Wacker swings to large loss in 2019 on impairment charge
Image from www.wacker.com.
German chemicals group Wacker Chemie AG (ETR:WCH) turned to a net loss of EUR 629.6 million (USD 693m) for 2019 from a profit of EUR 260.1 million a year back, following a hefty impairment charge on polysilicon facilities.
The group said that its result before interest and tax (EBIT) was negative at EUR 536.3 million against earnings of EUR 389.6 million in 2018, the reason being a EUR-760-million impairment charge on the carrying amount of Wacker’s polysilicon production plants. It noted that this impairment reflects its subdued expectations for the future trend in solar-grade polysilicon prices.
Wacker's annual sales decreased by 1% to EUR 4.93 billion because of lower prices, particularly for solar-grade polysilicon, but also for standard silicones.
The group’s polysilicon division saw its earnings before interest, tax, depreciation and amortisation (EBITDA) fall by 21% to EUR 56.9 million due to price effects, even though it included EUR 112.5 million in insurance compensation for damage from an incident at Charleston in the US back in 2017. Sales at the polysilicon segment declined by 5% to EUR 780 million. This year, the division is seen to increase its sales slightly by a low-single-digit percentage, driven by an improved product-mix. EBITDA, adjusted for the non-recurring effect of the above-mentioned insurance compensation, is expected to be on par with that in 2019.
“In our polysilicon business, we still face strong competition and price pressure. Trade conflicts and geopolitical crises harbor downside risks. In addition, the uncertainties arising from the coronavirus currently top all other risks,” commented CEO Rudolf Staudigl.
For the group as a whole, Wacker forecasts sales going up by a low-single-digit percentage in 2020, but it sees a likely decline in adjusted EBITDA by a mid-single-digit percentage. The group, though, noted that this guidance excludes the economic impact of a coronavirus COVID-19 pandemic, which could be high -- above EUR 100 million -- when it comes to Wacker’s earnings and financial position.
For the first quarter of 2020, the group projects sales of some EUR 1.2 billion and EBITDA that is substantially above last year’s level of EUR 142 million.
The executive and supervisory boards of the company will propose a dividend distribution of EUR 0.50 per share at the annual shareholders’ meeting.