Opportunities Report

Opportunity Management System

WACKER’s opportunity management system remained unchanged from the previous year. It is a divisional and Group-level instrument. We identify operational opportunities and exploit them in our business divisions, which possess the detailed product and market expertise needed. We continuously use market observation and analysis tools to obtain a well-structured assessment of, for instance, market, industry and competitor data. Plus, we hold customer interviews to evaluate future opportunities. The monitoring process – how WACKER seizes opportunities – is based on key indicators (such as rolling forecasts and current-status reporting).

Opportunity Management System

Strategic opportunities of overarching importance – such as strategy adjustments, potential acquisitions, collaborations and partnerships – are handled at the Executive Board level. Such opportunities are incorporated into WACKER’s annual strategy-development and planning process, with current issues being discussed at regularly scheduled Executive Board meetings. For these issues, we normally use various scenarios to develop risk-opportunity profiles before making decisions.

WACKER has identified a whole range of opportunities for advancing the Group’s success over the next few years.

Overall Economic-Growth Opportunities

WACKER is systematically geared toward not only supplying emerging markets and sales regions with suitable WACKER products, but also reinforcing its presence in established markets, such as Europe and the USA. We consider Brazil, China, India and Russia to be among the markets with the highest growth potential. Here, we see the greatest overall opportunities for us. Thanks to globalization, our products’ growth will outstrip world economic growth. We have been especially active in China, successfully enhancing our sales, services and production operations. We also achieved substantially higher sales in Brazil and India in 2010. We intend to generate above-average growth in these markets over the next few years.

Sector-Specific Opportunities

Sector-specific opportunities arise mainly due to our extensive product portfolio, which enables us to respond to global megatrends with great success.

At the forefront is the energy megatrend, where the photovoltaic industry is playing a highly crucial role. Worldwide, many countries are increasingly harnessing renewable energy sources. Since solar power is becoming ever more competitive, demand for solar installations will go up. As a polysilicon producer and cost and quality leader, WACKER POLYSILICON will benefit from this megatrend.

Importantly, WACKER’s portfolio includes products that conserve energy. WACKER POLYMERS supplies innovative products for the thermal insulation of buildings, for example. The Chinese government has cited energy conservation as one of its key environmental goals for the next few years. Thanks to our products, we can play a significant role here.

Greater prosperity is a feature of Asia’s growth markets and of other regions’ emerging economies. As a result, there is an increasing need for high-quality products incorporating silicones. By 2014, the silicones market is expected to expand to €11.1 billion – growing at an average of 6 percent annually. In almost every sector, WACKER SILICONES offers products and solutions that support rising prosperity and promote urbanization, infrastructure expansion and environmental protection.

The digital processing and storage of information is progressing fast. As a manufacturer of silicon wafers, WACKER benefits from this megatrend. The demand for silicon wafers is climbing, fueled by semiconductor products for consumer electronics and by volume growth in Asia. The market share of 300 mm wafers is rising. WACKER will have ample capacity to participate in this growth due to the expansion measures planned in 2011 at Siltronic Samsung Wafer, our Singapore-based joint venture.

Strategic Opportunities

Production-capacity expansion is WACKER’s main source of strategic opportunities. As a result of our decision to build an integrated polysilicon site in the US State of Tennessee, we will benefit from the photovoltaic market’s continuing growth. The development of high-quality products opens up further opportunities.

Performance-Related Opportunities

With our “Wacker Operating System” (WOS), we continuously strive to improve our costs, processes and productivity. Our aim is to boost productivity by 10 percent each year. The overriding objective is to defend WACKER’s superior cost and quality position against competitors. Crucially, we are supported by our own engineering teams, who have a wealth of plant expertise.

At our new silicon-metal site in Holla, we see good opportunities for enhancing process efficiency. Additionally, we are investigating whether we can increase the site’s production capacity.

WACKER is systematically expanding its sales organization, technical competence centers and WACKER ACADEMY training facilities. With this even stronger market presence, we will be able to enhance our market share.

Our complete supply chain for dispersions and dispersible polymer powders also offers WACKER good perspectives for the future. We are able to tailor products to local requirements by maintaining production sites in Europe, the Americas and Asia. When it comes to VAE dispersions and dispersible polymer powders, WACKER is the only company with global access to a complete supply chain.