We value Wacker’s first virtual Investors Day as a good approach to communicate with investors, but it failed in a key aspect: helpful information. In essence, management did not provide additional strategic guidance nor additional figures. Our expectations might have been too high, but some cost figures on the months-ago announced cost-cutting measures would had been highly appreciated as, on the contrary, Wacker is willing to accept Polysilicon’s cash drain also for an undefined future.
16 Jun 20
Still cash-absorbing Polysilicon
Wacker has been working on its still loss-making polysilicon business, but the losses have not gone go away. Thankfully, Wacker is also active in the oil-based value chain, which gave EBITDA quite a nice push in addition to some lower corporate costs. In the light of the pandemic, management initiated some measures (lower capex) as expected. The Q1 figures were better than expected, especially profitability, which is also true for consensus.
30 Apr 20
Quite strong 2020 guidance ...
... but excludes the potential effects from COVID-19 and the cost-cutting programme. The reported FY figures were pretty much in line with those already communicated. Management’s dividend proposal does not reflect confidence. We understand that Wacker is struggling with the potential COVID-19 impacts, but that the (positive and negative) effects from the cost-cutting programme are still not determined, which does not look very professional to us.
17 Mar 20
In case of emergency ...
In a manager’s training (?) book there is usually a chapter on how a manager should behave in an ‘emergency’ situation. It looks to us as if Wacker’s management has done just this. The announced efficiency programme pulls the ‘usual’ strings, but we don’t see the additional strategic announcements. So the proposed measures (local ones still have to be accepted by German employee representatives) are unlikely to be very meaningful.
20 Feb 20
Good to be a family-backed company!
Wacker’s preliminary report confirmed our cautious view on company’s management as we think a necessary (?) write-down is one thing, but not providing a strategic solution for the ailing polysilicon business is another thing. The photovoltaic business value chain has become dominated by Chinese companies for many reasons over the past year, but there are only some small business adjustments in this regard. We highly recommend any kind of solution for Polysilicon.
28 Jan 20
St Nicolas unwraps his staff!
It is a confession! The announcement of the impairment of Polysilicon’s assets is waving the white flag to Chinese competitors, which dominate the largest photovoltaic market with some friendly governmental help. On the other hand, the announcement confirms your view on the company, which has remained too long in the polysilicon business without any good response to the changing market environment. As already announced, a cost cutting plan will be put in place and we recommend the publication of some details.
06 Dec 19
Thanks to the insurance compensation
After the most recent profit warning (a few days ago), one may have thought there was just one contributor forcing management to cancel its guidance, but the Q3 report shades more light: the other large divisions also have issues here and there. But Polysilicon still remains a tumbling giant. Nevertheless, management has failed to provide more information about the announced cost cutting / fitness programme.
24 Oct 19
Management clearly missed the right time to define the right strategy for Polysilicon. It looks to us as if the division will turn out to become a money tomb, despite the fact that it has good access to the largest photovoltaic market, China. The recent profit warning and the initiation of a cost-cutting programme underpin our view: should Polysilicon still stay with the company? We would say: PolysilEXIT! Additionally, management will miss FY guidance and adjusted it accordingly.
17 Oct 19
Polysilicon remains a bet...
...on the recovery of the (Chinese) PV market. Polysilicon’s positive EBITDA contribution seems to be becoming a fleeting star, which had some help from a positive one off. Silicones were a bit less profitable than expected owing to pricing pressure in standard products. Helped by the one-off, profitability was above our expectations and beat consensus. Despite management’s confirmation of the FY top -line and profitability (EBITDA) guidance, some adjustments (higher D/A and tax rate) are resulting in some pressure on net income.
05 Aug 19
Polysilicon's challenges continue
In Wacker’s Businesses & Trends section, we raise the question of whether the Polysilicon division needs a strategic revision. The Q1 figures seem to support this as the division’s EBITDA was in the red for the second sequential quarter and 2019 is expected to remain challenging. Wacker’s Q1 fully matched our expectations, whereas available consensus was not met, especially on profitability levels.
