- Group sales for q1 2017 reach €1.22 billion, up 8 percent year over year
- At €229 million, ebitda up 12 percent from a year earlier
- Net income of €666 million includes the gain from deconsolidation of siltronicnet cash flow clearly positive at €53 million
- Wacker silicones raises forecast, with other divisions reconfirming expectations
- Group forecast revised due to deconsolidation of siltronic: ebitda – adjusted for special income – expected to decline and sales to grow in 2017, both by a mid-single-digit percentage
In Q1 2017, Wacker posted earnings before interest, taxes, depreciation and amortization (EBITDA) of €229.3 million. That was 12 percent higher than a year ago (€205.3 million) and 4 percent more than in the preceding quarter (€221.2 million). Reporting-quarter earnings were supported not only by sales growth, but also by high plant-utilization rates. The Wacker Group's EBITDA margin from January through March 2017 was 18.8 percent, compared with 18.1 percent in Q1 2016 and 19.2 percent a quarter ago. Group earnings before interest and taxes (EBIT) totaled €73.2 million in the reporting quarter (Q1 2016: €64.1 million). That was a year-over-year increase of 14 percent and yielded an EBIT margin of 6.0 percent (Q1 2016: 5.7 percent).
Net income in the reporting quarter was strongly influenced by the deconsolidation of Siltronic as a Wacker Group segment and amounted to €665.9 million (Q1 2016: €16.1 million). Income from continuing operations climbed 15 percent to €31.2 million (Q1 2016: €27.2 million). Income from discontinued operations amounted to €634.7 million (Q1 2016: €-11.1 million). Earnings per share from continuing operations amounted to €0.59 in the reporting quarter (Q1 2016: €0.52).
Wacker updated its full-year 2017 forecast for the Group following the deconsolidation of Siltronic and adjusted the comparative figures for 2016 accordingly. Group sales in 2017 are still expected to increase by a mid-single-digit percentage relative to last year (€4,634.2 million). EBITDA on a comparable basis (i.e. excluding special income) is now forecast to decline by a mid-single-digit percentage compared with last year (€935.2 million). Group net income will be many times higher year over year due to the gain from the deconsolidation of Siltronic.
"Wacker got off to a good start in the new fiscal year in a somewhat challenging environment," said Wacker's CEO Rudolf Staudigl in Munich on Thursday. "In particular, demand for our silicones remains very strong, but we are also posting volume growth in polymers. Given the very good order levels, we have revised upward our sales and EBITDA forecast for Wacker SILICONES. Market conditions for our polysilicon business are more difficult at the moment. Spot-market prices for solar silicon have declined significantly in recent weeks. Generally, though, we anticipate further growth in the global photovoltaic market this year, which will have a positive impact on polysilicon demand. By reducing our stake in Siltronic to just under 31 percent, we have now achieved the strategic goals we pursued with a non-controlling position in the company: we have put Wacker on a less capital-intensive footing and are focusing investments on strengthening our chemical divisions' supply chains."
In Q1 2017, Wacker increased its sales in every region compared with a year earlier. Group sales in Asia amounted to €444.6 million in the reporting quarter, up 6 percent versus a year ago (€418.1 million). In Europe, Wacker achieved sales of €497.2 million in January through March (Q1 2016: €462.0 million), a rise of around 8 percent. Sales rose by some 8 percent in the Americas as well, reaching €219.8 million (Q1 2016: €203.9 million).
Capital Expenditures and Net Cash Flow
In Q1 2017, the Group's capital expenditures amounted to €46.7 million (Q1 2016: €90.7 million). That was around 49 percent less than the year before. Investments went primarily toward expanding capacity for silicone and polymer products.
Net cash flow from continuing operations amounted to €53.2 million in Q1 2017 (Q1 2016: €-10.3 million). Substantially lower capital expenditures were the main reason for this increase.
Wacker's workforce worldwide dropped markedly due to the deconsolidation of Siltronic. The Group had 13,594 employees as of March 31, 2017 (Dec. 31, 2016: 17,205). At the end of the reporting quarter, 9,875 employees (Dec. 31, 2016: 12,138) worked at Wacker sites in Germany and 3,719 (Dec. 31, 2016: 5,067) at international locations.
In Q1 2017, Wacker Silicones posted total sales of €555.6 million (Q1 2016: €491.3 million). That was an increase of 13 percent and was primarily attributable to higher volumes. The division exceeded its sales of a quarter ago (€492.3 million) by 13 percent as well. EBITDA at Wacker SILICONES reached €107.4 million in the reporting quarter, about 22 percent higher than a year ago (€87.9 million) and up 36 per-cent versus the preceding quarter (€78.9 million). Alongside sales growth, high plant-utilization and good cost levels had a positive impact on the division's profitability. The EBITDA margin improved to 19.3 per-cent in Q1 2017, after 17.9 percent a year earlier and 16.0 percent a quarter ago.
