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CREATING TOMORROW`S SOLUTIONS
2014 – A Year of Transformation
Wacker Chemie AG, November 2014
2014 – A Year of Transformation
November 2014
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Disclaimer
The information contained in this presentation is for background purposes only and is subject to
amendment, revision and updating. Certain statements and information contained in this presentation
may relate to future expectations and other forward-looking statements that are based on management's
current views and assumptions and involve known and unknown risks and uncertainties. In addition to
statements which are forward-looking by reason of context, including without limitation, statements
referring to risk limitations, operational profitability, financial strength, performance targets, profitable
growth opportunities, and risk adequate pricing, other words such as "may, will, should, expects, plans,
intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further", and similar
expressions identify forward-looking statements. By their nature, forward-looking statements involve a
number of risks, uncertainties and assumptions which could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements. These include, among
other factors, changing business or other market conditions and the prospects for growth anticipated by
the Company's management. These and other factors could adversely affect the outcome and financial
effects of the plans and events described herein. Statements contained in this presentation regarding
past trends or activities should not be taken as a representation that such trends or activities will
continue in the future. The Company does not undertake any obligation to update or revise any
statements contained in this presentation, whether as a result of new information, future events or
otherwise. In particular, you should not place undue reliance on forward-looking statements, which
speak only as of the date of this presentation.
2014 – A Year of Transformation
November 2014
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Our Business Portfolio is a Foundation for Growth…
WACKER BIOSOLUTIONS
WACKER SILICONES
 High potential for future
development
 No. 2 with global
footprint
 Leading positions in key
growth segments
WACKER POLYMERS
 No. 1 in dispersible
polymer powders
 No. 1 in VAE dispersions
 Global footprint
*)
FY 2013
Sales
€4.5 bn
WACKER POLYSILICON
Siltronic
 No. 1
 Cost and quality leader
 Technology leader, ranking
as no. 3
 Enabling industry growth
 Balanced base of customers
Note: Percentages based on external sales per segment
*) Others
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Strong Track Record:
Expecting strong Growth into 2017
Long Term Historic Sales Growth
Target 2017:
€6 - 6.5 bn
€m
7,000
~6% CAGR
6,000
€4.6 bn
€4.5bn
5,000
4,000
3,000
2,000
1,000
0
1997
1999
2001
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November 2014
2003
2005
2007
2009
2011
2013
2015
2017
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Mid-term Financial Targets
Target 2012 to 2017
Sales
EBITDA
ROCE
€6 - 6.5 bn
(~6% CAGR)*
€1.2 bn
(~20% margin)
> 11%
* CAGR 2012/2017
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Entering the Next Phase:
From Asset Growth to Cash Generation
Ratio of Capital Spending vs. Depreciation
capex between 1.3
and 2.2x depreciation
2005
2012
capex < depreciation
2013
capex >< depreciation
2017
2018
2022
Create
Leverage
Expand
2005 – 2012
2013 – 2017
2018 – 2022
Focus on capital intensive growth:
Focus on profitability and cash:
 Eight additional sites globally
 Execute cost roadmaps
Focus on selective expansion of
production network:
 Increased capacities 7x in
Polysilicon, 3x in VAE
dispersions, 2x Siloxane,
6x 300 mm wafer
 Leverage global asset base
The customer dimension:
 Focus on quality growth,
growing specialty sales
 Selective growth projects
 Exploring further Verbund
and debottlenecking
opportunities
 Invest below depreciation
 Global presence and market
penetration with technical
centers and global sales
structures
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Positioned for Sustained Sales and Earnings Growth
WACKER: A Leading Specialty Chemicals Company
Advanced
Materials
 Tech-based products ranging from standard to high value added
 Focus on innovation and customized solutions
Compelling
Growth
 Addressing high-growth markets
 Local presence in all regions
 Capitalizing on emerging markets growth
Strong
Cost Position
 World-scale plants, integrated production, proprietary process know-how
 Targeted cost reduction programs implemented
 Significant CapEx program concluded, now leveraging a global asset base
Leading
Market
Positions
 A global leader in most addressed segments and markets…
 … particularly at the individual customer level
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Create:
Global Market Presence
Technical Center &
WACKER ACADEMY
Market Penetration in all
Emerging Regions
China
Nünchritz
Canton, OH
Chino
Adrian
Local products and services
Moscow
Beijing
Burghausen
Akeno
Seoul
Dubai Kolkata
Shanghai
Mumbai Shunde
Korea
Focus on products for the
electronic market
Singapore
Jandira
India
Melbourne
Focus on textile applications
Brazil
Expanding Technical Center
presence, local products and services
22 Technical Centers
worldwide to service
customers and develop
products & applications
9 WACKER ACADEMY
sites provide training and
product know-how tailored
to our customers‘ needs.
