Polysilicon division loss hits Wacker's Q1 EBITDA

German chemicals company Wacker Chemie AG (ETR:WCH) on Friday said a substantial drop in polysilicon prices and higher energy costs have dragged down its first-quarter EBITDA by 44% in annual terms, but confirmed its full-year forecast.

Wacker booked EUR 142 million (USD 159m) in earnings before interest, tax, depreciation and amortisation (EBITDA), down from EUR 254.5 million in 2018. A temporary outage at a silicone-rubber plant also contributed to the drop.

The EBITDA margin for January-March was 11.5%, almost halving from 20.9% in the year-ago period.

The net result for the quarter was a loss of EUR 5.5 million, versus a profit of EUR 79.1 million a year ago.

In the first quarter of 2019, Wacker generated EUR 1.24 billion in sales, up 1.5% year-on-year, mainly thanks to higher volumes and its chemical business. Its polysilicon division, however, was hit by tough market conditions caused by a drop in the average price for solar-grade polysilicon. Sales there dropped by 4% to EUR 211.1 million.

Lower sales and increased energy prices dragged down Wacker Polysilicon’s EBITDA to a negative EUR 35.8 million from EUR 48.2 million. The EBITDA margin was a negative 17%, as compared 22% in the first quarter of 2018.

"To counter price and cost pressure, the [polysilicon] division is not only working on enhancing its production processes and lowering its costs, but is also striving to expand its market share of higher-margin business with its high-quality polysilicon for semiconductor applications and mono-crystalline solar cells," said Wacker.

The company still expects its total 2019 EBITDA to be 10%-20% lower than the EUR 930 million recorded in 2018, while sales are seen to rise by a mid-single-digit percentage from the EUR 4.98 billion recorded in 2018. The net result for the year is seen to decline significantly.

(EUR 1.0 = USD 1.120)

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