Corrected: Germany’s Wacker to cut 1,000 jobs by 2022 to prepare for ‘harsher’ conditions

LONDON (ICIS)–Wacker Chemie will cut 1,000 jobs by the end of 2022 to save costs and prepare for a “harsher competitive environment”, the CEO of the German chemicals producer said on Thursday.

Wacker employs 14,500 employees worldwide, and 10,000 of them are in Germany where around 80% of the job losses will take place. Most will affect administrative departments and “indirect, non-operational functions,” it said.

Wacker said the cuts will save it €250m/year from its cost savings programme which has been named ‘Shape the Future’ (Zukunft gestalten in German).

Following the cuts, the producer’s workforce will be almost 7% smaller.

“We are preparing for a harsher competitive environment – both in our polysilicon business and at our chemical divisions,” said Wacker CEO Rudolf Staudigl.

“Shape the Future is a comprehensive approach. Our aim is not only to achieve significant cost savings, but also to decisively strengthen Wacker for tomorrow’s challenges and secure a long-term competitive-edge.”

According to preliminary figures, published earlier, Wacker posted a net loss and negative earnings before interest and taxes (EBIT) in 2019.  Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell sharply and sales fell 1%.

	2019	2018	Change
Sales	€4.93bn	€4.98bn	-1%
EBIT	– €540	€390m	NA
Net profit / loss	– €630m	€260m	NA
EBITDA	€780m	€930m	-16%

The producer received a €112.5m hit related to insurance compensation for an explosion at its site in Charleston, US, in 2017.

“Earnings [in 2019] were primarily dampened not only by markedly reduced average prices for solar-grade polysilicon and the related effects of inventory valuation adjustments, but also by lower prices for standard silicones and by the steep rise in Germany’s electricity prices,” said Wacker on 28 January.

NO COMPULSORY LAYOFFS
On Thursday, Wacker board member Christian Hartel said the company is aiming to undertake the job cuts “in a socially responsible manner” and in agreement with its trade unions.

“Possible instruments include retirement, semi-retirement, and severance agreements. If the measures are successful, there should be no need for compulsory layoffs,” said Hartel.

Investors received Wacker’s announcement with a buying spree. Shortly after the firm announced the programme – at 11:00 local time – its shares on the German stock exchange were up nearly 4% to €73.22.

The Munich-headquartered producer is due to release fourth-quarter and 2019 financial results on 17 March.

Front page picture: Wacker’s headquarters in Munich
Source: Andreas Gebert/EPA/Shutterstock