The Group posted sales of € 1,314.3 million in the reporting quarter (Q1 2015: €1,334.9 million), down close to 2 percent year over year. This slight decrease was chiefly due to the fact that solar-silicon and semiconductor-wafer prices were lower than a year earlier. Compared with the prior quarter (€1,232.9 million), however, sales grew by around 7 percent, primarily thanks to stronger customer demand and volume growth.
EBITDA amounted to €228.9 million in the reporting period (Q1 2015: €267.1 million), down about 14 percent year over year, but almost 22 percent higher than in Q4 2015 (€188.4 million). The EBITDA margin came in at 17.4 percent in the reporting quarter, after 20.0 percent in Q1 2015 and 15.3 percent in Q4 2015. Group earnings before interest and taxes (EBIT) amounted to €58.9 million in Q1 2016 (Q1 2015: €126.3 million), with a corresponding EBIT margin of 4.5 percent (Q1 2015: 9.5 percent). Net income for the reporting quarter amounted to €16.1 million (Q1 2015: €70.6 million) and earnings per share came in at €0.41 (Q1 2015: €1.42).
Low price levels for semiconductor wafers and solar silicon as well as the anticipated start-up costs of around €30 million for the new site in Charleston had an impact on WACKER’s earnings from January through March 2016. Wafer prices averaged somewhat lower than a year ago, while prices for solar silicon were down substantially compared with Q1 2015. However, market prices for polysilicon have been recovering steadily since mid-February, benefiting WACKER’s polysilicon business. Combined EBITDA for the three chemical divisions was around 19 percent higher than a year ago, with volume growth and good cost levels having a positive influence.
WACKER has raised its earnings forecast for full-year 2016. EBITDA – adjusted on a comparable basis to exclude special income from damages received and from terminated contractual and delivery relationships with solar customers – is expected to rise between 5 and 10 percent against last year. WACKER had previously anticipated a slight increase in adjusted EBITDA year over year. The company has raised its forecast due to the chemical divisions’ strong and profitable start to the year and to the improving polysilicon pricing environment. The company still expects to post a low single-digit percentage increase in Group sales.
“WACKER had a good start to the new year given the underlying conditions,” said CEO Rudolf Staudigl in Munich on Thursday. “Our chemical business, in particular, performed strongly and profitably from January through March. As expected, our semiconductor business was impacted by the continued weak demand for smartphones, tablets and PCs. In our polysilicon segment, sales volumes were substantially higher than a year ago. We have experienced a slight but steady increase in solar-silicon prices over the past several weeks. Our sales and earnings trend in the opening quarter and our current order intake have made us even more confident about the months ahead.”
Regions
The Group’s sales in Asia totaled €551.9 million in Q1 2016. That was 4 percent more than in the preceding quarter (€530.6 million), but 3 percent less than in Q1 2015 (€569.3 million) primarily due to price effects. Overall, the company generated 42 percent (Q1 2015: 43 percent) of its sales in Asia. Thus, the region remains the Group’s largest market.
In Europe, WACKER achieved sales of €292.3 million in Q1 2016 (Q1 2015: €297.0 million) – a year-over-year decrease of 2 percent, but 6 percent higher than in the preceding quarter (€275.1 million). While business with semiconductors, silicones and biopharmaceuticals in Europe generated year-over-year growth, sales of polysilicon and construction polymers declined.
The trend in Germany was positive in the period January through March, with Group sales totaling €182.1 million (Q1 2015: €176.0 million). That was an increase of almost 4 percent from a year ago. Sales rose by 12 percent relative to Q4 2015 (€163.2 million). Amid good demand, all business divisions surpassed their respective prior-year and prior-quarter figures.
In the Americas, sales of €233.0 million were down 4 percent from a year ago (Q1 2015: €243.8 million). Most of this decline stemmed from lower semiconductor-wafer and solar-silicon sales. Compared with Q4 2015 (€212.6 million), however, WACKER grew its sales by almost 10 percent, with all three chemical divisions posting substantial increases quarter over quarter.
