UpdateChemicals sales mitigate polysilicon downturn for Wacker

24 October 2012 11:16  [Source: ICIS news]

(adds segment financials)

Wacker Chemie Headquarter in Munich.LONDON (ICIS)--Increased sales and revenues across most of Wacker Chemie’s chemicals divisions have helped to offset the impact of a slump for the company’s polysilicon and silicon wafer businesses in the third quarter of 2012, the Germany-based producer said on Wednesday.

Wacker reported a 78% year-on-year fall in net profit to €26.9m ($34.9m) from €124.9m in the third quarter of 2011, according to an earnings statement.

“In its chemical divisions, Wacker sees good opportunities for further growth in the remaining months of 2012 and beyond, even though raw-material and energy costs remain relatively high,” the company said.

Sales and earnings before interest, tax, depreciation and amortisation (EBITDA) for the company’s silicones business were up 7% and 10% to €432.1m and €57.4m respectively, as higher volumes and favourable exchange rates helped to offset price pressures on silicone production, according to Wacker. The unit produces silicone-based emulsions, elastomers, sealants and resins.

The company’s polymers division generated EBITDA of €50.5m, a quarter-on-quarter increase of 29%, as a result of strong demand for dispersions and dispersible polymer powders, sales of which rose 5% year on year, as well as higher volumes and good production capacity.

Wacker Biosolutions, the company’s life science chemicals subsidiary, reported a 77% EBITDA increase to €5.5m compared with the third quarter of 2011, driven primarily by customer demand for polymers for gum base.

These gains were offset by a 56% year-on-year EBITDA slump for its polysilicons division to €78.8m during the quarter, which the company attributed to issues in the solar energy industry, leading it to curb production. Sales for the subsidiary, which produces the raw materials for solar panel manufacture, were down 29% to €269.1m, compared with €378.2m in the third quarter of 2011.

“Ongoing consolidation pressures in the solar industry, high inventory levels along the entire photovoltaic supply chain, and the financial difficulties facing many manufacturers of solar cells and modules are slowing down sales volumes and impacting prices for hyperpure polysilicon,” the company said.

Siltronic, the company’s silicon wafer division, also reported an EBITDA slump of 71% year on year to €9.9m in the third quarter.

The company reported total demand levels on a par with the third quarter of 2011 in the US and Asia, but business in Europe was weak compared to the previous year. Crucially, business sales were significantly down in Germany, a market of such significance to Wacker that it classifies it separately to the rest of Europe in its earnings.

Third quarter sales in Germany were down 28% year on year to €172.2m, and down 6% in the rest of Europe excluding Germany to €282.2m.

“Many customers in Europe are currently rather cautious and hesitant about placing orders, given the economic uncertainties,” the company said.

Sales in Asia for the quarter stood at €481.5m, a slight drop from the €484.7m generated in the same quarter of 2011, while sales for the Americas were flat year on year at €219.9m.

The slump in polysilicon demand has led the company to delay the completion of a planned production facility in Charleston, in the US. The facility is now expected to come onstream in mid-2015, 18 months later than planned.

($1 = €0.77)

By: Tom Brown
+44 208 652 3214

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