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Wacker expects a tough year with lower profit

Image from www.wacker.com.

March 19 (Renewables Now) - German chemicals company Wacker Chemie AG (ETR:WCH) today posted a 4% year-on-year rise in 2018 profit from continuing operations, reaching EUR 260.1 million (USD 295m), and confirmed its 2019 sales and earnings guidance that was shared earlier this month.

The Munich-based company, which has a dedicated polysilicon business, said that group earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 8% to EUR 930 million mainly due to business-interruption costs at the polysilicon plant in Charleston, Tennessee.

Higher raw-material and energy costs also hit earnings.

Group sales, though, went up by 1% as higher volumes and prices in Wacker’s chemicals business more than offset negative exchange-rate effects and lower prices for polysilicon, the company explained.

More details about the group results are available in the table below.

Figures in EUR million 2018 2017
Group sales 4,979 4,924
-- of which from Polysilicon division 823.5 1,120
Group EBITDA 930 1,014
-- of which from Polysilicon division 72.4 290.4
Group EBIT 389.6 423.7
Net profit from continuing operations 260.1 250.1
Net profit 260.1 884.8

The 2017 bottom line includes proceeds of EUR 634.7 million from the deconsolidation of Siltronic as a group segment.

The company explained the 27% decrease in sales at the Polysilicon division with a marked decline in volumes and the fall in prices for polysilicon, primarily due to China’s decision to curb feed-in tariffs (FiTs) and cap the amount of new photovoltaic (PV) installations.

In 2019, Wacker Polysilicon is expected to experience a strong increase in volumes and a low-double-digit percentage increase in sales. EBITDA, however, will be substantially below the result in 2018 due to the fall in the selling price for solar-grade polysilicon and the impact of higher energy prices.

In the first two months of this year, the polysilicon division recorded sales figures that are slightly below the prior-year level regardless of strong volume growth, as average solar-grade polysilicon prices were lower.

Chief executive Rudolf Staudigl said that solar-grade polysilicon overcapacities in China are slowing the earnings trend at the company’s polysilicon business.

Overall, the group expects its sales to rise by a mid-single-digit percentage in 2019 and EBITDA to go down by 10%-20%, with a substantially lower margin. Group net profit is also expected to fall significantly.

For the first quarter of 2019, the group forecasts flat sales at around EUR 1.22 billion and a markedly lower EBITDA.

(EUR 1.0 = USD 1.135)

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