Wacker Chemie AG: Resilient Amidst Challenging Market Conditions in Q3 2024

image

Wacker Chemie AG: Resilient Amidst Challenging Market Conditions in Q3 2024

Wacker Chemie AG (WCH:GR) displayed a mixed performance in the third quarter of 2024 despite challenging market conditions. The company’s Group sales decreased by 6% year-on-year to approximately €1.4 billion, while Group EBITDA rose by 17% to €198 million. Specialty segments, particularly silicones, showed strong growth, and the EBITDA of the Chemicals segment increased by 23%.

Despite a significant decline in polysilicon sales due to weak demand in the construction and automotive sectors and a drop in volumes of solar energy quality, Wacker Chemie AG maintains its full-year EBITDA forecast in the range of €600 million to €800 million. The company continues to focus on high-margin specialty products and sustainability initiatives, targeting €10 billion in sales and an EBITDA margin of over 20% by 2030.

Key Points:

  • Group sales decreased by 6% year-on-year to approximately €1.4 billion.
  • Group EBITDA increased by 17% to €198 million, with the Chemicals segment's EBITDA rising by 23%.
  • Polysilicon sales fell by 39% year-on-year due to declining solar energy quality volumes.
  • Silicon sales increased by 8% year-on-year, with EBITDA doubling.
  • The company maintains its full-year EBITDA forecast of between €600 million and €800 million.
  • Wacker Chemie AG targets €10 billion in sales and an EBITDA margin of over 20% by 2030, with a NetZero goal by 2045.

Company Outlook: Wacker Chemie AG is focused on achieving €10 billion in sales and an EBITDA margin of over 20% by 2030. The company confirmed its full-year EBITDA forecast despite market uncertainties. Long-term growth is expected to stem from past investments and sustained demand for high-performance and sustainable products.

Negative Aspects:

  • Demand remained weak in the construction and automotive sectors.
  • Polysilicon sales significantly declined due to decreased demand in the solar energy market.
  • The company faces challenges in meeting expectations, particularly in the polysilicon segment.

Positive Aspects:

  • Specialty silicones exhibited significant growth.
  • The new biopharma facility in Halle is positioned for future growth.
  • The company anticipates a strong fourth quarter supported by the U.S. Inflation Reduction Act (IRA).

Shortcomings:

  • The Polymers segment's EBITDA fell quarter-on-quarter due to supplier issues.
  • Net working capital increased by €370 million, primarily due to rising inventory in polysilicon.

Questions and Answers Highlights:

  • The company primarily sells solar energy volumes from the Charleston facility outside of China.
  • Pricing for specialty silicone products is stabilizing, with growth observed in certain sectors.
  • A CO2 credit of between €150 million and €200 million is anticipated for Q4.
  • The company is optimistic about semiconductor volume growth in 2025 and 2026.

Wacker Chemie AG reported a strong financial position with €1 billion in liquidity and €4.6 billion in shareholder equity. The company generated €52 million in gross cash flow in the first nine months of 2024 and maintains a strong balance sheet despite a net debt of €772 million. WACKER management displays cautious optimism about the company's future, prioritizing value over volume in a deteriorating macro environment. The company’s hybrid strategy is expected to enhance margins through cost management and portfolio optimization, contributing to long-term stability and growth.