Wacker's preliminary financials point to strong 2022

MUNICH—Benefiting from higher selling prices and a positive exchange rate from a strong U.S. dollar, Wacker Chemie A.G. saw record overall sales of $8.93 billion in 2022, according to preliminary financial results released Jan. 23 by the company.

The high mark for the German chemical company compares to $6.74 billion in net sales in 2021, a 32 percent jump.

"All of our business divisions contributed to last year's strong sales growth," CEO Christian Hartel said in a release accompanying the 2022 preliminary financial results. "Although demand slowed noticeably in some customer sectors in the second half of the year, we achieved substantially higher prices for our products than in 2021. That also helped us to offset sharp cost increases, especially for energy, but also for raw materials and logistics."

According to Wacker's preliminary report, EBITDA in 2022 came in at $2.27 billion, an increase of about 35 percent over 2021's EBITDA of $1.67 billion.

Net income in 2022 came in at $1.4 billion, according to Wacker, compared to about $900 million in 2021.

Sales numbers were negatively impacted by overall volumes, which were down in 2022, especially in the fourth quarter as the international construction space slowed.

The group was led in 2022 by Wacker Silicones, which saw $3.75 billion in net sales, according to the preliminary results.

"In numerous application areas, the weakening economy is already affecting customer order trends," Hartel said. "We see signs of a slowdown, particularly in the construction industry, but also with silicones in other industries.

"In general, many customers are running down their inventories and currently remain cautious, even though they expect demand to pick up again in the course of the year."

In addition to a global reduction in inventory in silicones, demand fell in China—the largest global consumer of silicones—due to COVID restrictions.

"Outside of China, that has resulted in growing import pressure and falling prices," Hartel said.

Specialty silicones remained cost-stable, according to Wacker.

"In the past three years we have generated total net cash flow of about ($2.17 billion), we have high liquidity, and are free of debt," Hartel said. "That is why I am confident Wacker will remain successful even amid the tougher economic conditions to come."

Capital expenditures for Wacker were 58 percent higher in 2022 than 2021, at about $592 million last year against about $374 million in 2021.

A vast majority of the expenditures went toward capacity expansions in all four business segments, including HCR and LSR capacity expansions in the U.S., India and China, among other locations.

Wacker reached its high mark in group sales via higher selling prices in all four major business segments.

Wacker notes in the financial report that "the polysilicon business performed particularly well."

Wacker Polysilicones, which produces polysilicon for the semiconductor and photovoltaic industries, saw net sales last year of $2.48 billion, an increase of 49 percent over 2021's $1.66 billion.

As stated, the group was led by Wacker Silicones last year with about $3.75 billion in net sales, about 33 percent higher than the $2.82 billion in net sales generated by that segment in 2021.

"In addition to better selling prices for silicones, the division also benefited from the ever-increasing share of high-margin specialty products in its portfolio," Wacker reported.

Wacker Polymers, which produces dispersible polymer powders, dispersions, solid resins and solutions, concluded 2022 with $2.17 billion in net sales, up 20 percent over 2021's net sales of $1.81 billion for that division.

Wacker Biosolutions, which produces cyclodextrins, cysteine and biologics, saw $358 million in net sales in 2022 against $321 million in 2021, according to Wacker.

While net sales were up across every business segment, the same could not be said for EBITDA by segment in 2022, according to preliminary financial results.

While Wacker Silicones (up 58 percent), Wacker Polymers (up 13 percent) and Wacker Polysilicones (up 25 percent) saw year-over-year increases in EBITDA, Wacker Biosolutions dropped about 61 percent.

"This was attributable mainly to the outage of a production facility at the Burghausen site during the first few months of last year, to a customer failing to meet its contractual payment obligations, and to integration and upfront costs for the San Diego and Halle (Germany) sites," Wacker said.

Wacker added that the polysilicon segment's 2022 EBITDA benefited greatly from "particularly good prices" for solar-grade silicon.

"Prices for electronic-grade silicon also rose year-over-year and the share of this product in the total sales volume grew further," Wacker stated.

Wacker Chemie A.G., with about 14,000 employees worldwide, will publish its 2022 Annual Report March 14.

The company has 27 production sites, 23 technical centers and 52 sales offices across the globe.