WACKER expects new sales and earning records for 2008
- Q3 2008 group sales up 21 percent to 1.16 billion - Operating result (EBITDA) climbs 21 percent to 328 million in Q3 - EBITDA margin at 28.3 percent - Earnings per share rise 42 percent to 3.44 - Forecast for full-year 2008 remains unchanged: WACKER expects sales growth clearly above 10 percent and a higher EBITDA
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Munich (euro adhoc) - November 4, 2008 - Wacker Chemie AG increased both its Q3 sales and operating result by 21 percent against the prior-year quarter and expects new full-year sales and earnings records. July-September consolidated sales reached EUR1,156.9 million (Q3 2007: EUR958.5m). Growth was driven chiefly by soaring sales volumes, higher prices and favorable product-mix effects. The weaker US dollar, in contrast, lowered the sales upturn by 5 percent. The first nine months of 2008 saw consolidated sales exceeding the three-billion-euro level for the first time, up 15 percent year on year to EUR3.30 billion (9M 2007: EUR2.86bn). Q3 earnings also showed strong gains. Despite the tough business climate, WACKER generated an EBITDA (earnings before interest, taxes, depreciation and amortization) of EUR327.5 million for the quarter (Q3 2007: EUR269.9m). This translates into an EBITDA margin of 28.3 percent (Q3 2007: 28.2 percent). Cumulative January-September EBITDA reached EUR936.5 million (9M 2007: EUR796.2m).
Once again, WACKER´s main earnings contributors were polysilicon and semiconductors. At WACKER POLYSILICON, EBITDA grew EUR81.3 million year-on-year in the third quarter, virtually triple the comparable prior-year figure. Siltronic AG generated over a third of the Group´s EBITDA in Q3 2008. With earnings of EUR108.1 million, it nearly matched last year´s performance (EUR115.0m). At the chemical divisions, earnings were noticeably impacted by higher raw-material and energy costs. As a result, the EBITDA figures of these divisions were not quite at prior-year levels.
Consolidated Q3 earnings before interest and taxes (EBIT) rose 27 percent to EUR237.9 million (Q3 2007: EUR186.8m), with net income climbing 42 percent year on year to EUR170.8 million (EUR120.6m). As a result, earnings per share reached EUR3.44 (EUR2.43), a rise of 42 percent. WACKER increased January-September EBIT to EUR661.5 million (9M 2007: EUR552.9m), up 20 percent. In the same period, net income rose to EUR454.2 million (9M 2007: EUR365.1m) and earnings per share to EUR9.14 (9M 2007: EUR7.35).
The Munich-based chemical company reiterated its forecast of higher sales and earnings for the full 2008 fiscal year. Consolidated sales should surpass the prior-year figure clearly more than 10 percent. EBITDA is also expected to increase.
"We grew again in the third quarter, setting new sales and earnings records," said Group CEO Rudolf Staudigl in Munich on Tuesday. "The sustained strength of our polysilicon business is a major earnings driver. The Group´s well-balanced regional portfolio and its wide range of industrial customers have meant we´ve been able so far to balance fluctuating market demand. Another important point is the Group´s extremely sound financial footing. I see this as a major prerequisite for progressing with our strategic growth and investment agenda as planned."
Regions The most significant year-on-year sales gains were seen in the Americas at 62 percent, followed by Germany with 27 percent. In both regions, the full consolidation of WACKER´s former joint venture Air Products Polymers had a major influence on sales growth. Q3 2008 sales reached EUR263.5 million (Q3 2007: EUR162.6m) in the Americas and EUR246.2 million (Q3 2007: EUR193.8m) in Germany. Turning to Asia, polysilicon sales - mainly to solar companies - and the newly ramped up production facilities at Zhangjiagang (China) were the major catalysts of a 10 percent sales rise to EUR349.8 million (Q3 2007: EUR318.2m). In the remaining regions, third-quarter sales grew to EUR35.9 million (EUR28.7m) - a rise of 25 percent.
Net Cash Flow and Investments WACKER´s July-September net cash flow was EUR86.0 million (Q3 2007: EUR257.0m). This year-on-year decline is largely attributable to significantly higher investments for ongoing Group growth projects. Additionally, the prior-year quarter´s high customer prepayments for future polysilicon shipments affected net cash flow development.
