Central Risk Areas

Defining the Probability and Impact of Risk Occurrence

We have defined categories to describe the probability that risks we identify will occur. This provides a framework for understanding our assessment of individual areas of risk. In percentage terms, our categories define the range of probability as follows:

• Unlikely: under 25 percent
• Possible: 25 – 75 percent
• Likely: over 75 percent

We also use categories to describe how the occurrence of the risks listed might affect the Group’s earnings, net assets or financial position. We assess the possible effect on earnings using the net method, i.e. after taking appropriate countermeasures, such as establishing provisions or hedging. The following categories define the ranges:

• Low: up to €25 million
• Medium: up to €100 million
• High: over €100 million

The table shows our estimation of the probability of risks and of how the occurrence of those risks might affect the Group’s earnings, net assets or financial position. The statements refer to the forecast period, i.e. 2022.

Overall Economic Risks

Scenario: Economic slowdown.

Impact on WACKER: Production-capacity utilization drops, specific production costs rise, and the Group’s sales and earnings decline.

Measures: We counter this risk by continuously monitoring economic trends in our key sales markets. Should the economy weaken, we take early precautions to quickly adjust production capacities, resources and inventories to customer demand. In such a case, we concentrate capacity utilization on production locations with the best cost position, for example.

Evaluation and Risk Assessment: After the severe recession of 2020 due to the coronavirus pandemic, the global economy expanded markedly last year. Economists expect this trend to continue in 2022. But they still see significant economic risks stemming from the pandemic, especially from possible virus variants and from partly insufficient vaccination coverage. Moreover, global bottlenecks for certain product groups – for example, in the chip industry – and for logistics are impeding economic activity.

Due to the continuing risks, we consider it possible that the global economy will fall short of current expectations for 2022. Should global economic activity prove much weaker than currently anticipated, that would potentially have a high impact on WACKER’s earnings.

Sales-Market Risks

Scenario 1: Overcapacity at our chemical divisions.

Impact on WACKER: Price and volume pressure on our products.

Measures: We minimize this risk by adjusting our production capacity and by ensuring plant utilization through volume control and the intense cultivation of growth markets. It remains our goal to increase the share of cyclically resilient product lines in our portfolio and to rank among the global leaders in those lines. But we can only partially balance out the type of sudden and strong fluctuations in demand being caused by the coronavirus crisis.

Evaluation and Risk Assessment: We expect the risk of overcapacity for our products in 2022 to be low, especially in the first half. At the chemical divisions, both customer demand and the prices for our products remain high. Although we see no signs of a slowdown at present, the pandemic continues to evolve rapidly across the globe. It is difficult to reliably predict the virus’s impact on WACKER’s regions and customer sectors, above all for the second half of 2022.

Overall, we consider it unlikely that specific areas of our chemical business will face overcapacity and resultant price pressure. Our current projections are based on the assumption that the pandemic will be further brought under control in the course of 2022. Should that not be possible, this would have a medium impact on the Group’s earnings trend.

Scenario 2: Overcapacity and very low prices for solar-grade polysilicon; difficult market conditions due to a rollback of government incentive programs; and the tight financial situation of many customers.

Impact on WACKER: Volume risks arise if the photovoltaic market is negatively affected by excessive and hurried cuts to government solar incentives or by limitations on new PV capacity. Overcapacity could put pressure on margins through intense price competition. Both factors could lower sales and earnings.

Measures: We counter this risk by continuously improving our cost positions and by optimizing our product and customer portfolio in line with market developments, for example by expanding our market share for semiconductor-grade polysilicon. We respond to customers’ liquidity problems by demanding collateral.

Evaluation and Risk Assessment: The prices for solar-grade polysilicon climbed markedly last year and remain at a comparatively high level. Demand for our particularly high-quality polysilicon remains robust in both the semiconductor and solar sectors. On the other hand, the consolidation process in the solar industry is likely to continue in 2022. At the same time, competitors have announced plans to add new capacity to the market. Both factors could result in polysilicon prices coming under pressure again during 2022. Such a development has been factored into our planning and forecasts. Should demand for solar-grade polysilicon clearly exceed supply, this would presumably lift WACKER POLYSILICON’s earnings. Conversely, a slump in demand for WACKER’s solar-grade polysilicon would probably have a medium impact on earnings in this business. In our view, the risk of prices falling is possible.

