Overall Statement by the Executive Board on Underlying Conditions

The global economy was influenced in 2016 by the decision of UK voters to leave the European Union, by the presidential election in the United States, and by uncertainties about future trends in the Chinese economy. Global growth was also impeded by the conflicts in the Middle East and the continued sanctions imposed on Russia by the USA and the EU. China’s economic growth of 6.7 percent was in line with expectations. Germany continued to be a center of stability in Europe in 2016, and the pace of growth in other European countries like Spain and France picked up somewhat. In the USA, the upturn continued despite the (albeit very slight) interest rate increases.

WACKER’s business developed well in 2016 given the geopolitical risks. Whereas many chemical companies recorded declining sales, WACKER achieved a moderate sales increase in 2016, as planned. This was due to the three chemical divisions, which succeeded in selling higher volumes. Earnings climbed even faster than sales. The positive earnings trend stemmed from our high production-capacity utilization, cost improvements and low raw-material prices. The global solar market had another growth year. Polysilicon prices, though, fluctuated strongly and, on balance, were lower, which dampened sales and earnings. After a dynamic start in the first half of 2016, business slowed somewhat in the third quarter. Volumes recovered in the fourth quarter. Silicon-wafer business for the semiconductor industry was particularly sluggish in the first half year, before picking up in the second half. Volume gains and favorable exchange-rate effects were countered by low market prices. Sales at Siltronic were slightly higher than in the prior year.

We lifted our sales in all regions in 2016, even though the increases were not particularly strong in Europe and the Americas. In Asia, growth was 3.9 percent. Business there developed very positively in Japan, South Korea and India. At 43.3 percent, Asia again accounted for the largest share in Group sales.

WACKER performed well in the first weeks of the new fiscal year prior to publication of the consolidated financial statements on February 27, 2017.