Wacker Chemie delays US polysilicon plans; affected by solar consolidation

"Sustained price competition, high inventories, the difficult financial situation of many market players and the anti-dumping proceedings against Chinese solar manufacturers currently characterize our polysilicon business," stated Wacker CEO, Rudolf Staudigl, following the publication of the company’s Q3 2012 financial figures.
Overall, sales and earnings "significantly" declined in Wacker’s polysilicon business as a result, leading the company to postpone the start of production at its new polysilicon facility in Charleston, Tennessee by 18 months.
As such, the €1.1 billion (around US$1.4 billion), 15,000-MT facility is expected to come online in mid-2015, as opposed to the end of 2013. Despite this, Wacker said that of the €291.4 million invested in its business in Q3, more than two-thirds went to the ongoing construction of the U.S. facilities.
Of the €1.2 billion reaped in sales in Q3, Wacker’s polysilicon business accounted for just €269.1 million, down from €378.2 million in Q3 2011. While the company says that Q3 solar-silicon prices were around 40% below their prior-year level, sales volumes were said to be slightly higher, both sequentially and year on year.
Polysilicon EBITDA fell to €78.8 million (group EBITDA: €204 million) in Q3, down from €179.4 million in Q3 2011, and EBITDA margin was 29.3%, compared to 47.4%. Meanwhile, EBIT slipped from €130.1 million in Q3 2011, and €65.1 million in Q2 2012, to just €21.5 million in Q3 (group EBIT: €70.7 million), and EBIT margin from 34.4% and 22.7%, to 8%.
In order to match production with demand, Wacker says it reduced polysilicon production in Q3, meaning plant utilization was running at around 80%.
While the polysilicon business is being hit hard by the current difficult market conditions, Wacker’s Staudigl is confident of the future. "Generating solar power is becoming steadily less expensive," he said. "We are confident that the photovoltaic market will continue to grow, and that we will ultimately benefit from the consolidation in the long term."
Overall, Wacker expects more than 30 GW of new photovoltaic capacity to be added this year, and around 40 GW in 2013. "Inventory levels are very high at every stage of the supply chain, however," said the company. "These inventories will first have to be reduced, which is likely to affect the solar industry’s demand for polysilicon."