WACKER achieved a substantial increase in sales in 2015, which passed the five-billion-euro mark for the first time. Group EBITDA was unchanged year over year. Driven by robust customer demand and positive exchange-rate effects, sales grew by almost 10 percent. Each of the business divisions succeeded in selling larger volumes and posting higher sales than in the previous year. The chemical divisions, in particular, contributed to sales growth. WACKER POLYSILICON was able to post a slight increase in sales in a challenging market environment and Siltronic, too, achieved a substantial increase in sales. Group EBITDA remained fairly constant year over year, and amounted to € 1,048.8 million (2014: € 1,042.3 million). In 2014 and 2015, we recognized special income from advanced payments retained and damages received, which had a positive effect on EBITDA. Net income for the year amounted to € 241.8 million, substantially higher than the prior year (€ 195.4 million).

Group Sales of € 5.30 Billion Almost 10 Percent Higher Year over Year

In 2015, WACKER’s sales reached € 5.30 billion (2014: € 4.83 billion), up almost 10 percent year over year. The main reasons for this increase were the higher volumes sold by all divisions and the declining value of the euro against the US dollar and other currencies. While some prices were unchanged compared with the previous year, those at WACKER POLYSILICON and Siltronic were lower in 2015 due to the market environment.

The chemical divisions generated sales of € 3.33 billion (2014: € 2.97 billion), up 12 percent year over year. WACKER SILICONES, the company’s biggest business division, increased its sales to € 1.94 billion (2014: € 1.73 billion), also equivalent to a year-over-year rise of 12 percent. Positive exchange-rate effects and higher volumes were the main factors in this growth. WACKER POLYMERS increased its sales by 11 percent to € 1.19 billion (2014: € 1.06 billion), with both dispersions and dispersible polymer powders driving growth. Exchange rates had a positive effect here as well. WACKER BIOSOLUTIONS achieved sales of € 197.1 million (2014: € 176.2 million), up 12 percent. Higher volumes and favorable exchange rates had a positive effect here, too.

Although WACKER POLYSILICON benefited from strong volume growth, sales increased only slightly, due to persistently low polysilicon prices. Sales amounted to € 1.06 billion (2014: € 1.05 billion), up 1 percent year over year. Strong competition and excess capacity were again features of the market in 2015.

Siltronic posted strong sales growth in 2015, up 9 percent to € 931.3 million (2014: € 853.4 million). Positive exchange-rate effects more than compensated for lower semiconductor wafer prices. At the same time, Siltronic also raised its volumes slightly.

Higher volumes had a positive impact on sales, adding € 206 million. Price effects decreased Group sales by € –69 million, while exchange-rate effects had a positive impact of € 333 million. The exchange rates of the US dollar, Japanese yen and Chinese renminbi to the euro played a decisive role here, with the appreciation of the US dollar clearly having a positive effect on our sales. The major currencies developed as follows in relation to the euro:

Average Exchange Rate

WACKER generated the majority of its sales outside Germany. During 2015, international sales reached € 4.61 billion (2014: € 4.16 billion) or 87 percent of total sales. Asia is by far WACKER’s biggest market. WACKER delivers a large proportion of its polysilicon to Asia, and there is also strong demand from Asian customers for the Group’s silicone and polymer products.

Domestic and International Sales (by Customer Location)

Non-Recurring Factors Enhance Group EBITDA

WACKER’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 1,048.8 million in 2015 (2014: € 1,042.3 million), again surpassing the one-billion-euro mark. The EBITDA margin edged down, to 19.8 percent (2014: 21.6 percent), partly due to negative effects from currency hedging. Special income from advance payments retained and damages received was also lower than in the previous year. Although WACKER POLYSILICON benefited from special income received in connection with terminated contracts, the start-up costs for the new polysilicon site in Charleston, Tennessee (USA) weighed on the division’s EBITDA. WACKER POLYSILICON generated EBITDA of € 402.4 million in 2015 (2014: € 537.0 million), down 25 percent against the previous year. Thanks to volume growth, positive exchange-rate effects and, in some cases, lower raw-material costs, the chemical divisions achieved a substantial increase in EBITDA compared with the prior year. EBITDA rose to € 530.6 million after € 382.9 million in 2014, an increase of almost 39 percent. Despite the negative effects of currency-hedging transactions, Siltronic was able to post EBITDA of € 124.0 million (2014: € 114.0 million). On average, silicon-wafer prices were somewhat lower than in 2014 in US-dollar and yen terms. Sales growth due to exchange-rate effects, along with the good coverage of fixed costs due to high plant utilization, had a positive impact on EBITDA.

