Wacker projects 2023 net sales drop of 22%, against fruitful 2022

MUNICH—The last year appears to have been as financially challenging for Wacker Chemie A.G. as 2022 was fruitful.

With price pressure and a "weak market environment," Wacker Chemie estimates a 22-percent drop in net sales for 2023.

"In 2023, the industrial engine will have stalled worldwide," Wacker CEO Christian Hartel said in an investor call Jan. 29. "Many companies have felt the consequences. We at Wacker (have) too."

The year-end estimates for 2023 net sales—approximated at $6.94 billion against $8.9 billion in 2022—mirror a net sales decline that began in the second quarter of 2023, cascading through the third and fourth quarters of last year.

EBITDA for 2023 is estimated at $892.7 million, a 60-percent reduction from 2022.

Add in a record $710 million that Wacker infused into capacity expansions at four international plants over the last year (a 30-percent increase over spending in 2022), and the company has been unable to capitalize on 2022's historic high mark.

"Price pressure was high and the recovery in customer demand that was hoped for at the beginning of the year did not take place," Hartel said. "The continued high energy prices in Germany have placed additional strain on our business.

"In terms of sales and earnings, we were therefore unable to build on the year 2022, which Wacker closed with record figures."

Outside of lower prices and sales volumes, sales development was influenced by negative exchange rate effects in 2023, according to Wacker.

However, savings from the group's ongoing efficiency programs have had a positive impact on earnings development, the company noted in its Jan. 29 estimates.

But the future remains bleak from a demand standpoint, at least at the moment.

"A recovery in demand is not in sight at this point," Hartel said, adding he remains confident for the long term. "As great as the current challenges may be, we will continue to benefit from global megatrends in the medium and long term."

Digitalization, renewable energies, electromobility and energy savings remain central market drivers for Wacker.

"Strategically we are well-positioned," Hartel said. "We are therefore sticking to our growth targets for 2030. We continue to consistently invest in our future."

Net cash flow is estimated at around $180 million in 2023, a decline of 62 percent against 2022 year-end numbers due to the higher capital investments, Wacker said.

As of the end of 2023, Wacker reported net financial debt of about $91 million.

Wacker said it will publish final financial data on March 12 in its 2023 annual report.

Wacker said the estimated drop in year-end net sales comes about in its three chemical divisions, Wacker Silicones, Wacker Polysilicon and Wacker Polymers.

"This is due to the persistently weak market environment. The decline was particularly significant in the polysilicon business," Hartel said.

Net sales in Wacker Polysilicon dropped to $1.73 billion, 30 percent off of the $2.48 billion generated in 2022 in the division.

"The reason for the decline was primarily production-related lower sales volumes and prices in the solar silicon area," Hartel said. "The continued high energy prices in Germany also had a negative impact."

In addition, the share of silicon for semiconductor applications in total sales volumes continued to increase in the 2023 financial year, Wacker said.

Wacker Silicones is estimated to drop 21 percent in 2023 to $2.97 billion in net sales, against $3.74 billion in net sales for the segment in 2022.

Wacker Polymers also dropped 21 percent in net sales in 2023 against 2022, with $1.71 billion in revenues for 2023, compared to $2.17 billion the prior year.

The fourth business segment for Wacker, Wacker Biosolutions, is estimated to see net sales of $365 million in 2023, which is about even with the $359 million generated in 2022.

EBITDA declined in all business areas compared to the previous year.

"In addition to the lower prices, especially for standard products, and lower quantities of specialty products, the lower plant utilization had a negative impact on the operating result," Wacker stated.