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 leverage 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.

Overall Economic Opportunities

Despite the challenges facing the global economy, WACKER sees good opportunities for continuing to grow at a faster pace than world chemical production, especially in emerging 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.

Overview of Business Opportunities

Sector-Specific Opportunities

Our extensive product portfolio in particular offers sector-specific opportunities by placing us in an excellent position to leverage global megatrends. They include advancing urbanization, the trend toward conserving natural resources and energy, the increasing global demand for mobility, and the growing need for products that enhance the quality of life. These trends remain as important as ever to our business.

Rising affluence in emerging countries, particularly in Asia, coupled with ever more stringent market and customer requirements, are fueling demand for products incorporating high-quality silicones. WACKER wants to benefit from this development and bolster the proportion of highly profitable specialty silicones in its portfolio compared with standard products. Our main points of focus are automotive applications, cosmetics, personal care, health, medicine, electronics and clothing. We intend to support growth in these areas by launching innovative products and technologies for wound dressings, cosmetics, textile care, plastics processing, the electronics sector, and 3D printing.

We see good growth prospects for WACKER SILICONES in the electrical and electronics markets, especially in the field of automotive electronics. Growth is being driven by digitalization, connectivity and electromobility. For example, electronic automotive assistance systems – which are vital for autonomous driving – are playing an ever more important role. According to Semicast Research, the global market for driver-assistance systems in vehicles will grow by almost 13 percent annually until 2022. Silicone gels and silicone encapsulants reliably protect the necessary sensors and electronic components.

WACKER POLYMERS, too, has potential for growth amid the rising affluence in emerging economies, the increase in urbanization, and the trend toward conserving natural resources and reducing carbon dioxide emissions. 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 and gypsum mortars. Through the addition of these polymer powders, mortar mixtures are easier to process, can be applied more thinly and their properties can be substantially improved, too. 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. In particular, we are working on specialty polymer binders for gypsum-based materials for the rapidly growing drywall market. WACKER POLYMERS also sees further potential in its material-substitution business.

WACKER BIOSOLUTIONS primarily expects growth opportunities in its bioengineered products, which include pharmaceutical proteins, cyclodextrins and cysteine. With fermenter capacities ranging from 300 to 1,500 liters for the contract manufacturing of pharmaceutical proteins, we believe that we are well-equipped to cover our customers’ entire supply-chain needs, from clinical testing through to supplying the market. In the field of cyclodextrins and cysteine, we are developing new applications (e. g. for low-fat salad dressings), thereby creating additional demand for our products.

Sales Volumes: Opportunities and Risks

Energy remains a key megatrend, with the photovoltaic industry playing a major part here. The competitiveness of the solar industry versus 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, India and the USA. As a hyperpure-polysilicon producer, and a cost and quality leader, WACKER POLYSILICON will benefit from this megatrend.

Strategic Opportunities

The expansion of our upstream-product capacities in recent years offers WACKER opportunities for further growth at its business divisions. Our focus until 2020 will now be on meeting rising customer demand, mainly through cost-effective expansions to existing plants, and on strengthening our capacities for downstream products in global growth regions. At our Jincheon site in South Korea, for example, we are currently building new silicone production facilities to supply the construction, electronics and automotive industries. In the USA, we are setting up a new research center for silicones in Ann Arbor, Michigan, which will strengthen our development expertise in North America. The new pilot reactor for VAE dispersions at the Nanjing polymer site in China enables us to expand our offering for product developments, application technology and customer services. As planned, we completed commissioning of the production facilities at our polysilicon site in Charleston, Tennessee in 2016. As a result, we can participate in the continuing growth of the photovoltaic market. We expect our much lower capital-expenditure level to markedly lift net cash flow in this and the coming years.

Performance-Related Opportunities

WACKER has a number of opportunities for improving its cost structures, processes and productivity. At WACKER POLYSILICON and Siltronic, we are continuing to implement our cost roadmaps. In the chemical divisions, we are creating further cost-cutting potential with our productivity and efficiency program – the Wacker Operating System. Our various cost-cutting levers include the specific costs for auxiliaries, productivity advances on the manufacturing side, and a broader choice of suppliers for securing more attractive purchasing terms.