Trends: Assets

Property, Plant and Equipment Unchanged – Substantial Increase in Equity-Accounted Investments

Relative to the end of the previous year, fixed assets (including equity-accounted investments) rose by €115.8 million to €4.22 billion (Dec. 31, 2017: €4.11 billion). At €3.53 billion, property, plant and equipment was virtually unchanged year over year (Dec. 31, 2017: €3.50 billion). Depreciation, mainly of property, plant and equipment, amounted to €540.4 million. Capital expenditures increased to €460.9 million in the year under review (2017: €326.8 million). The main focus was on WACKER SILICONES and WACKER POLYMERS, as well as on infrastructure measures. Over half of investment spending was for projects outside Germany. Changes in exchange rates increased the carrying amount of property, plant and equipment by about €84 million.

The total value of equity-accounted investments was lifted by a profit of €99.9 million from investments in joint ventures and associates and also by distributions in the amount of €23.1 million from our equity investment in Siltronic. Further measurement gains contributed to the increase. As a result, the carrying amount rose from €564.6 million to €658.3 million.

Other Noncurrent Assets and Securities

Other noncurrent assets totaled €639.9 million as of December 31, 2018 (Dec. 31, 2017: €605.3 million). That was 6 percent higher than at the previous year-end. WACKER reduced its holdings of noncurrent securities from €42.1 million to €4.4 million. Deferred tax assets rose markedly, from €452.6 million to €520.9 million, driven by the increase in provisions for pensions.

Working Capital Up 4 Percent

Current assets grew by 6 percent year over year, amounting to €2.26 billion (Dec. 31, 2017: €2.12 billion). This increase was due predominantly to the strategic build-up of inventory at WACKER POLYSILICON. Inventories rose by 29 percent, up from €783.6 million to €1.01 billion. On the other hand, current liquidity – comprising securities and cash – declined by 24 percent to €383.1 million (Dec. 31, 2017: €505.1 million).

Working capital was 4 percent higher on December 31, 2018, amounting to €1.22 billion (Dec. 31, 2017: €1.17 billion). In addition to an inventory build-up of 29 percent and a 4 percent increase in trade receivables, trade payables were also up 75 percent. These changes were attributable to a rise in business volumes and higher investment spending as of year-end 2018. The inverse effects of prepayments made at year-end 2017 were another influencing factor. Changes in exchange rates had only a marginal effect on working capital.

Liquidity Down 29 Percent

Securities and cash and cash equivalents are a major component of other current assets. Current securities amounted to €42.0 million at the end of 2018 (Dec. 31, 2017: €218.2 million), with WACKER investing liquid funds in fixed-term deposits and short-term bonds that matured at year-end. As a result, cash and cash equivalents rose to €341.1 million as of December 31, 2018 (Dec. 31, 2017: €286.9 million). Total liquid assets (current and noncurrent securities, cash and cash equivalents) decreased by 29 percent to €387.5 million (Dec. 31, 2017: €547.2 million). Wacker Chemie AG’s dividend payment of €223.6 million and the disbursement of variable compensation in Q2 2018 reduced liquid assets. The cost of Charleston’s production shutdown in the first months of 2018 and of the gradual production ramp-up there resulted in cash outflows. It was not possible to make up for these outflows, since no insurance compensation payments were received for Charleston in 2018. The insurance company’s advance payment of US$100 million was offset against the property damage claims. High tax prepayments also reduced liquidity. WACKER recognized income tax receivables of €64.0 million under other current assets (Dec. 31, 2017: €13.9 million).