In total, WACKER generated about 86 percent of its Q1 2016 sales with customers outside Germany (Q1 2015: 87 percent).
Capital Expenditures and Net Cash Flow
In Q1 2016, the Group’s capital expenditures amounted to €111.2 million (Q1 2015: €174.9 million), down 36 percent year over year.
WACKER’s investing activities remained centered on completion of the new polysilicon site at Charleston, Tennessee (USA). This project accounted for more than half of the Group’s total investment spending during the reporting quarter. Start-up of the Charleston production facilities progressed as scheduled in the January-through-March period. WACKER already produced and sold initial quantities of polysilicon from the plant in the reporting quarter. Other investment spending focused on enhancing technology and modernizing crystal-pulling facilities at Siltronic.
The Group’s net cash flow was €-12.0 million in Q1 2016, after €17.4 million in Q1 2015. The main reason for this decline was the lower net income for the period.
Employees
Relative to the preceding quarter, the number of WACKER employees worldwide rose by 1 percent in Q1 2016. On March 31, 2016, the Group had 17,048 employees (Dec. 31, 2015: 16,972). As of the end of the reporting quarter, WACKER had 12,266 employees in Germany (Dec. 31, 2015: 12,251) and 4,782 at its international sites (Dec. 31, 2015: 4,721).
Business Divisions
WACKER SILICONES increased both its sales and earnings in Q1 2016. The division posted total sales of €491.3 million (Q1 2015: €474.8 million) in the period January through March 2016, an increase of almost 4 percent from a year ago. Relative to the preceding quarter (€460.3 million), sales rose by 7 percent. Higher year-over-year and quarter-over-quarter volumes were the chief contributing factor in this growth. In Q1 2016, WACKER SILICONES’ EBITDA totaled €87.9 milion (Q1 2015: €67.7 million), up 30 percent on the prior-year figure. In addition to sales growth, a high plant-utilization rate and a low cost level both had a positive impact on earnings. Relative to Q4 2015 (€49.6 million), the division’s EBITDA was 77 percent higher. The corresponding EBITDA margin increased to 17.9 percent, after 14.3 percent in Q1 2015 and 10.8 percent in Q4 2015.
At €285.9 million, total sales at WACKER POLYMERS in Q1 2016 were slightly above the level of a year earlier (€284.6 million). Compared with the preceding quarter (€273.3 million), sales grew by 5 percent. Volume growth for dispersions and dispersible polymer powders led to higher sales. The division’s EBITDA grew to €64.4 million, up almost 8 percent compared with Q1 2015 (€59.9 million). The rise was mainly due to volume growth and a very good cost level. Relative to the preceding quarter (€40.8 million), EBITDA was up 58 percent, with seasonal effects also playing a role. WACKER POLYMERS’ EBITDA margin increased from 21.0 percent in Q1 2015 to 22.5 percent in the reporting quarter. The corresponding Q4 2015 figure was 14.9 percent.
WACKER BIOSOLUTIONS generated total sales of €49.6 million in Q1 2016, which was at the prior-year level (€49.4 million), but 11 percent higher than the final quarter of 2015 (€44.6 million). The main reason for this increase in sales was volume growth in several segments. Earnings grew even more strongly than sales. In Q1 2016, EBITDA at WACKER BIOSOLUTIONS totaled €9.6 million after €8.8 million in Q1 2015, an increase of 9 percent on a year earlier. Relative to the preceding quarter (€6.7 million), EBITDA was up 43 percent. The EBITDA margin rose accordingly to 19.4 percent, after 17.8 percent a year ago and 15.9 percent in Q4 2015.
