WACKER concludes the third quarter of 2016 with good results
In the third quarter of 2016, Wacker Chemie AG posted sales slightly below the previous year’s figure, but earnings before interest, taxes, depreciation and amortization (EBITDA) were significantly higher than in the previous year. In the quarter under review, the Munich Chemicals Group generated sales revenues of € 1,346.1 million (Q3 2015: € 1,357.9 million). This is a minus of 1 percent. The lower prices for solar silicon, semiconductor wafers and some chemical products are the main reason for this slight decline. The overall increase in sales volumes could not fully offset the price effect. Compared to the previous quarter (€ 1,386.2 million), sales declined by 3 percent. This is mainly due to lower sales volumes for polysilicon and some chemical products.
WACKER generated an EBITDA of € 300.9 million in the third quarter of 2016. This is 14 percent more than in the previous year (€ 264.3 million) and corresponds to the value of the previous quarter (€ 300.0 million). From July to September 2016, the WACKER Group generated an EBITDA margin of 22.4 percent (Q3 2015: 19.5 percent). In the previous quarter, it was 21.6 percent. The main reason for the significant increase in EBITDA on a year-by-year basis is the good level of cost.
Consolidated earnings before interest and taxes (EBIT) for the third quarter of 2016 totaled € 115.2 million (Q3 2015: € 125.5 million). This is 8 percent less than a year ago and represents an EBIT margin of 8.6 percent (Q3 2015: 9.2 percent). Significantly higher depreciation is a reason for the decline in EBIT compared to the previous year. The quarterly result for the quarter was € 67.5 million (Q3 2015: € 58.2 million) and earnings per share amounted to € 1.29 (Q3 2015: € 1.21).
The forecast for the full year 2016 remains unchanged. The company also expects a slight single-digit percentage increase in Group sales. EBITDA is expected to be 5 to 10 percent higher than the previous year on a like-for-like basis – excluding non-recurring income from compensation payments and the termination of contractual and supply relationships with solar customers. After the good business development in the first half of the year, WACKER had already announced at the end of July that the adjusted EBITDA was expected at the upper end of this margin.
“WACKER has beaten well from July to September under not always simple conditions,” said Group CEO Rudolf Staudigl on Thursday in Munich. “Both in the chemicals business and at Siltronic, EBITDA grew further compared to the previous year and the previous quarter. The market environment for our polysilicon business was more difficult, as solar customers in September ordered much less material than in the previous months. In the meantime, the signals are growing that the demand for solar silicon is reviving. “
regions
In the third quarter of 2016, sales, with the exception of Germany, developed modestly in all regions. In Asia, consolidated sales amounted to € 571.5 million in the quarter under review. This is about 1 percent less than in the previous year (€ 575.8 million). In the Europe region, WACKER generated revenues of € 302.0 million (Q3 2015: € 316.5 million) between July and September 2016. This is about 5 percent less than a year ago. The business in Germany has developed positively. Sales revenues in the reporting quarter totaled € 182.9 million (Q3 2015: € 173.6 million). That is about 5 percent more than a year ago. Sales in the Americas region amounted to € 238.6 million (Q3 2015: € 238.9 million) on the previous year’s level.
Investment and net cash flow
The Group’s investments amounted to € 98.9 million in the third quarter of 2016 (Q3 2015: € 220.5 million). This is 55 percent less than a year ago. The funds were used, among other things, to expand the capacities for finished silicon products and to further automate production at Siltronic. The commissioning of the plants at the new polysilicon site Charleston in the US state of Tennessee was completed as planned in the quarter.
The Group’s net cash flow in the third quarter of 2016 was € 229.9 million (Q3 2015: € 36.2 million). The main reason for this strong increase is the higher gross cash flow, with significantly lower investments.
Employee
The number of WACKER employees worldwide remained almost unchanged in the third quarter of 2016 compared to the previous quarter. As at the reporting date of September 30, the Group had 17,136 employees (30 June 2016: 17,081). At WACKER’s locations in Germany, 12,179 employees (30.06.2016: 12,230) worked at the end of the quarter, while at international locations, there were 4,957 (30 June 2016: 4,851) employees.