Procurement-Market Risks

Scenario: Higher raw-material and energy prices; bottlenecks in the supply of certain raw materials; change to key relief regulations for energy-intensive industries.

Impact on WACKER: Earnings dampened by higher raw-material and energy prices. Any supply bottlenecks could lead to longer customer delivery times and volume losses.

Measures: Close cooperation between Procurement and our business divisions helps ensure that higher procurement costs are for the most part passed on to our customers, so that WACKER’s margins remain stable. For strategic raw materials and energy, we prepare systematic annual procurement plans, which include an evaluation of the procurement risk. Wherever possible, we take appropriate countermeasures for any procurement risk classed as relevant. Such countermeasures include: long-term supply contracts; structured procurement policies for multiple suppliers under contracts of differing lengths; a wider supplier base; a higher level of safety stocks. We reduce our dependence on external suppliers by means of partial backward integration, for example by producing silicon metal and vinyl acetate. In energy procurement, we strive to utilize as many relief regulations as possible. Moreover, WACKER is advocating a Europe-wide industrial electricity price.

Evaluation and Risk Assessment: WACKER’s good position in raw-material and energy procurement enables us to manage risks effectively during economic upturns and downturns. If the world economy were to weaken significantly, our purchasing terms for key raw materials would allow us to adjust contractual volumes flexibly and – wherever possible – to benefit from price decreases through appropriate pricing models. Should global growth become unexpectedly strong, our volume guarantees are so extensive that we do not see any major risks to raw-material security.

As regards electricity costs, current German law partially exempts energy-intensive companies from paying various levies and surcharges. WACKER, too, benefits from these rules. Any restriction on the exemption rules would significantly reduce the competitiveness of specific business activities. In general, energy price trends (wholesale prices, infrastructure costs and ancillary costs) will remain heavily dependent on how German and European policymakers organize the energy transition.

Raw-material and energy prices already rose significantly in 2021 and it is highly probable that this trend will continue in 2022. However, we expect to be able to increase the selling prices of our products correspondingly. Our planning is based on this scenario. The impact on earnings might be high at certain times, however, because there is always a time lag between price changes for procured energy and raw materials and when we are able to adjust the selling prices of our products.

Investment Risks

Scenario: Bad investments, higher-than-expected investment costs, postponed plant start-ups, deterioration of original market projections, and the assumption of risks from investments in joint ventures and associates.

Impact on WACKER: Bad investments lead to idle-capacity expenses and/or impairments of assets and investments. The possible effect on earnings could be substantial. Higher investment costs mean higher cash outflows and will lead to higher expenses for depreciation/amortization and impairments in our operating result. Postponed start-ups expose us to the risk of being unable to fulfill supply contracts and of posting lower sales and earnings. Should Siltronic AG’s market capitalization fall substantially, WACKER might have to recognize a corresponding impairment on the carrying amount of its equity-accounted investment and this could negatively affect WACKER’s earnings.

Measures: WACKER has numerous measures in place to counter investment risks. Investment projects are subject to a risk management process and their planning is thoroughly checked for completeness and plausibility. Economic feasibility is assessed using comparative studies that look at other projects, including those of competitors. Major capital expenditure is approved in stages only. Stringent project-budget management helps minimize or prevent delays.

Evaluation and Risk Assessment: Our capital expenditures will be substantially higher in 2022. This is due to capacity-expansion projects for our chemical segments. Higher-than-expected investment spending is a risk that is currently considered to be low. Even if this risk were to materialize, the impact on our earnings, net assets and financial position would probably be in the medium range. By the same token, we currently consider it unlikely that any negative trend in Siltronic AG’s market capitalization will pose a risk to our financial position. Overall, we consider it possible that investment risks could materialize. Were these risks to materialize, they would probably have a medium impact on our earnings, net assets and financial position.

Production and Environmental Risks

Scenario: Risks relating to the production, storage, filling and transport of raw materials, products and waste.

Impact on WACKER: Personal injury; property damage and environmental impairment; production downtimes and operational interruptions; and the obligation to pay damages.

