Release Date: March 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wacker Chemie AG (WKCMF, Financial) increased specialty volumes in silicones and polymers despite challenging market conditions.
- The company set up Europe's latest biotech facility to support German pandemic preparedness programs, indicating a strategic focus on biosolutions.
- Wacker Chemie AG (WKCMF) reported a strong performance in its Chemicals business, with an 11% year-over-year increase in EBITDA driven by specialty silicones.
- The company achieved a top A score from the CDP for its sustainability efforts, highlighting its commitment to reducing CO2 emissions.
- Wacker Chemie AG (WKCMF) maintained its dividend policy, proposing a EUR2.50 per share dividend, equating to a payout ratio of 52% of EPS.
Negative Points
- Group EBITDA was 7% lower year-over-year, primarily due to challenges in the polysilicon segment.
- Polysilicon sales were significantly impacted by overcapacities in China and US tariff uncertainties, leading to a 40% year-over-year decline in EBITDA.
- The company faced a challenging market environment in the construction sector, affecting polymer sales and earnings.
- Wacker Chemie AG (WKCMF) anticipates a challenging market environment in 2025 with higher risks for trade disputes.
- The company reported a decline in sales during 2024, primarily due to lower prices and volumes sold in polysilicon.
Q & A Highlights
Q: Can you elaborate on the demand increase in silicon specialties and the regions and end markets driving this growth?
A: Christian Hartel, CEO: We see demand increase across various segments and regions. Our recent investments in downstream specialty capabilities are now allowing us to leverage and grow the business. Demand is picking up, and we expect additional volumes in 2025.
Q: Regarding polysilicon, are there any initiatives by US authorities to address gray imports, and what are your plans if demand recovers?
A: Christian Hartel, CEO: US authorities are checking imports, but not at a 100% rate. If demand recovers, our priority is to sell inventory before increasing production. Tobias Ohler, CFO: We would first work down inventory and then increase production once demand picks up.
Q: Why is the margin outlook for silicones relatively muted despite a forecasted 10% growth in specialties?
A: Tobias Ohler, CFO: We are not seeing a significant turn in pricing yet, and we need to compensate for base cost inflation. Although we are growing in specialties, the standard business remains at low profitability levels. We expect a slight improvement in margins as we are not yet at mid-cycle.
Q: Can you provide insights into the semiconductor business growth mentioned in your annual report?
A: Christian Hartel, CEO: Our semiconductor growth is based on long-term contractual volumes. We see higher demand from customers this year, supported by our new hedging line coming on stream mid-year. We have contracted customers for this new plant, which contributes to the growth.
Q: How much inventory do you have in polysilicon, and is there pressure from auditors to reevaluate it?
A: Tobias Ohler, CFO: We are running at demand rate from firm contracts and have inventory in our hubs. We sell inventory at attractive economic rates, and there is no pressure from auditors to reevaluate it. The shelf life of polysilicon is years, allowing us flexibility.
Q: What is the outlook for the polymers market, and have there been any changes in the competitive landscape?
A: Christian Hartel, CEO: The construction market remains challenging, but we see slightly higher volumes in dispersions and powders with slightly lower prices. Some competitors are more aggressive on pricing, trying to fill capacities, which adds pressure.
Q: Can you explain the mix improvement in silicones and its impact on margins?
A: Christian Hartel, CEO: We see an improvement in specialty volumes and margins, but we are not yet at mid-cycle margins. Pricing has not turned substantially, and the drag from standard pricing is still visible. There is potential for silicon prices to improve going forward.
Q: What are the expectations for the Biosolutions segment, given its current EBIT loss?
A: Christian Hartel, CEO: The focus is on filling capacities acquired through past acquisitions. Acquiring projects takes time, and financing challenges for smaller biotechs have slowed the pipeline. The priority is to fill projects and improve profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