25 Apr 19
Moderate 2019 top-line and profitability
Wacker reported its full-set of 2018 figures, which confirmed the already announced preliminary figures, but broadly missed its own extensive guidance for 2018. More interesting is the given 2019 guidance, which foresees a decline in EBITDA and the respective margin, primarily stemming from Silicones’ more moderate, but still healthy, performance. Management’s view is more cautious and excludes a potential insurance compensation, which we are anticipating.
19 Mar 19
Better than expected
Wacker’s FY 18 profitability was negatively impacted by higher raw material prices (Polymers) and lower volumes and sales prices (Polysilicon) accompanied with the re-ramp up costs for the Charleston site. In addition to the difficult business environment, the compensation for the business interruption is still pending. All in all, Wacker’s preliminary figures exceeded our cautious expectations, but more information is needed to have a deeper dive into the figures.
18 Jan 19
Wacker’s Q2 figures were dominated by the good demand for silicium-based materials from the construction industry, whereas all other segments suffered for various reasons. Top-line and profitability were slightly above our expectations as consensus was beaten at the top-line and broadly met on profitability. The given outlook does not lead to huge changes.
26 Jul 18
Business performance as expected and Siltronic’s strong contribution
Wacker’s figures fit into our broad picture and have beaten consensus at some levels. Business development in the individual divisions confirmed our view, but the profitability increase was a notch stronger than expected, but not strong enough to make changes.
26 Apr 18
More details, extra dividend, weak 2018 to be expected
The strong increase in the total dividend was quite a surprise, whereas the weak FY 18 fits into our big picture. Silicones is in good shape and will be 2018’s drag horse, whereas Polymers suffers from the high raw material prices and its insufficient pricing power. Polysilicon looks to have a quite uncertain 2018 as the shutdown of the Charleston site has lasted more than six months and it is unclear as to when the production ramp-up could be re-started.
13 Mar 18
Nice year-end push...
... but not strong enough to meet our profitability expectations. Wacker’s FY preliminary figures expect sales to grow +6% (on an adjusted basis due to the lack of Siltronic’s contribution) to €4.92bn. EBITDA is expected to be up +6% to €1,015m and net income is seen at €885m and income from continued operations at €250m. The annual report will be available on 13 March 2018.
08 Feb 18
Polysilicon’s awakening – guidance lifted
Wacker’s sales clearly rose +14% (v: +17%; p: -1%; FX: -2%) to €1,312m and the gross profit margin improved from 20.8% to 21.3% in Q3, based on adjusted figures due to the deconsolidation of Siltronic after the loss of control. EBITDA went up +13% to €298m and net profit attributable to shareholders exploded (+58% to €101m). Operating CF remained fairly unchanged at €259m despite the strong operating performance and higher income tax expenses, but D/A was lower, other non-cash result generated a €27m swing to €-7m and NWC inflow came in lower. Adding previous year’s CF from discontinued operations, the previous year’s total operating CF was higher. Investing CF from continued operations (€-20m after €-152m) benefited from lower capex (48% (52%) of D/A) and the release of financial investments (€48m after €-71m). Financing CF more than doubled (€-79m after €-35m) due to higher repayments. Management still expects group sales to increase by a mid single-digit percentage (based on €4,634m sales ex-Siltronic), but EBITDA, excluding the one-offs, is now expected to come in at €1bn (previously: €900-935m range).
26 Oct 17
Charleston site down
The news has reported that Wacker’s US$2.5bn US investment, the polysilicon site at Charleston, Tennessee, has been down since 30 August, which stands for 25-30% of Wacker’s polysilicon capacity. A second explosion happened on 7 September. Wacker Chemie has released a short press release.
15 Sep 17
Despite weaker prices, guidance lifted
Q2 sales were up +2% (v: +3; p: -2%; FX: +1%) to €1,218m and the gross profit margin improved from 18.6% to 19.5%. EBITDA were down -5% to €253m and net profit attributable to shareholders was slightly up (€58m after €57m), helped by lower income tax. Operating CF from continued operations was broadly unchanged (€149m after €153m) despite significantly higher NWC outflows (€-72m after €-1m), primarily due to higher inventories. Investing CF (€-229m after €-139m) was hit by higher payments for the acquisition of securities (€-149m after €-61m). Financing CF from continuing operations (€-114m after €-89m) faced the €21m swing of financial liabilities. Management still expects group sales to increase by a mid-single-digit percentage, but the EBITDA, excluding one-offs, is now expected to be in the €900-935m range.