Measures: WACKER coordinates its processes through its integrated management system (IMS). This system regulates workflows and responsibilities, attaching equal importance to productivity, quality, the environment, and health and safety. The IMS is based on statutory regulations, and on national and international standards, such as Responsible Care^® and the UN Global Compact, which go far beyond legally prescribed standards. We focus on securing the highest possible level of operational safety at our production sites by monitoring maintenance extensively and by performing regular plant inspections. We conduct thorough safety and risk analyses, from the design stage through to commissioning, to ensure the safety of our plants. We regularly hold seminars on plant and workplace safety, and protection against explosion damage. Every WACKER site has an emergency response plan in place to regulate cooperation between internal and external emergency response teams, and with the authorities. We are insured against loss events at our plants and the potential consequences of such events. Our insurance cover is in line with customary chemical-industry standards. When we work with logistics providers, we ensure that shipments of hazardous goods are always checked prior to loading. Any deficiencies are systematically recorded and tracked.

Evaluation and Risk Assessment: Experience has shown that risks stemming from the production, storage, filling and transport of raw materials, products and waste can never be completely ruled out. Although there is a general possibility that such risks will occur, we currently consider a serious loss event to be unlikely. Should such an event occur, though, it could have a medium impact on WACKER’s earnings.

Financial Risks

WACKER’s ongoing operations and financing expose it to financial risks. These include credit, market-price, financing and liquidity risks. The Notes to the Consolidated Financial Statements provide extensive information about risk hedging with derivative financial instruments.

Credit Risk

Scenario: Customers or business partners fail to meet their payment obligations.

Impact on WACKER: Losses on trade receivables, and failure of banks to fulfill their obligations to WACKER.

Measures: We use a variety of instruments to reduce the risk of any loss on receivables. Depending on the nature of the product or service provided and the amount involved, we may demand collateral. Our preventive measures range from obtaining references and performing credit checks to evaluating payment histories. We limit default risks by means of credit insurance, advance payments and bank guarantees. We prevent counterparty risk with respect to banks and contractual partners by carefully selecting these partners. We transact cash investments and derivative dealings with banks that are usually above a defined minimum rating.

Evaluation and Risk Assessment: We consider it unlikely that credit risks stemming from customer business will materialize. We consider our risk concentration with regard to bank failures to be low, given our approach to counterparty risk. If bank failures were to occur unexpectedly, their impact on WACKER’s earnings would probably be low.

Currency-Exchange and Interest-Rate Risks

Scenario: Fluctuations in exchange rates and interest rates.

Impact on WACKER: Effect on earnings, liquidity, and financial assets and liabilities.

Measures: Currency risks arise mainly from exchange-rate fluctuations for receivables, liabilities, cash and cash equivalents, and financial liabilities not held in euros. The currency risk with respect to the US dollar is of particular importance. WACKER hedges any net exposure above a certain level by using derivative financial instruments. Foreign exchange hedging is carried out mainly for the US dollar. We also counter exchange-rate risks through production sites that are not in the eurozone.

Interest-rate risks arise due to changes in market rates. Such changes affect future interest payments for variable-rate loans and investments. Once an exposure has been identified, we hedge the corresponding interest rates.

The use of derivative financial instruments requires an underlying operating transaction and is governed by internal regulations.

Evaluation and Risk Assessment: We hedge part of our US dollar business. Possible gains or losses from exchange-rate fluctuations are partially cushioned by hedges. At the present time, we consider it possible that exchange-rate and interest-rate changes in 2022 will differ substantially from our planning assumptions. We believe that this would have a medium impact on Group earnings.

Liquidity Risk

Scenario: Lack of funds for payments and tougher access to credit markets.

Impact on WACKER: Higher financing costs and impact on further investment projects.

Measures: Liquidity risk is managed centrally at WACKER. Our Corporate Finance and Insurance department employs efficient systems for both cash management and rolling liquidity planning. To counter financing risks, WACKER holds adequate, contractually agreed long-term lines of credit, and has set aside sufficient liquidity. We invest liquid funds only in issuers or banks that have a solid investment-grade credit rating. Cash pooling means liquid funds are passed on internally within the Group as required.

Evaluation and Risk Assessment: WACKER’s liquidity totaled €1.98 billion as of the reporting date. At the same time, there were unused lines of credit with terms of over one year totaling around €900 million. We consider the occurrence of financing and liquidity risks to be unlikely. At the moment, we see no risks relating to financial-covenant infringements. If financing or liquidity bottlenecks did occur, their impact on Group earnings would be low. If unused lines of credit were tapped, net financial debt would rise.