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November 2014
South East Asia
Mobile technical center
Sales
TC
Academy
Plant
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Create: Sales Network and Customer Relations Building a Sustainable Competitive Advantage
Chemicals:
 Establishing a global network of technical centers
 Global sales network to create and develop specialty solutions
 Leveraging centralized upstream facilities into local growth opportunities
 Customer focus drives product evolution
WACKER POLYSILICON:
 Addressing the solar opportunity with specialized production technologies
 Supplier of choice, leading in quality and cost
Siltronic:
 Improved global production footprint for 300 mm
 Repeated Quality Award wins from industry leaders
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Leverage:
Shifting Focus to Downstream Products
Raw Material
Upstream
Methanol
Siloxane
Silicon Metal
Pyrogenic Silica
Downstream
Silicones
Electronic wafers
Vinylacetate
ethylene (VAE)
Vinylacetate
Monomer (VAM)
Acetic Acid
Starch/
Dextrose
Microbiological
fermentation
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November 2014
Construction
Automotive suppliers
Paints and coatings
Textiles, print and paper
Personal care
Solar wafers, cells and modules
Polysilicon
Ethylene
Customers’ Industries
Dispersible
Polymer
Powders (DPP)
Polyvinyl Acetate
(PVAc)
Therapeutic
proteins food
ingredients
Semiconductors
Engineered fabrics, coatings,
adhesives, carpet
Construction, remodeling,
insulation
Food, automotive
Food, life sciences, household
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Chemicals:
The Way Forward
 Strong and well established global market presence
 Growth opportunities in emerging markets
 Addressing global trends with advanced chemical products
 Leveraging existing upstream capacities will reduce capital intensity of growth
 Continuous productivity improvements and Verbund production support cost
competitiveness
 Target 2012 to 2017: Sales growth ~7% CAGR / EBITDA margin >16.0%
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Reduce Capital Intensity of Growth –
Leverage Existing Upstream Capacities
Upstream
Downstream
Global
Regional
Compounds &
Formulations
Local
 Silicon Metal
 Elastomers
 Compounds
 Siloxane
 Emulsions & Fluids
 SILMIX®
 VAM
 Resins
 Emulsions
 VAE dispersions
 Dispersible Powders
Capital Intensity
Value Creation
 2012 - 2017 growing share of specialties from 2/3 to 3/4 of sales
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SILICONES:
An Integrated Global Player in a Leading Market Position
Competitive Landscape 2013
2 raw
materials
Methanol
Sales Development (€m) – 5 years
Silicon Metal
Silanes
7 product
groups
Siloxane
Fluids &
Emulsions
Resins
1,600
Fumed Silica
OF Silanes
1,581
1,594
1,648
1,672
2010
2011
2012
2013
1,239
1,200
800
Elastomers
400
> 3000
products &
endless
applications
0
2009
Supply Chain
Market Characteristics
Others 14%
 Reduced cyclicality through broad market
penetration and wide customer base
WACKER 17%
 Historic growth rates 3% above worldwide GDP
Bluestar 7%
29%
Shin Etsu 11%
≈€10*
bn
Dow Corning 35%
 High entry barriers (capital and technology)
 Key drivers spur sustainable market growth
 Innovation broaden scope of applications
Momentive 17%
Silane/Siloxane backward integrated suppliers
WACKER JV participations fully consolidated
WACKER estimates
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Customization:
Combining a Unique Set of Properties
Hydrophobic
Formable
Adhesive
Electrically
conducting
Broad spectrum of adjustable
properties
Intrinsic properties
 Thermal stability
 UV-resistant
 Inert,
 Chemical resistant
amongst others
Hydrophilic
Form stable
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November 2014
Release
Insulating
Silicones are high performance
products, suitable for multiple
applications
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SILICONES:
Specialty focus creates Value
Standards  Exchangeable
Specialties  Specified properties
 Price elastic
 Value based pricing
 Low requirement for
technical service
 Technical service is a
key success factor
Customized
solutions
Standards
Business Strategy
