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EANS-News: WACKER Raises its Forecast for 2010 After Strong Third Quarter
- WACKER achieves new sales record of 1.27 billion in Q3 2010 thanks to strong and sustained customer demand - EBITDA grows by 85 percent to 340 million in third quarter - Q3 net income rises to 156 million - Net cash flow of 192 million more than double the prior-year figure - Full-year 2010 sales expected at well above 4.6 billion, with EBITDA exceeding 1.1 billion
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Subtitle: - WACKER achieves new sales record of 1.27 billion in Q3 2010 thanks to strong and sustained customer demand - EBITDA grows by 85 percent to 340 million in third quarter - Q3 net income rises to 156 million - Net cash flow of 192 million more than double the prior-year figure - Full-year 2010 sales expected at well above 4.6 billion, with EBITDA exceeding 1.1 billion
Munich (euro adhoc) - November 4, 2010 - Wacker Chemie AG has revised upward its sales and earnings forecast for full-year 2010 after a strong third quarter. July-to-September sales at the Munich-based chemical group climbed 29 percent to EUR1,269.5 (Q3 2009: EUR986.5 million). The increase was mainly fueled by higher sales volumes. Customer demand was strong this year during the usually weaker summer vacation period. Growth was also supported by the US dollar´s strength compared to a year earlier. All in all, prices were at about the same level as Q3 2009. WACKER´s earnings soared compared to both the year-earlier quarter and Q2 2010. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached EUR340.0 million, gaining 85 percent year over year (Q3 2009: EUR184.0 million) and advancing three times faster than sales. Last year´s third-quarter EBITDA had been reduced by non-recurring charges of about EUR52 million at WACKER POLYSILICON due to exiting the WACKER SCHOTT joint venture. The main earnings drivers were higher sales volumes and revenues. As in Q2, plant utilization was strong at the Group´s chemical and polysilicon businesses. This benefited specific production costs. In July through September 2010, the Group´s EBITDA margin continued its upward path, climbing to 26.8 percent from 18.7 percent a year ago. WACKER´s earnings before interest and taxes (EBIT) rose to EUR234.3 (Q3 2009: EUR82.9 million). The EBIT margin increased to 18.5 percent compared to last year´s 8.4 percent. Third-quarter net income reached EUR155.8 million (Q3 2009: EUR35.9 million), yielding earnings per share of EUR3.13 (Q3 2009: EUR0.68).
WACKER´s semiconductor and chemical divisions all contributed to Q3´s robust earnings. The semiconductor division, Siltronic, continued on its positive earnings trend and generated further EBITDA growth. Its July-to-September EBITDA of EUR31.6 million (Q3 2009: EUR-21.6 million) was 76 percent higher than in Q2 2010 (EUR18.0 million). The three chemical divisions reported EBITDA of EUR123.1 million, up 6 percent on last year (Q3 2009: EUR116.0 million). WACKER POLYSILICON more than doubled its EBITDA year over year. At EUR189.9 million, it rose 120 percent against Q3 2009´s EUR86.5 million. Compared to the preceding quarter, its EBITDA grew about 9 percent (Q2 2010: EUR174.6 million). At the end of September, the division had sold virtually its entire production output for the current and next two years. Moreover, it already has contracts covering most of the output planned for 2013, including volumes from a facility under construction at Nünchritz (Germany). For full-year 2010, WACKER expects new sales and earnings records. The Munich-based chemical company anticipates consolidated sales of well over EUR4.6 billion, with EBITDA exceeding EUR1.1 billion.
"Following our strong third quarter, WACKER is headed for a new record year," said CEO Rudolf Staudigl in Munich on Thursday. "We expect to surpass our EBITDA peak value of 2008 by about EUR100 million. Every division is experiencing strong demand for WACKER products. Even if demand edges down over coming months, which seems likely, market conditions will remain favorable. The outlook is good for increasing our sales again next year."
Regions In Q3 2010, WACKER achieved robust double-digit growth in all key regions of the world. Asia reinforced its position as WACKER´s largest market. July-to-September sales there rose to EUR466.6 million, up 32 percent on Q3 2009 (EUR354.4 million). China accounted for about 60 percent of WACKER´s Asian sales. WACKER also posted strong sales growth in Germany and the rest of Europe. In Germany, sales climbed to EUR228.9 million, up 27 percent on Q3 2009 (EUR180.4 million). In the other European countries, WACKER´s business grew some 26 percent, with sales climbing to EUR319.8 million (Q3 2009: EUR253.8 million). In the Americas, WACKER increased its third-quarter sales by 34 percent to EUR218.2 million (Q3 2009: EUR162.7 million). Expansion there was supported not only by greater customer demand, but also by the US dollar´s strength compared to a year earlier. In the other regions, third-quarter sales rose 2 percent to EUR36.0 million (Q3 2009: EUR35.2 million). Overall, WACKER generated 82 percent of its third-quarter sales with customers outside Germany.
