Polysilicon Prices Pull Down Wacker’s Q2/2020 Sales

COVID-19 Impact Felt By Wacker Chemie As Q2/2020 Group Sales Decline 15% YoY With Lower ASP & Volumes For Polysilicon Contributing
03:16 PM (Beijing Time) - 01. August 2020
Presentation2

For Wacker, the polysilicon business continues to bother the group sales as overcapacity of the material by Chinese competitors and lower ASPs negatively impacted its business in Q2/2020, and eventually H1/2020. (Source: Wacker Chemie AG)

Key Takeaways

  • Wacker Chemie’s Q2/2020 sales declined 15% from last year due to lower volumes and lower prices for solar-grade polysilicon and standard silicones
  • Polysilicon business sales were 10% down from last year and 17% down from last quarter
  • COVID-19 pandemic played a role, but so did overcapacity of solar-grade polysilicon among Chinese competitors
  • The group refrained from offering any specific business guidance for full 2020 due the continued challenges presented by the pandemic

Lower prices for solar-grade polysilicon and standard silicones during the second quarter of the year 2020 manifested in group sales for Wacker Chemie AG. The German company reported group sales of €1.07 billion ($1.27 billion) in Q2/2020 as coming down 15% YoY and 10% QoQ. It attributed the decline also to lower volumes amid the COVID-19 pandemic.

With the pandemic lowering demand, Wacker’s group sales declined in every region the company is active in, especially in the Americas where sales plummeted 19% annually, in Asia the decline was 16% over the same period and in Europe it suffered a 13% drop.

Th polysilicon business division contributed €152.5 million ($181 million) to the group sales, down 10% from last year and compared to last quarter, the sales declined by 17% both due to volume decline and lower average prices. EBITDA for solar-grade polysilicon was a €-35 million ($41.6 million) contracting by €40.7 million since Q2/2019 (see Wacker’s Polysilicon EBITDA Improved In Q2/2019). Compared to last quarter, EBITDA went down 21.3%.

Wacker management says EBITDA for polysilicon declined through inventory valuation adjustments and by lower plant utilization. Between April 2020 and June 2020, the EBITDA margin amounted to -22.9% for the group’s polysilicon division after 3.4% in Q2/2019 and -7.4% in Q1/2020.

“The coronavirus’s spread has caused the global economy to slump. We too are noticing the effects of the pandemic. Its impact has differed in intensity depending on the market segment,” said WACKER’s CEO Rudolf Staudigl. “Structural overcapacity for solar-grade polysilicon persists among Chinese competitors. Our semiconductor business, in comparison, experienced a significantly better trend, with customer demand there remaining at a high level.”

The group still did not offer any specific financial guidance for the year 2020 but expects sales, EBITDA and EBITDA margin to be below last year’s level while net cash flow likely to be higher than a year ago (see Wacker Confirms €630 Million Net Loss For 2019).

“Given the ever clearer risks from the coronavirus pandemic and the continued surge in global infections, it is still not possible to reliably estimate how strongly or for how long government measures to contain the pandemic will dampen the Group’s business. Specific guidance for full-year 2020 is still not possible,” stated the company.

Management confirmed it was moving ahead with its strategic transformation program Shape the Future saying the pandemic makes it more necessary than ever to cut costs significantly. “We want to save €250 million a year, half in non-personnel costs and half in personnel costs,” added Staudigl. Wacker has reduced its investment budget for the year to €250 million to reflect the current economic and business environment with a view to strengthen liquidity.

Shape the Future strategy entails the group to slash over 1,000 jobs by the end of 2022 (see Wacker Announces Plan To Slash Over 1,000 Jobs).

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani