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DGAP-News: Wacker Chemie AG / Key word(s): Half Year Report
Munich, August 5, 2021 - Wacker Chemie AG closed Q2 2021 with significant increases in both sales and earnings. The Munich-based chemical company generated sales of €1,501.0 million in the reporting quarter (Q2 2020: €1,072.4 million), a year-over-year increase of 40 percent. Relative to the preceding quarter (€1,359.6 million), sales were up 10 percent. Strong customer demand was the main reason for this substantial increase. Whereas the coronavirus pandemic had considerably slowed WACKER's business in Q2 2020, volumes in nearly all product segments grew substantially during the reporting quarter. Positive product-mix effects and improved prices - especially for solar-grade polysilicon, but also for many products of the chemical divisions - also contributed to the increase in sales. Exchange-rate effects dampened sales somewhat.
In Q2 2021, WACKER posted EBITDA (earnings before interest, taxes, depreciation and amortization) of €326.6 million, triple the figure for the same period last year (€105.4 million). This strong increase was due chiefly to substantial year-over-year growth in both volumes and prices of solar-grade polysilicon. Higher volumes and better prices in the chemical divisions as well as very high plant utilization rates also had a positive impact on EBITDA. On the other hand, much higher raw-material prices had a negative impact. Compared with a quarter earlier (€246.4 million), EBITDA increased 33 percent. WACKER's reporting-quarter EBITDA margin was 21.8 percent (Q2 2020: 9.8 percent). The margin in the preceding quarter was 18.1 percent.
Group EBIT (earnings before interest and taxes) totaled €233.7 million in the reporting quarter (Q2 2020: €1.8 million). That was an increase of €231.9 million and yielded an EBIT margin of 15.6 percent (Q2 2020: 0.2 percent). Compared with Q1 2021 (€154.9 million), EBIT grew 51 percent. Aside from the factors already mentioned, EBIT also benefited from a year-over-year decline in depreciation and amortization, which came to €92.9 million in the reporting quarter (Q2 2020: €103.6 million). Net income for the quarter totaled €178.8 million (Q2 2020: €4.5 million), while earnings per share came in at €3.50 (Q2 2020: €0.07).
The Munich-based chemical company confirmed its full-year forecast, which it had revised upward on June 16. It now expects full-year sales to amount to around €5.5 billion (2020: €4.69 billion). EBITDA is expected to come in at between €900 million and €1.1 billion in 2021 (2020: €666 million). The ongoing positive development of polysilicon prices and the continuously strong demand in WACKER's chemical business are the reasons for the higher expectations. At the same time, however, higher raw-material prices and negative exchange-rate effects are likely to diminish EBITDA by more than €300 million. This has been factored into the current outlook.
"We are well on track at the mid-year point and we remain confident that 2021 could prove to be an excellent year for WACKER," said CEO Christian Hartel in Munich on Thursday. "Our polysilicon business has been performing particularly well, fueled largely by the high quality of our product for both highly efficient solar cells and semiconductor applications, and by strong customer demand in a tight market."
According to Hartel, chemical business has also performed well, with sales across all the company's chemical divisions significantly higher than a year earlier. WACKER's silicones business, he said, was benefiting chiefly from its high-margin specialties, while customer demand for standard silicones remained high too. The company also achieved significant volume growth for dispersions and dispersible polymer powders, particularly in Asia. "This is where the wide range of applications covered by our product portfolio is paying off. The fact that our silicones and polymer products are indispensable basic materials for innovative products worldwide is a decisive factor in our strong business growth," said Hartel and added: "Our bioengineered products are also doing well."
With reference to the company's expectations for the future, Hartel underscored the ongoing activities to expand capacity: "The purpose of our capital expenditures in all regions is to systematically build on our leading market positions and to meet the consistently high demand from our customers. To achieve that, we have launched a number of key projects."
This year, according to Hartel, WACKER is investing around €150 million in the Burghausen site alone, its biggest worldwide, to expand its production capacity for silicones in line with the company's specialties strategy. "At our Nünchritz site, two plants are under construction that will deliver innovative solutions for construction applications and industrial coatings as well as for adhesives and sealants," he added. "In Amsterdam we are investing in new facilities to manufacture biopharmaceuticals, vaccines and live microbial products. And, at our site in Nanjing, China, we are currently building a new dispersion reactor and a spray dryer for dispersible polymer powders. China is the largest market in the world for construction applications, accounting for 20 percent of all construction investment. By expanding production capacity in Nanjing, we are strengthening our position as global leader for vinyl acetate-ethylene dispersions and polymer powders."
Capital Expenditures and Net Cash Flow
At €208.2 million, net cash flow was 52 percent higher in Q2 2021 than a year earlier (€136.8 million). Substantially higher cash inflows from operating activities were the main factor in this increase.
The new EBITDA forecast also affects estimates for the EBITDA margin and return on capital employed (ROCE) for the full year. The company expects the EBITDA margin to be substantially higher than last year (previous guidance: slightly higher than last year), whereas ROCE should be substantially higher than the cost of capital (previous guidance: substantially higher than last year).
The company now expects net cash flow to be clearly positive and on par with last year's level (previous guidance: clearly positive, substantially lower than last year).
Guidance for the remaining financial KPIs remains unchanged versus the forecasts made in the 2020 Annual Report.
Key Figures for the WACKER Group
Information for editorial offices: the interim report for the first half of 2021 is available for download on the WACKER website (www.wacker.com) under Investor Relations.
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 its forward-looking statements, nor does it assume the obligation to do so.
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05.08.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
Wacker Chemie AG
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