Wacker Chemie's WKCMF CEO Rudolf Staudigl on Q1 2015 Results

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Wacker Chemie's WKCMF CEO Rudolf Staudigl on Q1 2015 Results
Good afternoon, ladies and gentlemen, and welcome to the Wacker Chemie AG Conference Call regarding the First Quarter Results 2015. At this time, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation.Thank you, operator. Welcome everybody to the Q1 2015 conference call on Wacker Chemie AG. My name is Joerg Hoffmann, Head of Investor Relations. As usual, we have Dr. Rudolf Staudigl, our CEO, and Dr. Joachim Rauhut, our CFO with us on the call today.Please note that during this call we may make statements which contain predictions, estimates or other information which our forward looking statements. These statements are based on current expectations and certain assumptions, and are therefore subject to certain risks and uncertainties. Some of these risks and uncertainties are beyond Wacker's control and could cause the actual results to differ materially from results, performances or achievements that maybe expressed or implied in such forward looking statements. Wacker may not update those risk factors or the forward looking statements made during this call, nor does it assume any obligation to do so.We published today our Quarterly Report, a press release on our numbers, and an excel file detailing our data. A written version of today's presentation which will be posted on our website about half an hour after this call. Staudigl?Ladies and gentlemen, welcome to our first quarter 2015 conference call. We have a strong segment in comparing currency fact, Wacker recorded what we think is a very good result today. We achieved sales of 1.33 billion of 267 million in the first quarter. Last year the tax was retained to payment and damages had a big impact on Q1 results amounting to 114 million. In comparison, today reported Q1 results I think we should look at underlying profitability of our business that we have seen a significant improvement in earnings, excluding special effects, our Q1 able to 53% or 91 million higher than last year.Compared to last year, chemicals increased its absolute EBITDA contribution by almost 50 million Siltronic saw a very impressive improvement year over year of 25 million. Year over year Polysilicon, excluding special effects, was up 12% despite already absorbing rent up cost in Tennessee. As you know, we are looking at a strategic shift in our portfolio with a change in the only sheer structure of Siltronic. That talks about our rational for this move and in our view of Siltronic today, reshaping the Siltronic ownership structure, efficient for both, Wacker and Siltronic. As a result, Wacker could invest additionally available funds in reinforcing its chemical and Polysilicon businesses.In the event of an IPO,wholesale nashville predators jerseys, Siltronics harnessed additional growth opportunities by expecting the capital market itself in case it does. The further option under consideration as communicated on March 10 is divestment towards strategic investment,cheap washington capitals jerseys from china, presenting stands that we can discuss the current projects better for obvious reasons. Siltronic has done its homework over the last year and the response agreeing threshold it has improved mid level manufacturing footprint by reducing the complexity and the number of balance sites. The acquisition of the majority of the transaction in Singapore created a new impetus for costs reductions, sharing best practices reports now that continuation of ambitious cost estimate across the entire business.Siltronic was able to withstand the major price declines we have seen in this industry for the last year without much of an impact on the EBITDA. For Q1 EBITDA margin of about 17% demonstrates perpetual effort to maintain market share in the growing market through operational excellence efforts and through reduced cost significantly at the same time. Demand for ratios is growing at above the market average rates,where can i buy nfl jerseys cheap, markets are now driving this business effectively complimenting and even substituting PC demand. More and more, everybody devices such as Smartphones and Car Sensors require enhanced semiconductor contents.As a result Wacker as an information technology research and advisory company has raised its market growth forecast for 300 millimeter to 6% for 2015 from the 4.5% of its previous forecast. Given already high utilization rates in the industry, it is likely that the value chain will soon come under pressure to improve yields and operational excellence with product demand. For a strong volume in the semiconductor wafer industry to higher industry operating rates there is some good news on pricing. We are observing stabilizing prices for 300 millimeter and some improvements in 200 millimeter in Q1. As this far from what the industry needs to get back to the investment level but it is a good start. We are looking forward to see if the industry's efforts to raise prices from new report.The potential changes at Siltronic considers a strategic shift in our portfolio. Siltronic is a highly competitive technology leader in this industry recognized by its quality product, delivering into all of leading centers. The team at Siltronic is working hard to bridge the gap with profitability with a much larger competitors in the Far East, and they are making very good progress. I recall that Siltronics potential exit from our portfolio would lead to an increasing focus on our energy activities which provides for a much clearer industry profile and the reduction in the midst to long term capital intensity of the group.Going forward,cheap hurricanes t-shirt, Wacker will continue to focus on its successful cost revenue and forming our business by investing more into downstream activities resulting in lower capital intensity growth. This means for instance, adding more tax centers who are needed to be even closer to our customers with tailor made specialty provisions coupled with a strong focus on process improvement and productivity. All of this of course are linked to our Polysilicon and chemicals business, our target is to achieve higher levels of fresh generations and return on capital employed. All of this increases in ability in reacting to future challenges can advance financial and generate value for our shareholders at the same time.Before the opening details our performance this quarter as we stated, overall, I think we achieved a good result for this quarter. Yet looking into the details of course I see that there is still more to do and to gain. We continue to drive our cost reduction roadmaps which have already contributed to this good result. Joachim?Yes, I will provide you now with more detail on our segments and other items. In addition, I would touch on guidance at segment level in line with our visibility.Our chemicals business reported Q1 phase of 809 million, up 15% over last year and 13% over Q4. EBITDA in the chemical segments in