Roadshow Presentation Q1 2014

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Roadshow Presentation Q1 2014
CREATING TOMORROW`S SOLUTIONS
2014 – A Year of Transformation
Wacker Chemie AG, May 2014
Disclaimer
The information contained in this presentation is for background purposes only and is subject to
amendment, revision and updating. Certain statements and information contained in this presentation
may relate to future expectations and other forward-looking statements that are based on management's
current views and assumptions and involve known and unknown risks and uncertainties. In addition to
statements which are forward-looking by reason of context, including without limitation, statements
referring to risk limitations, operational profitability, financial strength, performance targets, profitable
growth opportunities, and risk adequate pricing, other words such as "may, will, should, expects, plans,
intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further", and similar
expressions identify forward-looking statements. By their nature, forward-looking statements involve a
number of risks, uncertainties and assumptions which could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements. These include, among
other factors, changing business or other market conditions and the prospects for growth anticipated by
the Company's management. These and other factors could adversely affect the outcome and financial
effects of the plans and events described herein. Statements contained in this presentation regarding
past trends or activities should not be taken as a representation that such trends or activities will
continue in the future. The Company does not undertake any obligation to update or revise any
statements contained in this presentation, whether as a result of new information, future events or
otherwise. In particular, you should not place undue reliance on forward-looking statements, which
speak only as of the date of this presentation.
2014 – A Year of Transformation
1
Our Business Portfolio is a Foundation for Growth…
WACKER BIOSOLUTIONS
WACKER SILICONES
 High potential for future
development
 No. 2 with global
footprint
 Leading positions in key
growth segments
WACKER POLYMERS
 No. 1 in dispersible
polymer powders
 No. 1 in VAE dispersions
 Global footprint
*)
FY 2013
Sales
€4.5 bn
WACKER POLYSILICON
Siltronic
 No. 1
 Technology leader, ranking
as no. 3
 Cost and quality leader
 Enabling industry growth
 Balanced base of customers
Note: Percentages based on external sales per segment
*) Others
2014 – A Year of Transformation
2
Strong Track Record:
Expecting strong Growth into 2017
Long Term Historic Sales Growth
Target 2017:
€6 - 6.5 bn
€m
7,000
~6% CAGR
6,000
€4.6 bn
€4.5bn
5,000
4,000
3,000
2,000
1,000
0
1997
1999
2001
2014 – A Year of Transformation
2003
2005
2007
2009
2011
2013
2015
2017
3
Mid-term Financial Targets
Target 2012 to 2017
Sales
EBITDA
ROCE
€6 - 6.5 bn
(~6% CAGR)*
€1.2 bn
(~20% margin)
> 11%
* CAGR 2012/2017
2014 – A Year of Transformation
4
Entering the Next Phase:
From Asset Growth to Cash Generation
Ratio of Capital Spending vs. Depreciation
capex between 1.3
and 2.2x depreciation
2005
2012
capex < depreciation
2013
capex >< depreciation
2017
2018
2022
Create
Leverage
Expand
2005 – 2012
2013 – 2017
2018 – 2022
Focus on capital intensive growth:
Focus on profitability and cash:
 Eight additional sites globally
 Execute cost roadmaps
Focus on selective expansion of
production network:
 Increased capacities 7x in
Polysilicon, 3x in VAE
dispersions, 2x Siloxane,
6x 300 mm wafer
 Leverage global asset base
The customer dimension:
 Focus on quality growth,
growing specialty sales
 Selective growth projects
 Exploring further Verbund
and debottlenecking
opportunities
 Invest below depreciation
 Global presence and market
penetration with technical
centers and global sales
structures
2014 – A Year of Transformation
5
Positioned for Sustained Sales and Earnings Growth
WACKER: A Leading Specialty Chemicals Company
Advanced
Materials
 Tech-based products ranging from standard to high value added
 Focus on innovation and customized solutions
Compelling
Growth
 Addressing high-growth markets
 Local presence in all regions
 Capitalizing on emerging markets growth
Strong
Cost Position
 World-scale plants, integrated production, proprietary process know-how
 Targeted cost reduction programs implemented
 Significant CapEx program concluded, now leveraging a global asset base
Leading
Market
Positions
 A global leader in most addressed segments and markets…
 … particularly at the individual customer level
2014 – A Year of Transformation
6
Create:
Global Market Presence
Technical Center & WACKER ACADEMY
Market Penetration in all Emerging Regions
China
Local products and services
Nünchritz
Moscow
Canton, OH
Chino
Adrian
Beijing
Burghausen
Akeno
Korea
Seoul
Dubai Kolkata
Shanghai
Mumbai Shunde
Focus on products for the
electronic market
Singapore
Jandira
India
Melbourne
Focus on textile applications
Brazil
Expanding Technical Center
presence, local products and services
22 Technical Centers
worldwide to service
customers and develop
products & applications
South East Asia
9 WACKER ACADEMY
sites provide training and
product know-how tailored
to our customers‘ needs.
