Wacker Chemie Ag Ord

conference is now being recorded. Welcome to the Wacker Chemie AG conference call Q1 2024. At the moment, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Now, I hand over to Jörg Hoffmann, Head of Investor Relations. Please go ahead.

Thank you, operator. Welcome to the Wacker Chemie AG conference call on the first quarter of 2024 results. Dr. Christian Hartel, our CEO, and Dr. Tobias Ohler, our CFO, will take you through our prepared statements momentarily. The press release, the IAR presentation, and detailed financial tables are available on our web page under the caption Investor Relations. Please note that management comments during this call include forward-looking statements involving risks and uncertainties. We encourage you to review the safe harbor statement in today's press release presentation and dollar 23 annual report regarding risk factors. All documents mentioned are available on our website. Chris?

Welcome, everyone. As you saw in 2023, economic headwinds and lower prices over last year defined our quarterly results. In 2024, we started with the low exit rates of the previous year, 2023, and as a result, sales in EBITDA for the first quarter are markedly lower year over year. On the other hand, sequential developments are more promising. When we published our full year results in March, we provided a trading update on the first quarter of 2024. In line with our expectations, sales came in at 1.5 billion euros. Group EBITDA, on the other hand, came in at the upper end of our expectations. This was primarily good business development on the one hand and some positive effects in the other segment. Group EVDA increased by 27% quarter over quarter to 172 million euros. This is up from 135 million euros in the fourth quarter of last year. The higher earnings were driven by strong growth in the operating segments. Chemicals EBDA came in at 137 million euros, which is up approximately two times from the 69 million euros in the preceding quarter. Chemicals demand was clearly higher quarter on quarter. This is in part seasonality, but also due to customer restocking from very low levels of inventory. Demand, especially for specialty silicones, developed positively in the first quarter. In polymers, we see typical quarter-on-quarter improvements from seasonality. As we discussed on previous calls, BioSolutions is focused on starting up our new mRNA facility in Halle. While the segment continues to see upfront costs weighing on its results, the first quarter EBDA of €5 million was supported by a better product and contract mix. Polysilicon also showed a strong sequential improvement. EBDA came in at 43 million euros, up from 21 million euros in the previous quarter. The results continue to be defined by low prices for solar-grade polysilicon. While we see some positive effects from lower energy costs, the underlying performance of polysilicon has been constant over the past two quarters. Actually, year-end effects held back the previous quarter, and Tobias will give you some more flavor shortly. So all told, our business came in at the upper end of our expectations, and some tentative economic indicators show business conditions are improving. Now, looking at our businesses, demand was markedly stronger quarter over quarter. However, this trajectory has not continued in April. We continue to see overall weak markets, uneven order patterns, and low prices defining our results. As you saw in this morning's press release, we confirmed our full year guidance. While the first quarter results may point to the top end of the EBITDA range of 600 to 800 million euros, we remain cautious. We respond to the weak market environment and low prices with consistent cost discipline to continue to pursue a restrictive hiring policy and are focused on streamlining processes to make them more efficient in cutting our material costs. Before highlighting some of our accomplishments on the next page, I would like to congratulate the Silicon's team on receiving the Fountain Award at one of China's largest trade fairs for personnel and home care ingredients. Our team has developed a new silicone elastomer gel that contains more than 80% renewable raw materials. And that, of course, is a great opportunity of our specialty silicone business. The product gives you a silky feel on your skin and also on hair care. and is a further proof of our strategy. While I've spoken a lot about lowering our CO2 footprint at WACKER in the past, developing sustainable products is also a core part of our strategy. By 2030, 100% of our products will meet defined sustainability criteria. That's the target. 94% of our products fulfilled already these criteria, up from 83% in 2020. We will actively improve our product portfolio and will continue to lower our carbon footprint, provide our customers with innovative, sustainable solutions. Now, looking at our cost-saving and efficiency measures on the next page. A clear focus on cost and efficiency is essential for WACKER to stay competitive in global markets. Our efforts are concentrated under our WACKER operating system, WOS, where we focus on reducing our specific operating costs. We awarded several teams at our annual WACKER operating system conference earlier this year for their remarkable achievements. and give you some examples on that. In silicones, the team was able to sustainably cut the amount of steam required in the desolation process. This one project alone saved 83,000 tons of steam last year and reduced our CO2 emissions by 26,000 tons. In polymers, our colleagues in Nanjing optimized steam production by leveraging waste guard incineration. this project also reduced CO2 emissions substantially. In biosolutions, our colleagues in Amsterdam increased utilization rates and improved maintenance at the biopharma site. And lastly, in polysilicon, the team in Burghausen was able to drive process improvements, significantly increasing the output in semi-cleaning. Now, these projects are just a few examples of the hundreds implemented last year. So continuous cost reduction is not about big wins, but about addressing every opportunity to become more efficient day by day. Since the inception of our WOS program over 20 years ago, we have addressed thousands of individual projects. These have resulted in over 800 million euros in savings. And we also have set ourselves ambitious targets for 2024. If our targets are successfully achieved, we should see further improvements in the cost base. Before I hand over to Tobias, let me sum up quickly. We saw a good operating performance in Q1 based on higher volumes and customer restocking. Difficult conditions, however, persist. Order intake continues to be uneven and does not provide a stable foundation for an improved outlook. But despite the uncertainties we are currently facing, I'm convinced about the success of our setup and strategies. We are confident about our future performance to continue to make strategic investments for future growth. We do this because we have confidence in our products, in our markets, and of course, in our people. Global megatrends, such as renewable energies, electromobility, digitalization, and biopharmaceuticals will drive demand for our products and solutions. We remain committed to our growth targets up to 2030. Now to Tobias for further details on our results.

