MOSCOW (MRC) -- Wacker Chemie has said that it intends to take an impairment charge of around EUR750 million (USD831 million) in its financial statements for 2019 on its hyperpure polysilicon production facilities, as per Chemweek.
The write-down is due to the continued absence of a recovery in solar-grade polysilicon prices on the back of high overcapacity created by Chinese manufacturers, the company says.
The exact amount to be written down will become clear during the completion of the financial statements. The impairment will reduce the value of property, plant, and equipment in the consolidated statement of financial position and also group earnings before interest and tax (EBIT), Wacker Polysilicon’s EBIT, and the group net result for the year. Cash flow will not be affected by the write-down.
"The expected solar-market recovery has not yet materialized, and prices are still very low for polysilicon used in photovoltaic applications," said chief financial officer (CFO) Tobias Ohler. "At the same time, we only have limited visibility at present of how the market will develop. That is chiefly because China’s construction of new solar installations falls short of initial expectations. An additional burden is the high polysilicon overcapacity in China. The Chinese government is subsidizing this expansion not only with loans and incentives, but also by providing polysilicon producers there with coal-generated electricity at extremely favorable prices. We have adjusted our projections for the coming year accordingly."
Wacker’s polysilicon strategy remains unchanged. “We are continuing to work hard to reduce our costs and are keeping our focus on polysilicon for semiconductor applications and on high-quality material for monocrystalline solar cells,” Ohler said.
Due to the impairment, Wacker now expects a net loss for 2019 of around EUR750 million compared with previous guidance of "slightly positive net income." Today’s guidance excludes special income of EUR112.5 million in insurance compensation, which Wacker booked in the third quarter of 2019. Wacker’s net result would exceed EUR100 million before the special effect stemming from the write-down but including this insurance compensation.
As MRC informed earlier, in September 2019, following a construction phase lasting 20 months, Wacker Chemie AG brought a new spray dryer for the production of dispersible polymer powders on stream in Ulsan, South Korea. The plant is part of an ongoing site expansion aimed at boosting the company’s production capacity for dispersions and dispersible polymer powders in Asia.
We also remind that in 2013, Wacker launched a new EVA production plant - with an additional 40,000 tonnes annually - at its Ulsan site in South Korea back in February. The production capacity of the site has, thus, almost doubled then, making the plant complex one of the biggest of its kind in South Korea - thereby solidifying the company's global leading position in this segment.
According to MRC's DataScope report, September EVA imports to Russia fell by 22,7% year on year to 3,420 tonnes from 4,430 tonnes in September 2018, and overall imports of this grade of ethylene copolymer into the Russian Federation decreased in January-September 2019 by 18,2% year on year to 29,190 tonnes (35,690 tonnes in the first nine months of 2018).
Wacker Chemie AG is a worldwide operating company in the chemical business, founded 1914. The company is controlled by the Wacker-family holding more than 50 percent of the shares. The corporation is operating more than 25 production sites in Europe, Asia, and the Americas. The product range includes silicone rubbers, polymer products like ethylene vinyl acetate redispersible polymer powder, chemical materials, polysilicon and wafers for semiconductor industry.