Mobile technical center
Sales
2014 – A Year of Transformation
TC
Academy
Plant
7
Create: Sales Network and Customer Relations Building a Sustainable Competitive Advantage
Chemicals:
 Establishing a global network of technical centers
 Global sales network to create and develop specialty solutions
 Leveraging centralized upstream facilities into local growth opportunities
 Customer focus drives product evolution
WACKER POLYSILICON:
 Addressing the solar opportunity with specialized production technologies
 Supplier of choice, leading in quality and cost
Siltronic:
 Improved global production footprint for 300 mm
 Repeated Quality Award wins from industry leaders
2014 – A Year of Transformation
8
Leverage:
Shifting Focus to Downstream Products
Raw Material
Upstream
Methanol
Siloxane
Silicon Metal
Pyrogenic Silica
Downstream
Silicones
Electronic wafers
Vinylacetate
ethylene (VAE)
Vinylacetate
Monomer (VAM)
Acetic Acid
Starch/
Dextrose
Microbiological
fermentation
2014 – A Year of Transformation
Construction
Automotive suppliers
Paints and coatings
Textiles, print and paper
Personal care
Solar wafers, cells and modules
Polysilicon
Ethylene
Customers’ Industries
Dispersible
Polymer
Powders (DPP)
Polyvinyl Acetate
(PVAc)
Therapeutic
proteins food
ingredients
Semiconductors
Engineered fabrics, coatings,
adhesives, carpet
Construction, remodeling,
insulation
Food, automotive
Food, life sciences, household
9
Chemicals:
The Way Forward
 Strong and well established global market presence
 Growth opportunities in emerging markets
 Addressing global trends with advanced chemical products
 Leveraging existing upstream capacities will reduce capital intensity of growth
 Continuous productivity improvements and Verbund production support cost
competitiveness
Target 2012 to 2017: Sales growth ~7% CAGR / EBITDA margin >16.0%
2014 – A Year of Transformation
10
Chemicals:
Enhancing Quality of Life
Global Trends
BELSIL®
 Growing population & rising welfare in emerging countries
 Increasing sales of personal care products
Our contribution: BELSIL® for gloss and feel
Silicone Fluids & Emulsions in Personal Care
ELASTOSIL® LR
Living Comfort
Urbanization
Mobility
 Airbags in cars = Safety first
 Silicones used as an airtight coating of woven fabrics
 Low flammability
Our contribution: ELASTOSIL® LR
Silicone liquid rubber for the Automotive Industry
VINNAPAS® dispersions/dispersible powders
 Buildings consume 40% of primary energy
 Need to reduce consumption of heating energy
Resource Savings
2014 – A Year of Transformation
Our contribution: VINNAPAS® dispersions and dispersible
powders for external thermal insulation
11
Reduce Capital Intensity of Growth –
Leverage Existing Upstream Capacities
Upstream
Downstream
Global
Regional
Compounds &
Formulations
Local
 Silicon Metal
 Elastomers
 Compounds
 Siloxane
 Emulsions & Fluids
 SILMIX®
 VAM
 Resins
 Emulsions
 VAE dispersions
 Dispersible Powders
Capital Intensity
Value Creation
2012 - 2017 growing share of specialties from 2/3 to 3/4 of sales
2014 – A Year of Transformation
12
SILICONES:
An Integrated Global Player in a Leading Market Position
Sales Development (€m) – 5 years
Supply Chain
2 raw
materials
Methanol
Silicon Metal
1,600
Silanes
1,581
1,594
1,648
1,672
2010
2011
2012
2013
1,239
1,200
7 product
groups
Siloxane
Fluids &
Emulsions
Resins
Fumed Silica
OF Silanes
Elastomers
800
400
> 3000
products &
endless
applications
0
2009
Competitive Landscape 2013
Market Characteristics
Others 14%
 Reduced cyclicality through broad market
penetration and wide customer base
WACKER 17%
Bluestar 7%
29%
Shin Etsu 11%
≈€10*
bn
Dow Corning 35%
 Historic growth rates 3% above worldwide GDP
 High entry barriers (capital and technology)
 Key drivers spur sustainable market growth
 Innovations broaden scope of applications
Momentive 17%
Silane/Siloxane backward integrated suppliers
WACKER JV participations fully consolidated
WACKER estimates
2014 – A Year of Transformation
13
Customization:
Combining a Unique Set of Properties
Hydrophobic
Formable
Adhesive
Electrically
conducting
Broad spectrum of adjustable
properties
Intrinsic properties
 Thermal stability
 UV-resistant
 Inert,
 Chemical resistant
amongst others
Hydrophilic
Form stable
2014 – A Year of Transformation
Release
Insulating
Silicones are high performance
products, suitable for multiple
