A decline in operating profit for the first quarter comes as no surprise for Wacker Chemie, but the figures were even worse than expected. EBITDA dropped by 44% compared with the previous year, to €142 million.
The Munich headquartered group announced on Thursday that the drop was primarily “due to the challenging market environment for solar silicon and the significantly increased energy prices.” Although the company’s sales volume for polysilicon grew significantly, average prices have fallen significantly in the past year. For its polysilicon business specifically, Wacker posted EBITDA loss of $35.8 million, an $84 million drop compared to the €48.2 million posted for Q1 2018.
“Many market observers believe that the price of solar silicon will improve in the second half of the year. In the quarter under review, however, no such development was felt,” stated Wacker CEO Rudolf Staudigl. In order to counteract these price and cost pressures, Wacker is working to further optimize production processes and further expand its market share in the higher margin business with high-quality polysilicon for semiconductor applications and monocrystalline solar cells.
Wacker Chemie also reported consolidated earnings (EBIT) of €100,000 for the first quarter, compared with €121.7 million in Q1 2018. In addition to difficulties in the solar business, the company said that the temporary loss of a silicone rubber plant and higher year on year depreciation also impacted its EBIT. Among other reasons, the company also cited the introduction of a new accounting standard, IFRS 6, which governs the accounting for leases, as having an impact on its first quarter results.
Overall, the company posted a net loss of €5.5 million for the period, a dramatic fall from Q1 2018’s €79.1 million. The company, however, has not altered its full year forecast, and still expects to see an increase in consolidated revenue by a mid-single digit percentage, and a fall in EBITDA of between 10 and 20 percent.