Business areas
In the third quarter of 2016, WACKER SILICONES generated total revenues of € 503.1 million at the level of the previous year (€ 501.9 million). While sales volumes were somewhat higher than a year ago, prices for some product groups declined slightly. Negative currency effects also slightly reduced sales. Sales in the previous quarter (€ 514.4 million) fell by around 2 per cent as a result of price and volume. At € 100.7 million, EBITDA of WACKER SILICONES was up 23 percent year-on-year (€ 81.6 million). Compared to the previous quarter (€ 93.7 million), the increase amounted to 8 per cent. The high capacity utilization of the production facilities of an average of over 90 percent and a low cost level have had a positive effect on the profitability of the division. The EBITDA margin improved to 20.0 percent in the third quarter of 2016, compared to 16.3 percent in the previous year and 18.2 percent in the previous quarter.
At € 308.2 million, WACKER POLYMERS ‘total sales were down 2 percent year-on-year (€ 313.0 million) and 5 percent less than the previous quarter (€ 325.7 million). The significantly higher sales volumes for dispersions compared to the previous year did not quite compensate for slightly lower prices for some product groups. Negative currency effects also slowed sales slightly. On a quarter-on-quarter basis, average prices remained virtually unchanged, but total sales volumes were lower than in the second quarter of 2016. The division’s EBITDA grew in the quarter under review to € 73.2 million (previous year: € 64.7 million). This is an increase of 13 percent. The main reason for this is the low cost level, which also contributed to the good utilization of the production facilities by almost 90 percent. Compared to the previous quarter (€ 78.2 million) EBITDA declined by about 6 percent. In addition to lower sales, the higher prices for the raw material ethylene were also reflected in the quarterly comparison. The EBITDA margin in the quarter under review was 23.8 percent, compared with 20.7 percent in the previous year and 24.0 percent in the previous quarter.
WACKER BIOSOLUTIONS generated a total turnover of € 54.0 million between July and September 2016. This is 7 percent more than a year ago (€ 50.4 million) and 2 percent more than in the second quarter of 2016 (€ 53.2 million). Higher sales volumes in some segments are the main cause of this increase. On the other hand, the slightly lower prices in the yearly and quarterly comparison have slowed sales. The EBITDA of WACKER BIOSOLUTIONS in the quarter under review was € 11.3 million, well above the previous year (€ 7.2 million) and the previous quarter (€ 9.0 million). The main reason for this strong increase was the sales plus, positive effects from the product mix as well as the good cost situation of the division, also due to the high capacity utilization of the production facilities. The EBITDA margin amounted to 20.9 percent, compared to 14.3 percent in the previous year and 16.9 percent in the second quarter of 2016.
WACKER POLYSILICON generated a total turnover of € 253.0 million in the quarter under review. This is 7 percent less than in the previous year (€ 271.4 million) and in the previous quarter (€ 272.2 million). The almost unchanged sales volumes compared with the previous year were lower average prices for solar silicon. Compared to the previous quarter, sales volumes fell significantly as customers ordered less solar silicon towards the end of the quarter. WACKER POLYSILICON’s EBITDA amounted to € 82.3 million between July and September 2016 (Q3 2015: € 91.8 million). The main reason for this decline of 10 percent is withheld advance payments and compensation payments of € 17.8 million in the third quarter of 2015. In the quarter under review, no such special income was recognized. Adjusted for this figure, EBITDA grew 11 percent year-on-year. EBITDA rose by 6 percent compared to the previous quarter (€ 77.7 million). Here, it is noticeable that in the quarter under review no start-up costs for the commissioning of the new Charleston location have been incurred. From July to September 2016, the WACKER POLYSILICON division achieved an EBITDA margin of 32.5 percent, after 33.8 percent in the third quarter of 2015 and 28.5 percent in the second quarter of 2016.
Siltronic recorded a total turnover of € 236.7 million in the third quarter of 2016. This is about 3 percent more than in the previous year (€ 230.6 million). Higher volumes than a year ago, also from the sale of inventories, offset the lower average prices. Positive currency effects have also fostered sales growth. Compared to the previous quarter (€ 229.8 million), sales also grew by 3 percent. Slightly higher sales volumes than in the second quarter of 2016 with almost unchanged average prices and positive currency effects are the reasons for this increase. Siltronic’s EBITDA amounted to € 36.9 million in the quarter under review (Q3 2015: € 29.4 million). This is a plus of 26 percent. In the third quarter of 2015, losses from currency hedging reduced the Group’s EBITDA by € 15.5 million. In the quarter under review, only € 6.8 million was incurred. Compared to the previous quarter (€ 35.0 million), EBITDA grew by around 5 percent. In addition to the higher sales, the good cost development also had a positive effect on the earnings performance of Siltronic during the quarterly comparison. The Siltronic EBITDA margin was 15.6 percent in the quarter, compared to 12.7 percent in the third quarter of 2015 and 15.2 percent in the second quarter of 2016.
