Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wacker Chemie AG (WKCMF, Financial) reported a strong start to the year with sales reaching EUR1.48 billion, substantially higher than the previous quarter due to typical seasonality.
- The chemicals segment saw a 6% year-over-year increase in EBITDA, driven by strong growth in specialty silicon costs.
- The company is ramping up its new etching line in Burghausen, which will support the next generation of chip production and strengthen its leadership position in the semiconductor industry.
- Wacker Chemie AG (WKCMF) has initiated nearly 1,000 efficiency projects, yielding net savings of about EUR160 million, demonstrating a strong focus on cost-cutting and efficiency improvements.
- The company is actively working on sustainability initiatives, including a new global safety initiative and products with a lower carbon footprint, such as renewable raw material-based sealants and low carbon cement binders.
Negative Points
- Group EBITDA for the first quarter was EUR127 million, significantly lower than last year's EUR172 million, primarily due to weak demand for solar grade polysilicon and construction-related polymers.
- The company faces considerable risks from international trade relations and potential customs conflicts, which have increased uncertainty and volatility in order intake.
- Lower utilization rates and weak demand in certain segments, such as construction-related polymers, have negatively impacted financial performance.
- The potential impacts of a trade war are not included in the company's forecast, adding uncertainty to future financial outcomes.
- The EBITDA margin for the silicons segment, although improved, remains below target and unsatisfactory, indicating room for further improvement.
Q & A Highlights
Q: Could you provide insights on demand trends in your chemical activities during Q1, and how has Q2 started in terms of demand? Also, regarding silicones, your guidance suggests slightly higher margins compared to 2024. Could you clarify what "slightly" means numerically?
A: Demand for our specialties in silicon remains strong, but order entry has become more volatile, particularly for standard products. March was slightly weaker than expected, but we anticipate a moderate seasonal uptake in Q2. For silicones, a slight increase in margins could mean an improvement of 1-2 percentage points. We had a strong start in Q1, but we do not expect the same level of performance to continue throughout the year.
Q: How is Wacker Chemie adjusting its polysilicon business in response to anti-dumping duties, and what are the dynamics in the silicons business regarding input costs?
A: With the final ruling on anti-dumping duties, supply chains are adjusting, with shifts towards countries like Laos and India. We sell at international prices, not at lower domestic prices. In silicons, while a softer upstream market isn't supportive due to high utilization needs, we are focusing on differentiated products. Lower silicon metal and energy costs are positives, but methanol prices are rising.
Q: Can you update us on your market share and potential for sales increases in semi-grade polysilicon? Also, how confident are you about demand improvement in the second half of the year?
A: We estimate our market share in semi-grade polysilicon at around 50%. Our new etching line in Burghausen will support further growth and potentially increase market share. We expect demand to improve in the second half as the US market remains a premium market for solar applications, driving demand for US-compliant polysilicon.
Q: Regarding your silicones business, how is your trade position in North America, and what impact do tariffs have on your operations?
A: Most chemicals, including silicones, are exempt from tariffs, minimizing the impact on our operations. We source silicon metal domestically for our US polysilicon production, so tariffs do not significantly affect us. Order entry in silicones has been volatile but not drastically declining, indicating a muted seasonal recovery in Q2.
Q: How does the underutilization of infrastructure affect your financials, and is there a disadvantage in having Europe-only production for biosolutions?
A: Underutilization in polysilicon affects infrastructure utilization, but other factors like lower equity income and hedging costs also contribute. In biosolutions, we have assets in the US, such as our cyclodextrin business, and regional setup is not a primary concern for project wins, so there's no significant disadvantage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