28 Jul 17
Wacker has reduced its stake in Siltronic down to 30.8% and has lost the dominating influence at the AGM. Consequently, Siltronic has to be reported as an at-equity investment starting in Q1 17. The remaining Wacker group reported +8% higher sales (to €1,219m; organic: +6%) and the gross profit margin moved from 16.5% (pro forma) to 17.6%. EBITDA was up +12% to €229m and net income from continuing operations increased +15% to €31m. Income attributable to shareholders swelled from €20m to €655m due to the proceeds from the sales of Siltronic shares (+€635m). Operating CF from continuing operations declined by 12% to €96m, suffering from a higher NWC outflow (€-82m after €-51m). Discontinued operations brought it up to €140m (€136m). Investing CF moved from €-212m to €-94m driven by lower capex as the higher investments in financial assets were more or less flattened by the proceeds from Siltronic’s deconsolidation. Financing CF (€103m after €199m) recorded lower net gross debt proceeds due to the inflow from the change in ownership interest in Siltronic. Due to the deconsolidation of Siltronic, management has adjusted FY guidance based on a pro forma level. For 2017, management now expects group sales to increase by a mid single-digit percentage and EBITDA, excluding the one-offs, should decline by a mid single-digit percentage.
27 Apr 17
Some interesting details and a moderate guidance
Having already provided some figures, Wacker’s gross profit margin dropped from 21.3% to 18.3% and EBIT dropped 23% to €366m, ‘missing’ the positive one-offs. Net income attributable to shareholders clearly went down by 27% to €179m. Operating CF moved up +19% to €736m, with clearly higher D/A and lower tax payments despite lower NWC inflows (€18m after €121m). Investing CF moved from €-691m after €-630m despite significant lower capex (€-514m after €-821m) as the net disposal of securities (€-113m after €124m) partly offset this. Financing CF swung from €58m to €-136m primarily due to the lack of the proceeds from the issuance of Siltronic shares. Management proposes an unchanged dividend of €2.00 per share at the AGM on 19 May 2017. For 2017, management expects group sales to increase by a mid single-digit percentage and EBITDA, excluding the one-offs, should be on a par with this.
14 Mar 17
'Chemicals' strong profitability continues
Wacker reported a set of preliminary figures, which were at the profitability line much stronger than expected. FY sales were up +2% to €5.4bn and EBITDA increased +5% to €1.1bn. Net profit dropped from €242m to €190m. The FY report is due to be published on 14 March 2017.
01 Feb 17
Weaker top line, but profitability strongly increased
Q3 sales slightly weakened 1% to €1,346m (v: +2%, p. -4%, +1%) and the gross profit margin moved 90bp down to 21.1%. EBITDA went up +14% to €301m and net profit attributable to shareholders rose +7% to €64m. Operating CF jumped +57% to €297m primarily driven by higher D/A and a swing in NWC (€15m after €-31m). Investing CF (€-177m after €-283m) saw a lower capex outflow as the Tennessee site is now ramping up production and investments in securities moved up +16% to €-71m. Financing CF fully reflected the development in financial liabilities (€-35m after €-54m). Based on the strong ‘chemicals’ performance, management continues to expect group sales to increase by a low single-digit percentage and sees EBITDA at the upper end of the 5-10% range, when adjusted for special income. Net income is seen markedly lower. However, management now targets the upper end of given guidance.
28 Oct 16
Strong ‘chemicals’ trigger guidance update
Wacker’s sales was slightly up (+1% to €1,386m) in Q2, but the gross profit margin (18.8% after 21.7%) partly suffered from the lower prices related to cheaper raw material prices. EBITDA weakened (-9% to €300m), due to lower positive one-offs and net profit attributable to shareholders nearly halved (-48% to €57m). Operating CF increased 23% to €172m, clearly helped by a lower NWC outflow (€-62m after €-110m). Investing CF (€-190m after €-223m) benefited from lower capex and investments despite some higher acquisitions of securities. Financing CF swung from €246m to €-89m, primarily due to the lack of the €362m income from the change in ownership in Siltronic. Based on the strong ‘chemicals’ performance, management continued to expect group sales to increase by a low single-digit percentage (unchanged) and sees EBITDA at the upper end of the 5-10% range (in this range), when adjusted for special income. Net income is seen markedly lower (substantially).