Non-recurring factors had a major effect on EBITDA in both 2015 and 2014. WACKER POLYSILICON terminated contractual relationships with a number of solar-industry customers. In this connection, the division retained advance payments and received damages, generating income in the amount of € 137.6 million (2014: € 206.3 million). Adjusted for this effect, Group EBITDA in 2015 was € 911.2 million (adjusted 2014: € 836.0 million). That corresponded to a rise of almost 9 percent, yielding an EBITDA margin of 17.2 percent.

WACKER’s earnings before interest and taxes (EBIT) reached € 473.4 million in 2015 (2014: € 443.3 million). EBIT is EBITDA with depreciation and amortization factored in. Depreciation totaled € 575.4 million in 2015 (2014: € 599.0 million). WACKER did not post any impairments in 2015. The EBIT margin for 2015 amounted to 8.9 percent (2014: 9.2 percent).

Cost of Goods Sold Slightly Higher over Prior Year

Gross profit from sales climbed to € 1.13 billion, up almost 34 percent year over year (2014: € 844.2 million). The gross margin amounted to 21 percent, 4 percentage points higher than in 2014, mainly due to increased sales.

The cost of goods sold rose by nearly 5 percent in the year under review, amounting to € 4.17 billion (2014: € 3.98 billion). This increase was mainly attributable to high plant utilization rates and high sales volumes, resulting in good fixed-cost coverage. Raw-material costs remained virtually unchanged year over year. Price trends for raw materials varied. Silicon metal was more expensive on average than in the prior year. Vinyl acetate monomer (VAM), methanol and ethylene were noticeably cheaper. The cost-of-sales ratio amounted to 79 percent in the year under review, 3 percentage points better than in 2014 (82 percent).

Functional Costs Higher

Other functional costs (selling, R & D and general administrative expenses) were 6 percent higher year over year, rising to € 623.5 million (2014: € 587.4 million). Selling and general administrative expenses, in particular, increased in the reporting period, while higher personnel costs impacted all functions.

Other Operating Income and Expenses

In 2015, the balance of other operating income and expenses was € –35.3 million (2014: € 183.5 million). Diverse factors contributed to this negative result. Income from advance payments retained and damages received in connection with terminated contracts with solar-sector customers amounted to € 137.6 million (2014: € 206.3 million). The Group posted a net foreign-currency loss of € –69.1 million in the year under review, compared with a gain of € 17.1 million in the prior year. This loss was mainly due to transactions intended to hedge the company’s sales in foreign currencies. Owing to the decline in the value of the euro against the US dollar, the corresponding forward-exchange contracts generated losses. Other operating income and expenses also included costs for commissioning the new polysilicon production plant in Charleston, Tennessee (USA).

Operating Result

Due to the effects described above, the operating result improved by € 30.0 million to € 470.3 million.

Financial and Net Interest Result

WACKER’s financial result improved year over year and amounted to € -66.7 million (2014: € –78.1 million). Interest income amounted to € 7.3 million (2014: € 8.4 million), while interest expenses came to € 31.8 million (2014: € 46.2 million). The net interest result was € –24.5 million (2014: € –37.8 million). The capitalization of construction-related borrowing costs reduced interest expenses by € 18.6 million (2014: € 5.1 million), helping improve the financial result relative to the previous year.

The other financial result amounted to € –42.2 million (2014: € –40.3 million). It primarily comprised interest-bearing components of pension and other noncurrent provisions, but also income and expenses from the exchange-rate effects of financial investments.

Income Taxes

For 2015, the Group reported tax expenses of € 164.9 million (2014: € 169.8 million). The Group’s effective tax rate was 40.5 percent (2014: 46.5 percent), which was influenced by non-deductible start-up costs for the Charleston, Tennessee (USA) production site and by losses incurred at some subsidiaries. The effective tax rate was better than in the prior year due to higher earnings before tax in 2015. In 2014, tax expenses for prior years added to the tax burden.

Consolidated Net Income

As a result of the effects mentioned, consolidated net income rose substantially, reaching € 241.8 million (2014: € 195.4 million).

ROCE

The return on capital employed (ROCE) sets earnings before interest and taxes (EBIT) in relation to the capital employed for business activities.

In the reporting year, ROCE came in at 8.1 percent (2014: 8.4 percent). This modest decrease was mainly due to the higher amount of capital employed, in combination with only slightly higher EBIT. Higher capital expenditure on new production facilities increased the level of capital employed, which rose from € 5,260.7 million to € 5,875.4 million in the year under review.

Combined Statement of Income