Wacker Chemie today announced its preliminary fourth-quarter and full-year 2019 results, reporting its biggest full-year loss in the company’s history.
In December, Wacker issued a profit warning and announced a major impairment charge against its polysilicon plants because of more pessimistic expectations for future earnings prospects in solar-grade polysilicon. Fourth-quarter EBITDA was down 10% to €155 million ($170.8 million) on sales 2.4% lower at €1.16 billion.
For full-year 2019, Wacker reported a net loss of €630 million compared with a net profit of €260 million in 2018. Reported EBITDA declined 16% to €780 million but was flattered by a €112.5 million insurance payment in the third quarter for the damage incurred at its Charleston, Tennessee, polysilicon plant in 2017. Excluding this one-off effect, EBITDA dropped 28% to €667.5 million. Reported EBIT collapsed from €390 million in 2018 to a loss of €540 million last year, largely due to the one time impairment charge of €760 million against the company’s polysilicon assets. Excluding this charge and the insurance gain, like-on-like EBIT fell from €390 million to €117.5 million.
Earnings were hit not only by markedly reduced prices for solar-grade polysilicon and by associated inventory valuation adjustments, but also by lower prices for standard silicone and by the steep rise in German electricity prices. Wacker Polysilicon’s EBITDA fell from €72 million in 2018 to an EBITDA loss, excluding the insurance payment, of €57.5 million, while Wacker Silicones reported EBITDA down 22% on the year before to €480 million. On a positive note, EBITDA at Wacker Polymers and Wacker Biosolutions rose 32% and 25% year-on-year to €195 million and €30 million, respectively.
Sales in 2019 fell 1% compared with the year before to €4.93 billion, mainly due to lower prices for solar-grade polysilicon but also for standard silicones. Sales were supported by higher volumes overall, by product-mix effects, and by the year-over-year rise in the US dollar.
“Our earnings last year were strongly influenced by non-recurring effects from insurance compensation received and from the impairment charge on fixed assets,” said Rudolf Staudigl, CEO. “In operating terms, especially our chemical business continued to perform well. After an exceptionally strong 2018, silicone margins resumed normal levels, while we achieved substantial profitability gains in dispersions, dispersible polymer powders and bioengineered products. Underlying conditions, however, remained unsatisfactory for solar-grade polysilicon, where prices fell markedly last year amid high overcapacity built up by state-subsidized competitors in China.
Staudigl added, “We are currently working on a comprehensive program to make Wacker more efficient and capable, and to achieve substantial cost savings. We expect already to announce concrete targets for this initiative in Q1 2020.”
By Natasha Alperowicz
Source: Chemical Week
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