Comparing Actual with Forecast Performance

WACKER did not change the 2019 targets it had set early that year for margin, , net financial debt and capital expenditures, but it did adjust its expectations for sales, EBITDA, depreciation/amortization and as conditions worsened during the year. The main reasons for the revisions were not only the weakening global economy, but also the absence of a recovery in solar-grade prices in the second half of 2019 – which WACKER had originally forecast in consensus with many market experts.

Guidance Lowered During the Year

At the start of 2019, WACKER projected that it would grow its sales by a mid-single-digit percentage. The EBITDA margin and ROCE would be substantially lower than a year earlier, with 10 to 20 percent lower. Net cash flow would be clearly positive and substantially higher than the year before. Capital expenditures would reach around €400 million, with depreciation/amortization amounting to around €525 million. Net financial debt would be higher than a year earlier.

In its Q1 Interim Report of April 2019, WACKER left its projections unchanged.

In its Q2 Interim Report, WACKER provided more specific guidance for EBITDA. With China’s solar-market upturn still not in sight, WACKER’s mid-2019 expectations were that EBITDA was likely to be closer to the bottom end of its projected range of 10 to 20 percent lower year over year. The Group lifted its guidance for full-year depreciation /amortization to around €550 million. For all the other key financial performance indicators, the outlook remained unchanged.

In its Q3 Interim Report, WACKER noticeably lowered its expectations for EBITDA and net cash flow. This was due to the continued decline in solar-grade polysilicon prices and the weakening global economy. Sales would likely be on par with the year before and EBITDA some 30 percent below the prior-year level. was projected to be clearly positive, but lower than a year earlier. The outlook for all the other key performance indicators remained unchanged. As explained at the start of the year, full-year guidance did not include insurance compensation for the incident-related damage incurred at the Charleston site.

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Comparing Actual with Forecast Performance

 

 

 

 

 

Results in 2018

 

Forecast
March 2019

 

Forecast
April 2019

 

Forecast
August 2019

 

Forecast
October 2019

 

Results in 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Financial Performance Indicators

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin (%)

 

18.7

 

Substantially lower than last year

 

Substantially lower than last year

 

Substantially lower than last year

 

Substantially lower than last year

 

15.9

EBITDA (€ million)

 

930.0

 

10 to 20% lower than last year

 

10 to 20% lower than last year

 

10 to 20% lower than last year (likely toward bottom of range)

 

Some 30% below last year’s level

 

783.4

ROCE (%)

 

5.9

 

Substantially below the prior-year level

 

Substantially below the prior-year level

 

Substantially below the prior-year level

 

Substantially below the prior-year level

 

-11.3

Net cash flow (€ million) (value for 2018 restated)

 

86.2

 

Clearly positive, substantially higher than last year

 

Clearly positive, substantially higher than last year

 

Clearly positive, substantially higher than last year

 

Clearly positive, lower than last year

 

184.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Financial Performance Indicators

 

 

 

 

 

 

 

 

 

 

 

 

Sales
(€ million)

 

4,978.8

 

Mid-single-digit percentage increase

 

Mid-single-digit percentage increase

 

Mid-single-digit percentage increase

 

On par with last year

 

4,927.6

Capital expenditures (€ million)

 

460.9

 

Around 400

 

Around 400

 

Around 400

 

Around 400

 

379.5

Net financial debt (€ million)

 

609.7

 

Higher than last year

 

Higher than last year

 

Higher than last year

 

Higher than last year

 

713.7

Depreciation/
amortization (€ million)

 

540.4

 

Around 525

 

Around 525

 

Around 550

 

Around 550

 

1,319.7

WACKER Achieves Its Q3 Sales and EBITDA Targets, with Impairment of Fixed Assets Increasing Depreciation/Amortization and Impairments

In 2019, WACKER posted sales of €4.93 billion, almost on par with the year-earlier level (€4.98 billion). The slight decline of 1 percent was mainly due to lower prices, especially for solar-grade polysilicon, but also for standard . Sales were supported by higher volumes overall, by product-mix effects and by the year-over-year rise in the US dollar.

EBITDA was €783.4 million, down 15.8 percent (2018: €930.0 million). The EBITDA figure included special income of €112.5 million in insurance compensation for the incident-related damage incurred at Charleston. Adjusted for this amount, EBITDA amounted to €670.9 million – down 27.9 percent, it was in line with the guidance issued in Q3. The EBITDA margin, in turn, was markedly lower than in the prior year.

Net cash flow of €184.4 million was clearly positive. Adjusted for the cash inflow of roughly €100 million, it was below the year-earlier figure as projected. As expected, ROCE of -11.3 percent was substantially below the prior-year level.

In 2019, capital expenditures reached €379.5 million, slightly below the some €400 million previously projected.

At €713.7 million, year-end net financial debt was higher than the previous year, as forecast at the start of the year. The increase was mainly due to first-time application of 16.

As announced in early December 2019, WACKER’s 2019 financial statements include an impairment charge on the carrying amount of its hyperpure- production facilities. At €760.0 million, the charge reflects the company’s subdued expectations for the future trend in solar-grade polysilicon prices. In consequence, full-year depreciation /amortization and impairments totaled €1.32 billion, markedly above the most recent guidance of around €550 million.

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Expenses by Cost Type

 

% of sales

 

2019

 

2018

 

 

 

 

 

Personnel costs

 

25.6

 

24.9

Raw-material costs

 

30.0

 

30.0

Energy costs

 

8.1

 

6.6

Depreciation/amortization and impairments

 

26.8

 

10.9

EBITDA
Earnings before interest, taxes, depreciation and amortization.
Return on Capital Employed (ROCE)
Return on capital employed is the profitability ratio relating to the capital employed. It is defined as earnings before interest and taxes (EBIT) divided by capital employed. Investment income from Siltronic AG and the corresponding carrying amount in equity are not included when calculating ROCE. ROCE is a clear indicator of how profitably the capital required for business operations is being employed. It is influenced not only by profitability, but also by capital intensity with regard to noncurrent assets required for business operations and to working capital. ROCE is reviewed annually as part of our planning process and is a key criterion for managing our capital expenditure budget.
Net Cash Flow
Net cash flow is the sum of cash flow from operating activities and cash flow from long-term investing activities (before securities).
Polysilicon
Hyperpure polycrystalline silicon from WACKER POLYSILICON is used for manufacturing wafers for the electronics and solar industries. To produce it, metallurgical-grade silicon is converted into liquid trichlorosilane, highly distilled and deposited in hyperpure form at 1,000 °C.
EBITDA
Earnings before interest, taxes, depreciation and amortization.
Net Cash Flow
Net cash flow is the sum of cash flow from operating activities and cash flow from long-term investing activities (before securities).
Silicones
General term used to describe compounds of organic molecules and silicon. According to their areas of application, silicones can be classified as fluids, resins or rubber grades. Silicones are characterized by a myriad of outstanding properties. Typical areas of application include construction, the electrical and electronics industries, shipping and transportation, textiles and paper coatings.
IFRS
The International Financial Reporting Standards (until 2001 International Accounting Standards, IAS) are compiled and published by the London-based International Accounting Standards Board (IASB). Since 2005, publicly listed EU-based companies have been required to use IFRS in accordance with IAS regulations.
Polysilicon
Hyperpure polycrystalline silicon from WACKER POLYSILICON is used for manufacturing wafers for the electronics and solar industries. To produce it, metallurgical-grade silicon is converted into liquid trichlorosilane, highly distilled and deposited in hyperpure form at 1,000 °C.

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