Investments and Net Cash Flow In the reporting period, WACKER invested EUR215.5 million in plant, property and equipment, and financial assets (Q3 2009: EUR171.8 million). Of this total, about three-quarters were allocated to WACKER SILICONES and WACKER POLYSILICON. Investments at WACKER SILICONES focused on the acquisition of a silicon-metal site at Holla in Norway. WACKER POLYSILICON´s investment priority was its new German polysilicon plant, which is under construction at Nünchritz and progressing as planned. Although third-quarter investment spending was high, WACKER more than doubled its net cash flow to EUR192.4 million (Q3 2009: EUR92.7 million). Two factors supported net cash flow: the continued strength of WACKER´s operational business and the inflow of EUR88.7 million in advance payments for future poly¬silicon deliveries.
Employees As of September 30, 2010, WACKER had 16,184 employees worldwide (June 30, 2010: 15,901). Payroll expansion was in response to higher staffing needs due to the dynamic business trend, greater plant utilization and the addition of new production capacities. On September 30, 2010, WACKER had 12,188 employees in Germany (June 30, 2010: 12,105) and 3,996 at its international sites (June 30, 2010: 3,796).
Business Divisions In Q3 2010, WACKER SILICONES posted total sales of EUR421.3 million, up 23 percent on last year´s third quarter (EUR343.9 million). Silicones remained very much in demand during the usually weaker summer months thanks to a strong stream of orders from the construction, electronics, mechanical-engineering and automotive sectors. The division also reported new records for pyrogenic-silica sales volumes and revenues. The division´s EBITDA reached EUR77.9 million, over 12 percent higher than a year ago (Q3 2009: EUR69.4 million). The corresponding EBITDA margin was 18.5 percent (Q3 2009: 20.2 percent).
WACKER POLYMERS generated total Q3 sales of EUR225.8 million, surpassing last year´s figure by 13 percent (Q3 2009: EUR200.2 million). Sales growth stemmed mainly from volume increases for dispersible polymer powders and dispersions. WACKER POLYMERS, too, did not experience the usual seasonal slackness this summer. Demand from the construction industry - the division´s pivotal market - remained strong. Despite higher sales volumes and stable prices, WACKER POLYMERS´ third-quarter EBITDA of EUR39.7 million was almost 7 percent lower than the year-earlier quarter (EUR42.6 million). Earnings were held back by ethylene prices, which were much higher than a year ago. The division, however, increased its EBITDA by 5 percent against Q2 2010 (EUR37.8 million). The third-quarter EBITDA margin was 17.6 percent (Q3 2009: 21.3 percent).
With demand high across all product segments, WACKER BIOSOLUTIONS increased its total Q3 sales to EUR37.0 million - up almost 14 percent on Q3 2009 (EUR32.6 million). Gumbase sales volumes rose around 11 percent and acetylacetone prices were well up on the previous year. The division also reported strong sales growth for cysteine, cyclodextrins and pharmaceutical proteins. WACKER BIOSOLUTIONS generated third-quarter EBITDA of EUR5.5 million (Q3 2009: EUR4.0 million). As a result, it strengthened its EBITDA margin to 14.9 percent (Q3 2009: 12.3 percent).
At WACKER POLYSILICON, sales volumes, sales revenues and earnings remained at record levels in Q3 2010. The division boosted its sales revenues by 30 percent year over year to EUR349.5 million (Q3 2009: EUR268.6 million). It also raised its production output by over 50 percent, in large part due to its new Poly 8 facility, which is operating at full nominal capacity since the preceding quarter. Further volume gains came from technological improvements. With output much higher, the division raised its production target in September for full-year 2010 - from over 24,000 metric tons of hyperpure polysilicon to roughly 29,000 metric tons. All the division´s facilities are currently operating at full capacity. Third-quarter polysilicon demand remained very high both in the photovoltaic and semiconductor markets. WACKER POLYSILICON more than doubled its EBITDA compared to last year´s third quarter. At EUR189.9 million, EBITDA was 120 percent up on Q3 2009 (EUR86.5 million). A year ago, WACKER POLYSILICON´s earnings had been reduced by non-recurring charges of about EUR52 million from exiting the WACKER SCHOTT joint venture. In Q3 2010, the EBITDA margin stayed at a very high level of 54.3 percent (Q3 2009: 32.2 percent).
