Poly-maker Wacker blames Chinese state subsidies for its latest €750m hit

From pv magazine Germany.

German chemical company Wacker Chemie AG has warned it will be forced to make an extraordinary write-down of around €750 million on the balance sheet value of its polysilicon production assets this year.

“That is chiefly because China’s construction of new solar installations falls short of initial expectations,” stated the company. “An additional burden is the high polysilicon overcapacity in China.” The exact amount of the write-down will be determined during the preparation of full-year results.

The hefty reverse has knocked expectations for Wacker’s polysilicon division from a slightly positive result into a loss before interest and tax of around €750 million. The figure will at least be dampened to the tune of €113 million by third-quarter insurance payment receipts related to a closure in 2017 after a hydrogen explosion at Wacker’s U.S. polysilicon facility.

Another blow

The latest setback came after the company had already been forced to rein in its full-year expectations in October.

“The expected solar-market recovery has not yet materialized and prices are still very low for polysilicon used in photovoltaic applications,” said chief financial officer Tobias Ohler. “At the same time, we only have limited visibility at present of how the market will develop.”

The executive did not pull his punches when pointing to what he considers the source of polysilicon oversupply, adding: “The Chinese government is subsidizing this expansion not only with loans and incentives but also by providing polysilicon producers there with coal-generated electricity at extremely favorable prices. We have adjusted our projections for the coming year accordingly.”

Ohler said the outlook has changed but the strategy remains the same. “We are continuing to work hard to reduce our costs and are keeping our focus on polysilicon for semiconductor applications and on high-quality material for monocrystalline solar cells,” he said.