WACKER Remains Optimistic

After last year's weak fourth quarter, Wacker Chemie AG recorded higher volumes amid rising demand in the first quarter of 2012. The Munich-based chemical company's sales and earnings both showed a marked improvement over Q4 2011. The very strong figures for the prior-year's first quarter could not be matched, however. The Group generated first-quarter sales of €1,194.3 million, down 8 percent from Q1 2011 (€1,291.7 million), but up 18 percent on Q4 2011 (€1,011.6 million). Sales at the Group were driven mainly by higher volumes in the quarter under review. In contrast, significantly lower prices held back sales, particularly in the solar-silicon business, but also in the area of semiconductor wafers. Changes in exchange rates were only of minor importance. 

Lower solar-silicon margins and non-recurring effects impacted WACKER's profitability in the first quarter of 2012. The Group generated earnings before interest, taxes, depreciation and amortization (EBITDA) of €211.8 million in the period under review, down 40 percent from a year ago (€351.0 million). Compared with Q4 2011 (€110.8 million), however, the Group almost doubled its EBITDA. The EBITDA margin in the period reached 17.7 percent (Q1 2011: 27.2 percent). The Group's first-quarter earnings before interest and taxes (EBIT) amounted to €82.4 million (Q1 2011: €245.9 million), which corresponds to an EBIT margin of 6.9 percent (Q1 2011: 19.0 percent). In the fourth quarter of 2011, EBIT had been €-55.0 million. Net income for the period was €40.0 million (Q1 2011: €168.0 million), which represents earnings per share of €0.84 (Q1 2011: €3.39).

Aside from the effect of lower prices on revenues, the continued high cost of raw materials and energy was also a key factor holding back earnings in the quarter. At Siltronic, non-recurring expenses relating primarily to the announced closure of the 150 mm wafer production line at Portland reduced EBITDA by some €15 million. Furthermore, higher depreciation resulting from additions to noncurrent assets also had a part in reducing both EBIT and net income for the period. The new polysilicon plant at Nuenchritz was one of the contributing factors here. During the quarter, WACKER POLYSILICON received around €37 million in advance payments and damages from polysilicon customers exiting the solar business. This had a positive effect on earnings.

For full-year 2012, WACKER's forecast for Group sales remains unchanged at approximately €5 billion. EBITDA for fiscal 2012 is expected to be well below the previous year's figure of €1.1 billion.

"In view of the general situation, WACKER saw a good start into fiscal 2012," said CEO Rudolf Staudigl on Friday in Munich. "Encouragingly, customer demand gained appreciable momentum in many business segments during the first quarter of 2012. Although the general economic environment remains challenging, especially in the first half of the year, it seems that the downward trend has now come to an end "“ a reassuring signal for the months ahead."

Regions

In the period under review, WACKER's business performance varied across individual regions. One of the major reasons for this divergence is the strong solar-industry shift toward Asia, where the Group increased sales by 3 percent. With first-quarter sales of €487.1 million (Q1 2011: €471.9 million), Asia is WACKER's largest sales market.

Europe showed a significantly weaker business performance. Along with declining solar-sector sales, cautious customer ordering patterns also left their mark. In Germany, first-quarter sales were €184.6 million in 2012 "“ down 25 percent from a year ago (€247.2 million). Sales in the rest of Europe also contracted. At €276.3 million, they dropped over 11 percent against the prior-year period (€311.9 million).

In the Americas, WACKER's chemical business grew during the quarter under review. However, semiconductor-wafer and polysilicon sales there posted declines. Total sales for the region from January through March 2012 amounted to €207.3 million "“ a drop of 6 percent from a year earlier (€220.5 million). In the markets combined under "Other regions," first-quarter sales totaled €39.0 million (Q1 2011: €40.2 million). Overall, WACKER generated about 84 percent of its first-quarter sales with customers outside Germany (Q1 2011: 81 percent).