Wacker provides financial report
Wacker Chemie AG expanded its business in April-through-June 2013 compared with the preceding quarter. This growth primarily stems from increased demand at its chemical divisions. Volumes in many business areas outperformed both Q2 2012 and Q1 2013. Products for the construction industry experienced particularly strong demand due to seasonal effects. Sales and earnings at the Munich-based chemical company were higher than in Q1 2013. As already expected, though, WACKER did not match the prior-year quarter's figures. WACKER posted sales of €1,150.3 million from April through June 2013, after €1,222.5 million last year, a decline of just under 6 percent. The low price levels for solar silicon and semiconductor wafers were the principal reason why sales did not reach the Q2 2012 figure. Compared with the preceding quarter (€1,076.3 million), however, sales were up roughly 7 percent.
In Q2 2013, WACKER achieved earnings before interest, taxes, depreciation and amortization (EBITDA) of €188.2 million "“ down some 22 percent from a year ago (€242.1 million), but over 14 percent above Q1 2013 (€164.5 million). The EBITDA margin for the second quarter was 16.4 percent, after 19.8 percent in Q2 2012 and 15.3 percent in Q1 2013. The Group's earnings before interest and taxes (EBIT) from April to June 2013 totaled €52.5 million (Q2 2012: €111.9 million). The corresponding EBIT margin was 4.6 percent, after 9.2 percent a year ago. Net income for the quarter under review was €15.1 million (Q2 2012: €61.1 million) and earnings per share amounted to €0.27 (Q2 2012: €1.19).
WACKER's earnings trend from April through June was once again marked by the low price levels for polysilicon. Solar-silicon prices in the second quarter were down about one-third from their prior-year levels. For semiconductor wafers, prices were roughly 10 percent lower than in Q2 2012. On the other hand, total EBITDA at the three chemical divisions climbed to €116.6 million, almost 4 percent above Q2 2012 (€112.3 million) and 21 percent up on Q1 2013 (€96.3 million). The increase was chiefly prompted by volume growth, which, in some cases, was due to seasonal effects. Second-quarter EBITDA included €23.8 million (Q2 2012: €19.4 million) in retained advance payments and damages stemming from terminated contracts with polysilicon customers.
WACKER has specified its sales forecast for full-year 2013, with Group sales now expected to reach €4.5 billion, after €4.63 billion last year. EBITDA for fiscal 2013 is still projected to fall short of the previous year's figure (€787 million).
"In the face of a persistently difficult market and competitive environment, WACKER closed the first half of 2013 with satisfactory results," said CEO Rudolf Staudigl on Tuesday in Munich. "Our chemical divisions performed well during the April-through-June period. In polysilicon, low price levels and trade-policy risks remain a challenge. A compromise has now been found in the solar dispute between the European Union and China. If this settlement is implemented, it could mark the start of another global photovoltaics upturn."
Asia was once again by far the most important market for WACKER products in the quarter under review. The Group achieved sales of €448.3 million in the region between April and June 2013, down about 8 percent from a year ago (€489.3 million). Demand for WACKER's chemical products, in particular, continued to rise in the second quarter. However, higher sales in chemicals could not compensate for polysilicon and semiconductor-wafer price declines. Compared with Q1 2013 (€434.7 million), WACKER increased its Asian sales by 3 percent.
In Europe, WACKER posted April-through-June sales of €289.2 million, thus almost matching the level of a year ago (€292.2 million). The chemical divisions improved their sales, but semiconductor wafers and polysilicon fell well short of their prior-year figures, largely due to lower prices. The generally weak economic situation dampened business in Europe year on year. Compared with the preceding quarter (€256.7 million), the Group's sales in this region rose by almost 13 percent.
In Germany, the main factor slowing sales was the solar sector's ongoing shift to Asia. WACKER generated second-quarter sales of €164.7 million in Germany, down almost 5 percent from the year-earlier period (€173.0 million), but up 3 percent on the preceding quarter (€159.9 million).
In the Americas, sales of €201.9 million were down 10 percent from a year ago (€224.4 million). Most of this decline stemmed from substantially weaker semiconductor-wafer sales. However, WACKER surpassed its Q1 2013 sales of €183.7 million by approximately 10 percent.
In the markets combined under "Other Regions," second-quarter sales totaled €46.2 million "“ rising 6 percent on last year (€43.6 million) and 12 percent on Q1 2013 (€41.3 million). Overall, WACKER generated some 86 percent of its second-quarter sales with customers outside Germany (Q2 2012: 86 percent).
WACKER SILICONES posted total sales of €437.2 million in Q2 2013, up more than 3 percent against the prior-year period (€422.9 million) and almost 9 percent more than in Q1 2013 (€402.1 million). The division expanded its second-quarter volumes for all major product groups. WACKER SILICONES' EBITDA amounted to €66.3 million in the quarter under review, almost 11 percent higher than in Q2 2012 (€59.9 million) and a good 23 percent higher than in the preceding quarter (€53.7 million). The EBITDA margin for 2013's second quarter was 15.2 percent, after 14.2 percent last year and 13.4 percent in the first quarter of 2013. Volume growth and by good fixed-cost coverage from high plant utilization were among the factors that positively impacted the division's earnings.
In a market environment shaped by the ongoing challenges of consolidation across the solar industry and by trade-policy risks, WACKER POLYSILICON generated total sales of €203.3 million between April and June 2013 (Q2 2012: €286.8 million) "“ 29 percent less than a year earlier. This decline was mainly caused by solar-silicon prices, which were about one-third lower than in the same period last year. Compared with Q1 2013 (€235.4 million), sales decreased by almost 14 percent. The main factor here was that the second quarter did not reach the first quarter's very high volumes, since there were fewer orders on the books. Fears that China might retroactively introduce punitive tariffs on polysilicon imports had resulted in customers taking delivery of lower quantities in Q2 relative to Q1. Prices for polysilicon remained stable, yet low, quarter on quarter. Amid lower prices for solar silicon, second-quarter EBITDA at WACKER POLYSILICON declined by almost 47 percent to €64.0 million (Q2 2012: €120.3 million). EBITDA included €23.8 million from retained advance payments and damages for terminated polysilicon contracts (Q2 2012: €19.4 million). In Q1 2013, this item had amounted to €32.2 million. Compared with the first three months of 2013 (€52.5 million), WACKER POLYSILICON increased its EBITDA by over 22 percent. This was partly the result of higher plant utilization compared with the preceding quarter. The EBITDA margin for the second quarter was 31.5 percent, after 41.9 percent in Q2 2012 and 22.3 percent in Q1 2013.
The world economy is expected to gain some momentum during the second half of 2013, though the pace of regional expansion will remain very varied. The risks to world trade and growth due to the sovereign-debt and financial crisis in the USA and Europe are still as strong as ever.
In 2013 and the following years, three factors will shape WACKER's business strategy: expansion into emerging markets and regions, innovations, and the substitution of existing market offerings with WACKER products.
