Earnings

At €6.40 Billion, Group Sales 22 Percent Below Prior-Year Figure of €8.21 Billion

In 2023, the WACKER Group posted markedly lower sales than in the prior year, with lower selling prices the main factor behind the decline across all business divisions. WACKER SILICONES recorded annual sales of €2.74 billion (2022: €3.45 billion), down by 21 percent year over year, primarily due to lower prices for standard products and lower volumes of specialty products. Sales at WACKER POLYMERS came in at €1.58 billion in 2023 (2022: €2.00 billion), a drop of 21 percent. This can be traced back to lower selling prices and volumes. Sales at WACKER BIOSOLUTIONS increased by 2 percent to €337.2 million (2022: €331.1 million). Sales at WACKER POLYSILICON dropped by 30 percent to €1.60 billion (2022: €2.29 billion), especially due to lower selling prices and volumes for solar-grade polysilicon.

WACKER generated the majority of its sales outside of Germany. International sales came in at €5.44 billion (2022: €7.04 billion), accounting for 85 percent of the total.

Group EBITDA at €823.6 Million, with EBITDA Margin at 12.9 Percent

Group EBITDA declined 60 percent year over year, coming in at €823.6 million (2022: €2.08 billion). The EBITDA margin of 12.9 percent was lower than in the previous year (2022: 25.4 percent). In addition to the marked drop in sales, persistently high costs for raw materials and energy, coupled with low plant-utilization rates as a result of the decline in sales, had a negative impact on EBITDA. WACKER generated savings as part of the ongoing efficiency measures that had a positive effect on EBITDA. EBITA was hit by provisions for contingent losses from outstanding delivery obligations as well as inventory write-downs. In the previous year, the reversal of an impairment loss on an equity-accounted investment increased EBITDA by €72.4 million.

Year-over-Year Sales Comparison

EBIT Reaches €404.9 Million

Group earnings before interest and taxes (EBIT) totaled €404.9 million in the reporting period (2022: €1.68 billion), yielding an EBIT margin of 6.3 percent (2022: 20.5 percent). In 2023, depreciation and amortization amounted to €418.7 million (2022: €402.1 million).

Cost of Goods Sold Lower Year over Year Due to Lower Plant Utilization

At €1.08 billion, gross profit from sales was 50 percent lower year over year (2022: €2.16 billion). The cost of goods sold reached €5.32 billion (2022: €6.05 billion). The gross margin was 16.9 percent (2022: 26.3 percent). Although WACKER was able to leverage efficiency gains to reduce the cost of goods sold, persistently high costs for raw materials and energy, coupled with low plant-utilization rates as a result of the decline in sales, reduced the gross margin considerably.overall. The Group’s cost-of-sales ratio rose from 74 percent to 83 percent year over year.

Slight Drop in Functional Costs

Other functional costs (selling, R&D and general administrative expenses) fell by 1 percent year over year, falling to €699.1 million (2022: €704.1 million).

Other Operating Income and Expenses

In 2023, the balance of other operating income and expenses was €-30.2 million (2022: €20.4 million). In the reporting year, income of €10.5 million (previous year: €29.1 million) from canceled long-term contracts and insurance compensation in the amount of €21.9 million were recognized in profit or loss. Expenses resulting from the addition to provisions for contingent losses from outstanding delivery obligations increased the other operating expenses by €39.2 million. The foreign currency result was positive at €1.1 million (2022: €-15.5 million).

Result from Investments

Compared with the previous year, investment income fell substantially, coming in at €51.2 million (2022: €201.7 million), mainly due to the lower investment income from Siltronic AG in the amount of €47.4 million (2022: €108.4 million). In the previous year, investment income had been increased by the reversal of an impairment loss of €72.4 million on the equity-accounted investment in Dow Siloxane (Zhangjiagang) Holding Co. Private Ltd., Singapore.

Financial and Net Interest Result

WACKER’s financial result was up considerably on the year before, coming in at €-17.9 million (2022: €-62.6 million). Interest income was €48.1 million (2022: €10.1 million) and interest expenses reached €40.3 million (2022: €28.6 million). The interest income can be attributed primarily to fixed-term deposits with much higher interest rates than a year earlier. The net interest result was €7.8 million (2022: €-18.5 million).

The other financial result came in at €-25.7 million (2022: €-44.1 million). Valuation effects related to exchange-rate effects on the Group’s financing agreements were the main factor driving lower financial expenses. On the other hand, interest-rate effects of provisions for pensions and other provisions remained constant year over year.

Income Taxes

In 2023, WACKER reported tax expenses of €59.7 million (2022: €334.6 million). The Group’s effective tax rate was 15.4 percent (2022: 20.7 percent). The effective tax rate in the reporting year was lower due, in particular, to tax-free income and to tax income for previous years.

Group Net Income

As a result of the effects mentioned, Group net income was €327.3 million, compared with €1,281.6 million in the previous year.

Return on Capital Employed (ROCE)

The return on capital employed (ROCE) is the ratio of earnings before interest and taxes (EBIT) to capital employed for business activities. Investment income from Siltronic AG and the corresponding carrying amount in equity are not included when ROCE is calculated.

In the reporting year, ROCE was 6.9 percent (2022: 34.7 percent). The drop is due to much lower EBIT and the increase in capital employed from €4.53 billion to €5.19 billion in the reporting year.