In Q3/2018, Wacker’s polysilicon sales declined 49% YoY and 28% sequentially, with EBITDA margin coming down considerably. (Source: Wacker Chemie AG)
- Wacker Chemie’s polysilicon business in Q3/2018 brought down the group’s total sales, which its well performing chemical business couldn’t offset
- Lower sales volumes and lower average prices for polysilicon along with ramp-up costs of its Charleston fab impacted its earnings during the quarter
- China FIT reduction and decision to reduce its solar installations brought down module demand, thereby impacting solar silicon prices that the company expects to impact its polysilicon business in the near future as well
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Polysilicon manufacturer Wacker Chemie AG was let down by its polysilicon business division in Q3/2018 as its YoY sales declined 49% with lower sales volumes and lower average prices for polysilicon. Sequentially, it reduced 28% to report total sales of €173.5 million ($198 million) (see Wacker’s Polysilicon YoY Sales Drop 2%). “Alongside the impact of lower sales, earnings were also dampened by the ramp-up costs at Charleston,” it said.
Total sales for the German company during the reporting quarter were €1,242.7 million ($1,419.7 million), down 5% over last year due to to the polysilicon business; a good performance by its chemical business division wasn’t enough to offset the solar business.
Prices for solar silicon, it says, were impacted by China curbing its solar FITs and curbing the number of installations in 2018 that slowed down demand for modules. Wacker said it ‘used this market situation for inventory rebuilding, which will allow it to supply customers promptly once demand and prices have picked up’.
EBITDA for the company in the polysilicon business segment was €4.3 million ($4.9 million), substantially lower than €85 million ($97 million) in Q3/2017 and €39.1 million ($44.6 million) in Q2/2018. EBITDA margin for the quarter was 2.5%, which is quite low compared to 24.9% achieved last year and 16.2% in the last quarter.
Going forward, the company expects China policy changes to continue to impact its sales solar silicon volumes and prices leading to an expected YoY decline of 25% in its full year sales and EBITDA of the polysilicon segment.
Even before China announced its policy changes, Wacker’s first quarter group sales were negatively affected by its Charleston production facility in the US state of Tennessee that was closed down temporarily after an explosion was reported (see Wacker To Restart Charleston Poly Fab). By Q4/2018, the Charleston fab is expected to reach full capacity, while Wacker’s German plants are running at full capacity.
For the entire group, Wacker has reiterated its previous 2018 guidance for sales to rise by a low-single-digit percentage, and EBITDA to increase by a mid-single-digit percentage versus last year.