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Wacker Chemie AG

EANS-News: Strong Polysilicon Business Mitigates Sales and Earnings Drop in Q1 2009

München (euro adhoc) -

- Q1 2009 Group sales drop 14 percent to €873 million
 - At €158 
million, the operating result (EBITDA) was 46 percent lower than the 
prior-year figure
 - Positive net cash flow of €71 million
 - Full 
year 2009 sales and earnings expected to drop substantially year on 
year
 - Continuation of strategic growth projects via investments of 
some €800 million in current ficsal year
  Corporate news transmitted by euro adhoc. The issuer/originator is solely
  responsible for the content of this announcement.
balance
April 30, 2009 - The global recession clearly
impacted Wacker Chemie AG´s Q1 2009 figures. The Munich-based 
chemical company generated January-March 2009 sales totaling EUR872.5
million (Q1 2008: EUR1,019.5m), down 14 percent compared to the 
prior-year quarter. This was primarily due to a decrease in sales 
volumes, though partially because of lower prices, too. In contrast, 
the more favorable US$ exchange rate had a positive effect on sales 
of +4 percent.
WACKER enacted measures as early as the second half of 2008 to cut 
costs and temporarily adjust production capacity to slowing demand. 
The first quarter of 2009 showed benefits of these measures on 
profitability. Whereas WACKER´s first-quarter earnings before 
interest, taxes, depreciation and amortization (EBITDA) fell 46 
percent year on year to EUR157.8 million (Q1 2008: EUR291.1m), the 
figure nevertheless reflected the advantages of lower material costs 
and personnel expenses, as well as more favorable raw-material and 
energy prices. The EBITDA margin equaled 18.1 percent (Q1 2008: 28.6 
percent). The Group´s Q1 2009 earnings before interest and taxes 
(EBIT) reached EUR58.2 million (Q1 2008: EUR198.7m), with a quarterly
result of EUR5.5 million (Q1 2008: EUR130.6m). Earnings per share 
were EUR0.17 (Q1 2008: EUR2.63).
The Group´s polysilicon business made the largest contribution to Q1 
2009 sales and earnings. The WACKER POLYSILICON division´s sales 
crossed the EUR300 million mark in a single quarter for the first 
time ever and EBITDA rose 136 percent. Nevertheless, the sales and 
earnings trend declined significantly at all other divisions. The 
drop was most pronounced for Siltronic´s semiconductor business, 
where sales were down 64 percent year on year - with EBITDA declining
to EUR-60.0 million.
For full-year 2009, WACKER is expecting markedly lower sales and 
operational earnings compared with the prior-year figures. How strong
this decline will be primarily depends on further demand and price 
developments at WACKER´s key customer groups. The Group is focusing 
its investments on its strategic growth projects, particularly the 
ongoing expansion of polysilicon production capacity. From today´s 
viewpoint, WACKER´s investment volume will reach a magnitude of 
EUR800 million in fiscal 2009.
"After several years of successful growth, we are facing a period of 
widespread economic uncertainty and thus a great entrepreneurial 
challenge in light of the global recession," said Group CEO Rudolf 
Staudigl in Munich on Thursday. "Our measures to limit the impact of 
the economic crisis on our company are proving effective. The key 
megatrends that we profit from remain intact. This is why I stay 
optimistic about WACKER´s future in the long term, even though 2009 
will not be an easy year for us."
Regions Benefiting from the strength of its polysilicon business, the
WACKER Group saw first-quarter sales in Germany climb some 3 percent 
year on year to EUR220.8 million (Q1 2008: EUR215.3m). In the rest of
Europe, however, sales fell 23 percent to EUR202.0 million (Q1 2008: 
EUR260.8m). Asia remains WACKER´s largest market, though 
January-March 2009 sales there dropped by 23 percent to EUR267.0 
million (Q1 2008: EUR345.6m). China accounts for over half of 
WACKER´s Asian sales. In the Americas, WACKER generated sales of 
EUR162.3 million in the period under review, nearly matching the 
prior-year level (Q1 2008: EUR169.2m). In this region, WACKER 
profited from the consolidation of Air Products Polymers, a former 
partner company, and from the favorable euro/dollar exchange rate. In
"Other Regions", Q1 2009 sales totaled EUR20.4 million (Q1 2008: 
EUR28.6m).
Net Cash Flow and Investments WACKER generated a positive net cash 
flow of EUR70.9 million (Q1 2008: EUR-3.2m) from January-March 2009. 
Here, a EUR67.9 million increase of customer prepayments and 
reductions in current assets together with our investment focus on 
strategic growth projects were the key contributors. Additionally, in
Q1 2008, a EUR173.4 million payment for acquiring the shares in Air 
Products Polymers and Wacker Polymer Systems (former partner 
companies) had affected cash flow in that quarter.
In Q1 2009, WACKER invested EUR176.8 million (Q1 2008: EUR145.5m). 
The focus was on polysilicon expansion projects at Burghausen and 
Nünchritz (Germany), as well as on extension of the silicones site in
Zhangjiagang (China). Some EUR100 million was spent on the ongoing 