WACKER invested EUR219.3 million (Q3 2007: EUR144.5m) in property, plant and equipment, intangible assets and financial assets in the reporting period, an increase of 52 percent. Capital expenditures over the first nine months of 2008 were up 72 percent to EUR717.4 million (9M 2007: EUR416.2m). This figure includes EUR171.2 million for acquiring stakes in APP and WPS (former partner companies). In Q3 2008, WACKER´s growth spending focused on increasing polysilicon capacity at Burghausen (Germany), continuing the expansion of siloxane and pyrogenic-silica production facilities at Zhangjiagang (China), and setting up the new polymer site at Nanjing (China). In September, the Group also officially started up two new production plants for silicone polymers and sealants at Nünchritz (Germany), a few days ahead of this silicone production site´s tenth anniversary in the WACKER Group.
Employees The number of WACKER employees climbed 1 percent to 15,843 as per September 30, 2008 (June 30, 2008: 15,769) - a six-percent growth against the prior year (Sept. 30, 2007: 14,969). Staff increase was due to additional production capacity coming on stream and to the first-time company consolidations effected during 2008. On September 30, 2008, WACKER´s German sites had 12,071 employees (June 30, 2008: 12,023), and its international sites 3,772 (June 30, 2008: 3,746).
Business Divisions In Q3 2008, total sales at WACKER SILICONES climbed nearly 9 percent year-on-year to EUR370.6 million (Q3 2007: EUR341.1m). This sales increase was fueled by demand-driven volume gains - particularly for silicone products in industries such as electronics, photonics, medical technology and silicone rubber. Additionally, the division succeeded in raising market prices. Currency exchange rates, on the other hand, held sales back.
Raw-material costs, particularly for methanol and silicon metal, as well as energy and transport expenditures, were significantly higher than in the prior-year period and led to a lower EBITDA of EUR61.0 million (Q3 2007: EUR68.3m) - a drop of 11 percent. The EBITDA margin thereby fell to 16.5 percent (Q3 2007: 20.0 percent). To at least partially offset those increased costs, the division introduced further price increases on October 1, 2008.
WACKER POLYMERS reported total Q3 2008 sales of EUR238.9 million (Q3 2007: EUR166.5m). Up 43 percent on the year-earlier quarter, sales benefited from the full consolidation of dispersion activities. WACKER fully acquired this business from its former partner Air Products at the beginning of the year and has since successfully completed its integration into the WACKER Group.
WACKER POLYMERS´ profitability was likewise impacted by high raw-material and energy prices, and the unfavorable euro/dollar exchange rate. Despite the somewhat lower oil price, Q3 2008 costs for ethylene were significantly higher than a year earlier. Divisional Q3 EBITDA was EUR29.3 million, down 9 percent (Q3 2007: EUR32.2m). The EBITDA margin dropped from 19.3 percent in the prior-year quarter to a current 12.3 percent. To counter rising raw-material and energy costs, WACKER POLYMERS set up a series of productivity-enhancing measures.
WACKER FINE CHEMICALS posted another year-on-year consolidation-related sales decline, with July-September sales of EUR22.7 million (Q3 2007: EUR24.3m). The division profited from strong demand for biotech products such as cyclodextrins and cysteine. For organic fine chemicals, the division succeeded in pushing through higher prices.
Compared to the prior-year period, WACKER FINE CHEMICALS increased its EBITDA in Q3 2008 to EUR2.4 million (Q3 2007: EUR0.8m). The EBITDA margin tripled to 10.6 percent (Q3 2007: 3.3 percent), primarily due to the successful consolidation of chemical activities.
WACKER POLYSILICON continued to profit from strong polysilicon demand in Q3 2008 - crossing the 200-million-euro quarterly sales mark for the first time ever - with total Q3 sales of EUR238.9 million (Q3 2007: EUR126.0m). The division´s 90-percent year-on-year sales increase stems from volume gains enabled by production-capacity expansion, as well as higher prices.
WACKER POLYSILICON´s EBITDA gain even outstripped that of sales. For the July-September period, the division reported an EBITDA of EUR130.7 million (Q3 2007: EUR49.4m) - up 165 percent. The EBITDA margin of 54.7 percent (Q3 2007: 39.2 percent) was higher than both the prior-year and prior-quarter figures (Q2 2008: 54.0 percent).
