Management Report of Wacker Chemie AG

(Additional information pursuant to the German Commercial Code)

The management report of Wacker Chemie AG and the Group management report for 2025 are combined in accordance with Section 315 (5) in connection with Section 298 (2) of the German Commercial Code (HGB). The annual financial statements of Wacker Chemie AG (prepared in accordance with the German Commercial Code) and the combined management report are published simultaneously in Germany’s Company Register.

The combined management report includes all reporting elements pertaining to Wacker Chemie AG that are required by law. Further to our report on the WACKER Group, we explain here developments at Wacker Chemie AG.

Wacker Chemie AG is the parent company of the WACKER Group and has its headquarters in Munich, Germany. It operates through four business divisions – Silicones, Polymers, Biosolutions and Polysilicon – which generate a substantial portion of the Group’s sales. Wacker Chemie AG directly and indirectly held subsidiaries and investments located in Germany and abroad have a strong influence on its business. Wacker Chemie AG has a total of 51 subsidiaries, joint ventures and associated companies and also includes the Group’s corporate departments. Wacker Chemie AG Executive Board exercises key management functions for the Group as a whole, which include determining the Group’s strategy, allocating resources (such as funds for investment spending), and bearing responsibility for managing executive personnel and corporate finances. Wacker Chemie AG Executive Board also oversees communications with the company’s key stakeholders, especially with the capital markets and shareholders.

The key performance indicators used in corporate management are implemented groupwide in the business divisions. Corporate goals are defined and reported for the divisions on a groupwide basis. Even though Wacker Chemie AG is an independent entity, no separate key performance indicators are defined or reported for it. For more information, please refer to the respective details provided for the WACKER Group as a whole.

The general business conditions of Wacker Chemie AG are essentially the same as those of the Group.

The annual financial statements of Wacker Chemie AG were prepared in accordance with the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). These statements differ substantially from the IFRS figures in relation to fixed assets, depreciation/amortization and impairments, financial instruments, right-of-use assets and financial liabilities in connection with lease accounting, provisions for pensions, and deferred taxes. As regards EBITDA, there are only slight differences between IFRS and HGB figures.

Wacker Chemie AG earnings pursuant to the German Commercial Code

Wacker Chemie AG earnings in 2025 were characterized by lower sales, an associated decline in the cost of materials, and expenses from inventory reduction measures, with sales in 2025 down in all business divisions. Particularly in the Polysilicon division, sales dipped due to lower prices and quantities. At year-end, Wacker Chemie AG posted a net loss of €-438.5 million (2024: net income of €27.4 million), €465.9 million less than a year earlier.

Sales fell from €4.09 billion to €3.89 billion, a drop of 4.9 percent year over year. This trend is due primarily to much lower volumes and to lower prices for solar-grade polysilicon in the Polysilicon division, where sales in 2025 dropped by 7.0 percent from €958.4 million to €891.6 million.

At Silicones, too, sales of €1.90 billion were down 3.5 percent (2024: €1.97 billion). Polymers’ sales totaled €745.6 million (2024: €766.0 million), a drop of 2.7 percent. Sales in the Biosolutions division fell by 18.5 percent from €143.6 million to €117.1 million.

The cost of materials decreased by €432.2 million in 2025 to €2.18 billion (2024: €2.61 billion), Inventory-reduction measures accounting for €-126.5 million had the opposite effect (2024: inventory buildup of €245.9 million). The drop in the cost of materials is due to efficiency measures, as well as lower volumes and procurement prices for strategic raw materials in 2025, with lower silicon-metal volumes having the biggest impact. Energy costs were lower as well, due especially to lower volumes. Prices remain high. The increase in a provision for contingent losses set up for long-term gas forward contracts in the amount of €25.3 million had the opposite effect. By contrast, there was a slight year-over-year increase in prices for methanol. Prices for ethylene and vinyl acetate monomer dropped slightly. The material-to-sales ratio decreased to 57.2 percent in 2025 (2024: 59.5 percent).

At €1.12 billion, personnel expenses were on par with the previous year (2024: €1.13 billion). At year-end 2025, Wacker Chemie AG had 10,340 employees (Dec. 31, 2024: 10,245). The employee-expense ratio rose to 29.5 percent (2024: 25.7 percent).

Depreciation, amortization and impairments rose to €208.4 million on the back of another increase in capital expenditures (2024: €172.1 million), up by 21.1 percent.

