Wacker Chemie Ag Ord

Welcome to the conference call, full year 2024 results conference call. I'm Moritz, the CorusCall operator. I would like to remind you that all participants will be in the listen-only mode and the conference has been recorded. The presentation will be followed by a question and answer 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 our pleasure to hand over to Jörg Hoffmann, Head of Investor Relations. Please go ahead, sir.

Jörg Hoffmann, Head of Investor Relations Thank you, operator. Welcome to the WACKER CHEMEA-HE conference call on the 2024 full-year results. Dr. Christian Hartl, our CEO, but with BSO, our CFO, will take you through our prepared slides momentarily. The press release, our IR presentation, and detailed financial tables are available on our webpage under the caption of this relation. Please note that management comments during this call include forward-looking statements involving risks and uncertainty. We encourage you to review the safe harbor statement in today's press release, the presentation, and our annual report regarding risk factors. All documents mentioned are available on our website. Chris?

Welcome, everyone. Today, we report on a challenging year, 2024, for WACKER and the entire chemical industry. The European chemical industry has been struggling with an economic recession since Q1 2022 and faced low demand and capacity utilizations. Despite these challenging conditions, WACKER remained on course and achieved some good successes. In silicones, we increased our specialty volumes despite slow momentum in the markets. We also increased volumes in polymers, despite weak construction markets. We grew the share of semi-grade volumes in polysilicon and we set up Europe's latest biotech facility to support the German pandemic preparedness program in biosolutions. All these actions were a hard one. They supported our results last year and they will have lasting effects in the future as we leverage those achievements further. For this, Please allow me and on behalf of the board to thank our employees for their engagement. Their expertise, commitment and experience really made the difference. Now looking to the figures. In 2024, we reported sales of 5.72 billion euros and an EBITDA of 763 million euros. While the group EBITDA was 7% lower year over year, Our chemicals business performed well. In sum, chemicals EBDA came in at 542 million euros, which is up 11% year over year. Specialty silicones primarily drove this improvement. In silicones, specialties were markedly higher, and this supported a better mix and a strong earnings recovery. EBDA climbed by 47% year-over-year and came in at 347 million euros. In polymers, volumes were up somewhat year-over-year, driven by dispersion for adhesives and coatings. This growth helped offset continued weakness in construction-related binders. Owing mostly to lower average prices, EBDA came at 194 million euros which is down 23% year over year. In biosolutions, EBDA was markedly higher at 35 million euros versus 7 million euros a year ago. The main driver was the new biopharma site in Halle. This, as well as our new capacities in Leon, Spain, will provide us with a strong foundation for further growth. With these major projects completed, we are now focusing on filling new capacities. In polysilicon, our strategically important semiconductor business developed positively, with both volumes and prices being resilient. However, massive overcapacities in China and U.S. tariff uncertainty weighed on solar-grade polysilicon demand. This left its mark on earnings. EBDA came in at 193 million euros which is down 40% year over year. Given the volatile market environment, achieving resilience is our key mandate. We are strategically on the right path. We increase specialty capacities and a strong focus on semi-grade polysilicon. To make us more resilient, we focus strongly on costs, efficiency, and specialties. With our established efficiency programs, we systematically lower our specific operating costs. Our WACKER operating system is the key driver for our competitiveness. Last year alone, we implemented around 1,000 measures, yielding savings of around €60 million. Looking to sustainability, we take a reliable, systematic approach here as well. Our goals are clear. By 2030, we want to cut our absolute CO2 emissions by 50% and achieved net zero by 2045. The science-based targets initiative validated this target in 24. Compared to 2020, we have already reduced our CO2 emissions by around 30%. Our sustainability efforts are not going unnoticed by rating agencies and customers. In 2024, the CDP climate change assessment WACKER earned the top A score. By offering high-performance, sustainable solutions, we support our customers' efforts to achieve their sustainability goals. A great example for this is Viv Unilever, who recently selected WACKER as a climate partner. This illustrates how sustainability is a clear business case, helping us strengthen