Pensions

Scenario: Higher life expectancy of those entitled to a pension; pay and pension adjustments; falling discount factors; significant changes in the composition of invested fund assets and capital-market interest rates (low-rate environment).

Impact on WACKER: A rise in pension obligations, a decline in fund assets and a possible injection of financial resources into the pension fund or into the plan assets will affect the financial position and earnings of the Group. Further factors with a substantial impact on WACKER’s equity and earnings are the higher life expectancy of pension-fund beneficiaries, adjustments to pay and pensions, and the discount factor (used to calculate the present value of future cash flows).

Measures: A large portion of WACKER’s pension commitments are covered by the Wacker Chemie VVaG pension fund, by other pension-related funds and special-purpose assets, and by insurance plans. The investment portfolio is diversified to ensure a sufficient rate of return and to limit investment risks. The pension fund optimizes all asset items so that it attains the required return within specified risk limits. As one of the sponsoring entities, WACKER makes payments to the fund (when necessary), thereby ensuring sufficient coverage for pension obligations. We periodically adjust the calculation parameters (e.g. life expectancy) for the other defined-benefit pension commitments. As instructed by the German Financial Supervisory Authority (BaFin), the pension fund ceased taking new hires as of year-end 2021 into its pension plan AVB 2013 (General Insurance Terms and Conditions of 2013). Starting 2022, WACKER intends to offer new hires in Germany a company pension solely in the form of direct commitments on a funded basis. These commitments are to be secured via a contractual trust arrangement (CTA), which finances the company’s pension obligations. Employees covered by the old pension plans are to have the option of voluntarily switching to the new system. WACKER also wants to offer these employees a voluntary capital option, which allows them to choose a lump sum or installment payments instead of a lifelong pension. The company agreed with employee representatives on an outline of the key points in 2021, and negotiations to finalize a company agreement are currently in progress. Once these changes have been implemented, WACKER expects its provisions for pensions to decrease, which in turn would ease pressure on the company’s statement of financial position.

Evaluation and Risk Assessment: Employee beneficiaries of the pension fund are steadily getting older and capital-market interest rates have been very low in recent years. The rate of return will probably be insufficient to fulfill pension obligations in the long term. By adopting the above-mentioned measures to reform our company pension system, we are countering the effects of these trends on our balance sheet. We do not assume that special payments to the pension fund will be necessary in 2022. For the foreseeable future, however, the existing plans will continue to dominate WACKER’s company pension arrangements. In consequence, it is highly probable that more special payments to the fund will be needed in the next few years, that pension expenses and pension payments will rise further, and that higher provisions for pensions will weigh on the company’s financial position. In the medium term, this would have a high impact on WACKER’s earnings, net assets and financial position.

Legal Risks

Scenario: Diverse legal risks related to tax, trademarks, patents, competition, antitrust proceedings, the environment, labor and contracts could arise from our international business.

Impact on WACKER: Drawn-out legal disputes, which could be detrimental to our company’s operations, image and reputation, and which could be costly.

Measures: We limit legal risks through centralized contract management and through reviews by our Legal department. Where necessary, we also have recourse to external legal experts.

Our Intellectual Property department protects and monitors patents, trademarks and licenses. Before launching R&D projects, we conduct searches to determine whether existing third-party patents and intellectual property rights could obstruct these projects.

We use compliance programs to limit risks arising from possible legal infringements. WACKER’s Code of Conduct defines and stipulates binding rules of behavior for all employees. WACKER enhances awareness of these issues through training programs.

Evaluation and Risk Assessment: Due to the varied nature of our business activities, it is always conceivable that legal risks could arise. We currently do not foresee any legal disputes, patent infringements or other legal risks that could significantly influence our business, and consider the probability of such risks materializing to be fundamentally unlikely. Should such an individual case occur, we would expect its impact on WACKER’s earnings to be low.

Regulatory Risks

Energy Transition in Germany

Scenario: The transformation of Germany’s energy supply system that is necessary to achieve the CO₂-reduction targets set for 2030 – 2050 will likely lead to huge and repeated legislative amendments to the regulatory framework. This will affect not only the electricity sector, the mainstay of future energy supplies, but also natural gas and the hydrogen economy. We expect to see major amendments to Germany’s Renewable Energy Act, affecting not only relief for energy-intensive companies and self-generated electricity, but also grid charges (including individual charges) and the rules for national and European emissions trading.

