UpdateStruggling solar industry weighs on Wacker 2012 net profit

14 March 2013 11:22  [Source: ICIS news]

(updates throughout)

Polysilicon is the solar feedstock, which is used to manufacture mono/multi-crystalline ingots, wafers, solar cells and solar panels.LONDON (ICIS)--Weak prices and demand for solar-grade semiconductors and silicon wafers have driven down Wacker Chemie’s net profit for 2012 despite a stronger chemicals performance, the Germany-based company said on Thursday.

The specialty chemicals company noted a 70% year-on-year decline in net profit to €106.8m ($138.7m) for the full-year 2012 as a result of plummeting solar silicon prices, which halved over the course of the year.

The extent of the price fall, coupled with weak demand for semiconductor wafers, outweighed strong increases in earnings before interest, tax, depreciation and amortisation (EBITDA) for the company’s polymers and biosolutions divisions, and steady earnings for its silicones operations.

The company’s sales fell by 5.6% year on year to €4.63bn, while EBITDA was down by 29% at €786.8m, it said in a statement.

In an analyst note, US investment bank JP Morgan Cazenove noted that the group’s total EBITDA was slightly above consensus estimates for the year, despite the year-on-year decline it represents.

Wacker noted that sales for its polysilicon division are higher than expected, but prices remain low. “At [silicon wafer subsidiary] Siltronic, there is no indication yet of any fundamental turnaround,” the company said.

Polysilicon sales in the first quarter of this year are on track to outperform the fourth quarter of 2012, but will nevertheless fall short of revenues generated in the first quarter of 2012, when sales were nearly twice as high as they are now, the company added.

Siltronic’s EBITDA for the year was €0.7m, a fraction of the €49.2m generated in 2011, and the company's polysilicon division marked a 43% fall to €427.5m for 2012 compared to 2011.

Polymers division sales climbed above the €1bn mark for the first time in 2012, buoyed by increased dispersion and polymer powder volumes. EBITDA increased by 32% year on year to €147.4m.

Wacker Silicones – which produces emulsions, elastomers, resins and silicas – also performed well, as higher sales volumes and favourable exchange rates helped to offset price pressure on silicone products. EBITDA was up slightly year on year at €189.3m compared to €182.9m in 2011.

The company’s biosolutions business posted a 20% increase in EBITDA to €24.5m, after marking growth in every business area apart from biopharmaceuticals.

Wacker projects its sales in 2013 to be at the “prior-year level – providing that trade barriers are not introduced in the solar industry and that semiconductor demand picks up in the second half”, the company said.

“EBITDA is likely to be below the prior-year level, primarily due to the lower prices for polysilicon and semiconductor wafers,” it said.

The company also plans to invest around €600m both this year and in 2014, with the focus on completing its Charleston site in the US.

 ($1 = €0.77)

Additional reporting by Nurluqman Suratman

By: Tom Brown
+44 208 652 3214

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