Wacker Chemie AG finished Q1 2022 with new highs in sales and earnings. The Munich-based chemical company generated sales of €2.08 billion in the reporting quarter, 53 percent higher than in the same period last year (€1.36 billion). Relative to the preceding quarter (€1.69 billion), sales were up 23 percent, with higher prices and positive product mix effects as the main growth drivers. Exchange-rate effects stemming from a stronger US dollar year over year also increased sales somewhat.
In Q1 2022, WACKER posted EBITDA (earnings before interest, taxes, depreciation and amortization) of €644 million, more than double the figure for the same period last year (€258 million). Relative to a quarter earlier (€510 million), EBITDA grew by 26 percent. This increase was attributable not only to higher prices and a better product mix, but also to cost-saving measures under the Group’s ongoing efficiency programs. The company encountered headwinds, however, from sharp increases in energy and raw-material prices both year over year and quarter over quarter. These increases reduced EBITDA by more than €250 million compared with a year earlier. The EBITDA margin for the three months from January through March 2022 was 31.0 percent (Q1 2021: 19.0 percent). In the prior quarter, the EBITDA margin was 30.2 percent.
Group earnings before interest and taxes (EBIT) also increased substantially in the reporting quarter due to the factors already mentioned, coming in at €550 million (Q1 2021: €166 million). This was more than triple the year-earlier figure, corresponding to an EBIT margin of 26.5 percent (Q1 2021: 12.2 percent). Net income for Q1 2022 totaled €403 million (Q1 2021: €118 million). This corresponds to earnings per share of €7.92 (Q1 2021: €2.29).
WACKER has raised its sales forecast for full-year 2022. Despite the significant risks to the global economy – due in particular to the impact of the war in Ukraine, but also to the ongoing coronavirus pandemic – WACKER expects to continue on its growth trajectory in 2022. The company now forecasts Group sales to come in at around €7.5 billion (2021: €6.21 billion). The company had previously expected to post annual sales of about €7 billion. EBITDA for 2022 is currently anticipated to come in at between €1.2 billion and €1.5 billion – with the higher figure being close to last year’s (€1.54 billion). Higher energy and raw-material costs are likely to impact EBITDA by around €1.1 billion (previous projection: around €1 billion). A substantial share of these additional costs is to be passed on in the form of price increases. Savings from WACKER’s ongoing efficiency programs will have a positive impact on the earnings trend.
“Despite the considerable amount of uncertainty and pressure facing the global economy, WACKER continued to operate very successfully in the first quarter of 2022,” said CEO Christian Hartel. “Our growth strategy – which focuses firmly on specialty chemical products with high value-add for our customers, on highest-quality polysilicon for semiconductors and solar applications, and on the active expansion of our biotechnology activities – contributes substantially to strengthening WACKER’s resilience and ensuring that it remains robust in the face of current macroeconomic challenges. After a very good start this year, we expect that full-year EBITDA will likely trend toward the upper end of the projected range.”
According to Hartel, however, WACKER expects strong headwinds throughout the remainder of the year due to sharp increases in energy and raw-material prices: “In the silicones and polysilicon segments in particular, we still benefited at the beginning of the year from raw materials and energy we procured last year at relatively favorable prices.” This would change in the coming quarters, he said, and have a marked impact on the further earnings trend in the current year.
Hartel was optimistic as regards WACKER’s medium-term prospects: “We want to accelerate our growth in the years ahead and are taking proactive steps in this direction. We aim to achieve sales of over €10 billion by 2030, with an EBITDA margin of more than 20 percent.” Sustainability would play a decisive role in this, Hartel pointed out. Demand was constantly growing for sustainable products, which already comprised more than two-thirds of the portfolio, according to the CEO, and were expected in the coming years to become an even stronger driver of Group sales and earnings.
“Amid strong customer demand, we are now entering a growth phase, where we will focus on organic growth, but also invest in acquisitions. We have set ourselves ambitious goals: we want to double sales growth – which is driven by higher volumes and a better product mix – while maintaining our high profitability,” the CEO emphasized.
Despite considerable uncertainty regarding the global economic trend – due in particular to the impact of the war in Ukraine, the continuing coronavirus pandemic and global inflation, with possible consequences for consumer behavior – WACKER has raised its sales forecast for full-year 2022.
WACKER now expects to post Group sales of approximately €7.5 billion in 2022 (previous forecast: about €7.0 billion). The company confirmed its forecast for EBITDA, which it continues to expect to come in between €1.2 billion and €1.5 billion. Higher energy and raw-material costs are likely to impact EBITDA by around €1.1 billion (previous projection: around €1 billion). However, a substantial share of these additional costs is to be passed on in the form of price increases. Due to inflation, the EBITDA margin is likely to be considerably lower than last year, as will Group net income. Capital expenditures will rise substantially to between €550 million and €600 million. Net cash flow should remain clearly positive, as should net financial assets.