Thank you, Chris. Welcome, everybody. Looking at the profit and loss sales during the first quarter of 2024 came in at 1.5 billion euros, down 15% year over year. As you can see on the right-hand side of the slide, pricing alone cost us about 300 million euros in revenues. A large share of this decline is due to policy. Higher volumes, particularly in chemicals, somewhat helped to offset lower prices. Compared to the previous quarter, Sales were up approximately 10% from customer restocking and seasonality. As Chris mentioned, we saw higher volumes in chemicals quarter over quarter and year over year. This supported our earnings, but low prices left their mark throughout the figures. First quarter group was 172 million euros, 39% lower year over year. Sequentially, it was 27% higher. When looking at the sum of the four operating segments EBTA, the sequential growth was even higher. The cumulative EBTA from silicones, polymers, biosolutions, and polysilicon came in at 185 million euros versus 100 million euros in the previous quarter. Looking at the other segment, it came in at minus 13 million euros in the first quarter, including at equity contributions and a stronger utilization of infrastructure, others came in better than expected. The better performance partially offsets charges in the connection with the embedded cost of CO2 in our energy bills. As explained on the last call, once we received the CO2 refund for the fourth quarter, the cumulative charges over the first three quarters of the year will be reversed. So much for Q1. For the full year, 2024, there is no change in our expectations. We expect the other EBITDA will be at about minus 20 million euros. Now looking at the last line items in the P&L, including the contribution from Sotronic and some positive effects in silicones, The results from investments was 12 million euros, taxes were 14 million euros, and net income was 48 million euros. This equates to earnings per share of 0.89 euros. Our balance sheet shows strong financials with 1.3 billion euros in liquidity and 4.7 billion euros in shareholder equities. Networking capital increased by about 200 million euros compared to the end of last year. This primarily reflects higher accounts receivables, which follow the development of sales. In addition, we have some inventory buildup ahead of the turnaround in silicones in the second quarter. At silicones, sales in the first quarter of 2024 decreased by 7%, as lower selling prices offset the higher volumes year over year. Compared to the seasonally weak fourth quarter, the pickup in specialty volumes drove sales to 710 million euros in the first quarter. This represents an increase of 16% over the preceding quarter and was mainly due to customer restocking from very low levels. At 81 million euros, the silicone EBTA is well above the past few quarters. Higher specialty volumes, improved utilization rates, lower raw material costs, and an equity contribution supported improved earnings. We have updated our silicone outlook for 2024. We now expect a high single-digit EBTA margin up from our previous forecast of a mid-single-digit margin. However, we expect prices to continue being low in the short term due to weak end-market dynamics and ample upstream capacities, keeping standard prices in check. Considering that the short-term benefits of customer restocking support the first quarter, the first quarter EBITDA may not be a good base for forecasting the full year. Also, the turnaround will hold back the second quarter. Sales in polymers were 372 million euros, 13% below last year, mainly driven by lower prices led by raw materials. Average selling prices were stable compared to the previous quarter, and higher volumes underpinned the 9% sequential sales growth. Decentrality and some restocking drove volumes up quarter over quarter. Acid utilization improved, EBITDA in the first quarter climbed to 56 million euros, up from 32 million euros in the previous quarter. Overall, we see relative good demand in Asia outside China and the Americas, while Europe and China continue soft. For 2024, our outlook is unchanged. At BioSolutions, sales during the first quarter of 2024 were 72 million euros, down 6% year over year. First quarter sales were supported by growth in bio-ingredients, but were held back by life science chemicals. EBITDA during the first quarter came in at 5 million euros, supported by a better product and contract mix. Our results continue to be held back by upfront costs from our new mRNA facility in Halle, Germany, We are making good progress there and the facility will be ready by mid-year. For this facility, we expect to receive a reservation payment as part of the German pandemic preparedness program. As disclosed at the beginning of April, the team reported a success in winning a first project for this new site. We will supply our customer Panterna with an active ingredient based on mRNA and lipid nanoparticles. They run a development project to combat acute respiratory distress syndrome. Our full year outlook for BioSolutions is unchanged. Polysilicon reported sales of 300 million euros during the first quarter, 32% below prior year. The primary driver for this were significantly lower solar prices. Sales were flat, with ASPs and volumes being comparable. EBITDA increased to 43 million euros, up from 21 million euros in the prior quarter, with some support from lower energy costs. Year-end effects in Q4, such as provisions and other effects, further add to explain the sequential improvement as prices for solar materials stayed challenging. As discussed, On the last, these efforts are ongoing and our first quarter results still reflect a significant exposure to the market prices in China. Our full year outlook for policy can say NEBDA is unchanged. Now let's look at our net financial position. In the first quarter 2024, we generated a gross cash flow of 56 million euros. Gross cash flow was held back by investments in working capital following the development of sales. In addition, some inventories were built ahead of the silicon's turnaround in the second quarter. Cash flow from investing activities was 183 million euros versus the reported capex figure of 117 million euros during the quarter, the difference between the two figures is due to the timing of cash payouts for investments. We made payments in the first quarter for investments recorded in capex in last year. We ended the quarter with a low net debt of 308 million euros. So before we start with the Q&A, let me summarize. WACKER is well positioned financially and strategically. Our development work with customers continues as we expand and improve our specialty portfolio. We look to the future with optimism, and we continue to invest in growth to better service our customers once the cycle improves.

