Special income lifts Wacker’s Q3 earnings

October 24 (Renewables Now) – Lower average prices for solar-grade polysilicon were one of the main factors to drag down Wacker Chemie’s (ETR:WCH) third-quarter (Q3) earnings, which still rose 13% on the year, though only because of an insurance compensation.

The German chemicals company today reported earnings before interest, tax, depreciation and amortisation (EBITDA) of EUR 272.9 million (USD 303.5m) for the third quarter of 2019 compared to EUR 241.7 million a year earlier. The result includes a EUR-112.5-million insurance compensation for damages incurred following an incident at its Charleston plant in the US in 2017. If it wasn’t for this item, EBITDA would have fallen 34% year on year to EUR 160.4 million, mainly because of the lower average prices for solar-grade polysilicon and standard silicones, as well as the effects of inventory valuation adjustments.

The table below gives more details about the group’s financial performance in Q3 and the first nine months of 2019.

Figures in EUR million, except percentages Q3 2019 Q3 2018 9-mo 2019 9-mo 2018
Sales 1,267.9 1,242.7 3,772.1 3,790.2
EBITDA 272.9 241.7 625.6 756.7
EBITDA margin (%) 21.5 19.4 16.6 20.0
EBIT 137.1 106.5 207.9 353.2
EBIT margin (%) 10.8 8.6 5.5 9.3
Net profit (loss) 86.3 68.9 118.0 231.5

Wacker attributed the 2% rise in sales to positive volume and product-mix effects, as well as to favourable exchange-rate effects.

The polysilicon division generated total sales of EUR 206.4 million in the third quarter, which is 19% more than a year earlier, thanks to strong volume growth. EBITDA at Wacker Polysilicon jumped to EUR 85.1 million from EUR 4.3 million because of the special income.

CEO Rudolf Staudigl stated he is happy with the group’s top line and not so much with its earnings performance.

“Although we posted strong EBITDA growth in Q3, this was due to special income. In operating terms, EBITDA fell quite significantly versus both last year and a quarter ago. We have started work on a comprehensive program to weatherproof our earnings and competitiveness,” he said.

As previously announced, Wacker lowered its forecast for full-year sales and earnings and now expects its top line to be on par with last year, or at about EUR 4.98 billion, and its EBITDA, excluding compensation, to be about 30% lower than the 2018 result of EUR 930 million. The bottom line is seen to be “slightly positive.” The company blamed the extremely low polysilicon prices for the downward revision.

(EUR 1.0 = USD 1.112)

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