Wacker's plan for growth is aggressive, sustainable

MUNICH—Wacker Chemie A.G. has bold goals in the next decade as it looks to accelerate growth and address sustainability needs—without sacrificing one for the other.

Looking to 2030, Martina Schulze-Adams, senior vice president of corporate development at Wacker, said the chemical and silicone producer is eyeing net sales in excess of $12 billion by 2030 and greenhouse gas reductions of between 25 and 50 percent.

"How Wacker can accelerate its growth and work on sustainability ... this is what is motivating and driving us every day," Schulze-Adams said during a March 21 online press conference. "Celebrating growth while maintaining resilience in the silicone and polysilicon industries ... this is what we are trying to do."

She said the company is estimating a CAGR from volume/mix by 2030 at between 1.5 to 2 times greater than historic growth. Wacker saw about $8.93 billion in 2022 net sales, a record for the company.

"It's not only going to be a revenue road for us going forward, it is going to be a volume road," she said. "Our goal by 2030 is to achieve a margin rate of more than 20 percent (in adjusted operating profit)."

Schulze-Adams said Wacker Chemicals (comprising Wacker Silicones and Wacker Polymers) is targeting a volume/mix CAGR of between 6 and 10 percent, an EBITDA margin of 20 percent and capital expenditures and two times the cost of capital, all by 2030.

"We are seeing a demand pull from sustainability needs ... we want to be the first choice for those innovative and customized solutions," she said. "And with a further expansion of our global presence, we can be closer to our customers."

Wacker has more than 15,700 employees at 27 production sites, 26 technical centers (the most recent of which opened in Ann Arbor, Mich.) and 51 sales offices around the world.

Within Wacker Biosolutions, which is conducting research into mRNA and biopharma wearables, among other biosolutions, the motto is "incubate, innovate and grow."

"We are seeing demand pull in this segment from medicine and clean food," Schulze-Adams said. "We plan to make strong investments in biosolutions moving forward, including with bolt-on acquisitions."

Specifically, Wacker has about $86.3 million per year pegged for capital expenditures in the biosolutions business segment. Wacker estimates the unit will crest the $1 billion sales mark by 2030, Schulze-Adams said.

And Wacker Polysilicon continues to strengthen its position as demand in the solar (photovoltaic) and semiconductor markets continues to skyrocket.

As a representative of the polysilicon unit said later in the press conference, refined silicon for the solar and wafer worlds "is the purest form of any material that mankind makes."

"With polysilicon we really want to focus on resilience as this business has been volatile in both price and revenue," she said. "We want to really focus on resilience by growing our share in the semiconductor business ... and we will see investments in semiconductors coming up in next years."

Capital expenditures in polysilicons are expected to be in the $105 million per year range.

It is in this final business unit where volume takes the place of price, as Wacker Polysilicon looks to double its semiconductor volume by 2030. Doing so, Schulze-Adams said, would give the unit the highest EBITDA margin (of any Wacker business unit) at 30 percent by that time.

"Such are many of the financial targets for Wacker," Schulze-Adams said. "Now let's look at further sustainability goals."

By 2030, Wacker will look to reduce its CO2 emissions in Scopes 1 and 2 (feedstock energy and production GHG produced) by 50 percent and its Scope 3 emissions (downstream freight and transport emissions) by at least 25 percent by 2030.

"We have not set a further Scope 3 downstream target yet," said Schulze-Adams. "But it is coming in the next 12 to 18 months."

In regard to diversity in the workplace, she noted that she is part of the 20 percent of women who are in management positions across Wacker currently.

"We have set ambitious diversity targets," she said. "We have a lot to do to reach the goal of one-third (of women in management positions) in the next 10 years. We are trying to work every day to boost that number."

In both the diversity and sustainability spaces, Wacker is trying to pull the necessary levers to reach each goal, each rung on the ladder.

"We do not think it is a cloudy forecast in our ability to get there," Schulze-Adams said. "The basis of our growth is our customers and their own demand with their sustainability needs.

"We are clearly focusing on greenhouse gas reduction and the necessary technology to get there. Be it solutions for e-mobility or otherwise, we are looking at strong sustainability targets."

Wacker has said it will look toward complete net zero production by 2045, sooner than the national target of 2050 in Germany and much of the rest of the EU.

"We are an enabler for sustainability for our customers," Schulze-Adams said. "Just what we have achieved in the past 14 or 15 months, it is really amazing to see how much progress has been made.

"We are on track to meet our targets of using and producing 100-percent sustainable materials."