German chemicals and polysilicon producer Wacker Chemie expects its earnings in 2019 to go down significantly due to around €760 million (836 million) impairment charge on polysilicon facilities that reduces its EBIT and net result, according to its preliminary results. In December 2019, the company issued a warning of €750 million write-down (see China Woes For €750 Million Wacker Impairment Warning).
“As already announced, Wacker will recognize this impairment on the carrying amount of its polysilicon production facilities in its financial statements. The charge reflects the company’s subdued expectations about future price developments for solar-grade polysilicon,” the management shared. The company’s EBIT is anticipated to be a loss of €540 million ($594 million) compared to a positive €390 million ($429 million) in 2018, while its net results will be also a loss at around €630 million ($693 million) compared to a net profit of €260 million ($286 million) in 2018.
In a preliminary note shared, the company said its group sales will be at the same level as the year before at €4.93 billion ($5.42 billion) but down by 1% due to the impairment charge and due to reduced average prices for solar-grade polysilicon, lower prices of standard silicones, a steep rise in Germany’s electricity prices, among other factors.
The management sees group EBITDA going down by 16% on an annual basis to €780 million ($858 million) in 2019 which also includes the insurance amount of €112.5 million ($123.7 million) it secured as compensation for the damage incurred at its Charleston fab in 2017.
Wacker’s polysilicon business division will report sales of €780 million, down 5% over 2018 due to lower YoY prices for solar-grade polysilicon caused by over-capacities in China.
Group CEO Rudolf Staudigl explained the company’s future course of action saying, “We are currently working on a comprehensive program to make Wacker more efficient and capable, and to achieve substantial cost savings. We expect already to announce concrete targets for this initiative in Q1/2020.” Wacker will publish its final full year results for 2019 on March 17, 2020.
Although the US government got China to agree to purchase US made polysilicon under phase I of the bilateral trade agreement reached between the two nations earlier this year, the Chinese Ministry of Commerce extended tariffs on solar-grade polysilicon from the US and South Korea for another five years in a decision announced last week (see China Extends Tariffs On US & South Korea Polysilicon).
