The WACKER Group's Prospects

We expect that the world economy will expand in 2011, though not as dynamically or as rapidly as in 2010. The BRIC countries and other emerging markets will be the main growth drivers.

WACKER Investing More

WACKER’s record 2010 earnings will support the Group’s development in 2011. Despite high investment spending, we posted a net cash inflow of over €400 million last year. Thanks to the continuing healthy state of our finances, we are able to focus on expansion, especially on boosting polysilicon-production capacity. Thus, WACKER’s investment activity will grow appreciably over the next two years. In 2011, we will start constructing a polysilicon site in the US State of Tennessee. Our main challenges there are to identify and qualify new suppliers and logistics providers, and to install a local project team.

At Nünchritz, the start-up of the Poly 9 expansion stage (which will reach full production capacity in 2012) will boost overall annual capacity from 30,500 to over 40,000 metric tons in 2012. As a result, WACKER will be able to benefit from the photovoltaic industry’s continuing growth.

In 2011 and 2012, capital spending will mainly focus on polysilicon-production expansion. Expenditures will increase as a result – totaling some €900 million in 2011 and rising to over €1 billion in 2012. Consequently, investments will rise to twice the depreciation amount over the next two years.

Future Products and Services

WACKER is developing a broad variety of new products and product specifications for diverse markets. In 2011, WACKER POLYMERS will market a polymer blend under the VINNEX® trademark. Mixed with flour or starch, this blend is processed into biodegradable granules. Areas of application include horticulture and crop cultivation. For healthcare, WACKER SILICONES will be supplying more products for medical uses, such as elastomer infusion sets and tubes.

Research and Development

In 2011 and 2012, we will place greater emphasis on our research and development work for key strategic projects. WACKER intends to spend just under 25 percent of its R&D budget on such projects in 2011. Our overall R&D budget for 2011 is expected to be slightly higher than in 2010.

Our R&D priorities remain the highly promising fields of biotechnology, energy, catalysis, and construction applications. We are devoting particular attention to the issue of energy storage.


Over the next two years, WACKER will bring additional production capacity on stream. The most important start-up is Nünchritz’s Poly 9 expansion stage, with a nominal capacity of 10,000 metric tons. Production there is due to begin in the second half of the year. At our Siltronic Samsung Wafer joint venture in Singapore, further production-capacity expansion is expected.

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Production Facility Start-Ups in 2011

















Poly 9 expansion stage





HDK® Facility 2, China





Expansion of silicone sealants





Merchant dispersions





Expansion of 300 mm epitaxy capacity



As announced last year, our Kempten production site will be closed in 2011. We will transfer its production volumes to the existing high-volume facilities at Burghausen and Nünchritz. WACKER will stop making its own acetic acid in 2012 because we can buy in the amounts more economically and with a similar level of reliability.

We are extending our “Wacker Operating System” (WOS) program to encompass the entire cost chain. One particular priority of our WOS projects is to explore how we can further increase our energy and raw-materials efficiency, because both aspects make up a major portion of our costs.

In China and the USA, we will continue establishing regional planning teams, which will collaborate closely with WACKER’s engineering units in Germany. Our objective is to boost engineering expertise internationally, and standardize and optimize our engineering processes across every region.

Maintenance costs will rise in 2011 due to substantial asset additions.

Procurement and Logistics

The positive economic trend will be reflected in 2011’s energy and raw-material prices. We are seeing substantially higher prices for electricity in Germany, mainly as a result of the levy to fund feed-in tariffs for renewables. As for silicon, the terms of our long-term contracts will no longer compensate fully for its sharp rise in price. We will probably have to pay higher prices for sourcing silicon externally. We anticipate modest price rises for gas and petrochemical raw materials. For 2011, our volume requirements for silicon – our most important raw material – have largely been covered. Ethylene, methanol, VAM and gas supplies have likewise been contractually secured. Most of the electricity we use is also covered by contracts.

