WACKER POLYSILICON

Strategy

WACKER POLYSILICON’s strategic aims are to uphold its quality and cost leadership as a hyperpure-polysilicon manufacturer and to expand its production capacities in line with market growth. To advance this strategy, we took an important decision in December 2010 – to build a new polysilicon site (capacity: 15,000 metric tons) in the US State of Tennessee by 2014.

Strong Rise in Sales and EBITDA

2010 was a very successful year for WACKER POLYSILICON. Sales climbed 22 percent to €1.37 billion (2009: €1.12 billion). Growth was supported not only by high and sustained demand for polysilicon from customers in the photovoltaic and semiconductor industries, but also by new output at Burghausen, thanks to expansion stage 8. Additionally, we achieved further productivity gains, which pushed up yields at existing facilities. Overall, production output increased from 18,100 metric tons in 2009 to 30,500 in 2010.

EBITDA performed slightly better than sales. At €733.4 million, it rose 41 percent (2009: €520.8 million). Importantly, EBITDA in 2009 had been reduced by €51.9 million due to our exiting the WACKER SCHOTT Solar joint venture. 2010’s good earnings trend was the result of lower specific production costs in relation to volume growth. The EBITDA margin was 53.6 percent (2009: 46.5 percent).

Strong polysilicon demand favored the conclusion of multiyear contracts at attractive prices and involving advance payments by customers for future deliveries. Consequently, we have virtually secured the utilization of our entire production capacity until the end of 2014.

Investments Down Slightly but Still at High Level

At WACKER POLYSILICON, we invested €309.9 million in 2010, 23 percent less than in 2009 (€400.1 million). The focus was on the construction of Nünchritz’s polysilicon facility (expansion stage 9), which is scheduled to come on stream in the fourth quarter of 2011. In September 2010, the EU Commission authorized a maximum, regional investment grant of €97.5 million for the Nünchritz polysilicon facility. These funds will be used in stages, in line with the project’s progress.

Due to the division’s ongoing expansion, employee numbers rose again. As of December 31, 2010, WACKER POLYSILICON had 1,763 employees (December 31, 2009: 1,600).