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Wacker sees 2011 financial declines on back of weak solar market

Wacker Chemie has posted full year 2011 financial losses, primarily due to the weak performance of both the solar and semiconductor industries, and higher raw material costs. It managed to remain well in the black, however.

The solar industry negatively impacted on Wacker's business performance.

Wacker Chemie AG

According to the German polysilicon company’s preliminary calculations, it suffered an eight percent EBITDA loss in 2011 compared to 2010. This loss saw figures falling from €1.19 billion to around €1.10 billion. EBIT, meanwhile, fell from €765 million in 2010, to an approximate €600 million. Overall, it expects to achieve a net income in 2011 of €350 million, down from the €497 million in 2010.

In a statement, Wacker explained, "The main reason behind the earnings decline was weak Q4 2011 business, primarily in the semiconductor and solar industries." Higher raw material and energy costs also contributed to the loss. The company says it spent around €160 million more on them in 2011, compared to 2010.

In particular, the fourth quarter (Q4) of 2011 impacted on Wacker’s business, due to weaker than expected performance in the solar industry. "Demand for semiconductor wafers and solar-grade silicon, in particular, was at a low level, also due to customers reducing inventories," said the company. It added, "At Wacker Polysilicon, high customer inventory levels and the consolidation process in the solar industry clearly left their mark on fourth-quarter figures."

As such, Q4 sales for the whole group fell from €1.21 billion in Q4 2010, and €1.28 billion in Q3 2011, to hit €1.01 billion in the last quarter. EBITDA also dropped drastically, from a healthy €292 million in Q4 2010, to €110 million in 2011.

Several non-recurring effects were also said to have impacted Wacker’s earnings. In particular, it said, "Due to the termination of supply contracts with customers exiting the solar business, Wacker Polysilicon retained advance payments and indemnity payments totaling around €65 million."

Specifically in relation to Wacker Polysilicon, Q4 2011 sales amounted to €255 million, down from €374 million in Q4 2010. EBITDA also fell from €211 million to €165 million in the same period.

The company did not provide any guidance information regarding 2012.