aggregate improved by 54% year over year and increasing by 74 million to 136 million in Q1,cheap nhl jerseys china, higher volumes, positive effects from currency, and better pricing in some products supported this result. Higher costs compared to Q1 last year for silicon material and then however reduced the result.Silicones report higher sales at 475 million, 12% over Q1 at sequentially 13% better,wholesale jerseys from china, positive price to volume and currency effects supported this. EBITDA in the quarter was at 68 million, sum 38% higher than last year and twice as higher as even though slow Q4. We saw good volumes in electronic automotive and medical applications. Holding performance back, the industry proteins personal care and giving the winter season some slower construction products. Our capital intensive silicon plants operated at full utilization rate during the quarter. Looking to the next quarter at silicones, we expect to accelerate the positive trend in volumes although a slower European macro environment possess a risk factor.Looking into the full year we now expect to report sales growth of more than 10% with improving margins. When volumes of full year reminds that the first quarter tends to see lower sales and earnings for the seasonal reason. Earnings improvement in silicones depend on volume growth and currency movement,cheap anaheim ducks jerseys from china, expectations on raw materials are mixed.Polymers reported sales of 285 million, about 90% better than last year supported by currency. In dispersion powders we achieved low double digit volume growth while liquid dispersion showed lower growth rate. EBITDA in this segment moved up sharply, at 60 million EBITDA was only as twice the level of Q1 2014. Currency effects compensated for rising raw materials year over year. Good utilization, positive mix effects, and productivity gains supported EBITDA in the quarter.For full year we are looking in Polymers at sales growth of about 10% with an EBITDA margin in the high teens. Volume increases in new powder markets compliment dispersion growth in coating and packaging. and specialty in monomer production in Bughausen. The pipeline lead to a refinery in Kentucky to give us our ethylene sourcing and promise to generate cost reduction, a direct access to the ethane based refinery supplement costly cooled rates [ph].Biosolution reported Q1 sales of 49 million and an EBITDA of 9 million following higher volumes and price increases,cheap official nfl jerseys, and some currency support. The quarter saw good volumes in pharma and agro application. For the full year we expect sales in EBITDA and Biosolution to increase substantially. Sales in Polysilicon reached 289 million in Q1, 11% higher than Q1 last year, and over previous quarter following strong demand for high purity solar silicon at slightly pricing. EBITDA came in essentially at guidance when we last meet. You will remember that I asked you then to model the year with about 25 million per month in EBITDA as we expand more rem cost in Tennessee and at current exchange rate.This quarter in Polysilicon was expected as guided with EBITDA of 79 million but improving 4.7 million in prepayments in damages. Excluding last year's special effects, EBITDA increased by 12% year over year, sequentially however,cheap winnipeg jets jerseys for sale, EBITDA was down as rem cost intends to increase significantly. dollar and renmimbi price declines observed in the Chinese market. Construction at the site in Tennessee proceeded as planned,wholesale Joe Haden jerseys, CapEx in the first quarter was 134 million.Looking into the next quarter for Polysilicon,Elaborate Design Cheap Edmonton Oilers Jerseys For Sale, you see our full year pre operational expenses for the Tennessee plant increasing now to almost 100 million, the increase being largely due to currency. At current Polysilicon price levels, we still want to generate about 25 million per month in EBITDA, which is an ambitious target.Siltronic sales came in at 239 million,wholesale davidson wildcats jerseys for sale, 17% higher than last year, and supported by a weaker euro. EBITDA of 40 million reflects high utilization, good cost performance, and a pricing environment that stabilized during the quarter despite slightly lower average prices versus Q4. Net currency effects on EBITDA were small as transaction effects on accounts receivables almost compensated hedging losses in Q1. As a result, the EBITDA margin was 17%.At 9 million, EBIT in the segment was positive for the second quarter in a row. While 300 millimeter US dollar prices today are about 10% lower than in Q1 last year, the euro conversion almost corrected. In euro terms,jackets alternate jerseys, prices for 300 millimeter today are at the level of Q1 a year ago. Good progress on its cost roadmaps coupled with higher utilization rates lead to significant improvement in Siltronic's operations. Industrial utilization during the quarter were in the 90s, this reflects a slowly tightening market for 300 millimeter wafers in our view.For the next quarters we expect to see the weak euro continue supporting sales,wholesale canadiens jerseys for sale, while hedging costs for the next three quarters should amount to about 40 million. Siltronic has improved so much that absent hedging effects at similarly utilization ratio [ph] and even without prices increased from today but now has the potential to reach 20% EBITDA margin in line with Wacker's 2017 target. For the 2015 full year, we expect a significant EBITDA increase over last year as mentioned in the last call.Sales in others came in at 52 million with EBITDA amounting to 12 million, this reflects a strong business,nfl jerseys youth sizes, the icing salt, during the quarter. Currency effect on sales and EBITDA were substantially in Q1. Currency effects contributed almost 100 million to sales in Q1 when compared to Q1 last year. In addition to this translation, transaction effects on accounts receivables supports profits in many of our businesses.For the full year 2015 we now expect a positive impact on EBITDA from currency of 125 million, of which about 70 million show in EBITDA. Q1 saw positive net cash flow at 17 million, substantially below from Q1 last year, when net cash flow was 105 million due to the absence of large special effects and prepayment inflows, as well an increase in CapEx for the Tennessee project in the quarter under review. The level of prepayments in our balance sheet decreased by 6% to 646 million as we shipped under legacy prepaid contracts.Net financial debt increased to 1.2 billion, 11% higher than at year end following CapEx and reductions of prepayments. The translation effect of a weaker euro on debt was about 90 million. We expect CapEx for the full year now at 725 million, as we finish the Tennessee project among cost inflation and the US dollar appreciation. and other countries increases in euro terms. This translates into the positive net cash flow for the full year 2015.
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