Trends: Assets

Impairment of €760.0 Million on Fixed Assets

Relative to the end of the previous year, fixed assets (including equity-accounted investments) fell by €781.4 million to €3.44 billion (Dec. 31, 2018: €4.22 billion). Property, plant and equipment dropped correspondingly to €2.64 billion (Dec. 31, 2018: €3.53 billion). This was due to a year-end impairment charge of €760.0 million on WACKER POLYSILICON’s fixed assets, which primarily affected facilities in the USA. Current depreciation/amortization amounted to €554.9 million. Capital expenditures fell to €379.5 million, after €460.9 million in 2018. Investments focused on WACKER SILICONES and WACKER POLYMERS, as well as on infrastructure measures. Over half of investment spending was in Germany. Changes in exchange rates increased the carrying amount of property, plant and equipment by about €38 million.

On the assets side, right-of-use assets from leases were recognized for the first time. Simultaneously, financial liabilities from leases rose. A total of €119.8 million in right-of-use assets from leases was reported as of December 31, 2019. WACKER’s investment property included right-of-use assets in the amount of €7.1 million for long-term sublease agreements for parts of its Munich headquarters.

Income from investments in joint ventures and associates was €54.3 million, while distributions totaled €48.8 million. Siltronic AG is the main investment, with an equity-accounted carrying amount of €591.6 million (Dec. 31, 2018: €616.6 million). Other measurement effects decreased the carrying amount of equity-accounted investments. Overall, the carrying amount declined from €658.3 million to €640.4 million.

Other Noncurrent Assets and Securities

Other noncurrent assets totaled €700.8 million as of December 31, 2019 (Dec. 31, 2018: €639.9 million), climbing 10 percent year over year. Deferred tax assets rose markedly, from €520.9 million to €632.9 million, reflecting higher provisions for pensions.

Working Capital Up 3 Percent

Current assets grew by 4 percent year over year, amounting to €2.35 billion (Dec. 31, 2018: €2.26 billion). The increase was due mainly to the build-up of liquid assets. Inventories decreased 3 percent, from €1.01 billion to €979.8 million. This was partly due to inventory valuation adjustments at WACKER POLYSILICON.

Working capital was 3 percent higher as of December 31, 2019, amounting to €1.26 billion (Dec. 31, 2018: €1.22 billion). A drop of 3 percent in inventories and 7 percent in trade receivables had an impact there. Trade payables fell by 25 percent. The decline in trade payables at the reporting date was due to lower investment spending and to payments falling due at the end of the year. Changes in exchange rates had only a marginal effect on working capital.

Liquidity Up 41 Percent

Securities and cash and cash equivalents are a major component of other current assets. Current securities amounted to €109.4 million at the end of Q4 2019 (Dec. 31, 2018: €42.0 million), with WACKER investing liquid assets in fixed-term deposits and short-term funds. As a result, cash and cash equivalents amounted to €435.8 million as of December 31, 2019 (Dec. 31, 2018: €341.1 million). Total liquid assets (current and noncurrent securities, cash and cash equivalents) grew by 41 percent year over year to €545.2 million (Dec. 31, 2018: €387.5 million). In March, WACKER took out new loans totaling €200 million. Insurance compensation of €112.5 million received for the damage incurred at the Charleston site also had a positive impact on liquidity. On the other hand, the company made a special payment of €70.7 million to the WACKER pension fund in Q4 2019. Wacker Chemie AG’s dividend payment of €124.2 million and the disbursement of variable compensation in Q2 2019 also lowered liquid assets. In the prior year, liquid assets were reduced by the cost of the production shutdown in Charleston in the first months of 2018 and by the gradual production ramp-up there.