Executive Board Statement on Business Development and on the Group’s Economic Position
In 2019, WACKER’s operations were characterized by stable chemical business and by persistent price pressure in its solar-grade polysilicon business. WACKER POLYMERS and WACKER BIOSOLUTIONS generated sales growth, while WACKER SILICONES posted a slight sales decline due to lower average prices for standard silicones. At WACKER POLYSILICON, markedly lower average prices weighed on business, although the division sold more volume.
The Group’s earnings were dampened not only by significantly lower average prices for solar-grade polysilicon and the related effects of inventory valuation adjustments, but also by lower prices for standard silicones and by the steep rise in Germany’s electricity prices. On balance, we did not fulfill our March 2019 projections for sales, EBITDA, the EBITDA margin, and ROCE.
Earnings performance was also influenced by special factors. On the one hand, earnings benefited from the insurance compensation received for the damage incurred at our Charleston site. On the other hand, the impairment charge on WACKER POLYSILICON’s fixed assets weighed on earnings.
Personnel expenses rose slightly, both in absolute terms and as a percentage of sales. Raw-material costs edged down in absolute terms, but remained constant as a percentage of sales. Energy costs rose substantially. Total depreciation/amortization and impairments rose markedly year over year due to the impairment charge on WACKER POLYSILICON’s fixed assets. Adjusted for this effect, the total was slightly higher year over year.
Group equity decreased from €3.15 billion to €2.03 billion compared with the year-earlier reporting date. The main reasons for this decline were the net loss of €-629.6 million and actuarial losses on provisions for pensions caused by the application of lower discount rates. The equity ratio came in at 31.3 percent. The Group’s net financial debt increased, amounting to €713.7 million as of December 31, 2019. As planned, capital expenditures decreased to €379.5 million year over year. Net cash flow was clearly positive at €184.4 million and substantially higher year over year.