Wacker's net profit soars on higher prices, volumes, cost savings

Wacker's net profit soars on higher prices, volumes, cost savings

At €1.54 billion, EBITDA 2021 was more than double the prior-year figure of €666 million in 2020

  • By ICN Bureau | March 15, 2022
Wacker Chemie AG has ended 2021 with new all-time highs for sales, earnings and net cash flow. The Munich-based chemical company posted Group sales of €6.21 billion in 2021 (2020: €4.69 billion), up 32 percent year over year. This strong rise was mainly due to higher selling prices and volume growth across every business division. Exchange-rate effects, on the other hand, dampened sales somewhat.
At €1.54 billion, EBITDA (earnings before interest, taxes, depreciation and amortization) in 2021 was more than double the prior-year figure (2020: €666 million), yielding an EBITDA margin of 24.8 percent (2020: 14.2 percent). Operating performance was driven not only by higher prices and volumes, but also by cost savings from the Group’s ongoing efficiency program. On the other hand, prices for some raw materials and energy were markedly higher, lowering EBITDA by about €500 million.
Group EBIT (earnings before interest and taxes) totaled €1.13 billion in the reporting year (2020: €263 million), resulting in an EBIT margin of 18.3 percent (2020: 5.6 percent). The strong year-over-year increase is chiefly attributable to the high EBITDA figure in combination with almost unchanged depreciation/amortization. Depreciation amounted to €404 million in 2021 (2020: €404 million). Net income for 2021 was €828 million (2020: €202 million).
WACKER is headed for a new record with its dividend. The Executive and Supervisory Boards will propose a dividend of €8.00 per share at the Annual Shareholders’ Meeting. Accordingly, WACKER will be distributing roughly 50 percent of its net income for the year, in line with its dividend policy. Based on the number of shares entitled to dividends as of December 31, 2021, the total cash dividend corresponds to a payout of €397 million. Calculated in relation to WACKER’s average share price in 2021, the dividend yield is 6.0 percent.
WACKER wants to accelerate its growth in the coming years. Sales for 2022 are targeted at €7 billion. Higher prices, higher volumes for chemical business and positive product-mix effects across all divisions will be the main growth drivers. The Group’s EBITDA for 2022 is likely to come in between €1.2 billion and €1.5 billion – which, on the high end, would be close to last year’s figure. Higher energy and raw-material costs are likely to impact EBITDA by around €1 billion. However, a substantial share of these additional costs is planned to be passed on in the form of price increases. Savings from the ongoing efficiency programs at WACKER will have a positive impact on the earnings trend. Group net income will be substantially lower than last year’s figure.
During the first two months of the current year, WACKER’s business remained on a dynamic trajectory. Demand has been robust across all business divisions, with Group sales and EBITDA both clearly higher than last year. Overall, WACKER expects to post Group sales of about €2 billion in Q1 2022 (Q1 2021: €1.36 billion). Group EBITDA in Q1 2022 is also poised for substantial growth and will rise more strongly than sales year over year, chiefly due to higher selling prices as well as continued high demand. In addition, WACKER benefited at the beginning of the year from the raw materials and energy it had procured last year at more favorable conditions.
“Although we are exercising due caution in the face of the armed conflict in Ukraine and the ongoing pandemic, we are optimistic about 2022,” said CEO Christian Hartel in Munich on Tuesday. “We expect our chemical business to perform well during the rest of the year, and anticipate higher prices, volume growth and positive product-mix effects in this segment. In our polysilicon business, we also expect to see higher prices and a better product mix.”
Referring to the developments in Eastern Europe, Hartel expressed his shock and concern: “Our thoughts and sympathy are with those suffering from the fighting in Ukraine.”
At this time, there is no way of estimating reliably what additional political and economic consequences could arise from Russia’s invasion of Ukraine, said Hartel. The direct impact on the volume side would be limited, as Hartel explained: “All of the CIS states combined make up less than 2 percent of Group sales.” On the other hand, the sharp rise in gas and electricity prices in particular are a source of concern.
WACKER aims to accelerate the pace of growth in the coming years and is making appropriate plans.
“The first highlight is the new, ambitious sustainability goals we presented last year,” explained CEO Christian Hartel. In his words, sustainability has two aspects for WACKER: “First, we are going to significantly improve our own ecological footprint. By 2030, we aim to reduce our absolute greenhouse gas emissions by 50 percent. Second, the growing importance of sustainability in all areas of life is opening up attractive business opportunities for us.”
With its products and applications, Hartel continued, the Munich-based chemical company offers its customers a multitude of solutions that enable them to achieve their own sustainability goals. “More than two-thirds of our product portfolio already contributes to this value driver,” Hartel emphasized.
The CEO also referred to the new growth targets that WACKER aims to reach by 2030: “Our unique, diverse and solution-driven product portfolio offers us additional profitable business opportunities – opportunities we intend to make the most of. That is precisely what our customers and the markets expect of us. We have already received a lot of positive feedback from our customers in this regard. We will continue to strengthen our focus on customers. It is the key to our long-term success.” WACKER will present its new growth targets on March 29 at a Capital Market Day.
WACKER expects to post Group sales of approximately €7 billion in 2022. EBITDA is expected to be between €1.2 billion and €1.5 billion. At the same time, energy and raw-material costs are likely to impact EBITDA by around €1 billion. However, a substantial share of these additional costs is to be passed on in the form of price increases. The EBITDA margin is likely to decline substantially versus last year. At between €550 million and €600 million, capital expenditures will be substantially higher year over year. They will also be clearly higher than depreciation/amortization, which will amount to about €400 million. Group net income for the year will be markedly lower than last year. Net cash flow should be clearly positive, but substantially lower than last year. Net financial assets are likely to be significantly lower than last year, but still in positive territory.
WACKER sees good opportunities to continue growing its chemical sales this year. WACKER SILICONES expects to post sales of around €3 billion and WACKER POLYMERS approximately €2 billion. Both divisions’ EBITDA margins are anticipated to match last year’s level.
WACKER BIOSOLUTIONS also expects to see sales growth, likely in the low double-digit percentage range. EBITDA should be slightly lower than last year, one reason being higher expenses for digitalization of the biologics segment.
WACKER POLYSILICON expects to post sales of around €1.6 billion in 2022. Higher average prices and further improvements in the product mix will drive this trend. EBITDA is likely to come in between €330 million and €500 million.

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