The other operating result (other operating income less other operating expenses) came to €-762.4 million (2024: €-573.8 million). Other operating expenses include not only exchange-rate losses, but also selling expenses, maintenance, other contractor work, rents, servicing costs, R&D costs and costs assumed on behalf of subsidiaries. The lower sales in 2025 resulted in lower logistics costs and selling expenses in particular. By contrast, other operating expenses increased in the reporting year due to valuation adjustments recognized on receivables from affiliated companies in the amount of €101.9 million (2024: €0.0 million). This also includes expenses associated with restructuring as part of the company’s ongoing PACE cost-saving project in the amount of €98.8 million. Other operating income includes energy subsidies of €170.4 million (2024: €183.3 million). The foreign currency result increased by €40.3 million to €29.8 million (2024: €-10.5 million).

The operating result was negative and was down considerably on the 2024 figure of €-95.4 million, coming in at €-463.0 million. In particular, the lower operating performance in 2025 was the main reason for this development.

The result from investments largely includes expenses and income from profit-and-loss transfer agreements and dividend payments. At €43.1 million, it was lower than the prior-year figure of €95.5 million. The drop is due to lower income transferred under profit-and-loss transfer agreements, lower dividend payments made by subsidiaries and lower dividend income from investments. In addition, an impairment loss recognized on loans to Wacker Leon S.L.U. is included in 2025.

The net interest result was positive once more at a lower level of €8.9 million (2024: €37.2 million). This was due to the year-over-year increase in interest on financial liabilities of €5.9 million. In addition, the balance resulting from the measurement of the plan assets and pension obligations fell by €2.8 million. This generated income of €40.2 million in 2025 (2024: €43.0 million).

Wacker Chemie AG – including those German subsidiaries with which it has profit-and-loss transfer agreements – recognized tax income of €6.2 million in the reporting year due to the loss situation. In the previous year, tax expenses of €23.8 million had been recognized.

The net loss for the year came to €-438.5 million. Retained profit for 2025 – calculated as the profit carried forward from the previous year less €124.2 million in dividends paid – totaled €814.8 million (2024: €1,377.5 million).

Net assets and financial position of Wacker Chemie AG pursuant to the German Commercial Code

Wacker Chemie AG total assets fell slightly by 1.0 percent year over year to €7.88 billion (Dec. 31, 2024: €7.96 billion), The individual items in the statement of financial position did not develop uniformly.

In 2025, fixed assets increased to €4.63 billion (previous year: €4.46 billion). Property, plant and equipment (tangible fixed assets) increased year over year, as capital expenditures in the amount of €268.1 million (Dec. 31, 2024: €394.0 million) exceeded depreciation of €205.2 million (Dec. 31, 2024: €169.3 million). Financial assets rose from €2.88 billion to €3.0 billion, due primarily to capital increases totaling €160 million at Wacker Biotech GmbH and Wacker-Chemie s.r.o. The repayment of fund assets that had been invested over the long term and the impairment losses recognized on the loans to Wacker Leon S.L.U. had the opposite effect. All in all, fixed assets accounted for 58.8 percent of total assets, as against 56.0 percent in the previous year.

Inventories decreased year over year and came to €1,005.8 million (Dec. 31, 2024: €1,175.4 million), down 14.4 percent. This is due mainly to a decrease in inventories in the Polysilicon and Silicones divisions.

Trade receivables fell by 6.3 percent from €267.1 million to €250.4 million. Other receivables and other assets amounted to €694.8 million as of the reporting date (Dec. 31, 2024: €962.9 million), corresponding to a decline of 27.8 percent. They included receivables from affiliated companies in the amount of €575.5 million (Dec. 31, 2024: €826.7 million). Receivables from intra-Group financing fell by €211.2 million to €398.6 million (Dec. 31, 2024: €609.8 million).

As of December 31, 2025, Wacker Chemie AG held €314.3 million in securities and fixed-term deposits with maturities of over three months (Dec. 31, 2024: €129.9 million). The increase is due primarily to the purchase of fixed-term deposits. Wacker Chemie AG bank deposits amounted to €954.3 million as of December 31, 2025 (Dec. 31, 2024: €920.8 million).

Equity came to €2.22 billion as of the reporting date (Dec. 31, 2024: €2.78 billion), yielding an equity ratio of 28.2 percent (Dec. 31, 2024: 35.0 percent). At Wacker Chemie AG annual shareholders’ meeting, a resolution was passed to distribute a dividend of €124.2 million from the retained profit for 2024. The remaining retained profit of €1,337.5 million was carried forward. As of December 31, 2025, retained profit totaled €814.8 million and comprised the current net result of €-438.5 million for 2025 and the profit carried forward from the preceding year.