Total sales at Wacker Polymers reached €306.8 million in the reporting quarter, up by more than 7 percent over a year ago (€285.9 million). Substantially higher volumes for dispersible polymer powders and dispersions were the main factors in this growth. The division surpassed its prior-quarter sales figure (€275.0 million) by about 12 percent. Reporting-quarter EBITDA at Wacker POLYMERS totaled €52.3 million (Q1 2016: €64.4 million). This decline of 19 per¬cent was prompted mainly by a substantial year-over-year rise in raw-material prices. The division announced price increases for its products in order to counter this trend. On the other hand, EBITDA grew by about 16 percent compared with a quarter ago (€45.2 million), with seasonal effects also playing a role here. The reporting-quarter EBITDA margin came in at 17.0 percent, after 22.5 percent a year earlier and 16.4 percent a quarter ago.
Wacker Biosolutions generated total sales of €51.4 million from January through March 2017, up by around 4 percent from a year earlier (€49.6 million). Higher volumes and positive exchange-rate effects were the key drivers of this growth. The division exceeded its Q4 2016 sales figure (€49.6 million) by 4 percent as well. EBITDA at Wacker BIOSOLUTIONS reached €10.6 million in the reporting quarter, a good 10 percent higher than a year ago (€9.6 million). The key factors behind this growth were higher sales and the division's good cost situation, which was also due to high plant-utilization levels. Wacker BIOSOLUTIONS exceeded its prior-quarter figure (€7.1 mil-lion) by 49 percent. The EBITDA margin rose accordingly, to 20.6 percent, after 19.4 percent a year ago and 14.3 percent in Q4 2016.
Wacker Polysiliconlanmei generated total sales of €268.1 million in the reporting quarter, 2 percent lower than a year ago (€273.1 million) and 10 percent less than in the preceding quarter (€297.2 million). The slight year-over-year decline was prompted mainly by somewhat lower volumes in the solar business. On the other hand, higher solar-silicon prices – both year over year and quarter over quarter – supported sales. Volumes fell substantially compared with Q4 2016. Spot-market prices for solar silicon have declined significantly in recent weeks. The division made use of this situation to increase its inventory levels in Asia and thus considerably shorten delivery times to its customers in the region. Wacker POLYSILICON's reporting-quarter EBITDA amounted to €70.5 million, up 79 percent versus a year ago (€39.4 mil-lion). This strong increase was primarily due to the costs incurred last year to commission the new polysilicon plant in Charleston, Tennessee (USA). In Q1 2016, these costs had lowered the division's EBITDA by around €30 million. Relative to a quarter ago (€86.5 million), EBITDA was down by almost 19 percent. One of the main reasons for this decrease was the special income of €13.3 million posted in Q4 2016 from advance payments retained and damages received from solar-sector customers. The division's EBITDA margin was 26.3 percent in the reporting quarter, after 14.4 percent in Q1 2016 and 29.1 percent in Q4 2016.
Wacker reduced its stake in Siltronic AG to 30.8 percent in the reporting quarter. As stipulated by IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations), Wacker is retrospectively reporting the net income of Siltronic AG and its subsidiaries for 2016 as income from discontinued operations. Since March 15, 2017, the stake in Siltronic has been accounted for using the equity method.
This has not caused any changes to division-specific expectations versus the corresponding statements in the 2016 Annual Report. But the Group is revising upward its projections for Wacker SILICONES due to strong demand for silicone products. Even with raw-material prices rising, the division's sales and its EBITDA are expected to grow by a high single-digit percentage relative to last year (2016 Annual Report: mid-single-digit percentage increase in sales, with EBITDA slightly higher).
At the Group level, the revised forecast – based on the adjusted 2016 figures – is as follows:
Group sales in 2017 are still expected to increase by a mid-single-digit percentage relative to last year (€4,634.2 million).
The EBITDA margin is projected to be somewhat lower than last year's figure of 20.6 percent (2016 Annual Report, including Siltronic: slightly below last year's figure). On balance, product prices will be lower and raw-material prices will be higher, both of which will weigh on the EBITDA margin.
EBITDA – on a comparable basis, i.e. adjusted to exclude special income – will decline by a mid-single-digit percentage from last year's €935.2 million figure (2016 Annual Report, including Siltronic: at last year's level, on a comparable basis without special income).
ROCE will be slightly below the 5.6 percent calculated for 2016 (2016 Annual Report, including Siltronic: at last year's level).
Net cash flow is expected to be clearly positive in 2017, but substantially below last year's figure of €361.1 million (2016 Annual Report, including Siltronic: at last year's level).
Capital expenditures for 2017 will amount to around €360 million (2016 Annual Report: around €450 million), which is a slight rise versus the year before (€338.1 million without Siltronic). Investments will, however, remain well below depreciation.
In 2017, depreciation will come in at about €600 million (2016 Annual Report, including Siltronic: around €720 million), slightly below the year-earlier level (€618.2 million).
As projected in the 2016 Annual Report, net financial debt will decrease further, to substantially below last year's level (€992.5 million).