Wacker Polysilicon reports small Q3 sales increase, reduced special income

While falling prices have been a feature of the solar polysilicon market for some time, Wacker Polysilicon appears to have largely ridden out the storm. The company reports that higher sales volumes have compensated for lower sales prices, on a Y/Y basis, with company booking before tax earnings of €91.8 million for Q3 2016, down from €180.3 million in Q3 2014.

Wacker attributes the fall in earnings and margin due to reduced special payments. In 2014 a large number of solar companies backed out of polysilicon supply contracts as market prices plunged, resulting in the special income of some €92.3 Wacker ($102 million) received in Q3 2014. By contrast, special payments totaled €17.8 million ($19.7 million) in Q3 this year.

Wacker Polysilicon’s earnings for the quarter were also adversely affected by what the company describes as, “a Y/Y increase in start-up costs for the new polysilicon plant in Charleston [Tennessee].”

On a Wacker Group basis, around 70% of its capital expenditure in Q3 related the expansion of polysilicon production capacities. Wacker Polysilicon is currently constructing a new facility in Charleston, which the company notes will be the biggest singe investment project in the company’s history. It is expected to begin ramping before the end of the year.

Polysilicon production facilities in Calvert City, Kentucky, is also being expanded with a reactor being added. Coming in at some 85,000 metric tons in additional capacity, the facility has cost Wacker some €50 million ($65 million) to construct.

While reduced special payments depressed revenues, Wacker reports reduced operating costs and increased production efficiencies in Q3. However margins, adjusted for special income, remained flat Q/Q (28.6%) and down Y/Y (34.9%).

Wacker noted that the fall in value of the euro against the U.S. dollar had a favorable impact on revenues right across the Group. It forecasts sales in excess of €5 billion ($5.5 billion) for the first time. Group sales are forecast to increase by 10% Y/Y.