applications
14
SILICONES:
Specialty focus creates Value
Standards  Exchangeable
Specialities  Specified properties
 Price elastic
 Value based pricing
 Low requirement for
technical service
 Technical service is a
key success factor
Customized
solutions
Standards
Business Strategy
 Increase our specialty business to 50% of Siloxane volume within 4 years
 Sell standards with low cost to serve
Siloxane Volume
Specialties 35%
Specialties 50%
2013
Standards 65%
2014 – A Year of Transformation
2017
Standards 50%
15
SILICONES:
Growth Target 6% with Improved Profitability
Our Roadmap 2017
1
Value creation
 We push our specialty business by investing in downstream
production and service close to our customers
2
Innovation
 We permanently investigate opportunities for organic replacement
to open up new markets for silicones
3
Cost
 We continuously improve our cost position through
operational excellence
2014 – A Year of Transformation
16
POLYMERS:
Global Leader in High Growth Markets
Sales Development (€m) – 5 years
Supply Chain
Raw Material Upstream
VAE
Downstream
Dispersions
DPP
Key Markets
Construction
Nonwovens &
Textiles
Acetic
Acid &
Ethylene
Adhesives
Carpet
VAM
PVAc
PVOH
Coatings &
Paints
VAE = Vinyl acetate ethylene, VAM = Vinyl acetate monomer,
PVAc = Polyvinyl acetate, PVOH = Polyvinyl alcohol
DPP = Dispersible Polymer Powders
Capacity Landscape 2013 (Capacities)
Others
WACKER
2nd
in the market
900
740
810
2009
2010
928
1,003
979
2011
2012
2013
600
300
0
Market Characteristics
 Diverse market and customer base
Others
WACKER
Dispersible
Polymer
Powders
1,200
VAE
Dispersions
2nd
in the market
 Historic growth above GDP
 Key trends, innovation and new applications drive
growth
 Moderate capital entry barriers and high technology
barriers in most segments
 Innovations and in-depth formulating expertise
broaden scope of applications
Source: WACKER estimates
2014 – A Year of Transformation
17
Solid: Transformation of unmodified to Polymer modified Dry
Mortar Market is One of the Key Growth Driver
Dry Mortar Market 2012
volume in thousand tons
~3,000
~80%
unmodified
~20%
modified
Dry
mortar
market
~50%
PVOH*
Transformation
Resins
DPP*
market
Competition
WACKER
market
share
Expansion
Source: Kline, Data base, WACKER-estimation / * Dispersible Polymer Powder (DPP), Polyvinyl alcohol (PVOH)
2014 – A Year of Transformation
18
Dispersions: opportunities for substitution based on properties
overlap in applications and cost advantages
~1,600 kt
~16,700 kt
~3,900 kt
4%
6%
10%
15%
Other*
64%
32%
Vinyl Acetate
Ethylene
34%
10%
23%
2012
2006 VAE market
2007
Construction
19%
Adhesives
Styrene
Butadiene
Latex
Total
2009market 2012 2010
2008
Coatings
Nonwovens
6%
2%
5%
SBL market 2012
2011
2012
Carpet
Paper
Other
Sources: Kline; F&S-study „Strategic Assessment of the World Emulsion Polymer Markets“ 2012; WACKER analysis
* Other: Pure acrylics, styrene acrylics, PVAc, vinyl acrylics, VA-copolymers
2014 – A Year of Transformation
19
Polymers Targets Continued Growth of 8% p.a.
Our Roadmap 2017
Expansion
 We invest in downstream production
and service close to our customers
2
Innovation
 We push new solutions beyond our core,
working in a global set-up with our R&D activities
3
Substitution
 We explore new substitution opportunities
in the non VAE systems
1
2014 – A Year of Transformation
20
BIOSOLUTIONS:
Acquisition SCIL – Bioengineered Pharmaceutical Proteins
-
1,500l fermenter capacity for
pharmaceutical actives
-
GMP* certified operations
-
Protein refolding technology
complements WACKER portfolio
WACKER BIOSOLUTIONS becomes
a full-service provider for the
microbial manufacture of biologics
*GMP = „Good Manufacturing Practice“, a standard in pharmaceutical manufacturing,
2014 – A Year of Transformation
21
POLYSILICON:
The Way Forward
 Fast cost decrease in Solar PV unlocks growth
 Polysilicon Market: 14% growth expected (2013 - 2017)
 Prices expected to rise to reinvestment levels
 Pricing differentiates between Polysilicon qualities
 Competitive pressure drives cost and conversion efficiency –
WACKER leads in cost and quality
 Cost reduction roadmaps implemented to maintain leading cost and quality position
Target 2012 to 2017: Sales growth ~7% CAGR / *EBITDA margin >20.0%
* excl. salt and fumed silica
2014 – A Year of Transformation
22
WACKER POLYSILICON Leading in Cost and Quality
Sales Development (€m) – 5 years
Production Chain
Raw Material
Upstream
Downstream
Key Markets
1,800
1,369
Salt
Polysilicon
Silicon Metal
Hydrogen
Electronic
wafer
Semiconductors
Solar
wafer
Solar
Modules
1,200
1,448
1,136
1,121
924
600
0
2009
Others 10%
WACKER 23%
29%
212 kt
Hemlock 12%
2013
PV market growth still intact driven by increasing
competitiveness of PV electricity, despite declining
subsidies

Excellent product quality is key to highest conversion
efficiencies in solar

Cost and quality are both decisive for market success
GCL 23%

Prices stabilized, but delayed capacity expansion
announced
OCI

Intense competition further drives industry
consolidation
16%
Source: Industry announcements; WACKER estimate
2014 – A Year of Transformation
2012

TBEA 2%
REC 9%
2011
Market Characteristics
Competitive Landscape 2013
DAQO 2%
Tokuyama 3%
2010
23
POLYSILICON:
Fast Cost Decrease of Solar PV Unlocks Growth
Roof-top System Prices*
LCOE & Electricity Price
Off-grid Applications
 PV becoming very competitive
and easy-to-install
mature
market
household power price
Germany
young
market
 PV can be built very fast and in
small increments
CA
China
TX
 Steep price decline of storage
solutions
 Cheap electricity for remote
areas with no access to grid
1000
1400
1800
annual solar energy yield(kWh/kWp)
US
Germany
Module
BOS
BOS = Balance of System
1.5 €/Wp
1.0 €/Wp
0.5 €/Wp
size of electricity market
Δ LCOE vs. power price
= room for positive NPV
(assumes full grid access)
*best practice Q4 2012
2014 – A Year of Transformation
24
Polysilicon Market:
Strong Market Growth at 14% CAGR Expected
Global Polysilicon Shipments (kt)
360
half, flat due to continued inventory
correction and lower consumption
per Watt
CAGR 2013-2017: 14%
224
211
 2013 shipments with stronger 2nd
 Increasingly competitive C-Si PV
213
drives polysilicon demand
 Silicon-based PV offers highest
162
conversion efficiencies and proven
long-term stability at lowest cost
92
2009 2010 2011 2012 2013
Electronic
2014 – A Year of Transformation
2017e
Solar
Assumption: 2017: 80 GW (incl. 10% thinfilm share); Silicon consumption < 5 g/Wp
in 2017; Shipment figures incl. time-delay
shipment/installation
25
Polysilicon Supply & Demand Balanced –
High Quality Poly Supply Tightening
Global Polysilicon Demand (kt) versus Capacity of Still Active Manufacturers
350
300
 Only a limited number of producers
still operating after consolidation
phase in 2012 & 2013
PV market:
2013: ~40 GW
2014: ~43-52 GW
2015: ~49-65 GW
 Limited additional capacity to come
online in 2014
250
200
 Questionable whether new entrants
will produce cost-effective
150
Capacity Announcements
100
Active Capacities
Total Demand (HIGH CASE)
50
Total Demand (LOW CASE)
Electronic Demand
0
2010
2011
2012
2013
2014
2015
Sources: market surveys, industry announcements, WACKER estimate
2014 – A Year of Transformation
26
Decreasing Prices open up New Markets – USA and Asia with
highest Growth Potential
Country
France
Germany
Italy
Europe other
Europe total
Australia
China
India
Japan
USA
Rest of World
Total
2010
2011
2012
2013
2014e
0.7
1.7
1.1
0.6
7.4
4.0
2.6
14.7
0.4
0.7
0.15
1.0
0.9
0.5
18 GW
7.5
7.4
3.3
19.9
0.8
2.5
0.4
1.3
1.9
1.3
28 GW
7.6
3.6
4.9
17.2
1.0
4.8
0.9
2.5
3.3
2.1
32 GW
3.3
1.1
5.8
10.8
0.9
12.9
1.0
6.8
4.8
2.8
40 GW
1.1 – 1.3
2.3 – 2.7
1.1 – 1.3
4.8 – 6.2
9.3 – 11.5
1.2 – 1.4
13.0 – 15.0
1.4 – 1.8
8.5 – 9.5
6.0 – 6.8
4.0 – 5.8
~43 – 52 GW
Sources: EPIA 05/2010, 02/2012 and 05/2013, Industry announcements, WACKER estimate
2014 – A Year of Transformation
27
Competitive Pressure drives Cost and Conversion Efficiency –
WACKER leads in Cost and Quality
Usable Ingot Length (%)
Solar Cell Efficiencies (%)
Cell Efficiency Distribution
Mainstream Multi
Production Costs (%)
high-purity Polysilicon
Mainstream Mono
100%
Super Mono
86%
76%
low-quality Polysilicon
Number of cells
25
20
66%
cells with
price discount
cells with price
premium
15
Ingot Yield
10
60%
70%
80%
90%
Higher quality
 longer usable length
 lower cost per wafer
2004 2006 2008 2010 2012
Higher quality supports
greater efficiencies
 lower cost per wafer
Cell efficient
Narrow distribution and
higher mean
 lower cost per wafer
Source: WACKER estimates
2014 – A Year of Transformation
28
POLYSILICON Expansion Tennessee (Poly 11):
establishing a Platform for Future Growth in the US
Tennessee – 20kt p.a.
Lower Electricity Cost in the US (indexed)
100
Germany = Electricity Price
+ FiT Surcharge (2013)
+ Grid usage fee
+ Other charges
US =
List price
TN provider
Feb. 2014
38
 Planned ramp up of Polysilicon production
in 2015
 Currency diversification for the Group
Growth platform for chemical products
in the USA
Germany (Industry HighVoltage)
USA (TN)
Assumptions: Data based on Year end 2012, USD/EUR: 1.35
Source: WACKER estimates, market data
2014 – A Year of Transformation
29
Strong Focus on Cost and Productivity – Process Innovation
Specific Energy Consumption (kWh/kg)*
Labor Productivity (kg/h)*
Index = 100
Index = 100
100
-36%
+270%
71
370
292
64
100
2005
2013
2017e
2005
2013
 New deposition reactors
 Economies of scale
 New conversion reactors
 Yield improvements
 New process design
 Automation
* Solar polysilicon process only, indexed weighted ø of all plants.
2014 – A Year of Transformation
2017e
* Total average for all sites, direct labor including analytics
30
POLYSILICON:
Maintain Leadership in Cost and Quality
Our Roadmap 2017
1
Cost
 Competitive pressure drives module cost and conversion
efficiency
 Cost reduction roadmap implemented to maintain WACKER’s
leading cost position
 C-Si-PV moving towards efficiencies above 20% (module)
2
Quality
 Pricing differentiates between polysilicon qualities
 Develop products for all crystallization technologies in close
cooperation with our customers
3
Customer
 Keep broad customer portfolio to react flexibly on market changes
 Expand capacities according to market demand
2014 – A Year of Transformation
31
Siltronic:
The Way Forward
 Rising demand for 300 mm
 Continuous cost reduction programs in place
 Customer focus – recognized for outstanding performance
 Siltronic strategy - Focus on cash generation
Target 2012 to 2017: Sales growth ~2% CAGR / *EBITDA margin >20.0%
* pro forma, excluding restructuring 2012
2014 – A Year of Transformation
32
Siltronic:
Focusing on 300 mm and Asia
Sales Development (€m) – 5 years
Value Chain
WACKER
Siltronic
Key Markets
1,600
1,025
1,200
Polysilicon
Ingots
Wafer
Semiconductors
800
992
638
869
743
400
0
2009
2010
2011
Sales Semi
2012
2013
Sales non Semi
Competitive Landscape 2012
Market Characteristics
Silicon Wafer Market Share (on USD basis)
 Semi and silicon wafer markets move in tandem
Global Wafers 6%
Others 5%
Siltronic 14%
 Historic silicon market growth of 8-12% CAGR with
last 3 years moving sideways
LG / Siltron 10%
 High volatility both annually and quarterly
Sun Edison 10%
 300 mm continues to grow while legacy diameter are
trending down
S.E.H. 28%
 PC era coming to an end. Market growth increasingly
coming from smartphone and tablets
SUMCO Group 28%
Source: Gartner (June 2013)
2014 – A Year of Transformation
Source: Siltronic estimates
33
Leading Wafer Area Growth: Shift from PC to Megatrend Mobility
(Smartphones, Tablets, mobile Infrastructure)
Wafer Demand 2013, bn. cm²
Growth 2014 vs. 2013
Ø ~ 5%
Mobility
18.5
PC and periphery
14.0
Living
10.5
Industry
5.5
Automotive
5.0
Storage
Others
3.5
1.5
2014 – A Year of Transformation
~ 20%
~ -10%
~ 0%
~ 5%
~ 10%
~ 10%
~ -20%
34
Siltronic:
300 mm continuous Cost Reduction Program
Siltronic 300 mm variable Costs, relative per Wafer
-9%
-12%
-16%
2010
2011
2012
2013
Targeting annual cost declines in variable costs of 10% for the next two years
2014 – A Year of Transformation
35
Siltronic Acquires Majority Ownership of Singapore JV in 2014
Siltronic Silicon Wafer Pte. Ltd. (SSW)
 Capital increase and other funds to pay off
external debt (~€210m)
 Ownership: Siltronic 78%, Samsung 22%;
 Samsung remains an important customer
to the fab
 Total cash layout: €150m
 Leveraging efficiency measures
 Siltronic moves further to Asia
 Global 300 mm integration benefits
 Full consolidation pro-forma results:
Capacity: >300 kw/m
(€m)
2011*
2012*
2013
Sales
1,134
1,029
876
130
100
110
11
10
13
EBITDA
EBITDA %
* incl. restructuring
2014 – A Year of Transformation
36
Siltronic Strategy:
Focus on Cash Generation
Create
Harvest
2005 - 2012
2013 onwards
 High capital intensity
 Focus on 300 mm in Asia
 300 mm expansion
 No 450 mm investment
 Strengthen market position
with JV
 Continue rationalization outside
of Asia
 Leading edge technology
 CapEx below depreciation
 CapEx above depreciation
Strategy: Focus on low capex and 300 mm in Asia
2014 – A Year of Transformation
37
WACKER:
The Way Forward
