Wacker Chemie Ag Ord

Dear ladies and gentlemen, welcome to the conference call of Vakashimi AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties here in the conference, please press star keys followed by the zero on the telephone for operator assistance. May I now hand you over to Jörg Hoffmann, who will lead you through this conference. Please go ahead.

Thank you, Operator. Welcome to the WACKER ChemEAG conference call on our first quarter 2022 results. Dr. Christian Hartl, our CEO, and Dr. Tobias Ohl, our CFO, will take you through our prepared slides in a minute. The presentation is available on our webpage under the caption Investor Relations. Please note that management comments during this call will include forward-looking statements that involve risks and uncertainties. I encourage you to review the Safe Harbor Statement in today's press release and presentation and any report regarding risk factors. All documents mentioned are available on our webpage. Chris?

Welcome, everyone. Good to be with you again. The war in Eastern Europe is now lasting for more than two months. Our thoughts are with the victims of this aggression. While the war has led to unspeakable suffering, It has also impacted global energy and commodity markets. We are feeling the effects already. Energy prices are up to levels previously unseen. All our raw materials charts spike up. If left unchanged, this development, especially in energy pricing, challenges the very fabric of Germany's industrial base. For the first quarter of 2022, we report sales of 2.1 billion euros, up 53% year over year. Higher prices in chemicals and polysilicon were the primary drivers for this. In addition, volume growth and mixed improvements in chemicals supported our performance as well. EBITDA more than doubled to 644 million euros year over year and showed strong growth over our record Q4 results. Polysilicon stayed tight and benefited from higher prices but was held back by higher energy and silicon metal costs compared to the previous quarter. Both silicones and polymers saw strong demand and delivered both year-over-year and consecutive growth. Both divisions benefited from higher prices. As we spoke about on the last call, silicones as well as polysilicon benefited from trailing raw material costs. Although our first quarter results are ahead of plan, risks for the remainder of 2022 are much higher today. On the input side, we now expect material and energy costs to be 100 million euros higher than our initial estimate. For the full year, we see them at over 1.1 billion euros higher. Global supply chains continue to struggle to normalize. All our segments are reporting logistics issues. From freight container availability to congested ports, shipping has become more difficult and logistics costs are going up. On the other hand, we see the availability of silicon metal on the global markets somewhat improving and prices are beginning to moderate from peaks seen at the end of last year. To counter cost headwinds, we have actively raised prices in our chemical segments. We have announced 30% price increase in silicones in the fourth quarter of last year. Beginning April, we raised once again our prices in polymers. We appreciate that price increases are hard on our customers, but we see them as necessary. Only by sharing this burden with our customers will we be able to invest in much-needed new capacities to support their growth. Demand is at a high level, and our pricing initiatives have been fast and very effective. Today, we raise our full-year sales forecasts from 7 to approximately 7.5 billion euros. Pricing initiatives and chemicals will allow us to grow faster sales while maintaining margins at the prior year's level. This should allow us to deliver significant, absolute EBDA growth in chemicals year over year. We reconfirm our group EBDA in the range of 1.2 to 1.5 billion euros for the full year, and we see our results trending towards the upper end of that range. And despite the significant headwinds from raw material and energy costs, we confirm our EBDA range. in light of the largely debated demand uncertainty for the remainder of the year arising from geopolitics, the pandemic and inflation. The first quarter was exceptional. While the strong performance reflects the strength of our businesses, it does not show the extent to which raw materials and higher energy costs will hold us back as the year progresses. Nevertheless, we have excellent and resilient businesses, the right strategies, and the right products, and we are investing in the means to serve our customers' growth even better. Our teams continue to deliver and are doing a tremendous job. Ladies and gentlemen, at our CMD in March, we introduced new 2030 targets. We enjoyed seeing our covering analysts and the in-depth discussions we held following these events while on our first physical roadshow since the beginning of 2020. Looking to the next pages in the presentation deck, please allow me to recap on the key takeaways before I hand over to Tobias. Our key message was that we strive to accelerate proven successes while maintaining resilience. We started our presentation with a summary of what we have achieved so far. We completed the leverage phase in which we promised to invest below depreciation, earn attractive margins, and focus on cash generation. We have done our homework. In chemicals, that is the transformation of our business to a specialty focus, demonstrating strong profitability and leveraging regional presence and focused investments. For silicones, which I believe is the best and the most versatile product on the planet, success comes from performance and our innovative strength. We have truly transformed ourselves to be the fully integrated specialty player in the market. In Polymers, we advance the transformation to smart construction. We support our customers in the regions like no other player and offer customized solutions. Essentially, we are deploying a specialty strategy. In BioSolutions, we set the foundation for a leading microbial and advanced medicines CDMO. In Polysilicon, we focus on high-end applications, achieving a leading market position as a key supplier to the semiconductor industry. And we did our homework on costs. The next slide, page four, now speaks about our way forward. we will accelerate growth in chemicals. The key growth drivers we are addressing here are sustainability, close customer interaction, as well as regional growth. In biosolutions, we will grow our biotechnology business and leverage innovation. A combination of demand pool, innovation, and some M&A gets us there. In polysilicon, we seek to solidify and expand our leading position in the semi-market, benefiting from strong growth in the market segments where we perform best, our intense cooperation with customers and the leading sustainability profile. You can see our respective 2030 targets. These targets are ambitious. We have demonstrated in the past and today that we can perform at this level and we will continue to do so. Page 5 breaks down our long-term targets into shorter-range targets until 2026. Here you see our key initiatives, our scheduled CapEx to achieve our targets, and capital-based return targets at the top range of our industry. To meet our customers' growing demands, we need to invest more than in the past in chemicals. We will increase CapEx in chemicals to more than €400 million per year globally. This will create an even more resilient portfolio. On page 6, you see that maintaining resilience is key to us. Our team pursues sourcing and pricing strategies to protect our margins. We keep working on our cost base, both structurally and from an efficiency perspective. Our foundation for resilient growth is our very strong balance sheet. Page 7 then covers our capital allocation priorities. Clear number one is growth. Given our strong growth opportunities, we need to invest in organic and inorganic growth. In chemicals, we will accelerate capacity growth, focusing on downstream, more specialized parts of the value chain with balanced upstream support only for specialty growth. We are talking about a portfolio of many mid-sized projects and no major greenfield investments. M&A in biosolutions will be most likely what we've done in the past, early stage investments with a strong view on synergies with our portfolio. In chemicals, we watch out for value chain extensions, like the acquisition of SECO, which we will close in the second quarter of this year. Number two of our priorities for capital allocation is shareholder returns. We are a shareholder-oriented company and pledge to pay out about half of our net income to our shareholders. In line with this policy, we propose an €8 per share dividend to the AGM next month. And lastly, we are making progress on pension reform. switching new entrants to a fully funded defined contribution system. Things here are underway and you will hear more once we have the required regulatory and administrative approvals. Coming to page eight, that summarizes it all. And we have the means to get to our 2030 targets. We will grow through volume and mix at almost twice our historic rate. We will earn two times our pre-tax cost of capital, which we estimated 10%. We strive for EBITDA margins above 20%. And we will reduce our CO2 equivalent emissions to half by 2030. You see, we have set ourselves both ambitious targets and attractive targets. Going forward, you should expect faster growth, bolder moves, and higher profitability while maintaining resilience. WACKER is a great company with a great future, and with this, I would like to hand over to Tobias.