Wacker Chemie AG ended Q3 2021 with strong growth in sales and earnings thanks to continued high customer demand across all business divisions. Group sales totaled €1,658.6 million from July through September. That is 40 percent more than a year earlier (€1,183.1 million) and 11 percent higher versus the preceding quarter (€1,501.0 million). Whereas the coronavirus pandemic still had a negative economic impact on WACKER’s business in Q3 2020, volumes grew significantly in all of the company’s key customer industries in the reporting quarter. Positive product-mix effects, higher prices – especially for solar-grade polysilicon – and exchange-rate effects also lifted sales. In the first nine months of the year, Group sales came in at €4,519.2 million (9M 2020: €3,453.0 million), up 31 percent year over year.

 

WACKER posted EBITDA of €433.7 million in Q3 2021. The operating result was more than double last year’s figure (€190.8 million). Compared with the prior quarter (€326.6 million), EBITDA increased 33 percent. In addition to higher volumes and increased prices, cost savings from the Group’s ongoing efficiency program had a positive effect on operating performance. On the other hand, a marked rise in prices for energy and certain raw materials dampened EBITDA. The Group’s EBITDA margin was 26.1 percent for the three months from July through September 2021. A year earlier, the figure was 16.1 percent, while the prior quarter’s EBITDA margin was 21.8 percent. In the first nine months of the fiscal year, Group EBITDA came to €1,006.7 million and was thus more than twice as high as the same period last year (€470.3 million).

 

Group EBIT (earnings before interest and taxes) more than tripled year over year. EBIT for July through September 2021 came in at €342.6 million (Q3 2020: €90.6 million). The EBIT margin was 20.7 percent (Q3 2020: 7.7 percent). Compared with Q2 2021 (€233.7 million), EBIT grew 47 percent. Net income for the quarter amounted to €248.7 million (Q3 2020: €67.7 million) and earnings per share came in at €4.90 (Q3 2020: €1.30).

 

WACKER confirmed its full-year forecast, which it raised on September 15. Full-year sales are expected to reach around €6 billion (2020: €4.69 billion) and EBITDA is likely to be between €1.2 billion and €1.4 billion (2020: €666 million). Continued high polysilicon prices and ongoing very strong demand in the chemical divisions are the reasons for these higher expectations. At the same time, higher raw-material prices and negative exchange-rate effects are dampening EBITDA. WACKER now expects this to have a negative effect of more than €400 million (previously: €300 million), which has been factored into the current outlook.

 

“WACKER is on a very good course. We achieved record sales in the third quarter and I expect 2021 to be an excellent year for the company,” said Group CEO Christian Hartel in Munich on Thursday. According to Hartel, all divisions contributed to the good Q3 figures. “Our polysilicon business has performed very well in recent months. With more and more photovoltaic installations coming on stream worldwide, demand is growing for the polysilicon we produce for highly efficient solar cells. On top of that, rising prices for solar-grade polysilicon have been beneficial for our business. Demand remains robust in the semiconductor industry as well. Today, our hyperpure polysilicon can be found in nearly half the computer chips being installed across the globe. We intend to continue building on our market position in this field. WACKER delivers the high-quality material needed for powerful solar modules and semiconductors.”

 

Hartel went on to say that, in recent months, demand had grown in the chemical divisions as well. “For years, our strategy with silicones has been to expand our range of specialty products, and that is paying off more and more. In the past quarter, we posted double-digit growth rates for silicones in all application fields, with our specialty silicones offering multiple indispensable properties,” explained Hartel. “As for polymers, our position as market leader also means we are profiting from high construction activity worldwide. Our polymer products are an indispensable base material for innovative building solutions.” Hartel also noted that bioengineered products were performing well. “Biotechnology is a particularly promising field for WACKER. Biologics, for example, is one segment where sales growth has been especially strong recently. Our cyclodextrins business has also expanded. These special properties of these molecules open up a wide variety of new applications. Cyclodextrins can improve the bioavailability of drugs, for instance, by enhancing their solubility.”

 

In view of the positive business trend, the company had already revised its sales and earnings forecast upward when it presented its figures for Q1 2021 and did so again on June 16. WACKER once again raised its full-year forecast on September 15, 2021, and now expects sales of around €6 billion for full-year 2021 (2020: €4.69 billion). The company had previously expected to post full-year sales of about €5.5 billion. Full-year EBITDA for 2021 is likely to come in between €1.2 billion and €1.4 billion. Previously, WACKER had expected EBITDA of between €900 million and €1.1 billion. Continued high polysilicon prices and ongoing very strong demand in the chemical divisions are the reasons for WACKER’s higher business expectations for the remainder of the year. At the same time, the company anticipates that higher raw-material prices and negative exchange-rate effects will dampen EBITDA this year. WACKER now believes this will have a negative effect of more than €400 million (previously: €300 million), which has been factored into the current outlook. The company currently expects net cash flow to be clearly positive and higher than last year (previous guidance: clearly positive, on par with last year’s level).

 

The company most recently revised its full-year estimates for the EBITDA margin, ROCE and net cash flow on June 16, when it expected the full-year EBITDA margin to be substantially higher than last year and ROCE to be substantially higher than the cost of capital.