Thank you, Tobias. Before we move into the Q&A, let me remind you to please limit yourselves to two questions at a time, so that everybody on the call gets a fair shot at asking questions. You may return to the queue afterwards. Thank you for your understanding. Operator, we are now ready for the Q&A.

We now begin the question and answer session. Anyone wish to ask a question will press star and 1 on their telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. In the interest of time, please limit yourself to two questions. The first question comes from the line of Sebastian Satz with Citi. Please go ahead.

Yes, thank you very much. Good afternoon, everyone. Two questions then from me, please. First on silicone, could you please give us just a little bit more color on what you're seeing in your order book for the second quarter so far, in particular with regards to your specialties business? Just want to better understand how the earnings progression is going to look from here, given the point you made around cytoxane prices falling. And if you could potentially also remind us where your share of specialties is today compared to where it was in the peak. And then the second question would just be an update on the discussions with your solar customers that you've just alluded to. Should we still expect them to move to the ex-China price by year end, or what's the likelihood of some of them being converted a little bit earlier than that? Thank you very much.

Sebastian Tobias speaking, starting with the CityCone's question. As we reported, very solid start into the year with silicon up in specialties volumes sequentially and against prior year. We now see that in April we are still at a good level, but that's not as strong as we saw it in Q1 so far. So there is some element of that restocking of customers that is now not continuing into the second quarter. In principle, that is also the reason why we do not want to see you extrapolate from the first quarter for the full year, because in addition to that little softer demand volume that we see, we have a turnaround in the second quarter that will limit us in volume. And that means that normally we try everything to sell as much as possible specialties as possible. So in the second quarter definitely the focus will be on specialties as we are limited on the upstream part of our business. But I caution a bit on the EBTA development for the second quarter because normally such a turnaround that we have could have an impact of say 20 million euros. It very much depends now on how demand develops in May and June. And yeah, we are doing everything to bring up the specialties share and I think the key improvement also in the in the first quarter in comparison to the Fourth quarter and in comparison to prior year was with development in specialty volumes And I think

And when you talk about the restocking not having continued, that applies to your overall portfolio for both the standard part as well as the specialties part of it?

I think it mainly applies to the specialties because on standards we don't have significant availability anyhow because of the turnaround. But it applies to sort of both. But we are limited on the standard significantly from the turnaround situation.

Okay. Coming to the second question, maybe to the first question, because I think you also asked on the Chinese standard pricing and the impact on our standards and specialties. And that's something which we commented also in the past. So, there is definitely no one-to-one relation. between standards and specialties, and there's always a kind of a time delay. Typically, our customers use it as an argument, and typically, we don't accept it as an argument, because with our specialties, which is a very high and a dominating share today, these products are made, tailor-made for our customers, and therefore, a one-to-one link to a index price on a product is not viable in our view. Now, on your second question on the solar