 Financial Targets for 2017
 Financial Stability & Profitability
 Summary: The Path to 2017
 Outlook 2014
2014 – A Year of Transformation
38
WACKER Financial Targets for 2017
Sales of €6.0 – 6.5 bn with Profit above Costs of Capital
Sales
2012
2013 guidance
2013
2014 guidance
2017 target
4,635
~ 4,500
4,479
Mid-single-digit %
increase
6,000 – 6,500
~6%
CAGR
EBITDA
795
Lower
679
At least 10 percent
higher
1,200
Margin
17%
Lower
15%
Slight increase
~20%
ROCE
5%
lower
2.2%
Slight increase
> 11%
24%
~ 500
11%; 504
Approx. 550
Below
depreciation
CapEx
(% of sales)
2014 – A Year of Transformation
39
Balance Sheet:
Financial Stability – Target Capital Structure
Group Balance Sheet – Target Structure 2017
Drivers
Drivers
 Equity ratio: Historical level ~40%
Non-current
assets
Equity
 2013-2017: CapEx below
depreciation
 Depreciation of certain polysilicon
assets accelerated from 2012
onwards
Financial debt
incl.
prepayments
Pension
provisions
 DIO: ~50 days and
 DSO: ~50 days despite increasing
globalization
Working
capital
 Minimum level for operations
Liquidity
2014 – A Year of Transformation
 Dividend policy: in general,
minimum 25% of net income
 Prepayments almost fully repaid
by 2017
 Target: Net financial debt = 1x EBITDA
 Impact of IAS 19 considered
Liabilities /
other accruals
40
Profit & Loss Statement:
Improving Profitability through 2017
WACKER P&L 2013 (€m)
€m
Sales
Cost of goods sold
Gross profit from sales
Gross profit margin (in %)
Selling expenses
Research and development expenses
General administrative expenses
Other operating income
Other operating expenses
Targeted Development until 2017:
2013
4,479
-3,815
664
15%
-272
-174
-112
255
-210
 Gross profit margin with increase
of up to 550 bps, driven by
 Accelerating growth in specialties
 Improving market environment
in POLYSILICON
 Lower D&A in relation to sales
Operating result
Equity result
EBIT
Interest result
Other financial result
Income before taxes
Income taxes
Net income for the period
151
-36
114
-27
-57
31
-89
6
 Limited overhead growth – SG&A
to decrease to less than 7% of sales
EBIT
Depreciation/amortization
EBITDA
114
564
679
 Prior to Poly 11 ramp-up: Tennessee
investment reduces ROCE by up to 150 bps
2014 – A Year of Transformation
 EBIT growth compensates higher interest
expense
 Tax rate > 50% in 2014, reverting back to
statutory tax rate mid-term (~30%)
41
Aggressive Cost Roadmaps: Targeting > €100m in 2014
Measures
Chemicals
POLYSILICON
 WOS WACKER Operating
System: targeting continuous
cost decrease in specific
operating costs
 Raw Materials: expanded
supplier portfolio
 Raw material and energy cost:
optimized yields, loss reduction,
raw material and energy
recovery, process optimization
 Electricity: reduced
consumption
in major process steps
(conversion, deposition)
 Labor: reduce set-up times and
non-value-added activities
 Personnel Expenses:
continuous productivity
improvement
 Logistics: lean processes,
optimized packaging
 Technical spending: optimize
inspection cycles, spare part
storage
 Supplies: expanded supplier
portfolio
 Maintenance Expenses: standardization, spare parts logistics
(sourcing/storage level)
Siltronic
 Raw materials and energy
costs: optimize specific raw
material and energy
consumption, increase yield
 Supplies: reduce consumption
of supplies
 Labor: reduce personnel costs,
set-up times
 Site loading rules
 Process optimization across
the entire value chain
 Process yield enhancement
 Asset utilization: debottlenecking
Total expected cost savings 2013: €200m  reached €225m
2014 – A Year of Transformation
42
Price Decline over €1 bn within Two Years (22% of Sales) –
Mainly in POLYSILICON
WACKER Group: Sales Development (€m)
5,000
4,910
158
703
4,500
4,635
270
366
301
Price
Volume
91
4,479
Currency
2013
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2011
Price
Volume
2014 – A Year of Transformation
Currency
Spalte1
2012
43
2014 CapEx determined by Tennessee Project
CapEx vs. Depreciation Expense WACKER Group (€m)
886
~ 600
564
504
489
~ 550
~ 600
~ 400
Ø 2008-2012
2013
Depreciation
2014 – A Year of Transformation
2014e
Ø 2015e-2017e
CapEx (asset additions)
44
Financial Debt incl. Prepayments to be Reduced over Leverage
Phase
Development of Financial Indebtedness (€m)
1,749
1,639
1,107
1,048
847
772
reduction
1,203
864
-92
Ø 2007 - 2010
792
2012
2013
-96
2011
Net financial debt
2014 – A Year of Transformation
701
2014 et seqq.
