Strong solar silicon ops, group volumes, boost Wacker Q2 income

(Updates with financial detail throughout)

LONDON (ICIS)–Strong sales growth across all business divisions and a “substantial” increase in demand and pricing for solar polysilicon materials helped to nearly double Wacker Chemie’s second-quarter net income year on year, the Germany-headquartered producer said on Friday.

Net income during the quarter was €29.4m compared to €15.1m in the second quarter of 2013, despite adverse currency effects on the back of a weaker US dollar and Japanese yen, and price pressure on some products, the company added.

“Demand for solar silicon has continued to grow and prices have stabilised,” noted Wacker CEO Rudolf Staudigl.

Second-quarter group sales rose by 8% year on year to €1.24bn, while earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 22% to €229.5m.

Asia remained Wacker’s key market with 42% of group revenues. Sales for the region grew 17% year on year during the period to €525.2m driven in particular by stronger sales and prices for polysilicon products.

Sales grew 4% year on year in Europe to €300.8m during the quarter on the back of improved polysilicon and polymers business, but fell almost 2% year on year in Germany to €161.6m. German chemicals operations strengthened during the period, but all other divisions were steady or weaker year on year, the company added.

Polymer and polysilicon operations also drove a nearly 3% year-on-year increase in Americas sales, to €207.2m, according to Wacker.

The company said it has “continued along its upward trajectory with sales and earnings, mainly thanks to substantially higher volumes” in the April-June period.

“Rising volumes, better prices for polysilicon and good coverage of fixed costs through high overall utilisation of production facilities all contributed to this growth,” Wacker added.

Wacker’s polysilicon division saw a 34% annual rise in second-quarter sales to €273.2m and a 37% increase in EBITDA to €87.9m due to substantially higher volumes and pricing.

The company’s silicones division generated a 1% year on year increase in second-quarter sales to €441.2m but earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped 13% over the same period to €57.4m, as healthy demand was wiped out by currency effects and lower pricing for some products.

A scheduled shutdown at a siloxane production facility in Germany also resulted in higher production costs during the period, Wacker added.

A revived spring construction market drove polymers division customer demand during the quarter, Wacker said, leading to a 4% sales uptick to €285.5, but “substantially” higher prices for raw material vinyl acetate monomer (VAM) resulted in a 2% drop in EBITDA to €43.5m.

Biosolutions division sales grew over 15% year on year to €46.6m and EBITDA rose by €2.3m to €8.2m on the back of Wacker’s acquisition of Germany-based Scil Proteins Production at the start of the year.

The company’s Siltronic division saw a 5% increase in sales and a more than threefold increase in EBITDA, to €210.4m and €28.1m respectively, on the back of higher volumes, Wacker added.

The company has substantially upgraded its earnings forecast for 2014, with the full-year EBITBA now expected to be at least one-third higher than the €678.7m in 2013. Wacker had previously assumed that it would exceed the prior-year figure by at least 10%.

Group sales are expected to increase by a mid-single-digit percentage from the 2013 figure of €4.48bn, Wacker said.

Additional reporting by Tahir Ikram