Key Events Affecting Business Performance
On September 7, 2017, a technical defect led to a hydrogen explosion that damaged a plant section at our site in Charleston, USA. As this plant section is essential for the entire manufacturing process, production was shut down. WACKER does not expect this incident to result in any notable financial damage, since the property damage and loss of production are insured. However, the production shutdown reduced the volume of polysilicon WACKER had available for sale by around 6,000 metric tons.
Early in 2017, WACKER sold an initial 1.8 million shares of its stake in Siltronic AG on the stock exchange, generating proceeds of €87.6 million. On March 15, 2017, WACKER then relinquished its majority stake in Siltronic AG. In a bookbuilding offering, WACKER sold around 6.3 million of its shares in Siltronic to institutional investors at a price of €56.06 per share. The gross proceeds from the placement amounted to about €353.2 million. With 30.8 percent ownership, WACKER remains an important Siltronic shareholder. Since March 15, 2017, the Group’s stake in Siltronic has been accounted for using the equity method.
Capital expenditures were at a comparable level to the year before. They amounted to €326.8 million in the reporting year (2016: €338.1 million).
The chemical divisions were at the center of WACKER’s investing activities, with a number of projects in different countries. In Jincheon, South Korea, we built new facilities to manufacture silicone sealants and specialty silicones. Investment spending on that project amounted to around €15 million. At Burghausen, Germany, a new dispersion reactor with an annual capacity of 60,000 metric tons expanded the site’s existing plants for polymer binders. About €25 million was spent on that. In addition, WACKER worked on a series of smaller investment projects.
In 2017, we launched a number of other investment projects. At our site in Charleston, Tennessee (USA), we started building a plant for pyrogenic silica, which will have a total investment volume of US$150 million. In Holla, Norway, we are expanding our production facilities for silicon metal. Some €25 million went toward this project in 2017. In Ulsan, South Korea, construction started on new production facilities for dispersions and dispersible polymer powders. Around €60 million is budgeted for this expansion. In León, Spain, we are modernizing a large-scale fermentation plant that we acquired in late December 2016. WACKER is investing a total of about €15 million in modernization there.