Financial-Management Principles and Goals
Our key financial-management goal is to secure WACKER’s financial strength over the long term. The central task is to sufficiently cover the financial needs of our operations and investment projects. Financial management at WACKER comprises capital structure management, cash and liquidity management, and the management of market-price risk (currencies, interest rates). Capital structure management involves shaping the capital structure of the Group and its subsidiaries.
In liquidity management, WACKER continuously monitors cash flows from operations and from financial transactions. WACKER covers the resulting liquidity needs via suitable instruments such as intra-Group lending, or through external loans from local banks.
WACKER pursues a careful financing policy that targets a balanced financing portfolio, a diversified maturity portfolio and a comfortable liquidity buffer. Our aim is to maintain our corporate financial structures so that the Group’s credit rating remains – at a minimum – in the investment-grade range.
WACKER’s key source of liquidity is the operations of its Group companies and the resulting incoming payments. This centralized system of internal transfers reduces our interest expense and the need for debt financing. The purpose of managing market-price risks is to limit the effects of fluctuations in exchange rates and interest rates on the Group’s bottom line.
Financing Measures in 2020
In April 2020, WACKER repaid a further installment of US$ 130 million of its private placement in the United States. Promissory notes (German Schuldscheine) of €300 million were finalized in June 2020, with maturities of four and six years. These promissory notes replace short-term interim financing of €250 million. In the fourth quarter, WACKER signed a European Investment Bank (EIB) loan for €290 million. This loan has a maturity of five years from utilization and will be drawn in 2021 or 2022.
The Group’s cash flow is a key instrument of liquidity management. Net cash flow serves as the internal indicator for measuring the liquidity of operating activities.