With the presentation of its annual report yesterday,, Wacker Chemie AG confirmed that its 2023 sales and earnings fell markedly versus the previous year due to persistently weak market conditions. The chemical Group’s sales totaled €6.40 billion last year, 22 percent less than in 2022 (€8.21 billion). This decline was prompted primarily by lower prices and volumes.

The Group’s EBITDA (earnings before interest, taxes, depreciation and amortization) reached €824 million in 2023 (2022: €2.08 billion), down 60 percent. The decrease stemmed not only from lower prices, but also from Germany’s ongoing high energy costs and from globally high raw-material costs. Additionally, lower sales volumes dampened plant-utilization rates. In contrast, savings from the Group’s ongoing efficiency programs buoyed earnings.

Due to the factors described above, EBIT (earnings before interest and taxes) dropped 76 percent to €405 million (2022: €1.68 billion). Depreciation and amortization amounted to €419 million, up slightly on the previous year (€402 million). Net income for 2023 came in at €327 million (2022: €1.28 billion).

WACKER’s dividend policy is to distribute about 50 percent of net income to shareholders. The Executive and Supervisory Boards will therefore propose a dividend of €3.00 per share at the Annual Shareholders’ Meeting. Based on the number of dividend-bearing shares as per December 31, 2023, the cash dividend corresponds to a payout of €149 million.

“The global industrial engine began to stutter in 2023 and the chemical industry in particular faced strong headwinds. We were not immune to this,” said President & CEO Christian Hartel on Tuesday in Munich. “There were hopes early in the year for a demand recovery in the second half, but it did not materialize. Inflation rates remained high. Price pressure increased. Compared internationally, energy prices in Germany were still high. High raw-material costs worldwide had an additional impact on the industry. As a result, we did not match our record figures of 2022.”

When speaking about expectations for 2024, Hartel said: “The weak economy continues to affect customer order trends in numerous application fields. While demand for silicones picked up in some customer sectors at the start of the year, there is still some constraint, particularly in the construction industry. There is no lasting turnaround in demand currently in sight.”

As a result, sales in this year’s first two months were lower than last year’s. Overall, WACKER expects to generate first-quarter Group sales of around €1.5 billion. EBITDA for Q1 is expected to be at the level of the prior quarter.

In its full-year guidance, WACKER expects its business development to slow slightly compared to last year. Sales are forecast at between €6 billion and €6.5 billion, with EBITDA between €600 million and €800 million. At the same time, WACKER expects volume growth. “If the economy recovers in the course of the year, WACKER will have further potential to achieve higher sales volumes,” said Hartel. Lower selling prices are the main factor holding back the earnings trend.

WACKER is responding to the weak market environment with stronger cost discipline. “We will first pursue a restrictive personnel policy, streamline processes, and cut non-personnel costs,” explained Hartel. “We are confident about the future in the medium to long term,” emphasized the CEO. “WACKER is well positioned strategically and financially. We remain committed to our 2030 growth targets.” 

Sales are expected to climb to over €10 billion by 2030, while the EBITDA margin should exceed 20 percent.

“We leverage three areas to achieve our targets,” said Hartel. “Firstly, with our product portfolio we address global megatrends. Whether it is renewable energy, electromobility or digitalization, in the medium to long term, these trends will continue to drive our business. Secondly, we are expanding our production network worldwide and, as a result, investing systematically in our future growth. Thirdly, sustainability is a business model for us. We are constantly expanding the share of sustainable products in our portfolio.”