2023 was a challenging year. Crises, wars and conflicts have become intertwined in a way that we have not seen for years. The ongoing war of aggression in Ukraine and the horrific terror in the Middle East with all its ramifications have turned the world upside down. Everywhere, surging forces are pulling us apart, and social cohesion is crumbling. Everyone is worried about the future.
This situation highlights how important it is that we take a stand as a values-oriented company. WACKER is committed to diversity, openness and tolerance. We reject any form of discrimination. We promote a peaceful coexistence that unites people. Because, as we know, the only way to solve the world’s major challenges is by working together. As an innovative chemical company, we aim to help provide answers – in line with our corporate purpose: Our solutions make a better world for generations. We want to improve the quality of life for people all around the world. That is what motivates us.
However, we are not immune to external circumstances. In 2023, the global industrial engine began to stutter, and the chemical industry faced strong headwinds. There were hopes early in the year for a recovery in customer demand, but it did not materialize. Price pressure was strong. And Germany’s persistently high energy prices and global raw-material costs further impacted our business. All these factors meant that our 2023 results did not match the record figures of the year before.
Given the weak market environment, WACKER’s sales fell 22 percent to around €6.40 billion in the reporting year. Group EBITDA (earnings before interest, taxes, depreciation and amortization) totaled €824 million, a decline of 60 percent year over year. The main reasons were lower prices along with persistently high costs for energy and raw materials, as well as reduced plant utilization rates amid weaker sales. Due to lower earnings and higher capital expenditures, net cash flow decreased to about €166 million. Net income for 2023 came in at around €327 million.
Although WACKER faced significant market headwinds last year, we want you, our shareholders, to participate appropriately in our company’s business success. Accordingly, the Executive and Supervisory Boards have decided, based on these figures, to propose a dividend of 3.00 euros per share at the Annual Shareholders’ Meeting. This means we would distribute about 45 percent of our 2023 net income.
It is hard to predict exactly how economic trends will develop in 2024. We expect that conditions for the chemical industry will remain challenging and that we will not see a sustained recovery in demand. As a result, we will continue to focus firmly on efficiency and cost discipline this year. For full-year 2024, we expect sales of around €6.0 billion – 6.5 billion, with EBITDA between €600 million and 800 million.
Although current market conditions are difficult, WACKER is well positioned strategically. Without WACKER, there would be no energy transition. Our polysilicon provides the starting material for solar cells, while our polymer solutions help make the construction sector more efficient, and buildings more economical and more sustainable. WACKER is also essential to the mobility transition. Our silicone products are in high demand for electric vehicle manufacturing. They make batteries safer, more powerful and more durable. Without WACKER, there would be no digital transformation. Half of the world’s chips contain our polysilicon. And without WACKER, effective health protection would be impossible. Our silicones enable high-tech applications in biomedical engineering. Moreover, we are expanding our biopharmaceutical capacities with core technologies involving proteins and mRNA actives. All these global megatrends will continue to drive our business. Our strategy is right.
As a result, we remain firmly committed to our growth targets for the period up to 2030. By then, our sales should exceed €10 billion. Similarly, we want to strengthen our profitability. Groupwide, we are aiming for an EBITDA margin of more than 20 percent by 2030. As regards capital employed, we want to earn twice our cost of capital.
At the same time, we focus strongly on sustainability. It is an integral part of our strategy. By 2030, for example, we intend to cut our absolute CO2 emissions by 50 percent. We made good progress here in 2023. By 2045 at the latest, WACKER intends to be completely climate-neutral. Early in 2024, that goal was validated by the independent Science Based Targets initiative (SBTi). This makes WACKER one of the first 15 chemical companies worldwide with a validated net zero target – Net Zero 2045. Complying with the Paris Agreement, WACKER’s entire greenhouse-gas reduction path helps limit global warming to 1.5 degrees Celsius.
Sales target for 2030:
>
10
billion euros
We adopt several approaches to improve our environmental footprint and make substantial contributions to limiting global warming. On the one hand, we are working on minimizing resource consumption and greenhouse gas emissions in our own products and processes. On the other, we aim to support our customers in the transformation to net zero by offering plenty of attractive product solutions. More than two-thirds of our product portfolio is already making a contribution here. And, by 2030, our portfolio should fully meet defined sustainability standards, thereby making us part of the solution for making business and society more sustainable.
To achieve our strategic goals, we invest systematically in our future. In 2023, capital expenditures amounted to €710 million, a rise of 30 percent year over year. With our investments in people, markets and molecules, we are laying the foundation for tomorrow’s growth.
“With our investments in people, markets and molecules, we are laying the foundation for tomorrow’s growth.”
We Invest in People. Last year, our global WACKER team grew by 4.2 percent to 16,378 employees. This increase was mainly due to strong investment and project spending, as well as the takeover of ADL BioPharma in Spain. We train our workforce continuously. To recruit talented people worldwide, we also launched our “We are WACKER” employer branding campaign in 2023. Reliable, resolute and ambitious – these are three core qualities inherent to people at WACKER. In 2023, the global WACKER team again did outstanding work. This merits our utmost respect. On behalf of the entire Executive Board, I sincerely thank all our employees.
We Invest in Markets. Our strategy is to remain close to customers and seize growth opportunities around the world. In 2023, we generated 85 percent of our sales outside Germany and more than 60 percent outside Europe. Amid weak market conditions, last year’s sales declined in all three of our global regions – Europe, the Americas and Asia. Despite this, we continued investing regionally. In China, the world’s largest chemical market, for example, we more than doubled Nanjing’s production capacity for dispersions and dispersible polymer powders. In Europe, we expanded capacity for semiconductor-grade polysilicon at Burghausen and set up additional production capacity for specialty silicones at Nünchritz. Early in 2024, we also announced plans for a new production site for specialty silicones in the Czech Republic. To bolster our biotechnology business, we further expanded our Amsterdam site last year. We also advanced the construction of an mRNA competence center in Halle. It will start up in 2024.
We Invest in Molecules. We are strongly positioned thanks to our chemicals business in silicones and polymers, our biosolutions activities and our polysilicon business. However, in 2023, the market environment was persistently weak. As a result, we posted a sales decline across every division, except for Biosolutions, where we matched the prior-year level. To further strengthen our market position in specific segments, our investments focus not only on expanding capacities, but also on developing new solutions for customer needs and enhancing our processes and procedures. To this end, we cooperate closely with customers, scientific institutes and universities. Our portfolio contains about 3,300 active patents worldwide, with 1,200 patent applications currently pending. To enhance our position in biotechnology, we also acquired ADL BioPharma in Spain last year – a top contract manufacturer for the food, pharmaceutical and consumer goods sectors.
These examples show that WACKER is firmly on track. With our investments in people, markets and molecules, we are paving the way for sustainable and profitable growth. We hope that you, our shareholders, will continue to accompany us on this path. On behalf of the entire Executive Board, I thank you for the confidence you have placed in us so far. I can promise you this: we will remain the architects of our own success – pressing ahead with spirit, speed and confidence.
Munich, March 2024
Dr. Christian Hartel
President & CEO of Wacker Chemie AG