customers, and, you know, as we stated in the last call and also in the calls before, and you recall that, you know, until the end of 22, essentially there was only one poly index, and that was based on the material in China. Now, since the end of Q4 of 2022, then a second index developed, which we then called the so-called outside China index. And we did some, I think, successful work in 2023, we can say. And we moved a significant volume towards linking these to the outside China pricing, which in our view also reflects more the value of our material. And we also stated as a kind of rule of thumb that this is around 50-50, the exposure. Now, we also commented that latest by the end of this year, we expect that all of the solar polyvolumes won't be related to the inside China price anymore. And you can really rest assured that we work diligently and with high priority on this topic. But at the moment, there's really not much more to provide on details on that.

The next question comes from the line of J.D. Pandilla with Onfield Research. Please go ahead.

Thank you. The first one. Could you just tell us what is really happening in your Tennessee plant? What exactly has caused these issues linked to production? And when do you actually expect the production to come back to running in a normal state? And whilst you are offline, what is actually happening in the German plant in the sense, how much solar volume do you have to sacrifice to service your semi-customers? Or are you not servicing all your semi-customers? That's the first question. And also, if you could just give us an update of when is the etching capacity coming in the semi situation in the second half this year. The second question is a real quick one for Tobias. Could you tell us what you expect for the rest of the year with regards to your raw materials bill and your energy bill? So just Q1, what was the year-on-year impact for ROS and energy? And for the rest of the year, how should we model ROS and energy? Thanks a lot.

Okay. This is Chris. And I would like to start with the first question on the side in Charleston, Tennessee. There is a larger maintenance activity, which is end of Q1 and which will also be in the beginning of the second quarter. And this is part of upgrading, a program to upgrade the facility, also in respect to having more capacity on the semi site. And this maintenance activity will also limit volumes for the first half of 2024. But overall, we expect for the, total year for 2024 to have higher volumes than previous year. Second part of that question, you said about, you asked about the etching capacity, and yes, we are ramping up that capacity for the new facility in Burghausen, and we expect volumes to be available in 2025, and that will be a a significant share of the market, and a lot of this capacity is already under contract. So a clear focus here for our polysilicon is on the semi-edging, highest quality material.

Sorry, just to clarify on the semi side then, what you're saying, Chris, is that You were offline in Tennessee in Q1, but once the plant comes online, you still expect to grow volumes in your semi-grade material. Did I understand that correct?

Absolutely correct. Thank you. And on the aromatization energy, as we reported For your financials for 23, I told you that about 500 million euros, we had lower raw materials and energy costs. We haven't provided a figure for 24, I think, so far. But I could say it's a bit more than half. We don't reach the same magnitude as the biggest step down was already in last year. And if you look at the sequential development I don't see big changes throughout the year. So quarter over quarter, I think the biggest step down was from Q4 to Q1. We all know that energy costs are now lower, but given our hedging policy, we have 80% hedged for this year and some 60% for next year. It comes more with the fiscal year changes than over the quarters. So I hope that helps you a little bit modeling your spreadsheet.