 Increase our specialty business to 50% of Siloxane volume within 4 years
 Sell standards with low cost to serve
Siloxane Volume
Specialties 35%
Specialties 50%
2013
Standards 65%
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November 2014
2017
Standards 50%
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Optical Bonding: Partnering with “VIA Optronics” – Global
Operations and Fast Growth
The Challenge
The Solution: WACKER SilGel®
 Reflections (due to sunlight etc.) can easily
 A transparent silicone gel bonds the surface of
occur at Liquid Crystal Displays (LCD) due to a
design constraint that requires a gap between
the cover glass or touchscreen and LCD
 Applies to all kind of LCD displays in TV, smart
phones, tablets, notebooks, displays in cars,
planes & trains
2014 – A Year of Transformation
November 2014
the touchscreen to the LCD which prevents
reflections
Advantages of silicone gels:
 Outdoor readability, energy saving (reduce
brightness of displays), dampening
 In comparison to organic compounds:
highly elastic, non yellowing, reduced
shrinkage
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Silicones in Cars: Growing Number of Applications
Additional
Electric
Heater:
Gaskets
Air-Circulation:
Flaps, Gaskets
Vibration
Dampers,
Buffers
Wiper
Blades
Airbag
Coating
Rain Sensor/
Camera: Coupling
Cushion
Sunroof
Profiles
Interior:
Switches, Light
Guides,
Cupholders
Fuel Cell:
Gaskets
AdBlue Systems:
Heating Mats,
Gaskets
Actuator:
Membranes
Exhaust Pipe
Hangers,
Dampers
Spark Plug Boots,
Ignition Cables
Engine/Radiator/
Intercooler/EGR:
Seals, Gaskets
Hybrid Cables,
Connectors
ABS/ESP
controllers:
Sealing, Vibration
Decoupling Frame
Turbo Charger,
Radiator Hoses
Oil-System:
Anti-DrainBack Valves
PDC, Radar, Airbag
Sensors: gaskets
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November 2014
Lighting: Seals,
Lenses
Dust Covers,
CVJ Boots
Engine
Mounts
Wire Harness:
Connector, MultiCavity Seals
Car Key:
Keypads
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SILICONES:
Growth Target 6% with Improved Profitability
Our Roadmap 2017
1
Value creation
 We push our specialty business by investing in downstream
production and service close to our customers
2
Innovation
 We permanently investigate opportunities for organic replacement
to open up new markets for silicones
3
Cost
 We continuously improve our cost position through
operational excellence
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POLYMERS:
Global Leader in High Growth Markets
Sales Development (€m) – 5 years
Supply Chain
Raw Material Upstream
VAE
Downstream
Dispersions
DPP
Acetic
Acid &
Ethylene
Key Markets
1,200
Construction
Nonwovens &
Textiles
900
Adhesives
600
740
810
2009
2010
928
1,003
979
2011
2012
2013
Carpet
VAM
PVAc
PVOH
Coatings &
Paints
0
VAE = Vinyl acetate ethylene, VAM = Vinyl acetate monomer,
PVAc = Polyvinyl acetate, PVOH = Polyvinyl alcohol
DPP = Dispersible Polymer Powders
Capacity Landscape 2013 (Capacities)
Others
WACKER
2nd
in the market
Market Characteristics
 Diverse market and customer base
Others
WACKER
Dispersible
Polymer
Powders
300
VAE
Dispersions
2nd
in the market
 Historic growth above GDP
 Key trends, innovation and new applications drive
growth
 Moderate capital entry barriers and high technology
barriers in most segments
 Innovation and in-depth formulating expertise
broaden scope of applications
Source: WACKER estimates
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Key Growth Markets VAE Dispersions:
Replacement in Carpet and Caulks & Sealants
Carpet
Caulks & Sealants
Expand the use of VAE dispersions through
Replacement of SB Latex
Growth in caulks - mastics at expense of
vinyl acrylic and acrylic dispersions
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Key Growth Lever Dispersible Polymer Powder:
Transformation to Polymer Modified Dry Mortars
“WACKER On Wheels” in Vietnam and
Indonesia
Educational tool to close the gap on awareness
for Polymer technology in emerging markets
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Magicgrip® in India
Transformation from traditional method to
modified CTA method through Magicgrip®
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Polymers Targets continued Growth of 8% p.a.