our relationship with key global customers. Despite challenging conditions, WACKER remains on course and we keep to our established dividend policy. At our upcoming AGM on May 7, we will propose a €2.50 per share dividend. This equates to a payout ratio of 52% of our reported EPS of €4.85. We consistently generate dividends for our shareholders. Over the past 10 years, we have paid out almost 2 billion euros in dividends. Now looking to the guidance on the next page. For 2025, we forecast group sales of 6.1 to 6.4 billion euros with an EBITDA of 700 to 900 million euros. CapEx is expected to be significantly lower than last year when we have invested 666 million euros. This year, CapEx will be slightly above depreciation, which is expected to be slightly higher than 500 million euros. We see net cash flow substantially higher than last year and positive. We expect the overall market environment to remain challenging in 2025 and see higher risks for trade disputes. The good news is that we will continue to benefit from global megatrends in the medium and long term. Sustainability, digitalization, health and smart construction are among the key drivers of our business. At our Capital Markets Day in late September, we confirmed our strategy and long-term growth targets. By 2030, we target sales of more than 10 billion euros and an EVDA margin of over 20% and a ROCE two times of our cost of capital. Our focus today is on filling new capacities improving margins, and investing in targeted areas. We continue to invest in specialty growth and in production efficiency. Strategically, we concentrate even more intensely on the specialty business in the chemical divisions. This includes high-tech silicones for the energy transition and e-mobility, or polymers for modern smart construction. In biosolutions, the focus is on customized high-tech products and modern medical therapies. At Polysilicon, we focus even more on our semiconductor business. From these projects here, you can see that we are investing across our global footprint. This follows our overall strategy of investing in the regions for the regions. I'm convinced that WACKER is well positioned for the future. With our committed team and our innovative products and solutions, We enable the maximum trends of today. Now to Tobias for further details on our results. Thank you, Chris. Welcome, everybody. Looking at the profit and loss, sales during 2024 were 5.7 billion euros, down 11% over the year. The sales development was primarily due to lower prices and volumes sold in polysilicon. Pending tariffs on solar product imports into the U.S. created significant uncertainty in the market. On the other hand, sales in chemicals were, at the prior year level, with strong volume and sales growth, especially in silicones, partially offsetting lower sales in columnars. Biosolutions sales were markedly higher due to growth in biopharma. The full-year EBITDA came in at 763 million euros. While the group result was 7% lower year-over-year due to polysilicon, both chemicals and biosolutions showed a strong year-over-year improvement. The chemicals EBTA reached 542 million euros. This was an increase of 11%, driven by growth in specialty silicones. So, altogether, the group EBTA was below the prior year, but with very different dynamics across the segments. Now, looking at the last line items in the P&L, including the contribution from Sochonic, the result was 19 million euros from investments. Last year, we reported a small contribution from income tax due to previously unrecognized U.S. deferred tax assets. All told, net income was 261 million euros, equating to an earnings per share of 4 euros 85 cents. Our balance sheet shows strong financials with a high liquidity of 1.3 billion euros and 4.8 billion euros in shareholder equity. Fixed assets have climbed over the past couple of years and now total 3.4 billion euros, up from 2.5 billion euros at the end of 2021. So we have made substantial investment in expanding our capacity. There is a significant opportunity now to drive sales higher by leveraging these assets. Networking capital increased by about 350 million euros in 2024. This primarily reflects the higher inventory levels in Polysilicon. Pension provisions decreased by 83 million euros to 752 million euros due to the higher discount rates. With a high level of liquidity and low debt, we have a solid financial structure. At silicone sales in 2024, we are approximately 2.8 billion euros, up 2% year over year. At 347 million euros, EBITDA was 47% above the low 2023 result. The increase was primarily due to higher specialty volumes, good mix, and better plant loading. Overall, specialty volumes are improving, but margins were still well below target. We are examining our portfolio more granularly, aiming to focus on high margin applications and efficiency measures. For 2025, we expect sales in silicones to be approximately 10% higher than last year. The EVDA margin is expected to be slightly