28 Jul 16
Prices and D/A burdens profitability
Q1 sales came in 2% lower at €1,314m due to lower polysilicon and silicon-wafer prices (prices: -4%). Gross profit margin melted down from 21.8% to 16.7%, partly absorbing the start-up costs for the Charleston plan. The group’s EBITDA clearly dropped 14% to €229m due to the lower contributions from Polysilicon and Siltronic. Net income attributable to shareholders fell off the cliff (€20m after €70m). Due to the weaker operating performance, operating CF moved down 17% to €136m, despite some higher depreciation and lower NWC outflow. Investing CF (€-212m after €-129m) was hit by a swing from net proceeds (€60m) to net acquisition (€-24m) of securities. By contrast, financing CF swung from net repayment of liabilities (€-114m) to net proceeds (€199m). Management provided some hard figures for 2016, now expecting group sales to increase by a low single-digit percentage (slightly higher) and EBITDA to move up by 5-10% (slight increase), when adjusted for special income. Net income is seen substantially lower (unchanged).
28 Apr 16
Cautious, but realistic into 2016
Having posted preliminary figures in early February, the annual report gave some additional information. In 2015, sales rose +10% to €5,296m and the gross profit margin improved from 17.5% to 21.3%. EBITDA came in fairly unchanged at €1,042m and net profit attributable to shareholders increased strongly moving up +21% to €247m. Operating CF jumped +275% to €617m reflecting the better operating performance and was additionally helped by lower a NWC outflow (€-169m after €-257m). Investing CF moved from €-506m to €-691m whereas financing CF swung from €-89m to €58m driven by the proceeds from the change in ownership interests in Siltronic, which were partly eaten up by the higher net cross debt repayments (€-220m after €-52m). Management is to propose a +33% higher dividend (€2.00 after €1.50) per share at the AGM on 20 May 2016. For 2016, management expects slightly higher sales and a slight EBITDA increase, when adjusted for special income. Net income is seen substantially lower.
17 Mar 16
Good chemicals, silicon-based moderate
Q3 sales rose +10% to €1,358m and the gross profit margin improved from 19.2% to 22.0%. EBITDA dropped 24% to €264m (w/o one-offs: €247m after €254m) and net income attributable to shareholders halved (€60m after €121m). Operating CF came in fairly unchanged at €189m due to a nearly halved NWC outflow (€-66m after €-126m). Investing CF increased from €-178m to €-282m, predominately driven by significantly higher capex. Financing CF swung from 82m to €-54m due to changes in financial liabilities. Management slightly adjusted FY guidance. Sales are still seen as increasing by c.10% and it continues to expect a slight rise at the EBITDA level and a somewhat lower EBITDA margin. Group net income is now seen somewhat below 2014 (previously: below 2014; €195m).
30 Oct 15
One-off drives Polysilicon, but it faced lower sales
Q2 sales increased +10% to €1,371m and gross profit moved from 18.9% to 21.7%. Driven by Polysilicon’s one-off, the group’s EBITDA jumped +43% to €329m and net profit attributable to shareholders flared up from €32m to €110m. Operating CF strongly rose +27% to €140m despite higher NWC outflow (€-138m after €-82m). Investing CF came in at €-223m after €-99m burdened by higher outflow toward songoing construction at the polysilicon site in Charleston, Tennessee, which was attributable for <50% of the expenses. Capex more than doubled from €-99m to €-201m. Financing CF swung from €-22m to €246m driven by €362m cash receipts from Siltronic’s IPO. Management adjusted FY guidance taking the one-off in Polysilicon into account. Sales are seen to increase by c.10% and the company continues to expect a slight rise at the EBITDA level and a somewhat lower (prev.: substantially lower) EBITDA margin.
03 Aug 15