Annual Report 2022

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Creating tomorrow’s solutions

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 and 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.

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.

New Financing Measures in 2022

In May 2022, WACKER drew down a loan for €290 million that had been agreed with the European Investment Bank (EIB) in 2020, with a five-year maturity starting the date the loan was drawn. In July 2022, a syndicated loan in the amount of €400 million from 2016 was replaced before maturity by a new syndicated loan agreement for the same amount. The latter also has a five-year maturity and two extension options of one year each. This line of credit and another syndicated loan for €200 million from 2021, which was extended in December 2022 for a further year until 2027, serve as backup lines for the Group and have not been drawn down yet. In December 2022, bilateral fixed-interest bank loans were signed for a total amount of €110 million and maturing in 2028. They will be disbursed in January 2023, along with further bilateral loans for a total amount of €90 million. All these loans have either fixed rates or the interest rates are secured by means of interest-rate hedges. These financing instruments are the product of long-term financial planning.

Financial Analysis

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.

Net Cash Flow
Net cash flow is defined as the sum of cash flow from operating activities and cash flow from long-term investing activities (excluding securities).