltext: Wacker Chemie AG
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