Prepayments (Group)
45
Annual Prepayment Reduction of about €200m expected
POLYSILICON Prepayments (€m)
1,176
1,021
1,012
817
2008
874
2009
836
2010
2011
2012
2013
-€200m p.a.
2014e et seqq.
 Retained prepayments and damages from cancelled contracts to continue with effects on earnings
as market consolidation takes place
 Expecting prepayments to decline by ~€200 m p.a.
2014 – A Year of Transformation
46
The Path to 2017:
WACKER Is an Attractive Investment
Advanced
Materials
2017
 Leading market shares
and global presence
Compelling
Growth
 Lower CapEx
 Growing share of chemicals
specialty products
Strong
Cost Position
Sales
€6 - 6.5 bn
(~6% CAGR)
EBITDA
€1.2 bn
(~20% margin)
 Well defined cost roadmaps
 Well positioned to harvest
the solar opportunity
ROCE
>11%
Leading
Market
Positions
2014 – A Year of Transformation
47
WACKER: Guidance FY 2014
2013
Outlook
2014
4,478.9
Mid-single-digit % increase
678.7
At least 10 percent higher
15.2
Slight increase
6.3
Improve
Net cash flow (€m)
109.7
Balanced net cash flow
CapEx (€m)
503.7
Approx. 550
Net financial debt (€m)
792.2
Increase of between 300 and 400
Depreciation
564.4
Approx. 600
2.2
Slight increase
Sales (€m)
EBITDA (€m)
EBITDA margin (%)
Group net income (€m)
ROCE
2014 – A Year of Transformation
48
CREATING TOMORROW`S SOLUTIONS
1st Quarter 2014 – Conference Call Note
Wacker Chemie AG, May 2014
WACKER: Strong Demand Supports Sales and Earnings
in €m
Q1 2014
Q4 2013
% QoQ
Q1 2013
% YoY
Sales
1,157.4
1,086.9
6.5
1,076.3
7.5
285.2
158.1
80.4
164.5
73.4
24.6%
14.5%
-
15.3%
-
133.8
-5.5
n.a.
32.2
>100
11.6%
-0.5%
-
3.0%
-
Result for the period
64.2
-19.3
n.a.
5.1
>100
EPS in €
1.35
-0.40
n.a.
0.08
>100
EBITDA
EBITDA margin
EBIT
EBIT margin
2014 – A Year of Transformation
50
One-Off Events mask good underlying Performance
WACKER
Q1 2014 Comments
2014 Challenges and Opportunities
 Increasing volumes in all divisions
 Volume growth in all segments
 Negative FX effect in Chemicals and
Siltronic
 Further focus on cost roadmap
 One-offs of around €114m
 Capex €89m, mostly for Tennessee,
POLYSILICON
 Sales slightly above 2013 (single digit %)
 EBITDA at least 10% yoy
 Net Cash Flow of €105m
 Net debt €900m, increase driven by the
refinancing of the former JV-project
financing
 Net income of €64m
2014 – A Year of Transformation
51
Special Effect on EBITDA in Polysilicon of €114m
Q1 2014 Sales1
Q1 2014 EBITDA
1% 5%
3%
17%
20%
3%
17%
Total:
€1,157.4m
63%
Total:
€285.2m
12%
36%
20%
2%
Siltronic
WACKER SILICONES
WACKER POLYMERS
WACKER BIOSOLUTIONS
WACKER POLYSILICON
Others
1based
2014 – A Year of Transformation
on external sales
52
First-Time Consolidation of Singapore 300 mm and S Protein
increase Total Assets
Balance Sheet (%)
Characteristics 03/31/14
Assets
Total
€6.6bn €6.3bn
Liabilities
Total
€6.6bn €6.3bn
33%
 Non current assets: €4,571m
 Securities, cash and cash
equivalents: €548m
 Provisions for pensions: €1,227m
35%
 Net financial debt: €900m
67%
65%
19%
 Equity: €2,156m
17%
Equity
13%
13%
Pension
Accruals
Noncurrent
Assets
24%
Current
Assets
22%
22%
Prepayments
22%
Financial
Debt
Securities,
Cash & Cash E.
