In its financial statements for 2019, Wacker Chemie AG intends to take an impairment of around EUR 750 million on the carrying amount of its production facilities for hyperpure polysilicon. The write-down stems from the continued absence of a recovery in solar-grade polysilicon prices due to the high overcapacity created by Chinese manufacturers.
The exact amount to be written down will become clear during the completion of the financial statements. The impairment will reduce not only the value of property, plant and equipment in the consolidated statement of financial position, but also Group EBIT, WACKER POLYSILICON’s EBIT, and the Group’s net result for the year. Cash flow, on the other hand, will be unaffected by the write-down.
“The expected solar-market recovery has not yet materialized and prices are still very low for polysilicon used in photovoltaic applications,” said WACKER’s CFO, Tobias Ohler, explaining the reasons for the write-down. “At the same time, we only have limited visibility at present of how the market will develop. That is chiefly because China’s construction of new solar installations falls short of initial expectations. An additional burden is the high polysilicon overcapacity in China. The Chinese government is subsidizing this expansion not only with loans and incentives, but also by providing polysilicon producers there with coal-generated electricity at extremely favourable prices. We have adjusted our projections for the coming year accordingly.”
The Munich-based chemical company’s polysilicon strategy remains unchanged. “We are continuing to work hard to reduce our costs and are keeping our focus on polysilicon for semiconductor applications and on high-quality material for monocrystalline solar cells,” explained Ohler.
Due to the impairment, WACKER now expects a net result for 2019 of around EUR 750 million (previous guidance: slightly positive net income). As previously, today’s guidance excludes special income of EUR 112.5 million in insurance compensation, which WACKER booked in Q3 2019. WACKER’s net result would exceed EUR 100 million before the special effect stemming from the write-down but including this insurance compensation.
WACKER is a globally-active chemical company with some 14500 employees and annual sales of around EUR 4.98 billion (2018). WACKER has a global network of 24 production sites, 22 technical competence centres and 50 sales offices.