The Group’s current high level of investment spending is leading to a cash outflow that clearly exceeds operating cash flow. Consequently, WACKER has adopted a supplementary strategy of external borrowing alongside its long-term goal of essentially funding its investments from its own cash flow. Through this strategy, the Group is ensuring that it can finance important investment projects partly through long-term loans.
Gross Cash Flow
In 2012, gross cash inflow from operating activities (gross cash flow) was down 58 percent to €363.1 million (2011: €867.0 billion). This was mainly due to the Group’s diminished net income of €106.8 million for the year (2011: €356.1 million) and to the decrease in advance payments received for polysilicon deliveries. There was a change of €-154.4 million in advance payments received (2011: €170.4 million). The determining factor here was polysilicon deliveries for which WACKER had in the past received advance payments from customers. In the previous year, cash inflows from customers’ advance payments had improved cash flow. Operating cash flow was further reduced by payments associated with the Hikari (Japan) site’s closure and with payments of variable compensation components. Higher inventories and trade receivables led to an increase in tied-up liquidity. The resulting impact on cash flow was €69.6 million (2011: €-149.1 million).
Cash Flow from Operating Activities (Gross Cash Flow)
Cash Flow from Investment Activities
As in 2011, cash flow from noncurrent investment activities was dominated by high capital expenditures for constructing polysilicon production facilities. In 2012, WACKER invested a total of €1.05 billion (2011: €831.5 million) primarily in property, plant and equipment, and in financial investments. A major part of the capital expenditures went to the WACKER POLYSILICON division, where it was used for the construction of the new polysilicon production site in Charleston (Tennessee, USA). Shareholder loans to associated companies and joint ventures resulted in cash outflows of €117.8 million (2011: €34.9 million).
Cash Flow from Noncurrent Investment Activities before Securities
In 2012, inflows and outflows of cash from securities with maturities exceeding three months were classified as cash flow from investment activities. Cash flow from investment activities totaled €-970.4 million in 2012 (2011: €-979.0 million). Matured securities led to incoming payments during the year.
Net Cash Flow
As of December 31, 2012, net cash flow totaled €-536.2 million (2011: €-157.4 million). This figure reflects the high level of capital expenditures at the WACKER Group.
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Net Cash Flow | ||||||
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€ million |
2012 |
2011 |
Change in % | |||
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Cash flow from operating activities (gross cash flow) |
363.2 |
867.0 |
-58.1 | |||
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Changes in advance payments received |
154.4 |
-163.6 |
– | |||
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Cash flow from noncurrent investment activities before securities |
-1,053.8 |
-831.5 |
26.7 | |||
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Additions from finance leases |
– |
-29.3 |
-100 | |||
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Net cash flow |
-536.2 |
-157.4 |
>100 | |||
Net cash flow is the sum of cash flow from operating activities (excluding changes in advance payments) and cash flow from noncurrent investment activities (before securities), including additions due to finance leases.
Net Cash Flow
Cash Flow from Financing Activities
In 2012, cash inflow from financing activities came in at €326.6 million (2011: €37.4 million). The reported amount chiefly reflected the cash received under the new loans. The dividend payment by Wacker Chemie AG in Q2 2012 reduced cash flow from financing activities by €109.3 million. Cash and cash equivalents decreased by €281.3 million on the previous year and amounted to €192.6 million (2011: €473.9 million).
Changes in Cash and Cash Equivalents