Siltronic generated total Q3 2008 sales of EUR359.4 million (Q3 2007: EUR360.2m), matching the prior-year level. Surface area sold remained somewhat below the prior-year figure, but was slightly up against Q2 2008. Moreover, falling market prices weighed on sales - particularly in the 300 mm wafer segment. As previously, surplus crystal-pulling capacities are being exploited to produce monocrystals for the solar industry. These transactions help stabilize the division´s sales and have decisively bolstered Siltronic´s profitability.
In the reporting period, Siltronic generated an EBITDA of EUR108.1 million (Q3 2007: EUR115.0m), 6 percent down on the year-earlier period. This yielded an EBITDA margin of 30.1 percent (Q3 2007: 31.9 percent).
Outlook For the full fiscal year, WACKER remains firmly on course to achieve its forecast goals despite the overall economy´s uncertainties and risks. The Group´s Executive Board therefore reaffirms its full-year 2008 forecast and anticipates sales growth of clearly above 10 percent compared to 2007. EBITDA should increase, too. In making this forecast, the company expects seasonal and demand-related factors to lead to weaker Q4 business, except at WACKER POLYSILICON. In this segment, WACKER anticipates a continued strong performance.
The Group sees outstanding long-term growth potential in its product portfolio that it intends to decisively utilize. Next to the continuation and completion of strategic growth projects already in progress, WACKER´s focus is on further production-capacity expansion at WACKER POLYSILICON and measures for ensuring its semiconductor business´s ongoing profitability, as well as continuous optimization of our global position, cost situation and chemical-segment capacity utilization. WACKER views these as key prerequisites for continued long-term profitable growth.
Information for editorial offices: The Q3 2008 report can be downloaded from WACKER´s website (www.wacker.com) under Investor Relations.
WACKER's Key Figures |EUR million |Q3 2008 |Q3 2007|Change | |9M 2008|9M 2007 |Change| | | | |in % | | | |in % | |Sales |1,156.9 |958.5 |21 | |3,299.4|2,861.2 |15 | |EBITDA1 |327.5 |269.9 |21 | |936.5 |796.2 |18 | |EBITDA margin2 |28.3% |28.2% |1 | |28.4% |27.8% |2 | |EBIT3 |237.9 |186.8 |27 | |661.5 |552.9 |20 | |EBIT margin2 |20.6% |19.5% |6 | |20.0% |19.3% |4 | | | | | | | | | | |Financial result |-4.6 |-6.1 |-25 | |-8.5 |-17.7 |-52 | |Income before taxes |233.3 |180.7 |29 | |653.0 |535.2 |22 | |Net income |170.8 |120.6 |42 | |454.2 |365.1 |24 | | | | | | | | | | |Earnings per share in |3.44 |2.43 |42 | |9.14 |7.35 |24 | |EUR | | | | | | | | | | | | | | | | | |Investments |219.3 |144.5 |52 | |546.2 |416.2 |31 | |(incl. financial | | | | | | | | |assets) | | | | | | | | |Payments for |0.0 |0.0 |n.a. | |171.2 | 0.0 |n.a. | |acquisitions | | | | | | | | |Net cash flow |86.0 |257.0 |-67 | |187.5 |603.3 |-69 | | | | | | | | | | |EUR million |Sept. |Sept. |Dec. | | | | | | |30, |30, |31, | | | | | | |2008 |2007 |2007 | | | | | |Equity |2,080.1 |1,815.4|1,865.6| | | | | |Provisions for pensions|387.1 |363.8 |369.2 | | | | | |Net financial debt |-188.8 |-100.6 |-148.7 | | | | | |Total assets |4,605.1 |3,852.3|3,918.1| | | | | | | | | | | | | | |Employees |15,843 |14,969 |15,044 | | | | | |(number at end of | | | | | | | | |period) | | | | | | | |
1 EBITDA is EBIT before depreciation and amortization. 2 Margins are calculated based on sales. 3 EBIT is the result from continuing operations for the period before interest and other financial results, limited partnership interests and income tax.
This press release contains forward-looking statements based on assumptions and estimates of WACKER´s Executive Board. Although we assume the expectations in these forward-looking statements are realistic, we cannot guarantee they will prove to be correct. The assumptions may harbor risks and uncertainties that may cause the actual figures to differ considerably from the forward-looking statements. Factors that may cause such discrepancies include, among other things, changes in the economic and business environment, variations in exchange and interest rates, the introduction of competing products, lack of acceptance for new products or services, and changes in corporate strategy. WACKER does not plan to update the forward-looking statements, nor does it assume the obligation to do so.
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