On presenting its annual report on 14th March, WACKER announced that Group sales for 2016 came in at €5.40 billion, up 2% year over year (2015: €5.30 billion). The rise was mainly due to higher volumes. EBITDA – earnings before interest, taxes, depreciation and amortization – totalled €1,101.4 million in 2016 (2015: €1,048.8 million). This corresponds to an EBITDA margin of 20.4% (2015: 19.8%).
Although special income from advance payments retained and damages received from solar customers was much lower than in 2015, EBITDA in 2016 was 5% above the prior-year value. Special income totalled €20.3 million in full-year 2016 (2015: €137.6 million). Adjusted for this effect, EBITDA reached €1,081.1 million (2015: €911.2 million), a rise of around 19%.
The Group’s EBIT (earnings before interest and taxes) came in at €366.2 million in 2016 (2015: €473.4 million), a year over-year decline of 23%. The company said that a key factor here was that depreciation rose significantly. It amounted to €735.2 million in 2016 (2015: €575.4 million). On the bottom line, WACKER ended 2016 with Group net income of €189.3 million (2015: €241.8 million). That was around 22% less than the year before.
Wacker spent €183.4 million on R&D in 2016, up 4.6% compared with the previous year (2015: €175.3 million).
“WACKER is in very good shape,” said CEO Rudolf Staudigl in Munich. “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.”
In 2016, the Group’s capital expenditures amounted to €427.6 million (2015: €834.0 million). They dropped by about half versus the year before, as expected.
One of the priorities of investing activities last year remained the completion of the new polysilicon site at Charleston, Tennessee (USA). Some €100 million – or about a quarter of total capital spending in 2016 – went toward this project. WACKER finished commissioning the production facilities there in the third quarter of 2016.
A further investment priority in 2016 was expanding capacities for manufacturing downstream products. For example, WACKER increased production capacity for cyclodextrins by 30% at its site in Eddyville, Iowa (USA). At its Burghausen site, it expanded production of functional silicone fluids in several stages. Capital spending for this amounted to some €25 million. Siltronic’s Freiberg site invested in new pulling facilities for manufacturing silicon monocrystals.
In 2016, WACKER began additional investment projects. These include new facilities for silicone products at sites in Jincheon (South Korea) and Jandira (Brazil). In Burghausen, WACKER is building a new reactor for polymeric dispersions and is expanding a plant for hydrophobic specialty grades of silica.
In 2016, sales at WACKER SILICONES rose to €2 billion (2015: €1.94 billion). The main reason for this 3% increase was volume growth amid somewhat lower prices. EBITDA outpaced sales growth, climbing 31% to €361.2 million (2015: €276.2 million). The rise was fuelled by volume growth, good plant utilization and high levels of cost efficiency.
Sales at WACKER POLYMERS grew slightly in 2016, up 1% to €1.20 billion (2015: €1.19 billion). Growth was mainly driven by higher volumes for dispersions and dispersible polymer powders. Lower prices had the opposite effect. EBITDA amounted to €261.0 million, rising by 17% (2015: €222.2 million). This reflected the impact of much higher volumes, good plant capacity utilization and very high levels of cost efficiency.
The sales trend was positive at WACKER BIOSOLUTIONS, too. Sales rose by around 5% in 2016 to €206.4 million (2015: €197.1 million). It was essentially higher volumes that spurred the increase, while lower prices had the opposite effect. EBITDA increased by 15% to €37.0 million (2015: €32.2 million), mainly due to volume growth and high plant utilization.
WACKER POLYSILICON sales climbed 3% to around €1.10 billion (2015: €1.06 billion). The rise was due to substantial volume growth, despite lower average solar-silicon prices. At over 66,000 metric tons, the division sold more polysilicon last year than the year before (2015: 56,000 metric tons). EBITDA amounted to €285.9 million, 29% below the previous year’s level (2015: €402.4 million). The decline was basically caused by lower average prices, start-up costs at the new production site at Charleston, Tennessee (USA), and a substantial reduction in special income from advance payments retained and damages received from customers. In 2016, special income amounted to €20.3 million (2015: €137.6 million).
At Siltronic, sales in 2016 were roughly on a par with the previous year, coming in at €933.4 million (2015: €931.3 million). Volume gains and favourable exchange-rate effects were countered by lower prices. EBITDA improved by about 18% year over year, climbing to €145.9 million (2015: €124.0 million). Positive factors influencing EBITDA included additional cost-reduction measures, high rates of production-capacity utilization and lower currency-hedging expenses.
Proposal on Appropriation of Profits
In 2016, Wacker Chemie AG posted a retained profit of €1,243.8 million under German Commercial Code accounting rules. The Executive and Supervisory Boards will propose a dividend of €2.00 per share (2015: €2.00) at the Annual Shareholders’ Meeting. Based on the number of shares entitled to dividends as of 31st December 2016, the cash dividend corresponds to a payout of €99.4 million. Calculated in relation to WACKER’s average share price in 2016, the dividend yield is 2.6%.
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 €400 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.
During the first 2 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 €1.4 billion in the first quarter of 2017 (Q1 2016: €1.31 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.
WACKER’s chemical business offers good prospects for further growth in 2017. Sales are projected to continue rising at all three chemical divisions. At WACKER SILICONES and WACKER POLYMERS, sales are expected to grow by a mid-single-digit percentage, with all business units contributing. At WACKER BIOSOLUTIONS, the sales forecast is for a low-single-digit percentage increase, chiefly driven by products for the pharmaceutical and agrochemical industries.
Overall, WACKER expects Group sales to rise by a mid-single-digit percentage in 2017. EBITDA – adjusted on a comparable basis to exclude special income – should be on a par with last year. If current market conditions continue during the year, there will be additional opportunities for the EBITDA trend. The Group’s EBITDA margin is projected to be slightly below the year-earlier level due to generally lower prices for its own products and rising raw-material prices. At around €450 million, capital expenditures will edge up slightly versus last year.
More information can be found at www.wacker.com under Investor Relations.