Just why I was asking this is I suppose you were still holding some of the expensive raw material inventory as of Q1. So I was thinking as you progress through the year in Q2 and Q3 and Q4, at least on the silicon metal side, you would see lower raw material prices, but I guess what you're saying is that sequentially it will stay stable.

Absolutely. It's a fair point. We have those lagging effects in the P&L. On the other hand, as you just mentioned, silicon metal, that material has just moved up a bit again from Q4 into Q1. So we see the lagging effect of that also in Q2. So market... prices for silicon metal in Europe and the US have been trending up a bit.

Thanks a lot.

The next question comes from the line of Chetan Udeshi with JP Morgan. Please go ahead.

Hi. The first question I had was just going back to the discussion on polysilicon. You know, given where the Chinese prices are, can you confirm whether you're actually participating in that market at all? And if you really make money at those prices, because you said 50% of your volumes are still on China index pricing. And I don't know if you actually can make money on those prices. So what is the strategy that you are adopting at the moment in the short run? Are you shipping to China? Are you stopping? And if that's the case, should we be thinking about any impact you might have on the numbers in Q2 and Q3 from what we see in the Chinese solar market. And just beyond that, I was just curious, you're spending about 700 million or so in capex this year. Given what we've seen in the industry over the last three, four years, does it not sort of push you to question your assumptions on you know, mid- to long-term growth of high single digits that you talked about at the Capital Markets Day in 2022, because it just seems quite a bit off the charts compared to what we've seen for the whole industry, not just for WACA, from, let's say, 2019 to now, so from pre-COVID to now. Thank you.

Okay. Chetan, this is Chris. I would start with you. If your first question, again, on the Chinese polysilicon market, I mean, when you look at the development of the pricing of Inside China pricing index, I think it's fair to say that it's not much fun for everybody that participates in that market, including, and I really want to stress this, including the Chinese players. So I guess that nobody is... willing to spend too much volume in this unless necessary. And as we said, and as Tobias also mentioned, we continue to work on getting more on the inside, the outside China pricing, sorry, the outside China pricing, and that will be done latest by end of this year. And to your question, did you sell? I mean, our efforts are ongoing. And if you look at our first quarter results, they still reflect a significant exposure to the market prices. And we gave you the roughly number 50-50 on that.

On the CapEx question and our volume expectations going forward, I think the guidance for this year to be slightly below prior year numbers with respect to CapEx is very much driven by the large projects that we have in biopharma and in polysilicon for the semiconductor. And as soon as those are completed, we could also cool down a bit on CapEx. But it all depends on the market environment. And as we know, we had seen a very tight market in chemicals for two years. Now we have had a two-year correction which was super long and no end market recovery yet. And for that reason, I think it's far too early also to speculate about our 2030 targets. We will definitely give you some updates when we have kept the market stay in September. But we are convinced that we are well positioned with our portfolio with megatrends driving growth going forward. And we will adjust our CapEx program in a professional way in order to time the next increases to the market demand.

So it's very much about the timing. It's not about the if, but it's about the when. And let me add this as well. So we remain committed to our growth and profitability targets 2030.

Thank you. The next question is from Andreas Heine with Stifel. Please go ahead.

Yes, I actually have two. The first is on silicones. Could you provide some more insight on what you see in the different end markets? You have many, many different grades for different end markets and regions. I understand that on the whole silicon segment, the order pattern is very uneven and very difficult to extrapolate. But are there some end markets where you really see a recovery and others where it is less the case? That's the first question. And then second on polysilicon, I obviously do understand what your incentive is to switch from the Chinese spot prices to the international prices. But what should be an incentive for your customers to accept for, let's say, the second half of four times higher price by moving from the Chinese spot prices to the international one?

