At WACKER, corporate financing is a core responsibility. In terms of capital requirements and cover, the need to balance conflicting demands such as profitability, liquidity, security and independence is at the heart of WACKER’s financial strategy. The assets employed must yield a competitive return over long periods and earn their cost of capital. WACKER strives to finance corporate growth without outside help to the greatest possible extent. Sustaining a positive net cash flow is as important as generating a positive contribution to earnings.
The company’s solvency is ensured by liquidity planning and adequate credit lines guaranteed in writing. WACKER’s cash and cash equivalents and financing are constantly analyzed and adjusted on a rolling basis and according to multi-year plans. Generally, financing requirements are calculated and funding granted on a groupwide basis. Project-specific or regional funding is available, too, in special cases.
WACKER’s financial strategy requires the setting aside of sufficient cash and cash equivalents, as well as credit lines. Most of our funding comes in the form of €805 million in unused credit lines (as per December 31, 2008) that can mainly be tapped as syndicated loans with multi-currency/multi-user facilities. Further examples include bilateral, special-institution and subsidiaries’ local-working-capital credit lines. WACKER finances itself externally through private and public financial institutions (such as banks and special institutions) and publicly-traded, global money and capital markets. Currently, no other financial instruments, such as issuing corporate bonds, are in use. We aim to maintain our corporate financial structures such that our credit rating remains – at a minimum – in the upper investment grade range.
WACKER Has Sufficient Liquidity and Credit Lines
WACKER’s business dealings with banks are based on long-term partnerships. The company collaborates with a number of banks (core-bank principle) to ensure optimum advice on all financial topics. To avoid cluster risks, a bank’s stake in the credit lines promised to WACKER must not exceed 20%. Preferred banking partners are centrally-organized institutions with an impeccable credit rating.