polysilicon capacity expansion alone in the period under review. In 
the medium term, WACKER intends to build a new production plant for 
hyperpure polycrystalline silicon in the USA to satisfy the increase 
in demand expected from the solar and semiconductor industries in the
years to come. In February, WACKER purchased a plot of land (550 
acres or 220 hectares) in the State of Tennessee for this purpose at 
a cost of close to $20 million.
Employees On March 31, 2009, WACKER had 15,851 employees worldwide 
(Dec. 31, 2008: 15,922), of whom 12,103 worked at German sites (Dec. 
31, 2008: 12,110) and 3,748 at international sites as per the end of 
Q1 2009 (Dec. 31, 2008: 3,812). To gain the flexibility needed for 
reacting to the current demand decline, the Group applied for 
short-time work schedules at Siltronic AG from January 2009 and at 
Wacker Chemie AG from February, in each case for six months. In 
addition, the Group is taking every opportunity to reduce personnel 
costs by not extending limited employment contracts and by 
terminating contracts with temporary workers. WACKER is also 
transferring employees from its semiconductor subsidiary Siltronic to
other corporate entities.
Business Divisions In Q1 2009, WACKER SILICONES generated total sales
of EUR264.9 million (Q1 2008: EUR360.3m). The sales trend was marked 
by a substantial decline in sales volumes, particularly in the 
construction and automotive market segments, as well as in the 
textile industry. In contrast, sales in the medical technology and 
power generation and distribution segments developed comparatively 
better. WACKER SILICONES generated an EBITDA of EUR27.7 million from 
January-March 2009 (Q1 2008: EUR64.8m), thus achieving an EBITDA 
margin of 10.5 percent (Q1 2008: 18.0 percent). The year on year 
earnings drop resulted almost entirely from lower volumes. Favorable 
exchange rates and lower personnel costs, however, had a positive 
effect on earnings.
Construction-segment weakness worldwide and seasonal effects of the 
severe winter in Europe had a noticeable impact on WACKER POLYMERS´ 
sales. Total sales from January-March 2009 amounted to EUR172.3 
million (Q1 2008: EUR198.5m), down 13 percent year on year. Adjusted 
for the addition of Air Products Polymers´ dispersion business, the 
decline was 22 percent. Q1 2009 EBITDA for the division was EUR21.5 
million (Q1 2008: EUR38.1m), resulting in an EBITDA margin of 12.5 
percent (Q1 2008: 19.2 percent). The earnings drop vis-à-vis Q1 2008 
was primarily caused by declining sales volumes and price pressure. 
In contrast, lower raw material costs and more favorable exchange 
rates had a positive effect on results. Measures to optimize 
production efficiency also served to support earnings.
WACKER FINE CHEMICALS had total sales of EUR21.6 million in Q1 2009 
(Q1 2008: EUR27.7m), down 22 percent year on year. This drop in sales
is attributable to the discontinuation of certain catalog products  
resulting from the fine-chemical business portfolio consolidation. 
The division´s earnings performance presents a similar picture. The 
division generated an EBITDA of EUR1.9 million for January-March 2009
(Q1 2008: EUR3.2m), thus achieving an EBITDA margin of 8.8 percent 
(Q1 2008: 11.6 percent). WACKER FINE CHEMICALS´ bioengineered 
products, such as cyclodextrins and cysteine, performed well. The 
same was true of pharmaceutical proteins, thanks to rising sales 
volumes.
WACKER POLYSILICON profited further from continued strong polysilicon
demand in Q1 2009. Compared to the prior-year period, the division 
doubled its total quarterly sales to EUR315.0 million (Q1 2008: 
EUR155.9m). The enormous production capacity expansion at the 
Burghausen site was primarily responsible for this growth. WACKER 
POLYSILICON´s EBITDA greatly outpaced sales growth, climbing to 
EUR168.1 million (Q1 2008: EUR71.3m). This represents a 136 percent 
increase compared with the prior-year quarter. At 53.4 percent (Q1 
2008: 45.7 percent), the EBITDA margin remains at the high level 
achieved in the last few quarters. This growth was driven by higher 
sales volumes, as well as by positive price and product-mix effects.
At Siltronic, the negative business trend of late fiscal 2008 gained 
additional momentum in Q1 2009. Sales revenues of EUR126.0 million 
(Q1 2008: EUR346.1m) for the period under review were 64 percent 
below the comparable prior-year figure. Quarterly demand for silicon 
wafers of all diameters was very weak in all regions. This led to 
both significantly lower sales volumes and a drastic deterioration in
market prices. Moreover, the silicon-monocrystal business for the 
solar and equipment industry showed clear signs of the current crisis
in terms of both sales volumes and prices achievable on the spot 
market. Favorable exchange rates were not able to compensate for the 
extremely difficult global semiconductor-market situation. As a 
result, Siltronic posted a January-March 2009 EBITDA of EUR-60.0 
million (Q1 2008: EUR114.0m). The EBITDA margin dropped accordingly 
from 32.9 percent in Q1 2008 to -47.6 percent in Q1 2009. To 
counteract the earnings situation, Siltronic implemented an extensive
