Economic and Legal Factors

WACKER sells its products and services to virtually every industry. Although economic fluctuations cannot be avoided in individual business divisions, their impact and onset may vary greatly. We are, however, able to mitigate the impact of these fluctuations thanks to our product portfolio and broad customer base.


The terms for orders placed with WACKER vary from division to division. Most orders received by WACKER SILICONES are short-term, with a small number of long-term ones. Goods are usually shipped within three months of receipt of order. At WACKER POLYMERS, business is based on contracts and master agreements with terms of up to one year. Around 30 percent of incoming orders are short term. WACKER POLYSILICON concludes short- and medium-term contracts, some of which include flexible volume-specific escalator clauses. Siltronic usually negotiates orders with the customer from one quarter to the next. As a rule, we aim for fixed contracts with negotiated prices and quantities. Due to varying order-placement procedures at the Group and its divisions, order-level reporting is not very meaningful and hence does not serve as an indicator in our monthly reports.

Operational Metrics as Leading Indicators of Future Developments

By referring to specific leading indicators based on operational metrics, we try to consider potential developments in our business plans and to allocate capacities accordingly. Since our operations are based on diverse businesses and markets, we use a number of leading indicators to gain insights into potential developments at each of our business divisions. As many of WACKER’s products are destined for the construction industry, we deploy various analytical tools in order to assess future growth in this segment.

Leading Operational Indicators


Business Divisions


Leading Operational Indicator


Indicator of:








Raw-material and energy price trends


Our cost trends



Orders received per month


Our capacity utilization



Short-, medium- and long-term contracts


Our capacity utilization, further market trends


Market research, talks with customers


Increase in solar capacity by country, our capacity utilization



Data on chipmakers’ capacity utilization


Our capacity utilization

Every business division


Talks with customers, market research


Our sales trend, our product quality




Market trends, product innovations

Economic Factors Impacting Our Business

The main economic factors influencing WACKER’s business remained unchanged in many areas. Accounting for around 42 percent of production costs, energy and raw-material costs had the largest impact in 2015.

Energy and raw-material costs

As a chemical company, we belong to an energy-intensive industry and require diverse raw materials to manufacture our products. Consequently, higher energy and raw-material costs impact our cost structure. WACKER is taking steps to become more independent of this factor. By generating our own power at Burghausen and Nünchritz, we are reducing our energy-procurement needs and thereby the cost risk. Regulatory requirements or additional expenses, such as the electricity tax or levies relating to the German Renewable Energy Act (EEG), can affect WACKER’s energy costs both directly and indirectly – for example, through higher grid fees, which lead to increased operating costs for grid operators. However, cost reductions in connection with the EEG levy can have a positive impact on energy costs. We continually focus on improving our energy efficiency. The goal is to reduce specific energy consumption by half between 2007 and 2022. When procuring raw materials, we increase price flexibility by sometimes concluding new contracts with shorter terms, with more scope regarding volumes or with regular price adjustments that reflect wholesale market prices.

Exchange-rate fluctuations

As a rule, WACKER hedges against exchange-rate fluctuations. We hedge at least half of our dollar and yen exposures for each subsequent year with derivative currency hedging transactions. The hedging ratio for 2015 was around 50 percent. In determining sensitivity, we simulate a 10-percent devaluation of the US dollar against the euro. Without hedging, an increase in the euro against the US dollar would have negatively impacted EBITDA by € 60 million. The appreciation of the US dollar against the euro in 2015 had a positive impact of € 120 million on EBITDA. However, only € 60 million of this amount effectively benefited EBITDA due to negative currency-translation effects stemming from receivables and hedging.

State-regulated incentive and feed-in tariff programs for renewable energy sources

As one of the world’s leading suppliers of hyperpure polycrystalline silicon, we are affected by regulatory changes to incentive and feed-in tariff programs for renewable energy sources. Substantially lower prices for solar modules and cells have greatly increased the competitive advantage of solar energy over fossil fuels and other methods of generating energy. The cost of manufacturing photovoltaic products is expected to decline further, which will additionally reduce the dependence on state-regulated incentive and feed-in tariff programs over the next few years. Our assumption is that, in a few years, solar energy will manage even without special incentives, particularly in combination with cost-efficient storage possibilities. At the same time, WACKER will keep its focus on improving productivity in order to maintain its competitive position. Our strong cost position, high product quality, international orientation, wide customer base and medium- to long-term supplier contracts all offer us competitive advantages over other producers.

Legal Factors Impacting Our Business

China has imposed anti-dumping and anti-subsidy tariffs on polysilicon manufacturers in the USA. As things stand now, polysilicon produced at our site in Charleston, Tennessee (USA) will also be affected by these tariffs. Negotiations are being conducted between China and the USA with the aim of resolving the trade dispute regarding solar products, which would also benefit WACKER. However, WACKER has the option of taking up direct contact with China to discuss an exemption from tariffs. In May 2014, WACKER and the Chinese Ministry of Commerce (MOFCOM) signed a minimum price agreement for exports of polysilicon produced in Europe. MOFCOM, in turn, has refrained from imposing anti-dumping and anti-subsidy tariffs on this material. The agreement is valid until the end of April 2016. In addition, the agreement signed by the European Union and China regulating the import of solar modules from Chinese solar companies still applies.

Total of 178 Registration Dossiers Submitted as Part of REACH

By late 2015, WACKER had submitted 178 registration dossiers to the European Chemicals Agency (ECHA). For some of the phase-one and phase-two dossiers, submitted in 2010 and 2013, ECHA required additional information, which we provided in 2015. By the end of 2015, ECHA and EU-member-state agencies had jointly designated 168 substances that could be of particular concern for humans or the environment. Thirty-one of these substances are already subject to registration. WACKER has been only marginally affected to date, with very few purchased substances, and none of its own. As part of the EU Commission’s GHS (Globally Harmonized System of Classification and Labeling of Chemicals), all mixtures (some 7,000) had been reclassified pursuant to EU-GHS by May 31, 2015. A central register for hazardous substances has been set up at the ECHA.

The ICCA (International Council of Chemical Associations) has developed the Global Product Strategy (GPS), which is a guideline on how to assess chemical properties and provide product safety information. In Europe, most GPS requirements are satisfied by REACH and by CLP (Classification, Labeling and Packaging of Substances and Mixtures). Manufacturers are asked to publish descriptions written in layman’s terms on the safe and environmentally sound use of chemicals (Safety Summaries). By the end of 2015, we had published 75 Safety Summaries on the ICCA chemicals website for the substances we have registered under REACH.