German specialty chemicals maker Wacker Chemie has reported that it met its sales target and exceeded its earnings expectations in 2016. However, it fears that its earnings this year may shrink as the spiralling cost of raw materials eats into its profit.

“We are... facing headwinds from raw-material prices. At present, they are rising significantly and this could impact earnings,” admitted Rudolf Staudigl,  president and chief executive Rudolf Staudigl, Wacker Chemia.

The Munich-based chemical company announced that Group sales came in at €5.40 billion ($5.82 billion), up 2 per cent year-over-year (2015: €5.30 billion). The rise was mainly due to higher volumes. Ebitda – earnings before interest, taxes, depreciation and amortization – totaled €1,101.4 million in 2016 (2015: €1,048.8 million). On the bottom line, Wacker ended 2016 with Group net income of €189.3 million (2015: €241.8 million), around 22 per cent less than the year before.

In 2017, Wacker intends to continue its good performance, despite expectations of higher raw-material prices. For the full year, Wacker aims to lift its sales by a mid-single-digit percentage and it anticipates a high cash inflow from operating activities again in 2017.

Wacker Chemie president and CEO Rudolf Staudigl

During the first two months of the current year, Wacker’s business developed positively. In chemicals, and at Siltronic and Polysilicon, sales for the first two months were clearly above the comparable values of last year. Overall, Wacker expects to generate sales of some €1.4 billion in the first quarter of 2017 (Q1 2016: €1.31 billion). In addition to volume growth, it is achieving better prices than a year earlier, especially for semiconductor wafers. As a result, the Group expects Ebitda to grow significantly in Q1 2017.

“Wacker is in very good shape,” said Staudigl. “We expect volumes to rise at every division. In the industry sectors relevant to our business, the trend will be broadly positive in 2017. That is why we are confident of increasing sales by a slightly higher percentage than last year. We are, however, facing headwind from raw-material prices. At present, they are rising significantly and this could impact earnings. If current market conditions remain unchanged during the year, we definitely see additional upward potential for Ebitda – over and above our present expectations.”

In 2016, the Group’s capital expenditures amounted to €427.6 million (2015: €834.0 million). They dropped by about half versus the year before, as expected.

In 2016, sales at its Silicones division topped the two-billion-euro mark for the first time, rising to €2.00 billion (2015: €1.94 billion). The main reason for this 3-percent increase was volume growth amid somewhat lower prices

Sales at Wacker Polymers grew slightly in 2016, up 1 per cent to around €1.20 billion (2015: €1.19 billion). Growth was mainly driven by higher volumes for dispersions and dispersible polymer
powders.

The sales trend was positive at Wacker Biosolutions, too. Sales rose by around 5 per cent in 2016 to €206.4 million (2015: €197.1 million). It was essentially higher volumes that spurred the increase, while lower prices had the opposite effect.

Wacker Polysilicon lifted its sales slightly in 2016. They climbed 3 per cent to around €1.10 billion (2015: €1.06 billion). The rise was due to substantial volume growth, despite the fact that average solar-silicon prices were lower. At over 66,000 metric tonnes, the division sold more polysilicon last year than the year before (2015: 56,000 metric tonnes).