When negotiating new contracts, we try to shift away from conventional, fixed annual contracts with rigid price structures. Our goal is to negotiate prices that reflect market and cost trends so that we can respond better to volatility on raw-material markets. In 2011, we will finalize not only the energy and electricity procurement process for commissioning the Poly 9 expansion stage at Nünchritz, but also the electricity contract for the polysilicon plant to be built in Tennessee. The coal and quartz supplies for our new Holla site in Norway are contractually fixed, and its electricity has also been secured in the long term. We will remain on the lookout for new suppliers and sources of silicon.

One of Technical Procurement’s main tasks is to qualify and integrate new US suppliers for constructing the polysilicon site in Tennessee. To handle procurement processes and supplier management even more effectively, we will introduce the new version of SAP-SRM (Supplier Relationship Management) in 2011. Another focus will be to continue setting up category management teams (including networking processes) in China and the USA. We will also push for greater standardization in supplier qualification and assessment, and in procurement approvals.

Turning to Logistics, the main task for 2011 and 2012 is to secure supply and distribution logistics for our polysilicon projects. Additionally, we are preparing logistics masterplans for Nünchritz, Nanjing and Zhangjiagang, to enhance the handling of rising sales volumes. The plans concern incoming and outgoing shipments, warehousing and supply logistics. At Burghausen, we are making good progress with plans for a freight gate that is expected to be ready at the same time as a public handling terminal.

Sales and Marketing

Over the next two years, we will further intensify our efforts to identify and meet customer and market needs. To be launched in 2011, our new customer relationship management system (or CRM for short) will provide valuable support here. This software solution bundles together customer and market information efficiently. It will make it easier for 1,500 WACKER employees worldwide to record, analyze and report on information and processes that affect customers. There are benefits for customers, too. By standardizing information processes, we will be able to respond faster to their needs and improve our customer service.

We plan to extend our distribution network in Africa in 2011. As yet, it covers only northern regions and South Africa. We aim to widen our limited presence on the African continent and to sell our products in other countries, too.


In 2011, our workforce will rise substantially to over 17,000. Personnel costs will increase accordingly. This higher employee growth rate is necessitated by the start-up of Nünchritz’s Poly 9 expansion stage, by the construction of the polysilicon facility in the US State of Tennessee, and by increased technical spending. In line with market trends, employee levels at WACKER Greater China will continue to grow, too, over the next two years. We are keeping the number of vocational training places continuously high. The need to attract fresh talent to WACKER remains a priority.

To prepare for the new challenges facing us over the next few years, we reassessed our HR work in 2010. Effective January 1, 2011, we reorganized Human Resources and reallocated responsibilities. The new organization is based on two main components: first, HR support for business divisions and corporate departments and, second, strategic HR activities. The latter includes personnel marketing and development, compensation systems and new approaches to HR work. These tasks are now consolidated across the entire Group. They also cover Siltronic, which previously handled such issues within its own organization.


2011 will see WACKER publish its new Sustainability Report for 2009/2010.

Our production sites in Holla (Norway) and Jincheon (South Korea) will be integrated into our Group management system. In order to certify all sites to the OHSAS occupational health and safety standard, we will be identifying requirements for each site during 2011. The aim is then to obtain a groupwide OHSAS certificate by 2016.

Our primary-energy consumption will be higher in 2011 as a result of our silicon-metal plant in Holla, Norway. Furthermore, we expect our electricity needs to increase due to both the Holla plant and the start-up of the Poly 9 expansion stage at Nünchritz.

By 2015, we aim to have reduced our accident rate (the number of workplace accidents per million hours worked) to 2.0, roughly halving it compared to 2010. REACH will be a major issue for us during the next eight years. By June 2013, we will have sent the European Chemicals Agency (ECHA) over 60 dossiers on substances manufactured in quantities of between 100 and 1,000 metric tons annually.

REACH Timetable REACH Timetable (graph)

1 Phase-in substances > 1 metric ton / year
2 New substances > 1 metric ton / year
3 R50 / 53: “highly toxic to aquatic organisms” and “may have long-term harmful effects in bodies of water”
4 CMR: carcinogenic, mutagenic, toxic to reproduction
5 Phase-in substances: predominantly old substances on the EINECS inventory (European Inventory of Existing Commercial Chemical Substances on the market before 1981)

WACKER will take part in the German Chemical Industry Association’s open day. We will be welcoming the public to our Burghausen, Nünchritz, Freiberg and Cologne sites on September 24, 2011.

