Fiscal 2014 was a good year for WACKER. We achieved a substantial increase in sales and earnings before interest, taxes, depreciation and amortization (EBITDA) in our centennial year, thanks to higher volumes at all our divisions and improved polysilicon prices. We also benefited from special income from advance payments retained and damages received in connection with amended or terminated contracts with solar-sector customers. Sales reached € 4.83 billion overall, up almost 8 percent year on year. EBITDA rose by more than 50 percent to € 1.04 billion.
These figures are testimony to our employees’ great dedication, outstanding expertise and high levels of identification with the company – their strong performance was a key factor in our success. That is why I and my colleagues on the Executive Board wish to express our thanks to all WACKER employees.
The agreement reached last year with the Chinese Ministry of Commerce concerning polysilicon exports to China was of crucial importance to us. In accordance with the agreement, we have undertaken not to sell polysilicon manufactured at our European sites below a specific minimum price in China. In turn, the Chinese authorities will refrain from imposing anti-dumping and anti-subsidy tariffs on this material. As a result, we will remain in a position to offer our polysilicon in our biggest market at competitive prices.
Other key financial indicators, too, were in line with – or even exceeded – our expectations. Although net financial debt further increased in 2014 as planned, we achieved our goal of keeping it below € 1.1 billion in total. Net cash flow almost doubled year on year to more than € 200 million and net income for the year was substantially higher at € 195 million.
As we want you, our shareholders, to share in this positive performance, the Supervisory and Executive Boards will be proposing to the Annual Shareholders’ Meeting a dividend payment of € 1.50. That means we will be distributing 37 percent of the company’s profit for the year to you.
The acquisition of a majority stake in Siltronic Silicon Wafer in Singapore and the purchase of Scil Protein Productions in Halle, Germany, proved to be the right moves strategically, and both companies were quickly and successfully integrated into the WACKER Group. As a result of these acquisitions, Siltronic was able, in line with its strategy, to expand its business with 300 mm silicon wafers in Asia, while WACKER BIOSOLUTIONS now has additional prospects for growth in the field of pharmaceutical proteins thanks to additional capacity. This acquisition has already enabled us to conclude contracts with new customers.
On the whole, we can be more than satisfied with the performance of all our divisions, particularly with the good results achieved by WACKER POLYSILICON and Siltronic.
Record sales volumes, higher prices and further improvement in production costs are the key messages when it comes to our polysilicon business. Siltronic more than offset the price pressure in its market not only through substantially higher volumes and notable cost reductions, but also through high plant utilization rates. The closure two years ago of our site in Hikari, Japan, and of a production line in Portland, Oregon (USA), have proved to be the right decisions, and we reaped the benefits in 2014.
Our three chemical divisions posted healthy sales growth. This achievement was marred solely by the EBITDA trend, with which we were not entirely satisfied. High prices for vinyl acetate monomer, a raw material, and falling prices for silicone products dampened earnings. The important thing for us is that, in all our key regions, we continued to invest in our production facilities, which will enable us to profit from future growth in these markets. By the same token, we were successful in enhancing our global presence.
In many ways, 2015 will be a thrilling year for WACKER. We intend to commence production of polysilicon at our new production facility in Charleston, Tennessee (USA), at the end of the year and are working hard to achieve this goal.
Completion of the polysilicon production plant in Tennessee will mark a turning point in our investment strategy that will impact WACKER’s financial figures. Although net financial debt is set to rise once again in 2015, it will decrease over the next few years. Capital expenditures, which are expected to come in at around € 700 million in 2015, will decline in the following years, too. When the Charleston plant comes on stream, we will have concluded the phase of capital-intensive expansion projects during which we reinvested up to 25 percent of our revenue. The focus of our capital expenditures will then shift to facilities for the manufacture of intermediate and downstream products in our chemical divisions – products that are targeted at exploiting growth opportunities in all key markets.
We have set ourselves ambitious goals for 2015 – not only regarding the Tennessee plant. We want to build on the upward trend from 2014 and achieve percentage growth in sales in the high single-digit range. Although the start-up costs in Charleston will impact our EBITDA, we still expect to post a slight increase on a comparable basis, excluding special income. We want to achieve this even though the global economic and political environment is set to remain highly volatile. All over the world, we are seeing developments whose outcome we cannot predict, let alone reliably plan for, and this situation is unlikely to change going forward.
Despite these uncertainties, we are confident of being able to keep WACKER on its long-term trajectory of profitable growth – because we take the long view, because we factor the future into what we do today, and because we possess the ability to change and yet stay firmly grounded.
One of WACKER’s greatest strengths is its wide array of sophisticated products for key industries. As globalization progresses and more and more people benefit from rising affluence, demand for higher-quality products in all areas of life will increase as well. This is precisely where we come into play with our high-quality products. Many markets in which we have only just gained a foothold are ripe for development.
In Germany, per-capita demand for chemical products is about € 1,500 a year. The equivalent figure for China is around € 150 and for India about € 60. These figures underscore our exceptional prospects in these growth regions. But even established markets, in which we already have a strong position, offer us ample opportunity to increase our market share. We will do everything within our power to make the most of these opportunities, no matter where in the world they arise.
“Creating tomorrow’s solutions” is our all-pervasive motto at WACKER. Every day, we have to work at turning this aspiration into a rule that we live by in practical terms. After all, a constant flow of new solutions will be needed in the future.
This is what motivates us. We invite you to accompany us as we continue on this path. My Executive Board colleagues and I wish to thank our customers and our suppliers for the trust they have placed in us and for the positive working relationship we share. We would also like to express our gratitude to you, our shareholders, for the open dialogue we enjoy. Let us continue shaping the future of WACKER together.
Munich, Germany, March 2015
Dr. Rudolf Staudigl
President & CEO of Wacker Chemie AG