WACKER Polysilicon business remains on a growth course
Wacker Chemie AG profited from higher customer demand in Q2 2009. The global economic crisis did, however, continue to impact the Munich-based chemical company's performance in the reporting period. Sales totaled €925.5 million (Q2 2008: €1,123.0m) – down 18 percent on the prior-year period. Compared to Q1 2009 (€872.5m), sales nevertheless rose 6 percent. This quarter-on-quarter gain was fueled by higher sales volumes at all divisions. Lower prices, though, burdened sales growth.
Factors that helped stabilize earnings in Q2 2009 were personnel and material cost savings, and lower year-on-year prices for ethylene and methanol, two key raw materials. On the other hand, production capacity utilization remained low in many areas and weighed on profitability. Second-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to €170.1 million (Q2 2008: €317.9m) – 47 percent below the strong prior-year value, but 8 percent up against Q1 2009 (€157.8m). Second-quarter EBITDA includes provisions of €15 million for the planned job cuts at Siltronic and WACKER SILICONES. This special effect burdened the earnings trend. The EBITDA margin reached 18.4 percent (Q2 2008: 28.3 percent), following 18.1 percent in Q1 2009.
Earnings before interest and taxes (EBIT) dropped to €-53.7 million (Q2 2008: €224.9m). The key factor behind the above-average EBIT decline were impairment losses of €121.3 million on Siltronic's fixed assets. This impairment takes account of plans to concentrate Siltronic's wafer production at lead sites and the expected semiconductor-market development. Adjusted for this special item and the provisions for job cuts, Q2 2009 EBIT would have been €82.6 million, up 42 percent compared to the first three months of 2009. The Q2 result was €-74.5 million (Q2 2008: €152.6m) and earnings per share were €-1.47 (Q2 2008: €3.08).
The Group's polysilicon business made the largest contribution to Q2 2009 earnings. WACKER POLYSILICON's EBITDA climbed 30 percent year-on-year to €136.0 million (Q2 2008: €104.8m). Although sales were lower than in Q1 2009, the EBITDA margin was once again over 50 percent. The other divisions improved their operational results compared to the first quarter.
For full-year 2009, WACKER still expects significantly lower sales and operational results than in the prior year. Although economic forecasts increasingly predict that global output will slowly stabilize, customers remain very cautious about placing orders. Due to the current business environment, they are ordering smaller quantities or concluding contracts with shorter durations. This is why it is difficult to say to what degree Q2's stronger customer demand will continue during the rest of the year.
“In several of WACKER's key customer sectors, demand picked up somewhat,” said CEO Rudolf Staudigl in Munich this Thursday. “At the moment, though, it's impossible to estimate just how long this recovery limited so far to sales volumes will last. That's why we are continuing to improve our cost structures and optimize our processes and resource allocations. Such steps help us stabilize earnings.”