InterviewWeak dollar may hit Wacker earnings

03 December 2007 11:01  [Source: ICIS news]

By Jeanne Lim

 

SINGAPORE (ICIS news)--Wacker Chemie expects further growth and stable margins next year but continued weakening of the US dollar could hurt earnings, the Geman chemicals group's CEO said on Monday.

 

“We're pretty confident that we can grow on sales and stabilise margins next year... but for the exporting industry in Germany and the rest of Europe the exchange rate is a challenge,” Peter-Alexander Wacker said in an interview.

 

“At this level, we are in a position where it hurts earnings,” he said.

 

He had told a German daily in an interview published on Saturday that the weak US dollar versus the euro had reached a point where the entire German industry was feeling the strain.

 

However, growth was still very likely in Asia, he told ICIS news.

 

Wacker, who was in Singapore to receive a public service award recognising contributions made to the island state's economy, said that the company expects revenue growth in Asia to grow quicker than the region's GDP, as it was able to supply products to growing brands in the energy-saving and construction markets.

 

“We see growth potential for all products [in Asia],” he said of the company, which produces polymers, fine chemicals and silicon for the semiconductor and solar industries. Silicon products make up 80% of the firm's business.

 

Asia, its single largest market, contributed €961.4m ($1.4bn), or about a third of the firm's total sales in 2006.

 

Wacker sees growth potential particularly for its construction polymers and polysilicons in the region, where tight supply and high demand were driving up margins.

 

The company planned to double its polysilicon capacity by 2010.

 

Wacker, however, was less specific about how the firm planned to grow its polymer business in Asia, and would only say that it had invested in a dispersible polymer powder facility in Nanjing, China, and its “next step was to look into India”.

 

The company has technical centres in Beijing, Shanghai and Singapore, and was looking to build another centre in India next year, he added.

 

Wacker which declined to provide financial forecasts for next year, had projected sales of €3.8bn for full-year 2007, a growth of 14% compared with 2006.

 

It has forecast earnings before interest, tax, depreciation and amortisation (EBITDA) margin in 2007 to be 26% higher than last year.

 

($1 = €0.68)

 

By: Jeanne Lim
+65 6780 4359

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