Its been a tumultuous time for the polysilicon, as prices plummeted and sales volumes increased. However, German chemical company Wacker Chemie AG rode the storm and saw its EBIT grow 7% in 2015, with an increase in sales across all of its business operations, including its polysilicon business. It now predicts an exciting year ahead, as its production capacity grows.
Growth in demand in the industry was reflected in the 10% rise in total revenue that Wacker enjoyed in 2015, from 4.83 BN (US$5.47 BN) in 2014 up to 5.3 BN (US$6 BN) in 2015. The same increase was not found in the polysilicon branch of the business, due to decreasing prices, but it did still manage a 1% increase to 1.06 BN up from 1.05 BN in 2014. The lowering prices of polysilicon are highlighted by the sales volume increase during that same period from 51,000 metric tons in 2014 to 56,000 metric tons in 2015, which amounts to 10%.
A significant increase came in the companys net income, which flew up 24% to 242 million from 195.4 million in 2014.
However, it is important to see whether this success could be transformed into a larger annual EBIT, which it was. The total EBIT grew to 473.4 million in 2015, from 443.3 million in 2014, which is an increase of 7%, and exceeded the companys expectations. Yet, there was a slight decline in the EBIT margin, which fell to 8.9%, after it had been at 9.2% in 2014.
The biggest event for Wacker in 2015 was undoubtedly the investment in its new polysilicon factory in Charleston, Tennessee, which started producing its first batches of polysilicon in early 2016. Wacker invested a significant 550 million in the facility in 2015, making up the main investment of the year.
The financial effects on the company are due to continue into 2016, as the start-up costs amount to 30 million, which will pull down the EBITDA for the first quarter of 2016, but then be diluted throughout the year. The start-up costs at our new Tennessee site will impact earnings this year, but we expect sales and adjusted EBITDA to climb slightly, said CEO Rudolf Staudigl.
These costs, alongside lower year-over-year polysilicon prices are also expected to bring down the net income of the group in 2016, although the company is confident that an increase in sales will lead to a higher EBITDA. Staudigl also mentioned that polysilicon prices have stabilized since January 2016, and even increased a little.
If there is any increase in polysilicon on the horizon, Wacker is well placed to take advantage of the situation, with the large facility in Tennessee at the ready.