Wacker Confirms €630 Million Net Loss For 2019

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
06:29 AM (Beijing Time) - 20. March 2020
Presentation1

The €760 million impairment charge in 2019 pulled down Wacker’s EBITDA 16% over last year while leading to a net loss of €-630 million. (Source: Wacker Chemie)

Key Takeaways

  • Wacker Chemie’s impairment charge on polysilicon made the company suffer group net loss of €-630 million in 2019
  • Polysilicon business annual sales decline 5% but management is hopeful of better times ahead for this division in 2020
  • Company’s 2020 forecast does not factor in COVID-19 effects but challenges arising out of its impact will negatively influence its earnings for more than €100 million

At a time of coronavirus pandemic related risks and general economic uncertainty, German polysilicon producer Wacker Chemie has guided for a potential high impact of over €100 million on its earnings and financial position in 2020. Even though it sees its net income during the year rising significantly, and net cash flow to be positive and higher than last year at group level, it has guided for group EBITDA to decline by a 2-digit percentage over 2019.

As China recovers from the pandemic, Wacker’s management says international flare up poses new challenges that are impossible to assess now. “These could impact logistic chains, operations and global demand. We highlighted this in our risk management systems as a risk of highest category with the potential impact of more than 100 million euros,” stated the company. Nonetheless, the company says its 2020 guidance is ‘conditional’ as it does not factor in the coronavirus’s effects.

In its 2019 financial results report, the company has confirmed suffering a net loss of €-630 million ($-687 million) in 2019 due to €760 million ($829 million) impairment charge on polysilicon. The company had shared this fear in January 2020 while sharing its preliminary financials (see Wacker Expects €630 Million Net Loss In 2019).

Wacker’s polysilicon business division reported 5% less annual sales with €780 million ($851 million) as its EBITDA dropped 21% during the same period.

Overall, the group EBITDA during the year was €783 million ($854 million) reflecting a decline of 16% YoY, while EBIT came in negative at €-536 million ($-584.6 million) compared to €390 million ($425 million) posted a year back.

For the polysilicon business in 2020, the management expects sales to increase albeit by a low single digit percentage with focus on high-value products. Cost savings will offset low average polysilicon prices, it said while guiding for EBITDA to be on par with last year when adjusted for a non-recurring effect of the insurance compensation in 2019.

For Q1/2020, Wacker expects €1.2 billion ($1.3 billion) annual sales, down on YoY basis while EBITDA during the period is likely to be substantially higher.

Wacker reiterated its job cut preparation under its Shape the Future strategy launched in February 2020 with more than 1,000 jobs to go by the end of 2022, 80% of these being in Germany.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani