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 analysis 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).

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 and Southeast Asia. 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 satisfy global megatrends with great success. These trends remain as important as ever to our business.

Rising affluence in Asia and in the emerging economies of other regions is driving demand for high-quality products that incorporate silicones. WACKER wants to benefit from this development and further increase its proportion of high-end silicone products compared with standard products. Our main points of focus are automotive applications, cosmetics, personal care, health, medicine and electronics. We intend to support growth here by launching innovations in the personal-care, film-technology, 3D-printing and electronics sectors. We see good growth prospects for WACKER SILICONES in the electrical and electronics markets, especially in the field of LEDs. Several products are in the research pipeline at our new technical competence center for electronics in Seoul. WACKER is concentrating its efforts on materials for chip encapsulation and lenses. According to a study by McKinsey, LED lighting technology will dominate the world market for lighting, gaining an estimated share of 70 percent by 2020. By then, Asia will be the biggest market, accounting for 45 percent of the total volume.

WACKER POLYMERS, too, has potential for growth due to the rising affluence in emerging economies. A key aspect here is the use of dispersible polymer powders for modifying cement. By admixing these polymer powders, cement becomes easier to process, can be applied more thinly and can be imparted with decisively enhanced properties. Its spreadability, flexibility or water repellency increases. While industrialized countries modify 85 percent of their cement already, the rate in emerging economies has only reached about 15 percent so far. Of the 30 million metric tons of cement used worldwide, only 20 percent is modified with dispersible polymer powders. WACKER POLYMERS continues to see growth potential in its material-substitution business, especially in the carpet industry. We intend to target the European market with a new VAE dispersion.

At WACKER BIOSOLUTIONS, we see good opportunities for expanding our biologics business following the takeover of Scil Proteins Production. We now have a fermenter with a capacity of up to 1,500 liters. It can be used not only to manufacture pharmaceutical actives for clinical testing, but also to supply the market.

Energy remains a key megatrend, with the photovoltaic industry playing a major part here. The competitiveness of the solar industry compared to other energy sources continues to spur demand for solar installations. All around the globe, the use of renewable energy is increasing. Other countries and regions have supplanted Germany as the key market. The main examples here are the USA, China and Japan. As a polysilicon producer and cost and quality leader, WACKER POLYSILICON will benefit from this megatrend.

Sales Volumes: Opportunities and Risks

Strategic Opportunities

Thanks to the production-capacity expansion of recent years, WACKER has opportunities for further growth at its business divisions. The investment focus is now shifting, though, toward facilities for the manufacture of downstream products. The commissioning of the new polysilicon site in the US state of Tennessee in mid-2015 will bring fresh production capacities on stream and enable us to tap into further growth on the photovoltaic market.

A new organizational structure for WACKER SILICONES is designed to boost our penetration of the Asia region yet further and significantly increase our market share there. The business teams in Asia are being supported by two teams working on global product development and global business development. We now have five new business teams based in different countries throughout the region to handle business in a variety of application areas. Together with our customers, we aim to develop products tailored to local requirements.

Overview of Business Opportunities

Performance-Related Opportunities

WACKER has a number of options for improving its cost structures, processes and productivity. We have identified scope for cutting costs at WACKER POLYSILICON and Siltronic and are already acting to realize these savings. The various levers for cost reductions include the specific costs for auxiliaries, productivity advances on the manufacturing side, and a broader choice of suppliers for securing more attractive terms.

At WACKER SILICONES, we are working on optimizing our integrated production network, while increasing the proportion of higher-quality products per metric ton of siloxane. For a number of years now, the “Wacker Operating System” (WOS) program has been helping us to realize further potential savings by optimizing our processes and increasing productivity. Specific energy consumption alone – i.e. amount of energy per unit of net production output – is to be reduced by 11 percent in Germany by 2022.