Wacker reports weak results as demand declines

Munich – German chemicals supplier Wacker Chemie AG has reported declines in second quarter sales and earnings (EBITDA), as Covid-19 impacted demand and volumes. 

Group earnings was halved to €105 million in the three months to end of June, on 15% year-on-year lower sales of €1.0 billion, Wacker announced 30 July.

The company’s silicones segment generated total sales of €533 million, down 18% compared to €650 million reported in the second quarter of 2019.

Wacker linked the decline to lower volumes chiefly due to demand slowing amid the pandemic as well as lower prices for standard silicones. 

The sales decline, Wacker said, was particularly noticeable within the automotive and textile industries. 

Segment earnings fell 43% to €68.1 million, compared to €119.8 million reported last year and €118.6 million posted in the first quarter. 

Earnings margin for the second quarter was 12.8%, down from 18.4% in the second quarter of 2019.

Wacker, which had refrained from issuing full-year guidance for 2020 in its first quarter results, said it expected sales, earnings and the earnings margin for 2020 to be below last year’s level. 

The company did not provide further details but said it anticipated that net cash flow will be higher than a year ago.

Commenting on the results, CEO Rudolf Staudigl, said the Covid pandemic had differing impact on its various segments. 

“At our chemical divisions, second-quarter demand dropped markedly, especially for silicones in the automotive and textile segments,” he noted. 

In the construction industry, however, Wacker noted a “comparatively stable” demand. 

Wacker said the varying levels of demand explained why the declines were “much less pronounced” for its silicone and hybrid sealants.

To address the financial impact of Covid, Staudigl said Wacker is continuing with short-time work in specific areas of the company in order to align its capacity with market demand. 

At the same time, the company has reduced its investment budget for this year to €250 million to reflect the current economic and business environment.

In the second quarter, the group’s capital expenditures came in at €39.8 million, down 62% year over year. The investment focus, Wacker said, was on expanding capacity for silicone and polymer products.