Impact on WACKER: Higher energy costs due to rising government-regulated charges and levies if exemption levels for energy-intensive industries are not maintained; plus the additional expense of complying with new administrative requirements.

Measures: We continually monitor regulatory activity in Germany and in the EU. Whenever we anticipate changes in the current legal situation, we try to introduce our viewpoint into legislative procedures through discussions with policymakers and by participating in the work of trade associations. We also take advantage of market opportunities arising from regulatory changes (e.g. industrial demand-response management).

Evaluation and Risk Assessment: Changes in grid fee reductions and in the calculation basis for grid levies have already caused WACKER’s level of relief from grid charges to decline in recent years. Since 2021, regulations for Phase 4 of European emissions trading have been in effect to accelerate reduction of the emission ceiling in the European Union. This may lead to higher prices and lower allocations of emission allowances. In addition, we consider it possible that 2022 will see further amendments to statutory provisions on energy supply. The impact of such amendments on WACKER’s earnings would probably be low in the current year, but could increase substantially in subsequent years.

Polysilicon Trade Restrictions

Scenario: Anti-dumping proceeding completed by MOFCOM (Chinese Ministry of Commerce) against polysilicon imports from the USA. On January 20, 2020, MOFCOM decided (following an expiry review) to extend the existing anti-dumping and anti-subsidy tariffs on US-made solar-grade polysilicon for another five years.

Impact on WACKER: Negative impact of anti-dumping and anti-subsidy tariffs on earnings, net assets and financial position; influence on sales volumes; impact on long-term customer relations.

Measures: Despite the USA-China trade conflict, we are holding numerous talks with policymakers in both countries to try and mitigate or eliminate punitive solar-sector tariffs (US tariffs on Chinese solar modules and cells, and Chinese tariffs on solar-grade polysilicon from the USA). Our aim in doing so is to reduce or end Chinese anti-dumping and anti-subsidy tariffs and other punitive tariffs on WACKER’s US-made solar-grade polysilicon. In addition, we have already qualified polysilicon made at our Charleston site with customers for semiconductor applications and will be able to complete further qualifications for semiconductor customers in 2022.

Evaluation and Risk Assessment: The USA and China signed Phase 1 of a trade agreement on January 15, 2020. Under the agreement, China committed itself to purchase at least US$250 billion worth of US-made goods in 2020 and 2021. This explicitly included solar-grade polysilicon. As China, however, did not lift its tariffs on US-made solar-grade polysilicon, WACKER could not export its Charleston-made solar-grade polysilicon from the USA to China at competitive terms. At the moment, it is not clear whether the USA and China will negotiate a successor agreement to their Phase 1 agreement. Given the ongoing trade disputes worldwide, we consider it possible that WACKER’s polysilicon business could be affected by further trade barriers and punitive tariffs. The potential impact on our 2022 earnings would then probably be high.

New Regulations for Production Processes, Products and Their Applications

Scenario: Due to new legislation, the production and use of chemical substances is regulated more strictly. New regulations make it necessary to modify our production processes or reformulate our products. They also impose more extensive information requirements on us and, in some cases, on our customers as well. Additional legal provisions in individual countries raise the expense of necessary registrations.

Impact on WACKER: Extra investments in production facilities, conversion costs, revenue losses in certain application fields, plus extra costs for the required audits and registrations.

Measures: WACKER continually monitors the regulatory environment surrounding its products and production processes so that it can react promptly to impending changes. We are continuously optimizing our production processes. Any other necessary measures will be aligned with the changed regulatory environment in each specific situation.

Evaluation and Risk Assessment: It is always possible that new legal provisions necessitate modifications to our product portfolio or production processes. We consider it likely that new legal provisions will require additional investment in our production facilities or changes to our product portfolio. Should such changes occur, their short-term impact on WACKER’s earnings in 2022 would probably be low. In the medium term, though, they could have a medium-to-high impact.

IT Risks

Scenario: Attacks, system errors and unauthorized access to our IT systems and our production plants and networks, resulting in a threat to data security.

Impact on WACKER: Negative impact on the company’s earnings, net assets and financial position, on its reputation and on its production processes and workflows; loss of know-how.

