MOSCOW (MRC) -- Wacker Chemie reports net profit for 2020 of EUR202.3 million (USD241.2 million), swinging from a net loss of EUR629.6 million, despite a 4.8% decline in sales to EUR4.69 billion due to the negative impact of the COVID-19 pandemic on volumes and prices, reported Chemweek.
The loss in 2019, as noted in a financial update provided by the company in February, was mainly the result of an impairment charge of EUR760.0 million that Wacker recognized related to its polysilicon production facilities that year, it says. EBITDA declined 14.9% year on year to €666.3 million, while EBIT of EUR262.8 million compared with a loss of EUR536.3 million in 2019.
The company’s silicones business reported a 9% decline in sales, to EUR2.24 billion, due to lower prices for standard silicones, reduced volumes, and negative currency effects. EBITDA decreased 19%, to EUR387.8 million. In 2021, the company expects the business’ sales to climb by a mid-single-digit percentage, and EBITDA is projected to be slightly higher than 2020, with higher raw material prices slowing earnings, it says.
Wacker’s polymers division posted a slight, 1%, decline in sales to EUR1.30 billion, due to price declines and negative exchange-rate effects. EBITDA was 39% higher, at EUR270.5 million, with positive effects coming from improvements in the cost of goods sold and a decline in raw material prices, the company says. In 2021, Wacker expects the division’s sales to go up by a mid-single-digit percentage, and EBITDA to be markedly lower due to substantially higher raw material prices.
The biosolutions business recorded sales that were 1% higher at EUR246.1 million, due mainly to volume growth in biopharmaceuticals and cyclodextrins. EBITDA increased 23%, to EUR38.1 million because of volume growth and an improved cost structure, Wacker says. In 2021, the business’ sales are likely to grow by a low-double-digit percentage, and EBITDA is expected to be slightly higher than 2020, the company says.
Wacker’s polysilicon division saw sales increase 2%, to EUR792.2 million, due to volume growth and a better product mix. EBITDA, however, dropped 92% to EUR4.7 million. The fall in EBITDA is mainly because special income of EUR112.5 million in insurance compensation booked for the Charleston incident was included in 2019, the company says. In 2021, Wacker forecasts that the division’s sales will increase by a mid-single-digit percentage, driven by an improved product mix and slightly higher volumes. It also anticipates that average prices for polysilicon will not decrease in 2021. EBITDA is expected to be clearly positive and markedly above the 2020 figure, it says.
“Although we are suitably cautious about the coronavirus situation, we have entered 2021 with optimism,” says Rudolf Staudigl, CEO of Wacker. During the first two months of 2021, the company’s business “remained on a dynamic trajectory,” the company says. Demand is robust across all business divisions, with group sales and EBITDA both clearly higher than last year, it says.
For the first quarter of 2021, Wacker expects to post group sales of almost EUR1.3 billion, compared to EUR1.2 billion in the first quarter of 2020. EBITDA is likely to be substantially above last year’s level, benefiting mainly from strong demand for polysilicon and construction-sector products, and from generally lower production costs, the company says.
For the full year 2021, the company says that despite the ongoing risks and negative impacts associated with the pandemic it expects group sales to climb by a mid-single-digit percentage, primarily due to volume growth. EBITDA is likely to be 10-20% higher than in 2020, with savings in personnel and non-personnel costs achieved under the company’s ongoing efficiency programs expected to have a favorable effect on earnings, it says. Markedly higher raw material costs and negative currency effects will slow EBITDA by more than €100 million, it adds. Net earnings are expected to be substantially above the 2020 figure.
Non-personnel cost savings improved 2020 income by more than EUR50 million, but efficiency-related restructuring expenses of EUR48.9 million lowered earnings, Wacker says. In 2021, the company expects to see non-personnel cost savings of over EUR100 million, as well as a noticeable reduction in personnel costs. It intends to achieve annual savings of about EUR250 million from the end of 2022 through its ongoing efficiency program, reduction of non-personnel costs, and the cutting of around 1,200 jobs in Wacker’s administrative departments and in the divisions’ non-operational functions, according to Staudigl.
As MRC reported earlier, Wacker Chemie will cut 1,000 jobs by the end of 2022 to save costs and prepare for a “harsher competitive environment”. Munich-based chemical group Wacker Chemie AG has begun its “Shaping the Future” restructuring plan by announcing 1,000 jobs will be lost by the end of 2022 as it aims to save EUR250 million per year. The company announced around 800 posts will be culled at German sites with administrative staff and people working in indirect and non-operational roles those at risk.
We remind that Wacker Chemie operates a 90 ktpa ethylene-vinyl-acetate (EVA) compounding plant at the Ulsan site, consisting of two lines. The second line with a capacity of 40,000 tons of products per year was launched in 2013.
According to MRC's DataScope report, January EVA imports to Russia rose only by 0,07% year on year to 3,084 tonnes from 3,087 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-December 2020 by 3,41% year on year to 38,170 tonnes (39,520 tonnes in 2019).
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.