WACKER Raises Full-Year EBITDA Forecast
Wacker Chemie AG concluded the first quarter of 2016 in line with its expectations. The Munich-based chemical company’s sales were down marginally year over year. Earnings before interest, taxes, depreciation and amortization (EBITDA) were considerably lower than in Q1 2015, influenced by start-up costs for the new site at Charleston, Tennessee (USA). Compared with the preceding quarter, however, WACKER achieved a substantial increase in both sales and EBITDA.
The Group posted sales of € 1,314.3 million in the reporting quarter (Q1 2015: €1,334.9 million), down close to 2 percent year over year. This slight decrease was chiefly due to the fact that solar-silicon and semiconductor-wafer prices were lower than a year earlier. Compared with the prior quarter (€1,232.9 million), however, sales grew by around 7 percent, primarily thanks to stronger customer demand and volume growth.
EBITDA amounted to €228.9 million in the reporting period (Q1 2015: €267.1 million), down about 14 percent year over year, but almost 22 percent higher than in Q4 2015 (€188.4 million). The EBITDA margin came in at 17.4 percent in the reporting quarter, after 20.0 percent in Q1 2015 and 15.3 percent in Q4 2015. Group earnings before interest and taxes (EBIT) amounted to €58.9 million in Q1 2016 (Q1 2015: €126.3 million), with a corresponding EBIT margin of 4.5 percent (Q1 2015: 9.5 percent). Net income for the reporting quarter amounted to €16.1 million (Q1 2015: €70.6 million) and earnings per share came in at €0.41 (Q1 2015: €1.42).
Low price levels for semiconductor wafers and solar silicon as well as the anticipated start-up costs of around €30 million for the new site in Charleston had an impact on WACKER’s earnings from January through March 2016. Wafer prices averaged somewhat lower than a year ago, while prices for solar silicon were down substantially compared with Q1 2015. However, market prices for polysilicon have been recovering steadily since mid-February, benefiting WACKER’s polysilicon business. Combined EBITDA for the three chemical divisions was around 19 percent higher than a year ago, with volume growth and good cost levels having a positive influence.
WACKER has raised its earnings forecast for full-year 2016. EBITDA – adjusted on a comparable basis to exclude special income from damages received and from terminated contractual and delivery relationships with solar customers – is expected to rise between 5 and 10 percent against last year. WACKER had previously anticipated a slight increase in adjusted EBITDA year over year. The company has raised its forecast due to the chemical divisions’ strong and profitable start to the year and to the improving polysilicon pricing environment. The company still expects to post a low single-digit percentage increase in Group sales.
“WACKER had a good start to the new year given the underlying conditions,” said CEO Rudolf Staudigl in Munich on Thursday. “Our chemical business, in particular, performed strongly and profitably from January through March. As expected, our semiconductor business was impacted by the continued weak demand for smartphones, tablets and PCs. In our polysilicon segment, sales volumes were substantially higher than a year ago. We have experienced a slight but steady increase in solar-silicon prices over the past several weeks. Our sales and earnings trend in the opening quarter and our current order intake have made us even more confident about the months ahead.”
Regions
The Group’s sales in Asia totaled €551.9 million in Q1 2016. That was 4 percent more than in the preceding quarter (€530.6 million), but 3 percent less than in Q1 2015 (€569.3 million) primarily due to price effects. Overall, the company generated 42 percent (Q1 2015: 43 percent) of its sales in Asia. Thus, the region remains the Group’s largest market.
In Europe, WACKER achieved sales of €292.3 million in Q1 2016 (Q1 2015: €297.0 million) – a year-over-year decrease of 2 percent, but 6 percent higher than in the preceding quarter (€275.1 million). While business with semiconductors, silicones and biopharmaceuticals in Europe generated year-over-year growth, sales of polysilicon and construction polymers declined.
The trend in Germany was positive in the period January through March, with Group sales totaling €182.1 million (Q1 2015: €176.0 million). That was an increase of almost 4 percent from a year ago. Sales rose by 12 percent relative to Q4 2015 (€163.2 million). Amid good demand, all business divisions surpassed their respective prior-year and prior-quarter figures.
In the Americas, sales of €233.0 million were down 4 percent from a year ago (Q1 2015: €243.8 million). Most of this decline stemmed from lower semiconductor-wafer and solar-silicon sales. Compared with Q4 2015 (€212.6 million), however, WACKER grew its sales by almost 10 percent, with all three chemical divisions posting substantial increases quarter over quarter.
In total, WACKER generated about 86 percent of its Q1 2016 sales with customers outside Germany (Q1 2015: 87 percent).
Capital Expenditures and Net Cash Flow
In Q1 2016, the Group’s capital expenditures amounted to €111.2 million (Q1 2015: €174.9 million), down 36 percent year over year.
WACKER’s investing activities remained centered on completion of the new polysilicon site at Charleston, Tennessee (USA). This project accounted for more than half of the Group’s total investment spending during the reporting quarter. Start-up of the Charleston production facilities progressed as scheduled in the January-through-March period. WACKER already produced and sold initial quantities of polysilicon from the plant in the reporting quarter. Other investment spending focused on enhancing technology and modernizing crystal-pulling facilities at Siltronic.
The Group’s net cash flow was €-12.0 million in Q1 2016, after €17.4 million in Q1 2015. The main reason for this decline was the lower net income for the period.
Employees
Relative to the preceding quarter, the number of WACKER employees worldwide rose by 1 percent in Q1 2016. On March 31, 2016, the Group had 17,048 employees (Dec. 31, 2015: 16,972). As of the end of the reporting quarter, WACKER had 12,266 employees in Germany (Dec. 31, 2015: 12,251) and 4,782 at its international sites (Dec. 31, 2015: 4,721).