Expected Earnings Performance

The main assumptions underlying WACKER’s plans relate to raw-material and energy costs, to personnel costs and to exchange rates. For 2011, we are planning on an exchange rate of US$1.40 to €1.

Group Sales to Rise Further in 2011

We expect sales revenues in 2011 to exceed €5 billion for the first time, with all five divisions boosting their revenues. Sales volumes will be the main growth driver. Revenues will continue rising in 2012 provided the economic upswing remains robust.

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Outlook for 2011





€ million












> 5,000





At the high
prior-year level



Investments (incl. financial assets)


Approx. 900



2011’s EBITDA is expected to reach the high prior-year level. At WACKER POLYSILICON and Siltronic, we anticipate EBITDA growth. At our three chemical divisions, EBITDA will be below 2010’s level, due to increasing energy and raw-material costs, which we cannot fully recoup through price increases. As in 2010, we expect Group net income to reach a high positive figure.

Divisional Performance

WACKER SILICONES will remain on its growth path in 2011. Rising prosperity in emerging markets – such as Brazil, China and India – is prompting higher per capita consumption of silicone products. Additionally, ever more stringent quality demands are accelerating the process of substituting simple products with value-added products incorporating silicones. Earnings are being held back by the anticipated rise in raw-material costs, especially for methanol and silicon metal. Our Holla silicon-metal plant and our planned price increases will help counter these higher costs, but will not compensate for them entirely.

At WACKER POLYMERS, the outlook for 2011 is bright. We expect continued sales growth. VAE dispersions will benefit from increasing environmental awareness, and dispersible polymer powders from urbanization and infrastructure projects in emerging markets. WACKER POLYMERS will also face higher raw-material costs, the increase depending on oil-price developments. In China, we will continue expanding our Nanjing production operations.

At WACKER BIOSOLUTIONS, we expect a slight rise in 2011’s sales revenues. We aim to extend the division’s market leadership for gumbase and tap into Asia’s disproportionately high growth. In food, life sciences and biopharmaceuticals, we see attractive opportunities for our products over the next few years.

WACKER POLYSILICON is well positioned for 2011. It has already sold all the production volumes planned for 2011 until 2014. Because Nünchritz’s Poly 9 expansion stage is not scheduled to start up until late in the second half of 2011, volume growth will not be as high as in 2010. There will be more significant volume gains in 2012.

Of all our divisions, we expect WACKER POLYSILICON to generate the strongest growth. On the earnings side, we will face substantial start-up costs for the new polysilicon site at Nünchritz. In contrast, earnings will benefit from productivity advances and scale effects due to output growth.

Expansion in the semiconductor market will continue, supported by image and video applications that require higher-performance processors and memory chips. Growth is focusing mainly on 300 mm wafers, which will benefit plant utilization at Siltronic’s 300 mm segment. Demand for small and mid-sized wafer diameters remains stable. We expect to see a slight rise in Siltronic’s sales in 2011. The earnings improvement should be stronger.

Expected Liquidity and Financial Performance

WACKER entered 2011 with a strong net cash position. In 2010, we had concluded numerous supply contracts for polysilicon and received many advance payments for them. This year, advance payments are also likely to exceed prepayment outflow from deliveries made to customers. The total amount received in advance payments will rise again. Although our investment spending will go up, we expect a positive net cash flow in 2011, too. Our equity ratio will continue rising.

Future Dividends

Our policy on dividends is generally oriented toward distributing at least 25 percent of net income to shareholders, assuming the business situation allows this and the committees responsible agree.


In 2011, we will adhere to our conservative financial policy. We already laid the groundwork for medium-term Group financing over the past few years. As of December 31, 2010, WACKER had some €1.2 billion in used and unused credit lines. The terms of two sizable credit lines do not expire until 2013.