Cash Flow
Net Cash Flow from Continuing Operations
In 2018, WACKER complied with its long-term policy of financing its investments essentially from its own cash flow. Net cash flow totaled €124.7 million in 2018 (2017: €358.1 million), demonstrating that long-term investments are covered largely by cash flow from operating activities.
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€ million |
2018 |
2017 |
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Cash flow from operating activities (gross cash flow) |
509.6 |
613.0 |
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Change in advance payments received |
38.5 |
70.1 |
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Cash flow from long-term investing activities before securities |
-423.4 |
-325.0 |
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Additions from finance leases |
– |
– |
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Net cash flow – continuing operations |
124.7 |
358.1 |
Net cash flow is the sum of cash flow from operating activities (excluding the change in advance payments received) and cash flow from long-term investing activities (before securities), including finance leases.
Net Cash Flow – Continuing Operations
Gross Cash Flow from Continuing Operations
In 2018, cash flow from operating activities (gross cash flow) totaled €509.6 million (2017: €613.0 million). Net income from continuing operations was slightly higher at €260.1 million (2017: €250.1 million), while changes to working capital increased to €182.7 million (2017: €124.1 million) and taxes paid to €152.0 million (2017: €92.8 million). The profit from investments in joint ventures and associates of €131.7 million (2017: €42.0 million), which was included in net income for the period, reduced gross cash flow. Siltronic AG’s dividend payment of €23.1 million increased gross cash flow. In advanced payments retained, the smaller reduction of €38.5 million (2017: €70.1 million) had a positive effect on gross cash flow. The depreciation of €540.4 million included in net income for the period was less than in the previous year (2017: €590.4 million).
Cash Flow from Operating Activities (Gross Cash Flow) – Continuing Operations
Cash Flow from Long-Term Investing Activities – Continuing Operations
The Group’s investment projects influence cash flow from long-term investing activities. In 2018, cash payments of €-408.8 million for investments were substantially more than the prior year’s €-328.2 million. The increase was due to the fact that various sites were expanded in 2018, as planned, especially in the chemical divisions. Preparations for these expansion projects were made in 2017. WACKER made over half of these capital expenditures outside Germany. WACKER BIOSOLUTIONS paid €21.0 million to acquire a biologics production site in Amsterdam. Cash flow from long-term investing activities amounted to €-423.4 million in the reporting period (2017: €-325.0 million).
Cash Flow from Long-Term Investing Activities – Prior-Year Disposals and Discontinued Operations
In the prior year, proceeds from the sale of shares in Siltronic AG and relinquishment of the majority shareholding generated income of €353.2 million after accounting for transaction costs. The liquidity outflow from the deconsolidation of Siltronic amounted to €161.4 million and resulted in a net cash inflow from the sale in the amount of €191.8 million.
Cash Flow from Long-Term Investing Activities Before Securities – Continuing Operations
Cash Flow from Financing Activities
Cash flow from financing activities totaled €-240.5 million in the reporting year (2017: €-333.1 million). The figure reflected the refinancing of external financial liabilities. The dividend of €223.6 million paid by Wacker Chemie AG in Q2 2018 was a key component of cash outflows. In the previous year, financial liabilities were repaid and the sale of 6 percent of the company’s shares in Siltronic AG generated a cash inflow of €87.6 million.
Cash and Cash Equivalents
Cash and cash equivalents climbed to €341.1 million (2017: €286.9 million). On the other hand, liquidity from cash and from current and noncurrent securities fell from €547.2 million to €387.5 million.
Net Financial Debt Higher
WACKER defines net financial debt – which is one of its financial indicators – as the balance of gross financial debt (current and noncurrent financial liabilities) and existing noncurrent and current liquidity, consisting of securities, cash and cash equivalents. Net financial debt amounted to €609.7 million as of December 31, 2018 (Dec. 31, 2017: €454.4 million). That was 34 percent more than the year before.
Lower net cash flow and Wacker Chemie AG’s dividend payment reduced liquidity, while financial liabilities remained unchanged. Changes in exchange rates had no material effect on net financial debt.
Aside from the financial liabilities disclosed in the report on net assets, WACKER has at its disposal adequate unused syndicated loans for around €600 million, with maturities of over one year. Our existing lines of credit provide us with enough financial scope to secure the Group’s continued growth. The Group does not use any off-balance-sheet financing instruments.
Net Financial Debt
