WACKER raises full-year forecast after strong quarter

Munich, Germany – Wacker Chemie AG continued on its growth trajectory in Q2 2022. The Munich-based chemical company generated sales of €2,174.2 million in the reporting quarter (Q2 2021: €1,501.0 million), up by 45 percent year over year. Relative to the preceding quarter (€2,076.2 million), sales were up by 5 percent, benefiting from product-mix and volume effects, as well as from the year-over-year rise in the US dollar. All four business divisions contributed to this sales growth. Polysilicon performed particularly well, with sales increasing by 68 percent year over year, due to higher prices. The two chemical divisions – WACKER SILICONES and WACKER POLYMERS – each grew by more than 40 percent and demand was particularly strong, for example, for products used in adhesives and industrial coatings. Business in biotechnological products and fine chemicals also showed solid growth, with sales up by 16 percent.

EBITDA (earnings before interest, taxes, depreciation and amortization) totaled €625.8 million in Q2 2022, almost double the figure of a year earlier (€320.9 million). Here, again, improved prices and product-mix effects were key growth drivers. Very high plant-utilization rates also had a positive impact on EBITDA. On the other hand, significantly higher energy and raw-material prices had a negative effect. They were also the reason for a slight decline in EBITDA compared with a quarter earlier (€643.7 million). WACKER’s reporting-quarter EBITDA margin was 28.8 percent (Q2 2021: 21.4 percent). The margin in the preceding quarter was 31.0 percent.

Reporting-quarter EBIT (earnings before interest and taxes) came in at €528.5 million, more than doubling year over year (Q2 2021: €228.0 million). That corresponded to an EBIT margin of 24.3 percent (Q2 2021: 15.2 percent). Relative to Q1 2022 (€549.5 million), EBIT was slightly lower. Depreciation and amortization amounted to €97.3 million in the second quarter (Q2 2021: €92.9 million). Net income for the period totaled €390.9 million (Q2 2021: €173.2 million), corresponding to earnings per share of €7.67 (Q2 2021: €3.39).

Despite significant risks to the global economy – due in particular to the impact of the war in Ukraine, but also to the ongoing coronavirus pandemic – WACKER expects to continue growing. The company raised its forecast for full-year 2022 and now expects to post sales of between €8.0 billion and €8.5 billion (previous guidance: €7.5 billion). Full-year EBITDA is likely to come in between €1.8 billion and €2.3 billion (previous guidance: between €1.2 billion and €1.5 billion). Higher energy and raw-material costs are likely to impact EBITDA by around €1.5 billion (previous guidance: €1.1 billion). The current forecast takes this into account.

If major restrictions in the supply of natural gas were to arise in the course of the year, effects on WACKER’s production cannot be ruled out, as is the case for many other industrial companies. For this reason, WACKER has taken the precaution of factoring in a further €200–250 million in additional costs at the lower end of its EBITDA forecast, on top of the energy and raw-material price increases already taken into account. Without this additional cost burden, full-year EBITDA of between €2.0 billion and €2.3 billion is possible in 2022.

“In the second quarter, WACKER continued on its growth trajectory in an increasingly challenging environment. Our quarterly sales were the highest in our company’s history. Earnings almost doubled year over year, as we were able to offset a large portion of our substantially higher energy and raw-material costs by raising our prices,” said CEO Christian Hartel in Munich on Thursday. “However, we are increasingly concerned about the unabated price hikes for energy and raw materials. Added to that is uncertainty regarding future natural gas supplies,” said Hartel. The German government had already invoked Phase 2 of its emergency gas plan, he said. “This has not affected our production as yet. However, we have been working on solutions for various scenarios since February,” explained Hartel. He went on to say that the current geopolitical crises, first and foremost the war in Ukraine, would also give rise to significant risks, as would the ongoing coronavirus pandemic – and then there was rising inflation. “It not only pushes up our own production costs, but also strongly influences consumer behavior – and, in turn, our business.” Hartel was nonetheless upbeat about future business development: “The positive trend in selling prices and the strong demand we are currently seeing in our customer sectors allow us to look to the second half of the year with confidence – despite current uncertainty.”

Hartel was also optimistic as regards WACKER’s medium-term prospects: “Our solid business performance reflects customer confidence in WACKER’s products and technologies. It demonstrates that we are well on track to achieve our growth targets.” As part of its growth strategy, WACKER is focusing on specialty products in its chemical divisions and scaling up its biotechnology activities. When it comes to polysilicon, the company is concentrating on its goal of increasing the share of hyperpure semiconductor-grade polysilicon in its portfolio. The goal is to increase Group sales to over €10 billion by 2030, while still maintaining high profitability.

“In order to accelerate growth, we are focusing our investment spending on expanding capacity and on developing new products and applications,” said Hartel. “In recent months, we have launched a whole series of projects. At our plant in Holla, Norway, we are getting ready to expand our production capacity for silicon metal. We have opened a new production plant at Panagarh in India to meet burgeoning demand for silicone rubber. We are also expanding silicone production capacity at our Burghausen site. We opened a regional Innovation Center in the USA, where we will develop biotech and silicone specialty products for high-tech applications. In Munich, we commenced construction of a research center for biotech activities. At our site in Halle, an mRNA technical competence center is taking shape. When it is completed in 2024, mRNA vaccines are among the products we will be able to manufacture there. At this site alone, we are investing over €100 million.”