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 required. We continuously use market observation and analysis tools to obtain a well-structured analysis of market, industry and competitor data, for instance. In addition, 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 vital 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.

Overview of Business Opportunities

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, India 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

Our extensive product portfolio in particular offers sector-specific opportunities by placing us in an excellent position to satisfy global megatrends. 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 using silicones. WACKER wants to benefit from this development and further increase its proportion of high-value 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 innovative products in the personal-care, textile-impregnation and electronics sectors. We see good growth prospects for WACKER SILICONES in the electrical and electronics markets, especially in the field of LEDs and automotive electronics. According to a McKinsey study, cars will become much more digitally integrated over the next few years. By 2020, it is expected that one in five cars will be linked to the internet. The electronics required can only be protected reliably with silicone gels and silicone encapsulants.

What is more, our products play a key role in the development of innovative safety systems. In partnership with leading automotive suppliers, we are working on developing new driver-assistance and lighting systems based on energy-saving LEDs. We opened a new airbag competence center in Tsukuba, Japan, where we develop innovative silicone coatings for airbags. This market, according to a Markets and Markets study, is set to grow by almost 10 percent every year until 2019. Rising demand in North America and Asia is driving this growth.

WACKER POLYMERS also has potential for growth thanks to rising affluence in emerging economies. The move away from conventional building materials and construction methods to higher quality systems will continue. A key aspect here is the use of dispersible polymer powders for modifying cement. Cement mixed with these polymer powders is easier to process, can be applied more thinly and its properties can be substantially improved. Its spreadability, flexibility or water repellency increases. But, so far, some 80 percent of dry-mix mortars used in the building sector are not modified. In many regions, construction experts have only just started to appreciate the benefits of polymer-modified dry-mix mortars. WACKER POLYMERS continues to see growth potential in its material-substitution business, especially in the carpet and paper industries.

With its acquisition of Halle-based Scil Proteins Production GmbH, WACKER BIOSOLUTIONS has considerably expanded its offering for the contract manufacturing of pharmaceutical proteins. 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. We see growth potential mainly in China, Japan and the USA. As a producer of hyperpure polysilicon and a 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 Tennessee (USA) in the second half of 2015 will bring fresh production capacities on stream and enable us to tap into further growth on the photovoltaic market.

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 purchasing terms.

At WACKER SILICONES, we are working on optimizing our integrated production system, 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.