package of measures that will reduce personnel costs. This led to a 
year on year personnel-cost reduction of 30 percent in Q1 2009.
Outlook WACKER is preparing for a global downturn in 2009. From 
today´s vantage point, it is not clear whether the global economy 
will return to a growth path in 2010. Given the economic 
uncertainties, the Group cannot make a reliable and quantifiable 
forecast for the rest of 2009 at this time. Based on the current 
situation, the Munich-based chemical company assumes sales and the 
operating result will decline noticeably from now until year-end.
Despite the generally difficult global environment, WACKER does see 
growth potential, especially at WACKER POLYSILICON, which is 
profiting from plant and product-line expansions. At WACKER´s other 
three large divisions, however, business trends will be more 
difficult. According to company estimates, the silicon-wafer business
will perform particularly weakly, due in part to falling prices for 
300 mm wafers. Currently, no reliable forecast is possible for WACKER
SILICONES or WACKER POLYMERS.
WACKER enacted a series of measures at an early stage to counter the 
pressures of the global financial and economic crisis. For example, 
the Group cut budgets, introduced short-time work and other measures 
to lower personnel expenses, placed restraints on hiring, modified 
investment plans and safeguarded operational financing. WACKER 
intends to reduce personnel costs during the current fiscal year by 
15 percent, thus by some EUR160 million. The Group anticipates 
positive effects in 2009 from raw-material and energy costs, which 
will probably be lower than in 2008.
For the long term, WACKER believes that key megatrends will remain 
strong, enabling the company to sustainably profit from them. For 
example, the Group has a whole series of products to serve the energy
megatrend. As in the past, the largest growth opportunities there 
arise from the manufacture of polysilicon for the solar industry. As 
for the digitization megatrend, the Group´s semiconductor-grade 
silicon wafers will enable it to benefit from further growth. In view
of its strong regional presence in Asia´s growth markets and in 
emerging economies elsewhere, WACKER can offer a whole range of 
products and solutions that are ideal for increasing living standards
in these regions. WACKER is confident about the long-term potential 
of these megatrends and intends to use them to resume its 
sustainably-oriented growth path once the global economy has come out
of recession.
Information for editorial offices: The Q1 2009 report can be 
downloaded from WACKER´s website (www.wacker.com) under Investor 
Relations.
WACKER's Key Figures
|EUR million                |Q1 2009   |Q1 2008 |Change  | |
|                           |          |        |in %    | |
|Sales                      |872.5     |1,019.5 |-14.4   | |
|EBITDA1                    |157.8     |291.1   |-45.8   | |
|EBITDA margin2             |18.1%     |28.6%   |-36.7   | |
|EBIT3                      |58.2      |198.7   |-70.7   | |
|EBIT margin2               |6.7%      |19.5%   |-65.8   | |
|                           |          |        |        | |
|Financial result           |-7.1      |-0.8    |>100    | |
|Income before taxes        |51.1      |197.9   |-74.2   | |
|Result for the period      |5.5       |130.6   |-95.8   | |
|                           |          |        |        | |
|Earnings per share in EUR  |0.17      |2.63    |-93.6   | |
|                           |          |        |        | |
|Investments (incl.         |176.8     |145.5   |21.5    | |
|financial assets)          |          |        |        | |
|Investments in acquisitions|0.0       |-173.4  |-100    | |
|Net cash flow              |70.9      |-3.3    |n.a.    | |
|                           |          |        |        | |
|EUR million                | Mar. 31, | Mar.   |Dec. 31,| |
|                           |2009      |31, 2008|2008    | |
|                           |          |        |        | |
|Equity                     |2,106.1   |1,908.6 |2,082.8 | |
|Financial liabilities      |283.9     |250.2   |272.4   | |
|Provisions for pensions    |382.5     |374.4   |376.1   | |
|Net financial debt         |-100.7    |-152.8  |-32.9   | |
|Total assets               |4,705.1   |4,226.8 |4,625.1 | |
|                           |          |        |        | |
|Employees (number at end of|15,851    |15,660  |15,922  | |
|period)                    |          |        |        | |
|                           |          |        |        | |
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, limited partnership interests and income taxes.
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.
end of announcement                               euro adhoc

Further inquiry note:

Christof Bachmair
Media Relations & Information
Tel.: +49 (0)89 6279 1830
E-Mail: christof.bachmair@wacker.com

Branche: Chemicals
ISIN: DE000WCH8881
WKN: WCH888
Index: Midcap Market Index, MDAX, CDAX, Classic All Share, HDAX,
Prime All Share
Börsen: Börse Frankfurt / regulated dealing/prime standard

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