Wacker Chemie AG Financial Results H1 2023 | Navigating Challenges, Investing In The Future With IR - Seat11a - Video Insights For European Financial Markets

Excerpt

This video presentation delves into Wacker Chemie AG’s financial performance for H1 2023, a comprehensive review led by Joerg Hoffmann, the Head of Investor Relations. The company’s results for Q2 were presented, noting the revisions in the full-year guidance due to unforeseen factors.

The video highlights a significant development: the takeover of ADL antibiotic Stadium, a biotech compound in Spain. Wacker Chemie AG now wholly owns this European biotech site, increasing its fermentation capabilities threefold as part of its growth strategy in the solutions area.

However, the performance in Q2 resulted in €1.275 billion in sales, considerably lower than the previous year, largely due to volume and price declines. EBITDA reached €256 million, failing to match the previous year’s results. This was attributed to a rise in raw material costs and an unexpected shift from last year’s tailwinds into headwinds, primarily involving higher energy raws.

Significantly, the company’s net asset position shifted to a net debt position for the first time in a while, largely due to a record dividend payout of €600 million and the acquisition cost for the remaining ADL part.

In operations, volume reductions in chemicals, price declines in commodity products, and weak market demand have contributed to the challenging quarter. However, the semiconductor-grade polysilicon business showed resilience in volumes and prices. The company also faced headwinds from higher energy and raw material costs, impacting the P&L. However, they were proud of their innovations on the sustainability side, reducing CO2 emissions through advanced process control methods.

Given the absence of expected recovery for H2, the company updated its guidance, reducing sales to a corridor between €6.5 and €6.8 billion and EBITDA to about €900 million. The company, however, continues to pursue its growth targets, investing in its capabilities in chemicals and polymers and significantly expanding its processing capability for semiconductor-grade polysilicon.

The acquisition of ADL is emphasised as a significant achievement, increasing the company’s fermentation capabilities by three times and adding 300 new, highly-skilled employees. This acquisition provides the company’s capacity to reach its growth targets and aligns well with its innovation pipeline in bio ingredients.

In terms of the balance sheet, the company maintains a healthy liquidity position with €1.3 billion, even after a record dividend payout. However, it will take time to run down high-cost inventories due to slowing volumes in the chemical business, delaying net working capital contributions to cash generation over the next quarters.

Despite the challenging circumstances, particularly in silicones, polymers showed a strong performance in Q2 with expanding margins due to successful price adjustments. Similarly, the biopharma part of the business performed well, but the cost of growth from other parts offset these gains.

While the polysilicon sector increased its EBITDA significantly, expectations for the second half of the year are more modest due to pressure on prices, high energy costs, and increased capacities in response to the thriving solar market.

In conclusion, Joerg Hoffmann acknowledges the current challenges, with a notable cyclical element in the silicone business and a missing recovery. However, he remains optimistic about the company’s growth opportunities across different industries. He is confident in reaching its sales target of a billion euros by 2030, largely due to the ADL acquisition. The company is now eyeing the future with hope, awaiting improvements in industrial power prices and looking into capacity expansion, especially in the polysilicon sector.

Chapters

Wacker Q2 2023 highlights
Updated FY 2023 guidance, investments for further growth
Wacker strengthens its biotechnology business with acquisition of ADL
Profit & loss statement | EBITDA of €256m in q2 2023
Balance sheet composition | Resilient financials with €4.6bn in equity and €1.3bn in liquidity
Silicones | Weak demand and ongoing customer destocking
Polymers | Defending margins in a weak demand environment
Biosolutions | Results held back by upfront costs
Polysilicon | Strong performance in Q2, volumes firm but price pressure increasing
Net financial position | Low net financial debt of €270m following dividend payment & acquisition
Summary

Resources

Host

Joerg Hoffmann, CFA
Head of Investor Relations | Wacker Chemie AG

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