WACKER SILICONES

Strategy

Adhering to its strategy, WACKER SILICONES focuses on growing profitably, achieving cost savings and increasing its flexibility toward customers and markets. Our aim is to maintain our market positions in the established sales regions of Europe and the Americas, and to continue growing in highly promising markets. The division’s strategic marketing focuses on Brazil, China and India, where we anticipate the greatest growth opportunities, thanks to our wide range of products and applications.

Sales Edge Up

After 2010’s strong rise, sales at WACKER SILICONES edged up only slightly in 2011, climbing 0.8 percent to €1.59 billion (2010: €1.58 billion). Sales growth stemmed from higher volumes and prices, though negative exchange-rate effects hampered business. Regionally, WACKER SILICONES generated sales growth in Asia, primarily China and India, and also in the “Other” regions, especially the Middle East. Sales in the Americas were down slightly on the previous year as a result of the strong euro. Silicone business gained ground in the energy, electronics, medical technology, automotive and construction sectors.

Considerably higher raw-material costs, coupled with exchange-rate losses, prevented EBITDA from matching the previous year’s level. At €182.9 million, it was 20.4 percent below the 2010 figure (€229.9 million). Silicon-metal prices alone were 29 percent higher than in 2010, while methanol prices climbed 18 percent. EBITDA was bolstered by the proceeds from selling the silicone-based tire release agents business to Rhein Chemie Rheinau GmbH. The EBITDA margin fell to 11.5 percent (2010: 14.5 percent).

Investments Down on 2010

WACKER SILICONES invested less than in the previous year, with capital expenditures dropping from €174.1 million to €106.3 million. This was primarily because WACKER had spent €81.2 million in 2010 on two strategic acquisitions: the silicon-metal plant in Holla (Norway), and the Lucky-Silicone brand in South Korea. Investments in 2011 returned to a normal level for WACKER SILICONES.

WACKER SILICONES completed several new production facilities in 2011. At Zhangjiagang (China), it started up an additional production plant for pyrogenic silica. In July 2011, at Burghausen, the division began manufacturing high-purity silicone elastomers for the medical, LED and electronics sectors on several production lines. Moreover, we are now operating a new compounding plant for ready-to-use silicone elastomers on the premises of Wacker Metroark Chemicals Pvt. Ltd., near Kolkata (India). The plant enables us to supply the Indian market more swiftly and flexibly with high-quality WACKER silicone products. In parallel, the division has increased its presence in India by opening a sales office in Chennai.

The Kempten production location was shut down, as announced. Its pyrogenic silica production volumes have been transferred to existing facilities at Burghausen and Nünchritz.

WACKER SILICONES had 3,956 employees on December 31, 2011 (December 31, 2010: 3,892).