Wacker's 2017 forecast is again for sales growth and high net cash flow

Wacker Chemie AG has met its sales target and exceeded its earnings expectations in 2016. On presenting its annual report, the chemical company announced that group sales came in at EUR5.40 billion, up 2 percent year over year (2015: EUR5.30 billion).The rise was mainly due to higher volumes. EBITDA – earnings before interest, taxes, depreciation and amortization – totaled EUR1,101.4 million in 2016 (2015: EUR1,048.8 million). This corresponds to an EBITDA margin of 20.4 percent (2015: 19.8 percent).

Full-year EBITDA grew by 5 percent

Although special income from advance payments retained and damages received from solar customers was much lower than in 2015, EBITDA was 5 percent above the prior-year value. Special income totaled EUR20.3 million in full-year 2016 (2015: EUR137.6 million). Adjusted for this effect, EBITDA reached EUR1,081.1 million (2015: EUR911.2 million), a rise of around 19 percent. On the bottom line,Wacker ended 2016 with group net income of EUR189.3 million (2015: EUR241.8 million). That was around 22 percent less than the year before.

Continuing the good performance

In 2017, Wacker intends to continue its good performance, despite expectations of higher raw-material prices. For the full year, Wacker aims to lift its sales by a mid-single-digit percentage. Group EBITDA is projected at last year’s level – when adjusted on a comparable basis to exclude special income from damages received and from terminated contractual and delivery relationships with solar customers. Wacker anticipates a high cash inflow from operating activities again in 2017. At about EUR400 million, net cash flow should be at a similar level to the year before. Group net income is also projected to reach the year-earlier level.

Group expects growing EBITDA in Q1 2017

During the first two months of the current year, Wacker’s business developed positively. In chemicals, and at Siltronic and Wacker Polysilicon, sales for the first two months were clearly above the comparable values of last year. Overall, Wacker expects to generate sales of some EUR1.4 billion in the first quarter of 2017 (Q1 2016: EUR1.31 billion). In addition to volume growth, Wacker is achieving better prices than a year earlier, especially for semiconductor wafers. As a result, the group expects EBITDA to grow significantly in Q1 2017.

Broadly positive trend

"Wacker is in very good shape,” said CEO Rudolf Staudigl in Munich on Tuesday. "We expect volumes to rise at every division. In the industry sectors relevant to our business, the trend will be broadly positive in 2017. That is why we are confident of increasing sales by a slightly higher percentage than last year. We are, however, facing headwind from raw-material prices. At present, they are rising significantly and this could impact earnings. If current market conditions remain unchanged during the year, we definitely see additional upward potential for EBITDA – over and above our present expectations.”

Business divisions

In 2016, sales at Wacker Silicones topped the two-billion-euro mark for the first time, rising to EUR2.00 billion (2015: EUR1.94 billion). The main reason for this 3-percent increase was volume growth amid somewhat lower prices. EBITDA outpaced sales growth, climbing 31 percent to EUR361.2 million (2015: EUR276.2 million). The rise was fueled by volume growth, good plant utilization and high levels of cost efficiency.

Sales at Wacker Polymers grew slightly in 2016, up 1 percent to around EUR1.20 billion (2015: EUR1.19 billion). Growth was mainly driven by higher volumes for dispersions and dispersible polymer powders. Lower prices had the opposite effect. EBITDA amounted to EUR261.0 million, rising by around 17 percent (2015: EUR222.2 million). This reflected the impact of much higher volumes, good plant capacity utilization and very high levels of cost efficiency.