Siltronic strengthened its positive sales and earnings trend in Q3 2010. Total sales soared 61 percent to EUR280.4 million (Q3 2009: EUR174.0 million). So far, 2010´s quarterly sales have grown steadily, climbing to their present level from EUR219.1 million in Q1 and EUR255.8 million in Q2. July-to-September sales volumes were about 30 percent above the prior-year period. Prices, too, were generally above Q3 2009, with particularly strong increases for smaller diameters, above all for epitaxial wafers. Favorable exchange-rate effects additionally benefited business. In Q3 2010, Siltronic generated further earnings growth, with EBITDA reaching EUR31.6 million (Q3 2009: EUR-21.6 million). Siltronic had recognized losses in the comparable quarter last year, with positive EBITDA in Q1 2010 marking the turnaround. For the first time in seven quarters, Siltronic also posted positive EBIT of EUR8.0 million - an important milestone on its path to higher earnings. Siltronic´s third-quarter EBITDA margin was 11.3 percent, compared to -12.4 percent in Q3 2009.
Outlook After benefiting from some strong growth impulses in the first half of 2010, the world economy will become more subdued toward the end of the year and beyond. Although the pace of global recovery is slowing, growth momentum remains intact. Given the current economic trends and forecasts, WACKER expects customer demand and sales volumes to remain strong and steady at all its divisions. Healthy order books point to good plant utilization rates through the turn of the year 2010/2011 and beyond. If customer demand stays high, prices for WACKER products are likely to develop well overall. Although WACKER anticipates, as in the past, that Q4´s sales and earnings will not reach Q3´s level due to the usual seasonality of business (which affects construction, for example), this will not appreciably dampen the generally positive market trend, according to WACKER.
On September 15, 2010, the EU Commission announced that it had authorized a regional investment grant of EUR97.5 million for WACKER´s polysilicon facility at Nünchritz, Germany. These funds, which will be used in stages (in line with the project´s progress), have not yet been fully included in the current-year investment budget. Another budget-related factor is that WACKER has improved its expenditure flows for several smaller-scale investment projects. For these reasons, investments in full-year 2010 will be lower than planned. Previously estimated at some EUR750 million, the figure will now be in the region of EUR700 million instead.
Following its very good Q3 performance, WACKER predicts new sales and EBITDA records for full-year 2010. The Group expects it will substantially surpass its earlier 2010 sales forecast of EUR4.5 billion by well over EUR100 million. According to current estimates, full-year EBITDA will exceed EUR1.1 billion. Provided that the experts´ expectations prove correct and the global economy advances as anticipated, WACKER sees a good chance of further increasing sales in 2011. Earnings next year will depend on raw-material and energy costs, for example, and product-price trends.
Information for editorial offices: The Q3 2010 report can be downloaded from WACKER´s website (www.wacker.com) unter Investor Relations.
WACKER´s Key Figures |EUR million |Q3 2010 |Q3 2009 |Change | |9M 2010 |9M 2009|Change | | | | |in % | | | |in % | |Sales |1,269.5 |986.5 |28.7 | |3,538.5 |2,784.5|27.1 | |EBITDA1 |340.0 |184.0 |84.8 | |902.3 |511.9 |76.3 | |EBITDA margin2 |26.8% |18.7% |43.3 | |25.5% |18.4% |38.6 | |EBIT3 |234.3 |82.9 |>100 | |592.7 |87.4 |>100 | |EBIT margin2 |18.5% |8.4% |>100 | |16.8% |3.1% |>100 | | | | | | | | | | |Financial result |-11.7 |-6.6 |77.3 | |-24.0 |-20.0 |20.0 | |Income before taxes |222.6 |76.3 |>100 | |568.7 |67.4 |>100 | |Net income |155.8 |35.9 |>100 | |397.1 |-33.1 |n.a. | | | | | | | | | | |Earnings per share (EUR)|3.13 |0.68 |>100 | |7.98 |-0.62 |n.a. | | | | | | | | | | |Investments |215.5 |171.8 |25.4 | |454.7 |542.9 |-16.2 | |(including financial | | | | | | | | |assets) | | | | | | | | | Of which investments |66.1 |- |n.a. | |66.1 |- |n.a. | |in acquisitions | | | | | | | | |Net cash flow4 |192.4 |92.7 |>100 | |302.5 |53.4 |>100 | | | | | | | |EUR million |Sept. |Sept. |Dec. 31,| | | |30, 2010|30, 2009|2009 | | | | | | | | |Equity |2,341.6 |1,984.7 |1,942.4 | | |Financial liabilities |470.1 |517.9 |439.7 | | |Net financial |-152.0 |50.2 |76.1 | | |liabilities5 | | | | | |Total assets |5,233.0 |4,734.4 |4,541.9 | | | | | | | | |Employees (number at end|16,184 |15,685 |15,618 | | |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, and income taxes. 4 Sum of cash flow from operating activities and noncurrent investment activities. 5 Sum of liquidity and noncurrent and current financial liabilities. 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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