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27 Jan 2022
An abundance of talking points to kick off 2022

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An abundance of talking points to kick off 2022
Q4 EBITDA beats on continued outperformance in Silicones
Wacker reported preliminary full year results yesterday following the company''s pre-release two weeks ago. At the time management raised FY EBITDA guidance to EUR1.5bn, c7% ahead of consensus. The beat was driven by Silicones where Wacker was able to generate much higher pricing than anticipated to help offset raw material inflation.
Pension reform underway, capital allocation set to come under further examination
Management also reported that it has kicked off a much-heralded reform of its pension deficit. During Q4, a EUR250m contribution was made to a CTA which helped bring the company''s pension liability down to EUR1.8bn vs EUR2.2bn at the end of Q3. With Wacker''s balance sheet looking healthier by the quarter its capital allocation policy will receive even more focus. Wacker will hold a CMD on 29th March where this topic will be covered.
A collapse of the Siltronic deal isn''t necessarily a game changer
GlobalWafers'' acquisition of Siltronic looks likely to fall through after the deal failed to pass German anti-trust hurdles. Wacker was set to receive cEUR1.3bn of proceeds from the sale of its 30.8% stake, further enhancing its already robust balance sheet. However, the absence of the proceeds will not preclude the company from investing organically into its CDMO business, or returning cash to shareholders while keeping leverage in check, as we outlined in our June 2021 report.
FY22 guide the next catalyst, poly-si will move the needle (as expected)
Management will provide FY22 guidance on 16th March. Current consensus is looking for cEUR1.2bn of EBITDA. We would not be surprised to see Wacker to guide conservatively given the range of outcomes on polysilicon pricing for H2. We trim our FY22/23 EBITDA forecasts by c2.5% mainly on higher inputs and cost inflation. Our price target falls to EUR175 from EUR180. With Wacker having executed a mix shift within its polysilicon...