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As stipulated by IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations), WACKER is retrospectively reporting the net income of Siltronic AG and its subsidiaries for 2016 as income from discontinued operations. Since March 15, 2017, WACKER’s stake in Siltronic has been accounted for using the equity method. Where applicable, the figures for Q3 2016 and the first nine months of 2016 given in this press release have been adjusted accordingly and are therefore comparable with the latest figures
Wacker Chemie AG substantially in- creased its sales and EBITDA in the third quarter of 2017, both year over year and quarter over quarter. The Munich-based chemical company posted sales of EUR 1311.6 million in the reporting quarter (Q3 2016: EUR 1150.8 million). That was 14 % more than a year ago and 8 % higher than in Q2 2017 (EUR 1218.3 million). The main reason for the increase versus Q3 2016 was the fact that overall volumes for silicones, polymer products and polysilicon were markedly higher year over year. As a result, WACKER more than compensated for negative exchange-rate effects from a stronger euro and for prices that were somewhat lower on balance.
- GROUP SALES FOR Q3 2017 REACH EUR1.31 BILLION, UP14 % YEAR OVER YEAR AND 8 % QUARTER OVER QUARTER
- EBITDA OF EUR298 MILLION IS 13 % ABOVE LAST YEAR AND 18 % HIGHER THAN A QUARTER AGO
- NET INCOME FOR Q3 AMOUNTS TO EUR104 MILLION
- NET CASH FLOW CLEARLY POSITIVE AT EUR205 MILLION
- GROUP EARNINGS FORECAST RAISED: FULL-YEAR EBITDA EXPECTED TO BE AT EUR 1 BILLION, WITH SALES GROWTH UNCHANGED AT A MID-SINGLE-DIGIT PERCENTAGE
WACKER generated EBITDA of EUR298.0 million in Q3 2017. That was 13 % higher than last year (EUR264.0 million) and 18 % more than a quarter ago (EUR253.4 million). The increase was prompted mainly by volume-driven sales growth and by income from the equity investment in Siltronic. As a result, WACKER more than compensated for the year-over-year rise in raw-material prices. High plant utilization also strengthened EBITDA in the reporting quarter. The Group’s EBITDA margin from July through September 2017 was 22.7 % (Q3 2016: 22.9 %). A quarter ago, it was 20.8 %. Group earnings before interest and taxes (EBIT) amounted to EUR 155.3 million in Q3 2017 (Q3 2016: EUR 108.1 million). That was a year-over- year increase of 44 % and yielded an EBIT margin of 11.8 % (Q3 2016: 9.4 %). Net income for the reporting quarter amounted to EUR 104.2 million (Q3 2016: EUR 67.5 million) and earnings per share came in at EUR 2.04 (Q3 2016: EUR 1.29).
WACKER has raised its earnings forecast for full-year 2017. EBITDA is now expected to be at EUR 1 billion, exceeding last year’s adjusted figure of EUR 955.5 million. Previously, WACKER anticipated that EBITDA would be between EUR 900 million and EUR 935 million. The reasons for the upgrade are the Group’s strong business performance as well as the income from its stake in Siltronic AG. Group sales are ex- pected, as before, to rise by a mid-single-digit %age compared with last year’s EUR 4634.2 million.
“At WACKER, the third quarter was the most successful so far this year,” said Group CEO Rudolf Staudigl in Munich on October 26. “Demand for silicones and polysilicon was especially strong, with the two divisions posting news volume records. Our robust performance more than compensated for the headwinds from markedly higher raw- material prices and a stronger euro. Given the continued strength of business, we are upgrading our forecast. This means our 2017 earnings will be higher than last year.”
Regions
In Q3 2017, Group sales continued to climb in every region except for the Americas, where sales of EUR207.0 million were 1 % lower year over year (Q3 2016: EUR208.8 million) due to currency-exchange effects. Asia posted the biggest increase, with sales up 29 % to EUR536.4 million (Q3 2016: EUR416.4 million). In Europe, sales of EUR511.5 million were 7 % higher year over year (Q3 2016: EUR476.3 million).
Capital Expenditures and Net Cash Flow
In Q3 2017, the Group’s capital expenditures amounted to EUR 74.9 million (Q3 2016: EUR76.6 million), a decline of 2 %. Investments went primarily toward expanding capacity for silicone and polymer products. Net cash flow from continuing operations amounted to EUR 205.3 million in Q3 2017 (Q3 2016: EUR 208.9 million).
Employees
WACKER’s global workforce edged up in the reporting quarter. The Group had 13,798 employees as of September 30, 2017 (June 30, 2017: 13,689). At the end of the reporting quarter, 9,973 employees (June 30, 2017: 9,887) worked at WACKER sites in Germany and 3,825 (June 30, 2017: 3,802) at international locations.