In Q1 2016, WACKER POLYSILICON posted total sales of €273.1 million, compared with €289.4 million a year earlier, down nearly 6 percent. Relative to the preceding quarter (€241.5 million), sales were up 13 percent. Substantially higher volumes year over year could not fully compensate for declining prices. Since mid-February, however, solar-silicon prices have recovered slightly. In the first quarter of 2016, WACKER POLYSILICON’s EBITDA of €39.4 million was 50 percent lower than a year ago (€78.7 million) and down 44 percent compared with the preceding quarter (€70.5 million). In addition to the year-over-year decline in polysilicon prices, start-up costs of around €30 million for the new polysilicon site at Charleston reduced the division’s EBITDA. WACKER POLYSILICON’s EBITDA margin came in at 14.4 percent in the three-month period January through March 2016, after 27.2 percent in Q1 2015 and 29.2 percent in Q4 2015. When adjusted for the Charleston start-up costs, the division’s EBITDA margin in the reporting quarter was just over 25 percent.
Siltronic achieved total sales of €220.6 million in the first three months of the year. That was 2 percent more than in Q4 2015 (€215.3 million), but 8 percent less than a year earlier (€238.7 million). Subdued demand for semiconductor wafers and lower average prices year over year both had a dampening effect on the division’s sales in the reporting quarter. Siltronic’s EBITDA in Q1 2016 totaled €23.6 million, after €40.0 million in Q1 2015. This decline of 41 percent was mainly due to lower sales and higher currency-hedging costs. Relative to Q4 2015 (€23.2 million), EBITDA increased by 2 percent. Siltronic’s EBITDA margin was 10.7 percent in the reporting quarter, after 10.8 percent in the preceding quarter and 16.8 percent a year earlier.
Outlook
According to the latest forecasts, the global economy will continue to grow moderately in 2016. Nevertheless, risks to global economic growth remain, especially from the economic slowdown in Asia and the strong drop in oil prices.
Sales at WACKER SILICONES are expected to increase by a mid-single-digit percentage in 2016. Particular areas of growth are products and applications for personal care, plastics and medical technology, as well as for the electrical and electronics sectors. EBITDA should be markedly above the prior-year figure.
WACKER POLYMERS, too, is anticipating a mid-single-digit increase in sales for the full year, with both dispersions and dispersible polymer powders expected to help drive this growth. The division expects a slight year-over-year increase in EBITDA.
Mid-single-digit growth in sales is also forecast at WACKER BIOSOLUTIONS for full-year 2016. The division sees further growth potential particularly for pharmaceutical proteins and chewing gum. EBITDA should come in at the prior-year level.
WACKER expects to post further growth in polysilicon volumes in 2016, but nonetheless anticipates only marginal sales growth because of lower average prices. EBITDA is forecast to decline significantly year over year, since less special income – in the form of advance payments retained and damages received – is expected in 2016 than was posted last year. EBITDA will also be reduced by start-up costs at WACKER’s new polysilicon production site in Charleston.
Siltronic expects sales to decline by a low- to mid-single-digit percentage in the current year due to lower market prices. Siltronic continues to anticipate a slight improvement in the EBITDA margin compared with last year, with cost-optimization measures and lower currency-hedging expenses having a favorable impact.
Overall, WACKER expects Group sales to rise by a low-single-digit percentage in fiscal 2016. WACKER has raised its EBITDA forecast. EBITDA should climb by between 5 and 10 percent, when adjusted on a comparable basis to exclude special income. The company had previously anticipated a slight increase here. The EBITDA margin, on the other hand, will be somewhat lower, since no major special-income items are expected. Additionally, there will be further start-up costs at the new production site in Charleston, Tennessee (USA). Capital expenditures will be about €425 million, substantially lower than a year ago. Depreciation will reach around €720 million, significantly above last year’s level. Group net income is projected to be markedly lower than in the previous year. WACKER expects net cash flow to be clearly positive. Net financial debt for full-year 2016 is now expected to be slightly below last year’s figure of €1,074 million. WACKER had previously guided for full-year net financial debt to come in at last year’s level.
Information for editorial offices: The Q1 2016 report is available for download on the WACKER website (www.wacker.com) under Investor Relations.
