WACKER managed to continue its positive business trend in 2008, posting new sales gains. Sales amounted to €4.30 billion (2007: €3.78 billion) – up 13.7%. The increase is due to several factors: the consolidation of Air Products’ dispersion business, volume gains, higher prices for our products and strong customer demand in several target markets. WACKER POLYSILICON generated the biggest sales increase, up 81.2% to €828.1 million. At WACKER POLYMERS, too, sales rose, climbing 37.2% to €867.9 million (2007: €632.8 million). The main growth driver was the consolidation of the sales of Air Products’ business which we had acquired. Sales also rose slightly at our largest division, WACKER SILICONES, up 3.5% to €1.41 billion (2007: €1.36 billion). Lower semiconductor-wafer demand caused Siltronic’s sales to drop 6.3% to €1.36 billion (2007: €1.45 billion). Similarly, sales at our smallest division, WACKER FINE CHEMICALS, were 13.1% below the prior-year level – as expected due to plans to discontinue certain products. The following table shows external sales (without inter-divisional sales).
Sales Crossed the €4 Billion Mark
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External Sales by Division | |||||
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€ million |
2008 |
2007 |
2006 |
2005 |
2004 |
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SILTRONIC |
1,356.2 |
1,445.1 |
1,257.6 |
912.5 |
812.5 |
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WACKER SILICONES |
1,363.5 |
1,313.6 |
1,243.9 |
1,081.8 |
1,008.9 |
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WACKER POLYMERS |
860.4 |
623.7 |
548.9 |
473.0 |
424.1 |
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WACKER POLYSILICON |
567.0 |
243.8 |
132.7 |
132.5 |
109.1 |
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WACKER FINE CHEMICALS |
92.0 |
100.6 |
101.4 |
104.1 |
94.5 |
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Other |
59.0 |
54.5 |
52.4 |
51.8 |
55.2 |
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Group |
4,298.1 |
3,781.3 |
3,336.9 |
2,755.7 |
2,504.3 |
WACKER generated 77.9% or €3.35 billion of Group sales abroad. During the year under review, business in the Americas rose to €852.9 million, up 32.7%. The consolidation of Air Products’ polymer operations was a contributory factor. Sales in Europe amounted to €1.01 billion. In Asia, sales continued to grow. At €1.36 billion, they were up 7.6% on the prior year. Amounting to 22.1% or €948.6 million (2007: €723.5 million), domestic sales rose 31.1% year on year.
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Domestic and International Sales (By Customer Location) | |||||
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€ million |
2008 |
2007 |
2006 |
2005 |
2004 |
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External sales |
4,298.1 |
3,781.3 |
3,336.9 |
2,755.7 |
2,504.3 |
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Thereof domestic |
948.6 |
723.5 |
657.6 |
572.3 |
566.6 |
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Thereof international |
3,349.5 |
3,057.8 |
2,679.3 |
2,183.4 |
1,937.7 |
Earnings before interest, depreciation, taxes and amortization (EBITDA) did not grow quite as strongly as sales. At €1.06 billion (2007: €1.00 billion), EBITDA rose 5.4%. Volume growth, price increases and productivity boosts had a positive impact. In contrast, earnings were impacted by increased energy and raw material costs, and negative effects on sales due to exchange rates. The EBITDA margin was 24.6%, slightly down on 2007’s 26.5%.
At €647.9 million (2007: €649.6 million), earnings before interest and taxes (EBIT) remained at the prior-year level. Whereas gross profit rose €36.0 million to €1.19 billion, investment income fell €31.8 million to €–33.4 million.
With sales climbing 13.7% selling, administrative and R&D expenses only rose a relatively low 10.5% to €530.3 million (2007: €480.1 million). Selling costs grew the fastest – up €24.1 million to €257.6 million (2007: €233.5 million). R&D and administrative costs rose slightly, with the former amounting to €163.2 million (2007: €152.5 million) and the latter totaling €109.5 million (2007: €94.1 million).
In 2008, the balance of other operating income and expenses totaled €23.6 million, up on 2007’s €–20.7 million. This is due to exchange-rate effects and to income relating to the APP takeover and income from the disposal of assets. The balance of currency gains and losses increased compared to the previous year from €10.2 million to €23.5 million. In contrast, impairments for property, plant and equipment increased other operating expenses.
The year-on-year interest result was positive. This was due to operational cash flow surpluses and customer prepayments received at WACKER POLYSILICON, which we subsequently invested. The interest result was €5.7 million (2007: €–1.0 million).
Year-on-year investment income – the total income from investments in joint ventures and associates and other income from participations – is distinctly down, amounting to €–33.4 million (2007: €–1.6 million). This was due to start-up losses stemming from investments in joint ventures and associates. WACKER bears a share of these losses, which affect the following minority interests: Siltronic Samsung Wafer and the Zhangjiagang-based WACKER/Dow Corning joint venture (siloxane production plant). At the same time, investment income no longer includes the positive net results from WACKER’s two former partner companies with Air Products, because these have been fully acquired by WACKER.
Tax expenses declined slightly to €203.5 million in fiscal 2008 (2007: €209.9 million). The tax rate was thus 32% (2007: 33%).
In total, net income rose €16.1 million to €438.3 – up 3.8%.
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Summarized Income Statement | |||
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€ million |
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2008 |
2007 |
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Sales |
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4,298.1 |
3,781.3 |
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Gross profit from sales |
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1,188.0 |
1,152.0 |
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Selling, R&D and general administrative expenses |
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–530.3 |
–480.1 |
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Other operating income and expenses |
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23.6 |
–20.7 |
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Operating result |
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681.3 |
651.2 |
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Income from participations (including investments in joint ventures and associates) |
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–33.4 |
–1.6 |
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EBIT (earnings before interest and taxes) |
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647.9 |
649.6 |
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Financial result |
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–6.1 |
–17.5 |
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Income before taxes |
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641.8 |
632.1 |
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Income taxes |
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–203.5 |
–209.9 |
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Net income before minority interests |
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438.3 |
422.2 |
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Thereof attributable to Wacker Chemie AG shareholders (net income) |
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439.4 |
422.0 |
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Thereof attributable to other minority interests |
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–1.1 |
0.2 |
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Earnings per share |
€ |
8.84 |
8.49 |
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EBITDA |
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1,055.2 |
1,001.5 |
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ROCE |
% |
25.7 |
25.3 |