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 market, industry and competitor data, for instance. 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

Although the economic environment is becoming tougher, WACKER sees good opportunities for growth in new markets and sales regions. Our focus here is on Brazil, China, India and the Middle East. As previously, we expect the highest growth rates to be in China. To seize such opportunities, we are steadily expanding our presence in these markets. Our technical competence centers and the WACKER ACADEMY are pivotal in achieving WACKER’s high standard of service and customer proximity.

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. These trends remain as important as ever to our business.

At the forefront is the energy megatrend, where the photovoltaic industry is playing a highly crucial role. Many countries worldwide 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. The market for silicone products is expected to rise to €11.1 billion by 2014 – 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 sufficient capacity to participate in this growth due to the expansion measures planned in 2012 at Siltronic Samsung Wafer, our Singapore-based joint venture.

Strategic Opportunities

Production-capacity expansion presents WACKER’s divisions with opportunities for further growth. We intend to benefit from continuing growth in the photovoltaic industry. The same applies to the industries and sectors supplied by our other divisions. Consequently, we are investing specifically in technologies and production plants that underpin and promote growth.

Further opportunities arise through developing high-quality WACKER products that we can use to substitute other commercial products.

WACKER POLYMERS sees scope for growth in the substitution of styrene butadiene with VAE dispersions. The high price of crude oil and the lack of supply security following the switch from oil to ethane by American crackers have prompted many paper and carpet manufacturers to turn to lower-priced VAE dispersions. We believe this trend will continue. In our opinion, there is also scope for substitution in the coatings area.

When it comes to VAE dispersions and dispersible polymer powders, WACKER is the only company that can globally draw on an integrated supply chain in the three key regions of the Americas, Asia and Europe.

At WACKER SILICONES, we aim to promote products made from thermoplastic silicone elastomers. The prime advantage of these products is that crosslinking can be reversed under heat, via established technology, and that they retain their typical silicone characteristics. They are used in photovoltaics, in medical engineering and in film and sheet manufacturing.

Performance-Related Opportunities

Through our “Wacker Operating System” (WOS), we strive to minimize costs, optimize processes and increase productivity, each year fine-tuning the main levers within our supply chain so that we become even better. 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.

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

Our complete supply chain for dispersions and dispersible polymer powders continues to offer 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.