Wacker sees net sales, EBITDA decline in 2024

MUNICH, Germany—Wacker CEO Christian Hartel said that Wacker Chemie A.G. had a "challenging" 2024 thanks to various market factors. But looking forward to 2025, he expects all business groups to grow, even in the face of economic headwinds.

Group sales went down by 11 percent in 2024, according to Hartel, thanks to lower volume and a "persistently weak" chemical market, dropping from $6.97 billion to $6.21 billion. EBITDA also decreased by 7 percent, he said, going from $897 million in 2023, to $831 million in 2024.

"Despite headwinds, our chemical divisions achieved sales at the previous year's level and earnings in total in these divisions even exceeded the prior-year figure," Hartel said during Wacker's annual report meeting March 12. "Sales and earnings in our biotech division were up year over year.

"It was only the polysilicon division that painted a mixed picture. Our solar-grade polysilicon business has declined primarily due to excess capacity in China."

Wacker Chief Financial Officer Tobias Ohler said that the lower sales mostly came from softness in the company's polysilicon division, where sales dropped 41 percent from 2023, going from $1.72 billion to $1.59 billion. Combined with a 40-percent decrease in EBITDA, the sales drop represented a sizable financial downturn for the polysilicone sector. The report pointed to "lower prices and volumes for solar-grade polysilicon" as well as high energy prices throughout Germany as reason for the unit's lagging performance.

"Compared to various regions, (energy) costs are high in Germany," Ohler said. "In contrast, savings from ongoing efficiency measures positively influenced earnings, and we won't be easing off in 2025."

Still, Hartel saw promise in the team's work throughout 2024. He cited the group's chemical and biotechnology divisions for their performances even in a relatively weak market. The chemical and biotechnology sectors of the company saw a 2-percent sales increase from $2.99 billion to $3.07 billion, and an 11-percent increase in sales from $367 million to $409 million, respectively. The company's polymer division was down with sales going from $1.72 billion to $1.59 billion year over year.

Wacker as a whole brought in a net income of just over $284 million this year, somewhat buoyed by the performance those divisions.

"In 2024, we achieved a great deal, in spite of the weak market environment," Hartel said. "I'm extremely grateful to our global Wacker team. This was a great achievement, great team work."

Wacker is orienting its near future around several "targeted projects," Hartel said. At the start of 2020, the Munich-based firm pledged to cut its greenhouse gas emissions in half by 2030 and become a net zero emissions company by 2045. The company is well on its way to achieving that goal, according to Hartel, as it already cut its emissions by a quarter by the end of 2023. Wacker's silicon processing site in Holla, Norway, is leading the effort with help from Minnesota-based biogenic carbon producer Aymium, he added.

"As of today, we've already cut our emissions by 30 percent," Hartel said. "We've converted Holla's energy supply completely to renewable energy. This is an energy-intensive process. The facilities run on wind and hydroelectric power in Norway."

The Holla plant is on the cutting edge of systematic CO2 reduction, Wacker officials said. Thanks to a long-term contract with Aymium signed earlier this year, the plant has completely replaced its fossil fuel throughout the production process, a switch that Hartel hopes all of Wacker will make prior to 2045.

"The agreed volume covers a substantial portion of our total carbon requirements at the Holla site," Wacker executive board member Christian Kirsten said March 6. "This is a major step toward climate-neutral silicon production."

But sustainability and renewable energy is more important to the company than a selling point during an annual report, Hartel said. Green practices are closer to a business plan for the firm, he added, as it works to ride the line between sustainability and profitability. Now, two thirds of all of Wacker products work toward sustainable solutions of some kind.

"Sustainability, for us, is a business model," Hartel said. "We not only aim to improve our own products and our carbon footprint, in other words to optimize our products and processes, but we also want to help our customers develop sustainable products. And that's not just at the silicones division; it's the case in all of our segments."

In the future, Wacker will be more focused on improving its margins than growing its production volume, according to Hartel. He added that global trends including renewable energy and digitalization will guide the corporation into the future as it continues to grow.

"Specifically, this means concentrating more on our efficiency and driving the expansion of our specialty business," Hartel said. "By specialty business, we mean products and solutions that offer our customers clear added value thanks to their outstanding properties. They are generally developed on a customer-specific basis, have a greater depth of added value and achieve higher margins."

But, the future is rife with outside factors that could throw off the projections that Hartel and the Wacker team have set forth for the company.

Hartel fielded several questions about the possible impacts of tariffs from the U.S. during the March 12 annual report meeting, and highlighted that the inherent uncertainty of President Trump and his tariff plan could throw a proverbial wrench into the company's business plans. However, the company feels it is prepared to handle those changes thanks to its "natural edge," which comes from having facilities in the U.S. itself.

"I think if I look around the room, I think that's a very fluid system," Hartel said of the tariffs. "Things are announced and then they disappear again, so you have to be flexible and we are flexible. What I can tell you is, and this is part of our strategy (for) our regional position, we produce in the region, for the region. And this applies in particular to China, but it also applies to the United States."

The company is "almost completely independent" of the import system, he added, and will continue to invest in both the U.S. and China in the near future. But, officials still recognize that unforeseen tariffs and other geopolitical tensions could create a problem.

"When it comes to silicones, I think we need to import somewhat more, but we have a certain degree of independence there as well," he said. "So in cases where we have to import, they become more expensive, then our strategy would be to pass this on to the customer and I think that is a perfectly good way to go about it."

Hartel said he expects production volume to rise considerably in 2025, with expected sales between $6.6 and $7 billion. EBITDA is likely to range between $763 million and $981 million for 2025, he said.

2024 was a challenging year, but one that helped Wacker set its future course, Hartel said. Between a groundbreaking for a greenfield site in the Czech Republic, the opening of its mRNA Competence Center in Halle, Germany, and the launch of innovative products across the technology landscape, Hartel believes that Wacker is positioned soundly for 2025.

"Although we are still experiencing economic headwinds, we will not deviate from our course. We have a clear plan," he said. "Our strategic approaches are firmly in place. We will continue expanding our specialty business, we will recognize sustainability as a business model, and we will focus on semiconductor grade polysilicon."