higher. We expect higher specialty volumes to drive this year's performance again. Business performance in silicones improved over the course of 2024 and the exit rates were clearly higher year over year. This positive trend has continued into the beginning of 2025 with demand for specialty products at a good level. Full-year sales in polymers were 1.5 billion euros The DA declined by 23% year-over-year to 194 million euros. Lower selling prices compared to the previous year primarily drove the development of sales and earnings. Volumes and polymers, on the other hand, were slightly higher year-over-year. This positive development was driven by higher demand for dispersions used in adhesives and coatings, offsetting some weakness in construction powers. While overall construction-related volumes were a bit lower year over year, our global production and technical center setup enabled us to drive volumes in Southeast Asia, Middle East, and the Americas. The growth in these regions allowed us to counter some of the headwinds in Europe and China. For 2025 in polymers, we expect sales to go by a low significant percentage, with EBTA margin at the prior year level. This year, we see slightly higher volumes in dispersions and dispersible powders with slightly lower prices. At BioSolutions, sales in 2024 were up 375 million euros, up 11%. EBTA increased to 35 million euros, up from 7 million euros in 2023. was a driver of the sales and EBITDA groups. At the beginning of June, we opened the new MR&A facility. For 2025 in BioSolutions, we expect sales of approximately 400 million euros with an EBITDA margin slightly above the prior year level. We do not see a major recovery in biotech yet and expect the project business to stay challenging. Full year sales in polysilicon came in at €949 million, 41% lower year over year. The primary drivers were the significantly lower solar grade volumes and prices. Semi, on the other hand, was resilient and the percentage of semi-grade polysilicon in the mix increased in 2024. Primarily due to the lower solar grade volumes sold, EBITDA decreased to 193 million euros. As a reminder, in the fourth quarter of 2024, we booked the IRA benefit of approximately 30 million euros. This credit relates to the US policy volume sold and produced in 2023 and in 2024. For 2025, We expect sales of 1.0 to 1.3 billion euros and EBITDA of 100 to 250 million euros. This is a wide range and it covers some different scenarios. The lower end essentially shows a no demand recovery scenario for U.S. compliant solar grade materials from today's levels. All outcomes above the lower end of the guidance require some degree of demand improvement. The upper end factors a significant demand recovery. From today's point of view, it is difficult to predict which scenario is more likely. In the second half of 2024, we reduced solar wave production volumes and we took additional steps at the start of this year. So today, our production volumes are aligned with sales volumes. With inventory in our Asian hubs, we can respond quickly to any improvement in demand. Let's move on to others. As you can see here, the CO2 compensation scheme helped back the other EBITDA during the first three quarters of last year. Then in the Q4, when the payment arrived, we saw a reversal of the debits to others during the first nine months. This dynamic will be the same in this year, so in 2025. However, when modeling the reported full year 2025 others, EBITDA, we believe that minus 40 million euros before siltronic seems reasonable. This amount is lower than last year due to primarily the lower cost absorption of group infrastructure. Also, when modeling Ziltronic's ad equity contribution this year, please consider the latest consensus figures, which call for a negative net income of approximately minus 90 million euros. This would be a substantial swing compared to last year, when we booked about plus 30 million euros for our ad equity contribution from Ziltronic, which is at 30%. Now, let's look Look at our net financial position. In 2024, we generated a cross-cash flow of 310 million euros. Cross-cash flow was held back by investments in working capital, with investments in inventory totaling approximately 369 million euros. The cash flow from investing activities was 636 million euros. As Chris spoke about, the main investments were in silicone specialties and in semi-grade polysilicate. Including the dividend payment of €149 million, we ended the year with a net debt of €691 million. For the first quarter of 2025, we see sales of approximately €1.5 billion and EBITDA of around €135 million. Before we start with the Q&A, let me summarize. is well positioned financially and strategically. We have made substantial investments, strengthened our asset base, and have a better regional exposure. Our specialty business is performing well, and we leverage our completed investments here. And we will continue investment in serving our customers in attractive markets.