Andreas Tobias here. I would start with the first question. As you know, our silicones business is a GDP-driven segment. And I would say that from our end markets, we had seen a rather broad-based activity, mainly, as I said, restocking from very low levels. And there was even in construction, which is part of silicon, some higher activity sequentially, while we, in general, stay very cautious on the construction industry in Europe and in China. But overall, there was a good recovery in order intake from automotive, industrial, consumer applications as well. So it is broad-based. So there's not one single industry just driving it and going into the lead. But on the other hand, we also see from that lower order intake in April, and that fits to the picture that we also conveyed six weeks ago, that customers don't talk about the second half of the year. And so it's difficult really to get a longer term view on their end market estimates.

Christian, let me try to answer your question. second question on the polysilicon pricing inside, outside China and what's in for the customers. And I would love to answer it in a more general framework. I mean, if you look today at these two markets, and these are two really distinct markets, and the main difference between these markets is the supply-demand balance. On the one hand, you have a Chinese market, which is heavily heavily oversupplied, resulting in low prices for the end product. And on the other hand, you have a rather balanced market. And from our view, a more fair pricing on that. And the higher price market is mainly driven by U.S. regulation at the moment. I mean, that's the fact we have to see. And on the other hand, the end market for solar modules also in the US, has a different pricing than in China and also in the rest of the world. And therefore, it does make sense to provide an outside China polysilicon and to make modules which are produced outside of China at a higher cost, but also getting a higher price. And that's the incentive for everybody in that value chain.

Thanks. The next question is from Sebastian Bray with Burenberg. Please go ahead.

Hello, everybody. Good afternoon and thank you for taking my questions. I would have two, please. The first is I'd like to probe for comments on restocking effect assisting Q1 results and this starting to unwind in Q2. When things were going badly in 2023, a lot of chemicals companies had difficulty identifying stocking patterns and then customers. What makes the company sure this time is different and more particularly why, when we talk about the environment still being solid, but not quite as good as in Q1, are we talking about absolute terms, i.e. sequential basis trading? or the comparison on a year-on-year basis becoming less positive? And my second question is just on the China volume uncoupling or China price uncoupling in polysilicon. Are you feeling better or worse directionally relative to three months ago on the speed at which this uncoupling can occur? Thank you.

Sebastian, we are here on the restocking question and the sequential development. For sure, it is an experience that everyone made last year that after a decent start in Q1, Q2 was worse, and then it continued throughout the year. And there was destocking continuing at the customers. What we see now, I think, is slightly different. We had seen a restocking. from a very low level into the first quarter. And now, if I look at April numbers, these are lower than the average of the first quarter months, but they're still above prior year, if I take silicones, for example. And that makes me look at those numbers differently to last year, but I mean, As all chemical peers reported on a decent start into the year, Q1, and no one changed estimates, I think it's an overall pattern that we are not hearing from customers about the second half, so we stay on the cautious side. But I think it's different sort of to last year.

Okay, Sebastian, on your second question, do I feel better or worse with the possibility of decoupling on the pricing side? Let me say I feel confident that we will achieve it latest by the end of the year, and we work diligently on that. But, you know, it's not about whether I feel better or worse. We will achieve it, and we work on it.

That's helpful. Thank you for taking my questions.

We have a follow-up question from J.D. Bandia with On-Field Research. Please go ahead.

Thank you. Just on your policy-looking guidance, right, for 1300 to 1600, so if I, for the argument's sake, take 75 kT as your volume size, I get a blended price of around 17 euros per kilo. And I guess semi-grade material, although you don't comment on prices, remains relatively stable. So if I think 500 million sales for semi-grade leaves me 800 million sales for solar grade. So I'm just trying to understand, are you baking in some degree of improvement in prices in China? Because you still have decent exposure to China. Or are you expecting as you progress the year, you will probably sell I don't know, say call it 60, 70% volume in second half on international prices and therefore the blended price goes up. Because otherwise I can't really square this how you're guiding for basically flat sales or the low rent versus last year when prices in China were significantly higher.

This is a complex question. As we said in the last conference call, our guidance And I rather refer to the 200 to 400 million euros EBTA is for sure driven by the mix and the progression through the year. And as you know, we started with an EBTA below 50 million euros for the first quarter. And Christian also talked about maintenance that is going to improve. our tendency availability in the second half that is holding us back in the first quarter, end of first quarter, and start of second quarter. So if you then equate that, yes, we assume a stronger second half, and that is driven by an improvement in mix, say price mix and product mix. And that is driven by an improvement in product availability. And with product availability, there also comes a specific cost improvement. And then if you put it all together, we feel confident that we can also reach midpoint of the guidance. And yeah, it all depends on the assumptions. But I don't like to comment too much on how you equate on our split. in volume and what's the average price for obvious reasons. We don't talk about that.

