Comparing Actual with Forecast Performance

During the year, WACKER adjusted its targets for 2020 (published in its 2019 Annual Report) to take account of the pandemic’s effects. The main factor here was the steep slump in the global economy in the second quarter. When the company presented its 2019 Annual Report in mid-March, it already made its annual guidance conditional because of the difficulty of reliably estimating the pandemic’s implications for its earnings and financial position.

No Guidance after Close of the First Quarter

At the start of 2020, WACKER projected that its sales would increase by a low-single-digit percentage. The EBITDA margin was likely to be slightly lower than a year earlier, with EBITDA about 20 percent lower. ROCE was expected to be positive and substantially higher than the year before. Net cash flow would be clearly positive and substantially higher than the previous year. Capital expenditures would reach around €350 million, with depreciation and amortization amounting to around €425 million. Net financial debt would be substantially lower than the year before.

In its Q1 Interim Report of April 2020, WACKER refrained from issuing full-year guidance. At the time, it was not possible to reliably estimate either how strongly or for how long government measures to contain the global spread of the virus would dampen the company’s business.

In its Q2 Interim Report, WACKER again refrained from providing specific guidance for full-year 2020, as it was still not possible to adequately quantify how the global spread of the virus would affect the company’s business. But WACKER made it clear that it expected its sales, EBITDA and EBITDA margin for 2020 to be below the previous year’s levels due to the pandemic. Net cash flow was likely to be above the year-earlier figure.

In its Q3 Interim Report, WACKER reiterated its expectations for sales, EBITDA and EBITDA margin for 2020. Net cash flow was now likely to be substantially higher than a year earlier.

WACKER Closes 2020 in Line with Its Expectations

In 2020, WACKER posted sales of €4.69 billion (2019: €4.93 billion), down 4.8 percent year over year. The company’s sales contracted sharply in Q2 2020 due to the effects of the pandemic. Although WACKER regained some ground in Q3 and Q4, supported mainly by robust demand from the construction industry and for polysilicon, it did not fully make up for that sales slump. WACKER’s sales trend was slowed not only by somewhat lower volumes year over year, but also by price changes and exchange-rate effects.

EBITDA was €666.3 million, down 14.9 percent (2019: €783.4 million). The EBITDA margin was correspondingly lower than in the prior year. The main reason for the EBITDA decline was prior-year special income of €112.5 million in insurance compensation. Adjusted for this income, the year-over-year fall in EBITDA was 0.7 percent.

At €697.7 million, net cash flow was substantially higher year over year (2019: €184.4 million). Factors prompting this strong rise included a marked reduction in current assets and much lower capital expenditures. ROCE of 5.6 percent was clearly positive and significantly higher than in the prior year.

In 2020, capital expenditures reached €224.4 million, well below the year-earlier figure of €379.5 million.

At year-end, net financial debt amounted to €67.5 million, down significantly versus the previous year (2019: €713.7 million).