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 Polysilicons 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 companys 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.