Wacker reports strong operating loss for 2019 due to polysilicon business

The German polysilicon manufacturer said results for the past financial year are in line with its expectations. However, falling sales and earnings were also reported. The company blamed low prices for polysilicon for last year’s performance.

According to preliminary results, Wacker Chemie AG generated sales of €4.93 billion ($5.43 billion) in fiscal year 2019, which is approximately 1% below the previous year’s level. The low prices for polysilicon and standard silicones are cited as the main reason for this revenue drop, which could only partially by offset by higher sales volumes, product mix effects and exchange rate changes due to the stronger US dollar compared to the previous year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) reached €780 million last year, down from €930 million a year earlier. According to Wacker Chemie, the 2018 result includes a special income from insurance benefits amounting to €112.5 million from the accident occurred at the US polysilicon plant in Charleston in 2017. The lower prices of polysilicon and the resulting depreciation on inventories, as well as a sharp rise in electricity costs in Germany, have also affected its performance, the company stated.

The company also posted an operating loss of €540 million for last year, which it attributed to a special depreciation of €760 million for its polysilicon factories. It added this depreciation is also the results of “cautious expectations” for the further price development for polysilicon. For comparison, last year Wacker reported an operating profit of €390 million.

The polysilicon division saw revenue decrease by 7% year-on-year to €780 million. The sharp rise in sales volumes has not compensated for the low prices for polysilicon.

Wacker Chemie is currently developing a program that should make the company more efficient and significantly reduce costs. “We will probably announce specific goals in the first quarter of 2020.”

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