Our expectations are based on the assumption that the global economy will grow in 2016. The strongest impetus will come from Asia and the USA, with growth in Europe subdued.

Our capital expenditures in 2016 will focus on plants for manufacturing downstream products. WACKER’s priority is to grow its business organically. In our opinion, the applications and markets that we are addressing will continue to offer good growth potential. Investments will be markedly below depreciation in 2016 due to the completion of our polysilicon production site in Tennessee (USA). They will remain below the level of depreciation again in 2017.

At WACKER SILICONES, we are expanding production facilities for specialty applications in the USA and Brazil, and at Burghausen (Germany). WACKER BIOSOLUTIONS is increasing its cyclodextrin-production capacity at Eddyville, Kentucky (USA). WACKER POLYMERS is building a pilot reactor for VAE dispersions in Nanjing (China) to develop local products. At Siltronic, we are investing in new pulling facilities for manufacturing monocrystals.

Future Products and Services

WACKER POLYMERS is further intensifying its activities in polymeric binders for modifying dry-mix mortars. The experts at Research and Markets expect the drywall market to grow by over 5 percent on average to just under US$ 80 billion by 2020. We have developed specialty dispersible polymer powders and drywall applications that improve the adhesion of gypsum-based grout mortars and offer particularly easy processability. According to Global Gypsum, the market for gypsum products will grow by an average of about 10 percent per year until 2018.

Demand for paints and coatings, especially for environmentally friendly water-based products, is increasing worldwide. Researchers at MarketsandMarkets estimate that the global coatings industry will expand by an average of 5 percent a year to reach around US$ 180 billion by 2020. Asia will be the main growth driver, but sales are also anticipated to increase in South America, Africa and the Middle East. With our specialty PRIMIS ^® dispersions for external applications, we intend to enhance our market position in this area. These novel binders combine organic and inorganic components to produce brilliant, dirt-repellent exterior paints.

WACKER SILICONES has developed a professional 3D printing process for silicones. It opens up new industrial applications in automotive and medical technology, household appliances and optics. WACKER will offer a system solution for the additive manufacturing of silicone prototypes and small series. 3D printing using silicone is a dynamic growth market, with experts predicting annual growth rates of 30 percent. Another highly promising business is precision silicone films, which enable the development of artificial muscles, for example, and innovative sensors. Integrated in clothing, such sensors can monitor breathing or map the wearer’s movements on a computer screen. According to IDTechEx, global sales for wearable technologies will rise to some € 70 billion by 2025. WACKER has launched new silicone gels for practically painless wound treatment. The global market for wound dressings is estimated to grow by 4.5 percent a year until 2020.

In cosmetics and personal care, we are developing new silicone additives. The emphasis in Asia is on silicone elastomer gels for formulating skin care products and make-up. In China and India, we are expanding our portfolio of silicone emulsions for shampoos and conditioners. The global market for cosmetics and personal-care products will expand by 3 percent, according to Euromonitor, with Asia and the Middle East as the main growth drivers. Asia has already become the world’s largest market, with the value of goods sold exceeding € 86 billion.

In construction, WACKER SILICONES is focusing on silane-modified hybrid polymers, used in formulating highly durable industrial adhesives, coatings and sealing membranes. For the paper and pulp industry, we have developed highly efficient foam-control agents. We also expect our silicone additives – used as production aids, and in processing and modifying plastics – to spur growth. According to BCC Research, the global market for these additives will grow by around 5 percent annually until 2020.

Analysts at Persistence Market Research project that the global market for food supplements will grow by an average of 7 percent annually to reach just under US$ 180 billion by 2020. WACKER BIOSOLUTIONS intends to benefit from this growth, for example with its nature-identical hydroxytyrosol for cardiovascular health. Thanks to a new WACKER synthesis method, this highly effective antioxidant is now available without unwanted byproducts, in much greater purity, and with a defined amount of active ingredient. Biotech company MedImmune became the first customer to acquire a license for WACKER’s improved secretion technology, ESETEC ^® 2.0. MedImmune uses this WACKER proprietary system for the efficient, cost-effective production of antibody fragments for tomorrow’s pharmaceuticals. While soluble proteins and antibody fragments are already produced with ESETEC^®, there are some protein classes that form inclusion bodies (within a cell), where the target molecules are incorrectly or incompletely folded. For these cases, Wacker Biotech has developed FOLDTEC ^®, its proprietary refolding technology, which is used to make and refold such pharmaceutical proteins easily and cost-effectively. Studies by Global Industry Analysts indicate that the biologics market will be worth about US$ 300 billion by 2020.