And just a second follow up on the same topic. Apologies, but we've seen some announcements from the big players in China for CapEx outside China, be it in the Middle East. There's also an announcement for the US market. So I suppose you guys are striving very hard to switch contracts to international prices, but you know, on a three, four year view and you're not adding any capacity. So what is then the thought process really? Because it seems like you may have two years window of enjoying maybe this 20, $22 price, but as capacity grows outside China, you probably will end up in the same scenario. So what is your thought process and what are your discussions with your customers who probably are asking you, well, you want higher prices, but you're not committed to these markets outside China.

Yeah, that's a good question, Chris. Well, there's a lot of announcements of capacity outside of China. I think the first thing you have to keep in mind is this takes time. It takes time, and my assumption would also be that it probably takes longer time for Chinese players also investing outside of China because it's a more different surrounding and a different environment. And therefore, I think we easily talk about a couple of years. I would be surprised to see a two-year timeframe. I would see it rather in a three to four-year timeframe. At the same time, the demand for material outside of China, especially in the U.S., I would see as growing. with PV installations growing all over the world and also the expectations for the U.S. are big. And therefore, I think also the U.S. market needs more polysilicon. And so therefore, I don't see that kind of immediate risk or what you are referring to. And the third, don't forget, our key strategy for polysilicon is the semiconductor market. where we today have a very strong market share, which we want to defend and grow. And also, if you talk about new technologies, new capabilities, AI, a lot of new servers needed in the world, that is all super pure polysilicon, which you need for these equipment. So therefore, it doesn't give me a big headache.

OK, thanks.

The next follow-up question is from Sebastian Satz with Citi. Please go ahead.

Thank you for taking the follow-up questions. First one would be on polymers, where your pricing must have been down in the mid-teens, if I'm not mistaken, based on your revenue performance and your comment that volumes were up. I was just wondering, and because your margins declined as well, that means that your net pricing must have been down quite a bit as well. I just wondered what has caused that and how we should think about that dynamic going forward, please. And then the second part of it was really just on the timing of the IRA payments. When do you expect to hear about them? And if the outcome was positive, when would you book them, please?

on the two questions. First on polymers, you're about right with your estimate on price decline, but we always said that after that net positive spread in last year that this would turn negative. I can confirm that year-over-year prices are down, but sequentially, quarter-over-quarter, rather stable, not entirely stable, but there's only a smaller negative headwind. And for the full year, we assume that raw materials continue rather flattish, and the price deviation against prior year will also narrow, and with volume seasonality we feel confident that with the start of the year of the 15% margin that we reach the 15% margin for the full year as well. The second question on the IRA topic, there's no news from last call. As I said, we have not baked into the guidance, and we have not filed for taxes in the US. um and as soon as we get into this we would talk about the amount but yes no news today thank you very much we have a follow-up question from sebastian bray with berenbeck please go ahead

Hello. Thank you for taking my follow-up. Tobias, I'd like to touch on the comments that you made with regards to April trading being lower than the average of the first quarter of the year but above prior year. Can I please check two things? Does this refer to the silicones segment or the group as a whole? And is it a reference to volume, EBITDA, or both? And just to double-check, This is, if it does refer to silicones of a group, in either case, is it adjusted for the impact of shutdown in April, or is it just an underlying development? Thank you.

To put it simply, Sebastian, it was on silicones, and it was on order intake. There was not guiding on sales or EBTA, and the order intake was on... on revenue and volume, so both.

That's helpful. Thank you very much, Tobias.

So thank you all for joining us today and for your interest in Wacker Chemie. Our next conference call on the Q2 results is scheduled for July 26th. Our Capital Market Day will be held in September at our main set in Buchholz in Germany. As always, don't hesitate to contact the IR department if you have further questions. Thank you for your interest and welcome to me.

Ladies and gentlemen, the conference is now over. Thank you for your participation. You may now disconnect your lines. Goodbye.