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WACKER's growth continues in Q1 2007

Published on 2007-05-09. Author : SpecialChem

Munich -- Wacker Chemie AG remained on course for growth in Q1 2007. With the positive economic trend set to continue, the Munich-based chemical company has substantially expanded its manufacturing output and sales volumes. Q1 Group sales accordingly rose 18 percent to €943.7 million (Q1 2006: €798.5 million). Driven by operational strength across all five divisions, WACKER has again seen its year-on-year earnings growth greatly outstrip sales gains.

From January to March 2007, the Group generated Earnings before Interest, Tax, Depreciations and Amortization (EBITDA) of €265.5 million (€183.6m) - up 45 percent against the prior-year period. This yielded an EBITDA margin of 28.1 percent (23 percent). Semiconductor segment strength was a major factor in this earnings increase. Siltronic improved its year-on-year EBITDA by €61.1 million, nearly doubling earnings. WACKER POLYMERS profited from strong construction-industry demand thanks to the recent mild winter. Its EBITDA rose 44 percent against Q1 2006. WACKER POLYSILICON, too, posted a higher EBITDA - up 8 percent, mainly due to higher volumes and prices. Sales of hyperpure polycrystalline silicon grew 35 percent. The Group's Q1 2007 Earnings before Interest and Tax (EBIT) surged to €187.9 million (€105.7m), with year-on-year net income for the period climbing 73 percent to €114.5 million (€66.2m). As a result, Q1 earnings per share are €2.30 (€1.49). WACKER expects its sales and earnings performance to remain positive during the rest of 2007. Based on current exchange rates, the Group estimates its sales growth in fiscal 2007 to exceed 10 percent, with a higher EBITDA margin than last year.

"Our sales and earnings growth is mainly driven by strong volume gains and a positive pricing environment for many of our key products," CEO Peter-Alexander Wacker said. "Our high capacity utilization reflects continued firmness in customer demand. Capacity expansions resulting from our strategic investment projects are supporting WACKER's further growth."

With Q1 sales of €291.7 million (€217.8m) and a 34 percent growth rate, Asia is the largest regional contributor to WACKER Group sales. China has again been particularly dynamic. In the Americas, WACKER logged Q1 sales of €176.5 million (€173.9m), a gain of 1 percent amid dollar weakness and the generally more hesitant U.S. economy. Europe (excluding Germany) produced consolidated sales of €265.8 million (€232.5m), a year-on-year rise of 14 percent. Central and Eastern Europe experienced well-above-average growth. WACKER's Q1 sales in Germany grew 18 percent, climbing from the prior-year figure of €152.7 million to €180.2 million. In the rest of the world, the Group registered January to March revenues of €29.5 million (€21.6m) - a year-on-year increase of 37 percent. Mideast sales growth was especially strong.

In Q1 2007, the Group's net cash flow hit a new record: €224.2 million against the prior-year figure of €22.7 million. This is a gain of over €200 million compared to Q1 2006. The main impulses fueling this strong performance were the success of WACKER's business operations as well as €104.8 million in customer prepayments for future polysilicon deliveries.
From January to March 2007, investments in intangible assets, property, plant, equipment, and financial assets amounted to €91.0 million (€76.3m). WACKER's Q1 investment activities focused on several major projects: Production capacity for hyperpure polycrystalline silicon is being boosted at the Group's Burghausen (Germany) site. Expansion work continues at the silicone production site in Zhangjiagang (China). In Singapore, construction of a new 300 mm wafer fab - a joint venture between Siltronic and its customer Samsung Electronics - has made substantial progress, too. And a new dispersible polymer powder production plant, scheduled to come on stream this year, is currently being built in Burghausen.

On March 31, 2007, WACKER had 14,788 employees worldwide, a slight rise compared to the preceding quarter (Dec. 31, 2006: 14,668).

Business Divisions

In Q1 2007, WACKER SILICONES boosted its total sales by 8 percent to €348 million (€323m). This growth was largely due to volume gains, especially at the new siloxane production facility in Nünchritz (Germany), which went on stream in late 2006. WACKER SILICONES posted a Q1 EBITDA of €64.3 million, essentially on par with the prior-year figure of €64.8 million. Positive volume effects were offset by the significantly higher cost of raw materials, such as methanol and silicon, and the impact of the weakened U.S. dollar.

Business at WACKER POLYMERS progressed extremely well during the first quarter of 2007. Demand for dispersible polymer powders remained very high, due to the continuing construction-sector upswing and not least because of an unusually mild winter. Altogether, WACKER POLYMERS generated total sales of €148.7 million (€121.4m) - a 22 percent gain against the prior-year figure. Although higher raw-material costs and exchange-rate effects weighed on business results, this was successfully offset by volume gains and higher prices that took effect since the beginning of 2007. WACKER POLYMERS boosted EBITDA by 44 percent to €34.2 million (€23.7m).

Q1 sales at WACKER FINE CHEMICALS climbed 4 percent, rising from the prior year's €33.5 million to €35.0 million. In the period under review, EBITDA was €3.6 million (€5.8m) - down 38 percent on the prior-year figure. Dollar weakness, increasing cost pressure by Asian competitors and a less favorable product mix in the organic fine chemicals segment all left their mark. To counter this situation, WACKER FINE CHEMICALS is increasingly focusing its portfolio and accordingly consolidating custom synthesis activities. In contrast, the division's biotech products continued to perform well.

Business at WACKER POLYSILICON remains very robust, with sales of hyperpure polycrystalline silicon growing 35 percent. The increase was mainly due to higher prices as well as volume gains enabled by productivity improvements and the "Poly 4" polysilicon production plant (commissioned in late 2006 with an annual capacity of 1,000 metric tons). Polysilicon production is running at full capacity. Dampened by low sales of road salt, total divisional sales rose 8 percent to €92.2 million (€85.5m). WACKER POLYSILICON's Q1 EBITDA was €33.5 million (€30.9m) - an 8 percent gain compared with the prior-year figure. Price increases were countered by rising energy costs.

Once again in Q1, Siltronic considerably boosted sales, which totaled €377.3 million (€286.4m) - up 32 percent against the prior-year period. Siltronic's Q1 EBITDA shot up 88 percent to €130.4 million (€69.3m). This yielded an EBITDA margin of 34.6 percent, fueled mainly by productivity gains, an enhanced product mix focused on the 300 mm wafer segment, and especially price effects.

Outlook

In view of the global economy's upbeat perspectives and WACKER's own appraisal of demand trends, the Group expects sales and earnings performance to remain positive during the rest of 2007. WACKER's current efforts to expand production capacities are positioning the Group well to meet increasing demand for its products - especially at WACKER SILICONES, WACKER POLYMERS, WACKER POLYSILICON and Siltronic. Based on current exchange rates, the Group expects its full-year sales growth to exceed 10 percent, with a higher EBITDA margin than last year.

This press release contains forward-looking statements based on assumptions and estimates of WACKER's Executive Board. Although we assume the expectations in these forward-looking statements are realistic, we cannot guarantee they will prove to be correct. The assumptions may harbor risks and uncertainties that may cause the actual figures to differ considerably from the forward-looking statements. Factors that may cause such discrepancies include, among other things, changes in the economic and business environment, variations in exchange and interest rates, the introduction of competing products, lack of acceptance for new products or services, and changes in corporate strategy. WACKER does not plan to update the forward-looking statements, nor does it assume the obligation to do so.

Source: Wacker Chemie AG


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