- Wacker has guided for €750 million in impairment for 2019 that will impact its group and polysilicon business EBIT, and net result
- The write-down will also impact its property, plant and equipment in the consolidated financial position
- It blamed the continued low prices of polysilicon due to overcapacity created by Chinese manufacturers who are pampered by the state with various subsidies
- Management says company remains steadfast to its strategy for polysilicon and will continue to work to reduce costs and devoted to high-quality material for monocrystalline solar cells
COVID-19 Impact Felt By Wacker Chemie As Q2/2020 Group Sales Decline 15% YoY With Lower ASP & Volumes For Polysilicon Contributing
(01. August 2020)
Polysilicon Business Division Brings In 5% Less Annual Sales During 2019 For Wacker Chemie, But Management Has High Hopes For 2020; Expects Over €100 Million Earnings Impact Due To Coronavirus
(20. March 2020)
Wacker Chemie Hit Hard By €760 Million Impairment Charge On Polysilicon; 2019 Preliminary Financials Show Net Loss Of €630 Million
(30. January 2020)
German chemicals company Wacker Chemie AG has warned it may take an impairment for its hyperpure polysilicon facilities to as much as €750 million ($828.8 million) pointing fingers at the overcapacity created by Chinese manufacturers leading to continued lower prices of solar-grade polysilicon.
While the write-down does not impact the cash flow, the impairment will reduce the value of Wacker’s property, plant and equipment in the consolidated statement of financial position. It will also have a negative bearing on the group’s polysilicon business segment’s EBIT and the company’s net result for the year 2019. It previous guided for a slightly positive net income in 2019 when it announced a cost savings program to fight the low polysilicon prices and slump in global economy (see Polysilicon Prices Force Wacker To Lower 2019 Guidance).
Wacker said it will not change the business strategy for the polysilicon segment despite the tough times and will continue to work on reducing its costs and remaining focused on high-quality material for monocrystalline solar cells.
The management isn’t sure when the solar market will recover and when the uncertainty is over as China hasn’t been constructing newer projects as expected. “An additional burden is the high polysilicon overcapacity in China. The Chinese government is subsidizing this expansion not only with loans and incentives, but also by providing polysilicon producers there with coal-generated electricity at extremely favorable prices. We have adjusted our projections for the coming year accordingly,” explained company CFO Tobias Ohler.
The final amount of the write-down will become clear post the completion of financial statements. Wacker clarifies that this latest guidance excludes a special income of €112.5 million in insurance compensation for the Tennessee plant accident it booked for third quarter of this year (see Wacker Ends Q3/2019 With 2% YoY More Group Sales).
Wacker along with other polysilicon producers REC Silicon and Hemlock Semiconductor, all operating facilities in the US, tried to urge the US government to include Chinese tariffs on US made polysilicon in its trade talks with the Asian giant in October 2019 (see US Firms Want End To Chinese Tariffs On US Polysilicon).