Annual Report 2023

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Creating tomorrow’s solutions

Value-Based Management Is Integral to Our Corporate Policies

Value-based management is an integral part of our corporate policies. Its purpose is to achieve long-term and sustainable growth in our company’s value. In our management processes, we distinguish between performance parameters and budget parameters. Performance parameters serve the financial management of the company. They include the EBITDA margin and ROCE. The EBITDA margin indicates how successful the company is compared with the competition, while ROCE shows how efficiently the company employs its capital. The budget parameters EBITDA and net cash flow are also important for management control. In addition to these indicators, BVC (business value contribution) is used as a dedicated budget parameter for calculating variable compensation for Executive Board members. This calculation also takes into account absolute greenhouse gas emissions (Scopes 1 and 2) and safety-related incidents (WACKER Process Safety Incident Rate; WPSIR) as non-financial performance indicators. The EBITDA trend is considered to be the most important financial indicator for communication with capital markets.

Key Financial Performance Indicators for the WACKER Group

In 2023, the key financial performance indicators for value-based management remained unchanged:

  • EBITDA margin (EBITDA in relation to sales). We compare historical performance with planned performance as well as with that of the competition, and use the results to calculate a target EBITDA margin. We calculate the weighted divisional average as our target margin for the Group.
  • ROCE, or return on capital employed. ROCE is defined as earnings before interest and taxes (EBIT) divided by capital employed. Capital employed comprises the average value, calculated over four quarters, of working capital and of noncurrent assets required for business operations. It is determined retroactively for the previous quarter. Investment income from Siltronic AG and the corresponding carrying amount in equity are not included when ROCE is calculated. ROCE is a clear indicator of how profitably the capital required for business operations is being employed.
  • EBITDA (earnings before interest, taxes, depreciation and amortization). This shows the company’s operational performance capability before considering the cost of capital. We set absolute EBITDA targets for the business divisions and take the cost of capital into account by using BVC (Business Value Contribution) to determine the internal budget target. To calculate the BVC, the cost of capital and non-operational factors are deducted from EBITDA. The BVC trend depends mainly on changes in EBITDA.
  • Net cash flow (defined as the sum of cash flow from operating activities and long-term investing activities before securities). Net cash flow shows whether we can finance ongoing operations and necessary investments with the funds from our own operating activities. WACKER’s aim is to generate a sustained positive net cash flow. Apart from profitability, the main factors affecting net cash flow are the effective management of net current assets and the level of capital expenditures.

Supplementary Financial Performance Indicators

Our key financial performance indicators are supplemented by additional performance indicators that provide us with information on the Group’s sales and liquidity situation and on its debt levels.

These supplementary financial performance indicators include:

  • Sales: Profitable growth is an important factor in increasing the company’s value over the long term and one of the main drivers of a positive cash flow trend.
  • Investments: As part of our medium-term planning, we set capital expenditure priorities and an investment budget. Capital expenditures do not include right-of-use assets from lease accounting.
  • Net financial debt: We define it as the sum of cash and cash equivalents, noncurrent and current securities, and noncurrent and current financial liabilities.

Development of Key Financial Performance Indicators in 2023

EBITDA margin: We expected the EBITDA margin in 2023 to be considerably lower than a year earlier. The Group actually achieved an EBITDA margin of 12.9 percent.

Planned and Actual Figures


€ million


Reported for 2023


Forecast 2023










EBITDA margin (%)




Substantially lower than last year







€1.1 – 1.4 billion



ROCE (%)




Above the cost of capital,
much lower than last year



Net cash flow




Positive, substantially lower than last year



EBITDA: WACKER had expected EBITDA for 2023 to come in between €1.1 billion and €1.4 billion (2022: €2.08 billion). We lowered our EBITDA guidance during the year, expecting it to range between €800 million and €1.0 billion. At year-end, EBITDA totaled €823.6 million.







€ million















Capital employed1





ROCE2 (%)





Pre-tax cost of capital (%)











Capital employed is the sum of average noncurrent assets (less noncurrent securities and deferred tax assets), plus inventories and trade receivables (less trade payables). It is the variable used in calculating the cost of capital.


Return on capital employed is a ratio indicating how profitably capital is employed. Investment income from Siltronic AG and the corresponding carrying amount in equity are not included when ROCE is calculated.


BVC is calculated by adjusting EBIT for non-operational factors.

ROCE: We expected ROCE to be higher than the cost of capital, albeit significantly lower than forecast in the previous year. During the year, we lowered our forecast for ROCE, estimating it to be below the cost of capital. WACKER’s ROCE for 2023 was 6.9 percent.

Net cash flow: Our guidance was for a positive figure, but much lower than the prior year. At €165.6 million, net cash flow was markedly positive and 62 percent lower than a year earlier.