Comparing Actual with Forecast Performance

During the course of the year, WACKER revised the targets set at the start of the year, specifying and upgrading them. The revisions affected statements made regarding EBITDA, the EBITDA margin, ROCE, net cash flow, investment spending and net financial debt. In early 2017, WACKER forecast that it would grow its sales by a mid-single-digit percentage. It projected that the EBITDA margin would be below the prior-year level, that its EBITDA – on a comparable basis without special income – would be at the year-earlier level, and that ROCE and net cash flow would also be at that level.

Forecast Revised after Q1 Due to Sale of Majority Stake in Siltronic

On publishing its Q1 report in April 2017, WACKER revised its projection due to the sale of its majority stake in Siltronic. The revised forecast for EBITDA – on a comparable basis excluding special income – was for a mid-single-digit percentage decrease versus the previous year (€935.5 million). Earlier, in our Annual Report (released for the Annual Press Conference), we had expected that WACKER, including Siltronic, would post an EBITDA without special income that would at the previous year’s level. We had also expected that the EBITDA margin would be slightly below the year-earlier level (20.6 percent). In April 2017, we then projected that this margin would instead be somewhat lower than the year before. ROCE was no longer expected to be at the year-earlier level, but slightly below that level. Net cash flow, which we had previously expected to be at the prior-year level, was now projected to be substantially lower. All of the other financial performance indicators were in line with the forecasts we had made at our Annual Press Conference.

Forecast Raised in Q2 and Q3

In its Q2 Interim Report, WACKER specified its projections for EBITDA, expecting full-year EBITDA of between €900 million and €935 million. The upper figure corresponded to the prior year’s EBITDA adjusted for special income (2016: €935.2 million). This revision was due to the strength of chemical business and to higher-than-anticipated income from the stake in Siltronic.

In the Q3 Interim Report, we again upgraded our forecast, largely because of the good business trend. WACKER anticipated that EBITDA would reach €1 billion, exceeding the year-earlier figure. The EBITDA margin was likely to be at the prior-year level and not, as previously forecast, somewhat lower. WACKER also revised its projections for other financial performance indicators. ROCE was anticipated to be slightly higher than – rather than slightly below – the previous year’s level. Net cash flow was projected to be only somewhat lower than – and not substantially below – the prior-year figure. Capital expenditures, previously forecast to rise slightly, were instead expected to be at the year-earlier level. Net financial debt was forecast to total around €500 million at year-end.

WACKER Achieves All Its Outlook Targets

WACKER increased its sales by 6.3 percent to €4.92 billion (2016: €4.63 billion), primarily due to volume growth. As expected, the sales trend was positive at WACKER SILICONES and WACKER POLYMERS. At WACKER BIOSOLUTIONS, sales were on par with the previous year. WACKER POLYSILICON lifted its sales somewhat due to volume growth. WACKER’s EBITDA margin of 20.6 percent was on par with the previous year. At €1,014.1 million, EBITDA on a comparable basis was substantially higher than the previous year’s figure (€955.5 million). Net cash flow amounted to €358.1 million, the same level as the previous year. At 7.5 percent, ROCE was higher than the prior-year figure. Raw-material and energy costs trended in line with our expectations. On average over the year, the value of the euro against the US dollar was slightly higher than we had originally anticipated.

In 2017, capital expenditures were slightly below the prior-year figure. They amounted to €326.8 million.

At €454.4 million, net financial debt was even lower at year-end than projected in the Q3 Interim Report.

As anticipated at the start of the year, the workforce increased. As of the reporting date, WACKER had 13,811 employees, 363 more than the year before.

Deviations from Projected Expenses

Personnel costs climbed year over year, both in absolute figures and as a percentage of sales. This reflected not only the rise in employee numbers during the year, but also higher variable-compensation expenses, which were not entirely counterbalanced by ongoing productivity measures. In the medium term, we expect personnel costs to decline in relation to sales.

Raw-material costs were markedly higher than the year before, both in absolute terms and as a percentage of sales. The rise was prompted by higher prices for key raw materials, such as methanol, VAM and ethylene. Our medium-term projection is that the ratio of raw-material costs to sales will decrease slightly, given our measures to reduce the raw-material quantities used in our products.

In 2017, we further improved our energy efficiency. In turn, our energy costs dropped in relation to sales.

As expected, depreciation declined markedly year over year, both in absolute figures and as a percentage of sales. This was because investment spending in 2016 and 2017 was lower than in earlier years. We expect depreciation to drop further in 2018 and, in the medium term, to be at a level of some €500 million per year.