Wacker Chemie Ag Ord

Ladies and gentlemen, welcome to the VacuQME Agir conference call Q3 2024. I'm Alice, the Coruscant operator. We'd like to remind you that all participants will be listening on remote and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, It's my pleasure to hand over to Jörg Hoffmann, Head of Investor Relations. Please go ahead.

JÖRG HOFFMANN, Thank you, operator. Welcome to the WACKER Chemie AG conference call on the 2024 third quarter results. Dr. Christian Hartl, our CEO, and Dr. Tobias Ohler, our CFO, will take you through our prepared slides momentarily. Press release, our IR 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, the presentation, and the 2023 annual report regarding risk factors. All documents mentioned are available on our website. Chris?

Welcome, everyone. Bakker is performing well in challenging markets. Despite considerable headwinds, we achieved a strong result in our specialty business, and earnings in chemicals are clearly higher than last year, but remain below our target. As we discussed on the last call, it is still too early to speak about a broad-based recovery yet. Demand remains particularly weak in construction and automotive. Overall, customers continue to be cautious, and this is having an impact also on us. In the third quarter of 2024, group sales came in at about 1.4 billion euros, down 6% year over year. The combined EBDA of the four operating segments was 198 million euros, up 17% year over year. Group EBDA is essentially unchanged versus prior year due to the others segment. As a reminder, the other segment EBDA is largely defined by the CO2 charge which will be reversed in the fourth quarter. Now, chemicals EBDA came in at 155 million euros. That is up 23% year-over-year and 4% ahead of the previous quarter. Sales for the specialty silicones was markedly higher than the previous year, and volumes remained at the high level achieved during the preceding quarter. This improvement has supported the strong earnings recovery over the past year. at 109 million euros is two times higher than a year ago and sequentially higher due to maintenance in the second quarter. Now in polymers, consumer-related binders are performing well with strong growth in packaging applications from the plastic to paper trend. However, the regional demand dynamics for construction-related binders are unchanged. We continue to be held back by sluggish demand in Europe and China but see stronger growth in other regions around the world as we drive the transformation to higher quality building materials. EVDA and polymers declined quarter on quarter to 46 million euros due to a primarily supplier force majeure. In biosolutions, the new biopharmacide and highlight provides us with strong foundation for further growth. Setting up the completely new facility and meeting the highest quality standards in short time underlines our capabilities in realizing complex investment projects. Polysilicon. Our resilient semi-business supports results while uncertainty and solar weigh on total volume sold. As you highlighted on the last call, the anti-dumping, countervailing duties petitions in the U.S. targeting cell and module manufacturers in Southeast Asia create a situation where customers are in a bit of wait and see mode. In the beginning of October, the preliminary CVD investigation results were released, and now the industry is waiting the outcome of the anti-dumping duties at the end of November this year. The timing of these investigations has been delayed somewhat, and customers may likely await the outcome of these investigations before normal order patterns resume. Uncertainty remains in solar, but we are convinced that the U.S. will be successful in its reshoring efforts. It will remain a premium market. Substantial module and cell capacities are being built. These capacities will need to meet U.S. import restrictions. As a U.S. compliant supplier, we have a unique position to leverage here. In PolySilicon, our focus is on SEMI. We are preparing to commissioning our new edging line in Burghausen after fully testing the site virtually with a digital twin. The new line will enable the next generation of chip production and strengthen our leadership position in the industry. WACKER is the benchmark for quality and it's unique in the market, producing semi-products at two sites. This provides our customers with security of supply and supports our high market share. Now looking to sustainability. At WACKER, our efforts target lowering the footprint of our operations and enabling and improving the performance of sustainable products. We are committed to reaching net zero by 2045 and have shown good progress towards achieving this target. One area we must address is unavoidable CO2 emissions from our silicon metal production in Halla in Norway. In the first step, we have already sourced renewable energy And we are now looking to substitute fossil-based reductants with bio-based materials. This change would greatly reduce our financial risk exposure to carbon credits, especially as free allowances are gradually phased out. To achieve net zero, we need to be even more ambitious. We are investigating carbon capture, for example. We just completed a pilot study demonstrating the feasibility of capturing CO2 from our silicon metal emissions. So we can do this. However, what we need is a proper regulatory framework to make these types of innovative solutions a reality and ultimately finally convincing business case. Now coming to page three, and please let me quickly summarize the main takeaways from our recent Capital Market Day in Burghausen. We confirmed the key financial and sustainability targets for 2030. We target 10 billion euros in sales, an EVDA margin of more than 20%, and ROSI that is two times our cost of capital. Our strategy continues to evolve and adapt. With this, we wanted to highlight that we no longer have the specific growth targets for volume, mix, and chemicals. We are now clearly focused on margin, mix, and profitable growth. We will continue to invest in specialty growth and in production efficiency. We are addressing the right trends and are focused on innovation, regionalization, portfolio management, and cost efficiency programs. Those are the levers we pull to drive sales and get our margins back on target. Page four, our segment targets focus on profitability and ROSI. In chemicals, we target an EVA margin above 20%, and with a ROSI that is more than two times our cost of capital. We are away from that today, but we have delivered this before. We will get back there with a focus on high margin specialties and regional opportunities. By rigorously applying a stringent portfolio management process, we focus on the right products and markets. The volume transition from standards to specialties in silicones is done. Now, we need to shift towards more value within the specialties to a stronger, more resilient, more profitable, and higher margin portfolio. In BioSolutions, we target an EBDA margin above 25% and a ROSI clearly above our capital cost. We are setting up the foundation for future growth today. We have invested in new sites. We have made acquisitions to extend the product portfolio and capacities. Now, we need to integrate and fill them. In PolySilicon, we target an EBDA margin above 30% and a ROSI that is more than two times our cost of capital. We have a clear focus on the attractive semi-business with upsides in solar. We are growing in semi. Our mix continues to improve, and with that, so does the resilience of our business. Maintain resilience. You need to be robust. You need to be flexible. You really need to have a toolbox. With our established Shape the Future and WOS efficiency programs, We have a systematic approach here. But there's more. We have digitalization and automation. With advanced process control and AI, we leverage our deep data pool. We measure, we learn, we become more efficient. And we do that continuously. Also, we leverage regionalization. Our new excellent hub and silicone site in the Czech Republic helps us reduce costs and drive efficiency. By driving specific initiatives in each of these three main areas, We aim to achieve savings of more than 200 million euros annually. Coming to page six, for the next few years, we expect investments to be in the range of 500 to 800 million euros per annum. We are looking at smaller individual projects, nothing big upstream. Why such a wide range, you may ask yourself? Because we have a diversified portfolio. Depending on how markets develop, we can accelerate or slow down. But it's not just about growth. It is about highly profitable growth. With our four segments, we have competing projects. This gives us the ability to be selective. We will only deploy capital in the most attractive areas. Page seven, our strong balance sheet. That is the foundation. It's the basis for growth and the basis for dividends. a very clear capital allocation priorities, growing the company and paying dividends while maintaining resilient financials. So to wrap it up and before I hand over to Tobias, as you saw in this morning's press release, we confirmed our full year guidance. We continue to expect EBITDA to be in the upper half of the 600 to 800 million euro range. Even though today's global economic trends remain challenging, we continue to invest in our future. I'm convinced that we are well positioned and we remain committed to our 2030 targets. With our committed team and our innovative products and solutions, we enable the megatrends of today. Now to Tobias for further details on our results. Thank you, Chris. Welcome, everybody.