Annual Report 2021

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Creating tomorrow’s solutions

Economic and Legal Factors

WACKER sells its products and services to virtually every industry. Although our business divisions are not immune to economic fluctuations, their onset and impact may vary. Our product portfolio and broad customer base enable us to mitigate the magnitude of such fluctuations.


The terms for orders placed with WACKER vary from division to division. Most orders received by WACKER SILICONES are short term, though a small number are long term. At WACKER POLYMERS, business is based on contracts and framework agreements with terms of up to one year. At WACKER POLYSILICON, we conclude short- and long-term contracts. A proportion of incoming orders are short-term ones based on market benchmarks. Due to varying order-placement procedures at the Group, order-level reporting is not very meaningful and hence does not serve as an indicator in our monthly reports.

Operational Metrics as Leading Indicators of Future Developments

By referring to specific leading indicators based on operational metrics, we try to factor potential developments into our business plans and to allocate capacities accordingly. Since our operations are based on diverse businesses and markets, we use a number of leading indicators to gain insights into potential developments at each of our business divisions. Indicators include trends in raw-material and energy prices, as well as data from our own market research and discussions with customers.

Economic Factors Impacting Our Business

The main economic factors influencing WACKER’s business remained unchanged in many areas.

Raw-Material and Energy Costs

As a chemical company, we belong to an energy-intensive industry and require diverse raw materials to manufacture our products. Consequently, increases in raw-material and energy costs have a delayed effect on our cost structure. WACKER strives to keep costs at a competive level. It does so by using multiple suppliers for most of its key raw materials and structuring its supply contracts so as to grant it the greatest possible flexibility as regards volumes, and by monitoring commodity price indexes to ensure competitive procurement prices. Close cooperation between Procurement and our business divisions helps ensure that higher raw-material costs are for the most part passed on to our customers. However, it is not always possible to achieve this goal in years when price changes are extreme. Amendments to the regulatory framework – such as to grid charges, to energy and electricity taxes, to CO2 certificates in the European Emissions Trading Scheme (ETS) and to the German Renewable Energy Act (EEG) – can have both direct and indirect negative effects on WACKER’s energy costs. Germany’s high electricity prices result in competitive disadvantages for WACKER. That is why we advocate introducing an industrial electricity price and are urging policymakers to do so. In addition, we continuously strive to improve our energy efficiency. By 2030, we want to reduce our specific energy consumption by 15 percent of what it was in 2020.

Exchange-Rate Fluctuations

As a rule, WACKER hedges against exchange-rate fluctuations. We hedge about half of our dollar exposure for the following year with a mix of currency-hedging transactions. In determining sensitivity, we simulate a 10-percent devaluation of the US dollar against the euro. Without hedging, such an increase in the euro against the US dollar would have a negative impact on EBITDA of around €50 million. In 2021, we also concluded hedging transactions in Japanese yen (JPY).

State-Regulated Incentive and Feed-In Tariff Programs for Renewable Energy Sources

As one of the world’s leading suppliers of hyperpure polycrystalline silicon, we are affected by regulatory changes to incentive and feed-in tariff programs for renewable energy sources. Substantially lower prices for solar modules and cells have greatly increased the competitive advantage of solar energy over fossil fuels and other methods of power generation. The cost of manufacturing photovoltaic products is expected to continue decreasing, which will further reduce dependence on state-regulated incentive and feed-in tariff programs over the next few years. Our assumption is that, in a few years, solar energy will do well even without special incentives, particularly in combination with cost-efficient storage options.

Legal Factors Impacting Our Business

China imposed anti-dumping and anti-subsidy tariffs on US manufacturers of solar-grade polysilicon. These tariffs currently affect solar-grade polysilicon produced at our site in Charleston, Tennessee (USA). Trade relations with China were impaired further when the USA, in turn, introduced safeguard tariffs through a Section 201 proceeding (global safeguard tariffs on solar cells and modules) and through other “Section” proceedings. An amicable settlement to the dispute over solar products may be achievable as part of a comprehensive trade agreement between the USA and China.

Earnings before interest, taxes, depreciation and amortization.
Substance outputs, noise, vibrations, light, heat or radiation emitted into the environment by an industrial plant.
A polymer is a large molecule made up of smaller molecular units (monomers). It contains between 10,000 and 100,000 monomers. Polymers can be long or ball-shaped.
Hyperpure polycrystalline silicon from WACKER POLYSILICON is used for manufacturing wafers for the electronics and solar industries. To produce it, metallurgical-grade silicon is converted into liquid trichlorosilane, highly distilled and deposited in hyperpure form at 1,000 degrees Celsius.
After oxygen, silicon is the most common element in the Earth’s crust. In nature, it occurs without exception in the form of compounds, chiefly silicon dioxide and silicates. Silicon is obtained through energy-intensive reaction of quartz sand with carbon and is the most important raw material in the electronics industry.
General term used to describe compounds of organic molecules and silicon. According to their areas of application, silicones can be classified as fluids, resins or rubber grades. Silicones are characterized by a myriad of outstanding properties. Typical areas of application include construction, the electrical and electronics industries, shipping and transportation, textiles and paper coatings.