Earnings
At €4.69 Billion, Group Sales 5 Percent Below Prior-Year Figure of €4.93 Billion
The WACKER Group’s sales in 2020 were lower than the year before. Especially from April through June, sales dropped markedly due to the coronavirus pandemic. The main reasons for the decrease were lower prices and reduced volumes, especially at WACKER SILICONES. Changes in the product mix also had an impact, as did exchange-rate effects attributable to the year-over-year decline in value of the US dollar. The sales contraction was only slight at WACKER POLYMERS, while WACKER BIOSOLUTIONS posted marginal sales growth. WACKER SILICONES recorded sales of €2.24 billion (2019: €2.45 billion), down 9 percent year over year due to reduced volumes and lower prices for standard products. Sales at WACKER POLYMERS came in at €1.30 billion in 2020 (2019: €1.32 billion), down by a slight 1 percent. Sales at WACKER BIOSOLUTIONS edged up 1 percent to €246.1 million (2019: €243.0 million). WACKER POLYSILICON’s sales rose 2 percent to €792.2 million (2019: €780.0 million), particularly due to higher volumes in the second half of the year.
For further information on the business divisions, please refer to the Segments section.
WACKER generated the majority of its sales outside of Germany. International sales came in at €3.91 billion (2019: €4.13 billion), accounting for 83 percent of the total.
For further information, please refer to the Regions section.
Year-over-Year Sales Comparison
€ million
Group EBITDA at €666.3 Million, with EBITDA Margin of 14.2 Percent
Group EBITDA declined 15 percent year over year, coming it at €666.3 million (2019: €783.4 million). The EBITDA margin of 14.2 percent was lower than in the previous year (2019: 15.9 percent). Prior-year EBITDA included special income in insurance compensation for the damage incurred following the incident at the Charleston (USA) site in 2017. WACKER recognized this special income of €112.5 million under cost of goods sold. Adjusted for this amount, EBITDA totaled €670.9 million in 2020. Measured on a comparable basis, EBITDA fell 1 percent year over year. Despite the marked decline in sales in the second quarter due to the coronavirus pandemic, WACKER reduced its cost of goods sold and functional costs thanks to savings made in current non-personnel costs and to lower raw-material costs. That had a positive effect on EBITDA. The efficiency program also includes job reductions. WACKER set aside €48.0 million for voluntary termination benefits in the fourth quarter. These costs had a negative impact on EBITDA.
A positive factor influencing EBITDA was the Group’s income from investments in joint ventures and associates, which amounted to €34.9 million (2019: €54.3 million). Investment income from Siltronic contributed €32.7 million (2019: €51.4 million) to the result from investments in joint ventures and associates.
For further information on the business divisions, please refer to the Segments section.
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€ million |
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2020 |
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2019 |
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Change in % |
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EBITDA |
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666.3 |
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783.4 |
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-14.9 |
Depreciation/amortization and (reversals of) impairments of fixed assets |
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-403.5 |
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-1,319.7 |
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-69.4 |
EBIT |
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262.8 |
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-536.3 |
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n.a. |
EBIT Reaches €262.8 Million
Group earnings before interest and taxes (EBIT) totaled €262.8 million in the reporting period (2019: €-536.3 million), yielding an EBIT margin of 5.6 percent (2019: -10.9 percent). The negative prior-year EBIT was attributable to an impairment charge of €760.0 million recognized on WACKER POLYSILICON’s fixed assets because of low polysilicon prices. In 2020, depreciation and amortization totaled €403.5 million (2019: €1.32 billion, including impairment charge).
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€ million |
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2020 |
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2019 |
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Change in % |
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EBIT |
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262.8 |
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-536.3 |
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n.a. |
Financial result |
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-44.9 |
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-54.9 |
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-18.2 |
Income before income taxes |
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217.9 |
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-591.2 |
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n.a. |
Income taxes |
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-15.6 |
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-38.4 |
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-59.4 |
Net result for the year |
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202.3 |
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-629.6 |
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n.a. |
Of which |
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Attributable to Wacker Chemie AG shareholders |
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189.2 |
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-642.6 |
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n.a. |
Attributable to non-controlling interests |
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13.1 |
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13.0 |
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0.8 |
Earnings per share (€) (basic/diluted) |
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3.81 |
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-12.94 |
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n.a. |
Average number of shares outstanding (weighted) |
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49,677,983 |
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49,677,983 |
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Cost of Goods Sold Lower Year over Year
At €869.9 million, gross profit from sales was 8 percent higher than a year earlier (2019: €803.2 million). The cost of goods sold came in at €3.82 billion (2019: €4.12 billion). The gross margin was 18.5 percent (2019: 16.3 percent). WACKER reduced the cost of goods sold by means of efficiency gains, with lower raw-material and energy costs also having a positive effect. The prior-year figure for cost of goods sold included insurance compensation of €112.5 million posted in September 2019 for the incident at the Charleston site. Inventory valuation adjustments increased the cost of goods sold by €22.5 million (2019: €46.3 million). The Group’s cost-of-sales ratio declined from 84 percent to 81 percent.
Substantial Decline in Functional Costs
Other functional costs (selling, R&D and general administrative expenses) dropped 7 percent year over year to €586.7 million (2019: €633.4 million). This decline stemmed chiefly from a reduction in non-personnel and travel costs and from efficiency gains across all departments.
Other Operating Income and Expenses
In 2020, the balance of other operating income and expenses was €-57.4 million (2019: €-760.4 million). Other operating expenses included €48.9 million for termination benefits under the voluntary program. Most of these benefits will be paid out in 2021. In the previous year, other operating expenses had included an impairment charge of €760 million on WACKER POLYSILICON’s fixed assets. Foreign currency losses of €-7.8 million (2019: €-12.7 million) lowered other operating income and expenses.
Result from Investments
Due to lower investment income from Siltronic AG, the result from investments in joint ventures and associates fell, coming in at €34.9 million (2019: €54.3 million). Investment income from Siltronic was €32.7 million (2019: €51.4 million).
Financial and Net Interest Result
WACKER’s financial result improved year over year, amounting to €-44.9 million (2019: €-54.9 million). Interest income was €8.1 million (2019: €10.6 million) and interest expenses reached €22.0 million (2019: €20.3 million). The net interest result was thus €-13.9 million (2019: €-9.7 million). WACKER took on further financial liabilities in 2020 in order to enhance its liquidity.
The other financial result was €-31.0 million (2019: € -45.2 million) and included lower interest-rate effects from provisions for pensions and other provisions as well as exchange-rate effects and the cost of derivative financial instruments used to hedge Group loans.
Income Taxes
WACKER reported tax expenses of €15.6 million for 2020 (2019: €38.4 million). The Group’s effective tax rate was 7.1 percent (2019: 22.7 percent, adjusted for the impairment charge of €760 million). Recognized after tax, the investment income from Siltronic AG, which formed part of pre-tax income, reduced the effective tax rate, as did tax-free income and taxes relating to other periods.
Group Net Income
As a result of the effects mentioned, Group net income was €202.3 million, compared with a net loss of €-629.6 million in the previous year.
Return on Capital Employed (ROCE)
The return on capital employed (ROCE) sets earnings before interest and taxes (EBIT) in relation to the capital employed for business activities. Investment income from Siltronic and the corresponding carrying amount in equity are not included when calculating ROCE.
In the reporting year, ROCE was 5.6 percent (2019: -11.3 percent). The main reason for this rise was a marked improvement in EBIT. Capital employed declined due to higher working capital, decreasing from €5,183.5 million to €4,111.4 million in the year under review.