Provisions for pensions and similar obligations decreased by €34.7 million year over year to €917.0 million (Dec. 31, 2024: €951.7 million), although the development in the value of plan assets exceeded the increase in pension obligations. Other provisions – primarily comprising those for personnel, taxes and environmental protection – fell by €0.3 million in 2025, coming in at €539.7 million (Dec. 31, 2024: €540.0 million). The lower figure can be explained, in particular, by a reduction in the provision for variable salary components and in income tax provisions. The addition to the provision for restructuring as part of the company’s ongoing PACE cost-saving project had the opposite effect in 2025.

Provisions accounted for around 18.5 percent of total equity and liabilities (2024: 18.7 percent).

As of the reporting date, financial liabilities came to €3,355.2 million (Dec. 31, 2024: €2,721.3 million). This equates to an increase of 23.3 percent. Bank liabilities amounted to €1,958.7 million (Dec. 31, 2024: €1,523.6 million). Liabilities due to affiliated companies increased by €198.7 million to €1,396.5 million as of the reporting date (Dec. 31, 2024: €1,197.7 million). Financial liabilities accounted for 42.6 percent of total equity and liabilities compared with 34.2 percent a year earlier.

Trade payables amounted to €433.5 million as of the reporting date (Dec. 31, 2024: €542.0 million). As of the reporting date, other liabilities amounted to €395.1 million (Dec. 31, 2024: €411.2 million). The decrease can be explained first and foremost by advance payments received on supply contracts, particularly for polysilicon. They fell €26.4 million to €242.4 million (Dec. 31, 2024: €268.8 million).

Deferred income came to €10.2 million as of the reporting date (Dec. 31, 2024: €11.8 million), and mainly comprised a payment by Siltronic AG to Wacker Chemie AG for the transfer of employees.

Cash flow from operating activities was negative in 2025 and came to €-116.0 million (2024: €-153.4 million), due mainly to the net loss for the year.

Wacker Chemie AG generated a cash outflow of €-597.5 million from its investing activities (2024: cash outflow of €-193.8 million). This includes investment in property, plant and equipment (tangible fixed assets) of €-268.1 million. The repayment of fund assets that had been invested over the long term resulted in a cash inflow of €22.0 million during the reporting year. The purchase of securities and fixed-term deposits resulted in a cash outflow of €-182.5 million. In 2024, the sale of securities and fixed-term deposits and the repayment of loans classified as financial assets had resulted in a cash inflow of €144.8 million. Net cash flow – defined as the sum of cash flow from operating activities and cash flow from long-term investing activities (excluding securities and fixed-term deposits) – was negative in the reporting year and amounted to €-377.4 million (2024: €-461.1 million).

Cash flow from financing activities totaled €747.0 million (2024: €447.9 million). Intra-Group financing resulted in a cash inflow of €436.3 million (2024: cash inflow of €277.1 million). The dividend for the 2024 fiscal year resulted in a cash outflow of €-124.2 million.

All in all, cash and cash equivalents increased by €33.5 million to €954.3 million (2024: €920.8 million).

Risks and opportunities

Wacker Chemie AG business performance is subject to essentially the same risks and opportunities as the WACKER Group. Wacker Chemie AG exposure to the risks associated with its subsidiaries and investments depends on the size of its stakes in the respective entities. The measurement of investments, loans and receivables from subsidiaries are affected in particular by the risks specified in the Risk Management Report. Through our subsidiaries and investments, we could face impairments arising from legal or contractual contingencies (especially financing). These contingencies are explained in the Notes to the financial statements of Wacker Chemie AG. As the parent company of the WACKER Group, Wacker Chemie AG is integrated in the groupwide risk management system.

For further details, see the Financial Instruments section of this Annual Report. A description of the internal control system for Wacker Chemie AG, as mandated by Section 289 (5) of the German Commercial Code (HGB), can be found in the section on the Internal Control System (ICS) and the Internal Control System for Accounting.

Outlook

WACKER’s main planning assumptions relate to raw-material and energy costs, personnel expenses and exchange rates. The expectations for Wacker Chemie AG business performance in the year ahead are essentially the same as those for the WACKER Group, which are explained in full in the Group’s Outlook section.

Publication

The annual financial statements of Wacker Chemie AG, for which PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft issued an unqualified audit opinion and which include, in particular, the statement of financial position and the statement of income shown here, have been submitted to the Company Register provider and can be accessed on the Company Register website. Wacker Chemie AG annual financial statements are published together with those of the WACKER Group. These annual financial statements can be requested from Wacker Chemie AG, Gisela-Stein-Straße 1, 81671 Munich, Germany. They are also available online.