Business Divisions
WACKER SILICONES generated total sales of EUR559.3 million in Q3 2017 (Q3 2016: EUR503.1 million), up 11 %. Volume growth was the main reason for this increase, with better prices also lifting sales somewhat. Compared with a quarter ago (EUR548.7 million), the division’s sales rose 2 %. EBITDA at WACKER SILICONES reached EUR128.0 million in the reporting quarter, 27 % higher than a year ago. In addition to sales growth, product-mix effects and high production output enhanced profitability. Relative to a quarter ago (EUR110.8 million), WACKER SILICONES’ EBITDA climbed 16 %. The EBITDA margin improved to 22.9 % in Q3 2017, after 20.0 % in Q3 2016 and 20.2 % in the preceding quarter.
Sales at WACKER POLYMERS totalled EUR 317.9 million in the reporting quarter, 3 % higher than a year ago (EUR 308.2 million). Volume growth was the main reason for this increase. Compared with the preceding quarter (EUR 335.3 million), sales declined by 5 %, in part due to exchange-rate effects. The division’s EBITDA amounted to EUR57.0 million in Q3 2017 (Q3 2016: EUR 73.2 million). This decline of 22 % was mainly caused by a substantial year-over-year in- crease in raw-material prices. The division announced price rises to counter this development. EBITDA contracted by 9 % versus a quarter ago (EUR 62.4 million), mainly due to lower sales. The reporting- quarter EBITDA margin was 17.9 %, after 23.8 % a year earlier and 18.6 % a quarter ago.
WACKER BIOSOLUTIONS reported total sales of EUR 53.2 million in Q3 2017. That was 2 % below the year-earlier period (EUR 54.0 million), but 3 % higher than in the preceding quarter (EUR 51.4 million). The main causes of the slight year-over-year decline were somewhat lower prices in certain product segments and negative exchange-rate effects. The division’s EBITDA came in at EUR 10.3 million in the reporting quarter, down 9 % from a year ago (EUR 11.3 million), mainly due to lower sales. On the other hand, the division exceeded its EBITDA of a quarter ago (EUR 9.1 million) by 13 %. The EBITDA margin was 19.4 %, after 20.9 % last year and 17.7 % in Q2 2017.
WACKER POLYSILICON achieved total sales of EUR 341.7 million in the reporting quarter. That was 35 % more than a year ago (EUR 253.0 million) and 39 % higher versus the preceding quarter (EUR 246.7 million). The strong rise was mainly due to substantial year- over-year and quarter-over-quarter volume growth, which was supported by sales from inventory. WACKER POLYSILICON’s reporting-quarter EBITDA came in at EUR 85.0 million, compared with EUR 82.3 million last year. That was an increase of 3 %. Relative to a quarter earlier (EUR 71.3 million), EBITDA grew by 19 %. From July through September 2017, the division’s EBITDA margin was 24.9 %, after 32.5 % in Q3 2016 and 28.9 % in Q2 2017. Substantially higher sales lifted earnings, while product-mix and inventory effects dampened the EBITDA margin.
Outlook
In Q1 2017, WACKER reduced its stake in Siltronic AG to 30.8 per- cent. As stipulated by IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations), WACKER is retrospectively reporting the net income of Siltronic AG and its subsidiaries for 2016 and Q1 2017 as income from discontinued operations. Since March 15, 2017, WACKER’s stake in Siltronic has been accounted for using the equity method.
At the time of publishing its Q1 2017 report and then its Q2 2017 report, the company revised upward its expectations for WACKER SILICONES, given the strong demand for silicone products.
WACKER also upgraded its forecast for Group earnings in the Q2 2017 report.
In the present Interim Report, WACKER has once again revised up- ward its earnings forecast for the Group. Full-year EBITDA is anticipated to be at EUR1 billion, exceeding last year’s adjusted figure of EUR955.5 million. The reasons for the upgrade are the company’s strong business performance and also the income included in the forecast from WACKER’s stake in Siltronic AG. The full-year EBITDA margin is likely to be on a par with last year’s level. Previously, WACKER expected it to be somewhat lower than a year ago. WACKER has also adjusted or stated more precisely its estimates for investment spending, net cash flow, ROCE and net financial debt.
The full-year 2017 projections for WACKER’s financial performance indicators – based on the adjusted 2016 figures – are as follows:
Group sales are projected, as before, to rise by a mid-single-digit percentage compared with last year’s EUR 4,634.2 million.
The EBITDA margin is expected to be on a par with last year (20.6 %).
Full-year EBITDA is anticipated to be at EUR1 billion.
ROCE will be slightly above last year’s figure of 5.6 %.
Net cash flow is expected to be clearly positive in 2017, but somewhat lower than last year (EUR 361.1 million).
In 2017, capital expenditures will be at the year-earlier level (EUR 338.1 million, without Siltronic).
As before, depreciation is expected to come in at around EUR 600 million, slightly below last year’s level (EUR 618.2 million).
Net financial debt will amount to around EUR 500 million.