8%
9%
03/31/14 12/31/13
2014 – A Year of Transformation
14%
13%
 Prepayments received per
03/31/14: €881m
 CapEx: €89m
 Capital employed: €5,175m
Accruals &
Liabilities
03/31/14 12/31/13
53
EBITDA and EBIT Impact of Special Effects
2013
Special Effects
2014
Q1
Q2
Q3
Q4
FY
Q1
Silicones: Siloxane JV effects
-
-
-
13.7
13.7
-
0
Polysilicon: Retained
prepayments & damages from
cancelled contracts
32.2
23.8
13.2
8.4
77.6
114.0
114.0
EBITDA
32.2
23.8
13.2
22.1
91.3
114.0
114.0
-
-
-
-
0
32.2
23.8
13.2
114.0
114.0
Siltronic: Special depreciation
for disused assets
EBIT
2014 – A Year of Transformation
-31.1 -31.1
-9.0
60.2
Q2
Q3
Q4
FY
54
Raw Materials: Methanol and VAM* trending upwards
Ethylene Contract (€/MT)
Si-Metal Contract (€/MT)
1,400
Raw Materials 2013 (€m)
Chemicals
2,100
Others
Si Metal
VAM*
Ethylene
1,300
2,050
1,200
2,000
1,100
1,950
1,000
Source: ICIS, Ethylene Market Price
Europe, free delivered
2014 – A Year of Transformation
03/14
11/13
07/13
03/13
11/12
07/12
1,900
03/12
03/14
11/13
07/13
03/13
11/12
07/12
03/12
900
Methanol
Source: Source: CRU-Provider,
Si-Metal Contract Price Europe free delivered
Costs of top 4 raw materials
21% of chemicals segment
sales
*VAM = Vinylacetate monomer
55
1 Cent Change in USD/€ Exchange Rate had an Impact of €4.4m
on FY-EBITDA in 2013, unhedged*
USD/EURO Development
External Sales and Net USD Exposure
1.40
2,909
Chemicals
202
1.35
845
1.30
Polysilicon
1.25
736
Siltronic
03/14
01/14
11/13
09/13
07/13
05/13
03/13
01/13
11/12
09/12
07/12
05/12
1.20
03/12
385
Source: www.x-rates.com/d/USD/EUR/hist2013.html
2014 – A Year of Transformation
External Sales FY 2013
Net USD Exposure FY 2013
*Standard Hedging policy = 50% of net exposure, 12 months rolling forward
56
WACKER: Issuer, Contact and Additional Information
Issuer and Contact
Additional Information
 WACKER CHEMIE AG
Hanns-Seidel-Platz 4
D-81737 Munich
ISIN:
DE000WCH8881
WKN:
WCH888
 Investor Relations contacts
Mr. Joerg Hoffmann, CFA
Tel. +49 89 6279 1633
[email protected]
Deutsche Börse:
WCH
Ticker Bloomberg:
CHM/WCH:GR
Ticker Reuters:
CHE/WCHG.DE
Listing:
Frankfurt Stock
Exchange
Prime Standard
 Mrs. Judith Distelrath
Tel. +49 89 6279 1560
[email protected]
 Mrs. Manuela Ellmerer
Tel. +49 89 6279 2769
[email protected]
Financial Calendar
05/15/14 – Annual Shareholders’ Meeting
08/01/14 – Q2 Results 2014 (CHANGE)
10/30/14 – Q3 Results 2014
2014 – A Year of Transformation
57
WACKER: Higher Volumes in all Segments led to an increase in
Sales YoY and QoQ
Sales in €m
Q1 2014
Q4 2013
%QoQ
Q1 2013
%YoY
CHEMICALS
704.7
656.0
7.4
669.3
5.3
WACKER SILICONES
425.3
403.5
5.4
402.1
5.8
WACKER POLYMERS
238.7
213.2
12.0
226.7
5.3
40.7
39.3
3.6
40.5
0.5
WACKER POLYSILICON
262.0
249.8
4.9
235.4
11.3
Siltronic
203.8
174.6
16.7
171.2
19.0
40.4
51.6
-21.7
46.9
-13.9
-53.5
-45.1
18.6
-46.5
15.1
1,157.4
1,086.9
6.5
1,076.3
7.5
WACKER BIOSOLUTIONS
Others
Consolidation
2014 – A Year of Transformation
58
WACKER: Q1 14 EBITDA rises by a strong 73 Percent due to
Non-Recurring Effects of €114m compared to previous Year
EBITDA in €m
Q1 2014
Q4 2013
%QoQ
Q1 2013
%YoY
CHEMICALS
88.7
79.1
12.1
96.3
-7.9
WACKER SILICONES
49.1
51.0
-3.7
53.7
-8.6
WACKER POLYMERS
34.2
22.6
51.3
35.7
-4.2
5.4
5.5
-1.8
6.9
-21.7
180.0
70.8
>100
52.5
>100
15.0
11.5
30.4
0.7
>100
3.5
-2.7
n.a.
15.2
-77.0
-2.0
-0.6
>-100
-0.2
>-100
285.2
158.1
80.4
164.5
73.4
WACKER BIOSOLUTIONS
WACKER POLYSILICON
Siltronic
Others
Consolidation
2014 – A Year of Transformation
59