Research & Development

The Group’s research and development work will remain focused on key strategic projects. In 2016, WACKER intends to spend 15 percent (2015: 14 percent) of its R&D budget on these projects. The total R&D budget for 2016 amounts to around € 185 million. Our R&D priorities include the highly promising fields of energy, consumer care, biotechnology, construction applications and semiconductors, with particular emphasis being placed on energy storage and renewable energy generation. In 2016, for the sixteenth time, WACKER will confer its Silicone Award, which honors outstanding achievements in this field of research.

Production

WACKER will bring additional production capacity on stream over the next two years. The Group’s Wacker Operating System (WOS) program is focused on further improving the productivity of production facilities and of every production-related service department. This involves scrutinizing all the main productivity levers (raw-material and energy efficiency, maintenance, capacities, and labor productivity). The emphasis is on key projects that have a high economic impact on both costs and benefits.

Facility Start-Ups in 2016

In 2016, maintenance costs will amount to about € 460 million.

Procurement and Logistics

Energy and raw-material procurement continues to have a significant influence on WACKER’s profitability. Our energy and raw-material costs account for over one-third of the cost of goods sold. WACKER anticipates that the average prices of our most important raw materials will be lower than last year. We project declining prices for our four key raw materials – silicon metal, vinyl acetate monomer, ethylene and methanol.

We assume that electricity and natural-gas prices will be lower than in the prior year. Energy costs for 2016 will remain slightly below the prior-year level.

Supplies of raw materials and energy in 2016 are essentially secured. The markets where we source our raw materials are sufficiently liquid, making bottlenecks unlikely. In the next two years, we will continue to broaden the international base of WACKER’s portfolio of raw-material suppliers. At the same time, we will keep an even sharper eye on the raw-material purchasing sources that are relevant to us, so that we can access new suppliers.

At Technical Procurement, we are continuing to systematically optimize our supplier portfolio. Our aim is to measurably increase the business value contribution in the coming years. There are two priorities here. First, we are reinforcing our global procurement network for specific goods categories. Our intention is to buy goods as cost-effectively as possible on the world’s procurement markets independently of demand at individual sites. Our second priority is to enhance our global supplier-management system through structured analysis. The aim here is to focus on the key partners in our supplier portfolio, so that we can work together with them to increase their performance capabilities for WACKER.

As WACKER wants to intensify its commitment to sustainable management in the supply chain, we joined Together for Sustainability (TfS), a chemical-industry initiative launched in 2011 to promote the responsible procurement of goods and services.

With regard to logistics, we intend to enhance and actively shape our supply chains (supplier-to-customer). In 2016, we will set up a Transport Management System (TMS) to increase the transparency of our global supply chains. This system will help us identify supply-chain problems faster and more precisely, and adopt supply-security measures in good time.

Sales and Marketing

For silicone customers, WACKER will expand its technical centers in both Singapore and Dubai to develop new applications on-site for silicone rubber and silicone elastomers, and will enhance its focus on locally tailored construction-industry solutions. In Malaysia, we will expand sales activities through our local sales office in Kuala Lumpur. In Brazil, we plan to spur marketing efforts in the areas of foodstuffs, agriculture and textiles with the help of distributors. Key tradeshows in 2016 will include the “K” plastics tradeshow and Compamed, both in Düsseldorf, as well as in-cosmetics in Paris and BIO in the USA.

Employees

We expect employee numbers to edge up slightly in 2016. The increase will primarily be due to the commissioning of the polysilicon production plant in Tennessee (USA) and to an anticipated increase in international business at WACKER SILICONES.

In 2016, WACKER Heath Services will start its fourth health-promotion campaign, entitled “Just Move It.” The campaign targets a key risk factor for chronic illness – lack of exercise – and is scheduled to run until the end of 2017.

Sustainability

In 2016, the regional focus of WACKER’s sustainability management activities will be on Europe, where we are examining the environmental, health and safety aspects of individual sites. In 2017, we will concentrate on Asia.

WACKER will continue its efforts to improve its energy efficiency. The start-up of polysilicon production in Tennessee will increase our electricity needs.

We intend to decrease the impact of our production activities on the environment by setting quantifiable environmental goals.

WACKER’s Environmental Targets through 2022

With regard to occupational safety, we have defined a new goal – to reduce our groupwide accident rate (the number of workplace accidents per million hours worked) to 1.7 or lower by 2020.

We are preparing another 137 substance dossiers for the third stage of REACH, which runs until mid-2018. We will publish further descriptions of the safe, environmentally compliant use of chemicals (GPS safety summaries) for the substances we have registered with the European Chemicals Agency (ECHA).