Measures: WACKER constantly monitors the information technology it uses and also invests in protecting its IT systems and applications, thereby safeguarding the functionality and stability of its computer-based business processes. Our IT-security and risk-management specialists are responsible for handling hazards in a cost-efficient way. Their work is based on ISO 27001. An essential factor in configuring our systems for maximum availability (where necessary) is a robust backup and recovery procedure. Predefined processes and workflows are in place for emergencies (IT service continuity management). We minimize project-related IT risks by applying uniform project/quality management methods. These ensure that project outcomes and possible changes to IT services are integrated into our system landscape in a controlled manner and in accordance with defined processes.

During the risk management process, we log and evaluate any operations-related risks that arise and take appropriate technical and organizational countermeasures. Our Cyber Defense Center (CDC) continually monitors the security of our IT landscape and our applications. If the CDC identifies any vulnerabilities, it has them rectified in a timely manner. Our user-authorization systems are based on the need-to-know principle. We review them regularly and assess any new concepts that reflect advances in digitalization. In order to protect our IT systems against malware, we deploy efficient security software, which we always keep up to date. We have set up an international security team that takes organizational and technical measures to counter risks to our security goals (confidentiality, integrity and availability of data and systems). IT security events and training courses ensure that our employees are appropriately sensitized. In addition, we regularly conduct comprehensive penetration tests, audits and assessments at our German and international sites. We continually observe and evaluate the techniques of potential attackers and, where necessary, realign our defense strategies accordingly.

Evaluation and Risk Assessment: A long-term failure of IT systems or a major loss of data could considerably impair WACKER’s operations. As in previous years, there were a large number of attempted attacks on our IT systems and infrastructure in 2021. It cannot be ruled out that such attacks could succeed in certain cases despite the precautions we have taken. We thus consider such events possible. If, as a result of such an event, any of our IT systems faced downtime and service disruption that affected a significant number of users or lasted for a substantial period, the impact on WACKER’s earnings would be of medium scale.

Personnel-Related Risks

Scenario: Demographic change, lack of qualified technical and managerial employees, and problems in filling executive positions.

Impact on WACKER: A lack of technical and managerial employees could impede our continued growth and cause us to lose our technological edge.

Measures: We limit these risks through our personnel policies. In particular, we have a talent management process in place, which we use to draw up development plans for our employees. In addition, we offer a wide variety of training programs, attractive social benefits and performance-oriented compensation. We also offer our employees in Germany a wide range of working-time models and arrangements to better balance career demands with the different phases of their lives.

WACKER has a detailed, groupwide succession planning process in place for all key positions in the company, including all positions held by senior executives (OFKs). WACKER’s succession planning process distinguishes between short-term needs (up to two years) and medium-term needs (two to four years). In addition, WACKER has appointed deputies for senior executives in the event of a lengthy absence or illness.

Evaluation and Risk Assessment: Demographic change will increase the risk of not being able to find sufficiently qualified personnel for technical and managerial positions in the medium to long term. We consider it unlikely that risks to our personnel needs will arise in 2022. Should these risks materialize, the impact on Group earnings would probably be low.

External Risks

Scenario: Pandemic, natural disaster, war or civil war.

Impact on WACKER: Impairment of our company’s capacity to act; supply bottlenecks; production outages; supply-chain disruptions; loss of trade receivables; impact on sales and earnings.

Measures: Our management entities and our sites have prepared and communicated plans and measures to minimize the effects of a pandemic on the health of our employees and on our business processes. Our pandemic-preparedness plan ensures a uniform, coordinated approach. The financial impact of damage to our production plants due to natural disasters is partly covered by insurance. As WACKER has production sites on various continents, it can always ensure a certain degree of manufacturing and delivery capability even if individual plants fail.

Evaluation and Risk Assessment: Risks from pandemics, natural disasters, and acts of war or civil war can never be ruled out entirely. The current coronavirus pandemic is clear proof of this. In 2021, the pandemic and the government measures to contain it and protect public health once again hampered the economy, especially supply chains. In many countries, infection rates surged again during the autumn and winter of that year. Thanks to our detailed action plans, we have thus far succeeded in limiting the impact of Covid-19 on our company. But the situation continues to evolve rapidly. In consequence, we cannot reliably estimate the future situation at the moment. If the pandemic cannot be curbed significantly, there is a high probability that WACKER could once again be subject this year to risks from the pandemic and to measures taken by the authorities. If such a scenario occurs, it could have a high impact on WACKER’s earnings. Depending on how the armed conflict in Ukraine develops, potential disruptions to our energy and raw-material supplies could have a negative impact on production.