Our Roadmap 2017
Expansion
 We invest in downstream production
and service close to our customers
2
Innovation
 We push new solutions beyond our core,
working in a global set-up with our R&D activities
3
Substitution
 We explore new substitution opportunities
in the non VAE systems
1
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BIOSOLUTIONS:
Acquisition SCIL – Bioengineered Pharmaceutical Proteins
 1,500l fermenter capacity for
pharmaceutical actives
 GMP* certified operations
 Protein refolding technology
complements WACKER portfolio
WACKER BIOSOLUTIONS
becomes a full-service provider for
the microbial manufacture of
biologics
*GMP = „Good Manufacturing Practice“, a standard in pharmaceutical manufacturing,
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POLYSILICON:
The Way Forward
 Fast cost decrease in Solar PV unlocks growth
 Polysilicon Market: 14% growth expected (2013 - 2017)
 Market growth on a broader base: more and more markets >100 MW or even >1 GW
 Prices expected to rise to reinvestment levels
 Pricing differentiates between Polysilicon qualities
 Competitive pressure drives cost and conversion efficiency –
WACKER leads in cost and quality
 Cost reduction roadmaps implemented to maintain leading cost and quality position
 Target 2012 to 2017: Sales growth ~7% CAGR / EBITDA margin >20.0%
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WACKER POLYSILICON Leading in Cost and Quality
Sales Development (€m) – 5 years
Production Chain
Raw Material
Upstream
Downstream
Key Markets
1,800
1,369
Salt
Polysilicon
Silicon Metal
Hydrogen
Electronic
wafer
Semiconductors
Solar
wafer
Solar
Modules
1,200
1,448
1,136
1,121
924
600
0
2009
Competitive Landscape 2013

TBEA 2%
WACKER 23%

29%
213 kt
REC 9%
Hemlock 12%
GCL 23%


OCI

16%
Source: Industry announcements; WACKER estimate
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November 2014
2011
2012
2013
Market Characteristics
Others 10%
DAQO 2%
Tokuyama 3%
2010
PV market growth still intact driven by increasing
competitiveness of PV electricity, despite declining
subsidies
Excellent product quality is key to highest conversion
efficiencies in solar
Cost and quality are both decisive for market success
Prices stabilized, but delayed capacity expansion
announced
Intense competition further drives industry
consolidation
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POLYSILICON:
Fast Cost Decrease of Solar PV Unlocks Growth
Roof-top System Prices*
LCOE & Electricity Price
 PV becoming very competitive
and easy-to-install
mature
market
household power price
Germany
young
market
Off-grid Applications
 PV can be built very fast and in
small increments
CA
China
TX
 Steep price decline of storage
solutions
Cheap electricity for remote areas
with no access to grid
1000
1400
1800
annual solar energy yield(kWh/kWp)
US
Germany
Module
BOS
BOS = Balance of System
*best practice Q2 2014
2014 – A Year of Transformation
November 2014
1.5 €/Wp
1.0 €/Wp
0.5 €/Wp
size of electricity market
Δ LCOE vs. power price
= room for positive NPV
(assumes full grid access)
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Polysilicon Market: Strong Market Growth at 14% CAGR
Expected
Global Polysilicon Shipments (kt)
360
half, flat due to continued inventory
correction and lower consumption
per Watt
CAGR 2013-2017: 14%
224
211
 2013 shipments with stronger 2nd
 Increasingly competitive C-Si PV
213
drives polysilicon demand
 Silicon-based PV offers highest
162
conversion efficiencies and proven
long-term stability at lowest cost
92
2009 2010 2011 2012 2013
Electronic
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November 2014
2017e
Solar
Assumption: 2017: 80 GW (incl. 10% thinfilm share); Silicon consumption < 5 g/Wp
in 2017; Shipment figures incl. time-delay
shipment/installation
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Polysilicon Supply & Demand Balanced – New Entrants Have to
Prove Competitiveness in Terms of Cost & Quality
Global Polysilicon Demand (kt) versus Capacity of Active Manufacturers
 Only a limited number of producers
still operating after consolidation
phase in 2012 & 2013
350
300
PV market:
2013: ~40 GW
2014: ~44-50 GW
2015: ~49-65 GW
 Additional capacity expected to
come online in 2015 – questionable
whether new entrants will produce
cost-effective
250
200
150
Capacity Announcements
100
Active Capacities
Total Demand (HIGH CASE)
50
Total Demand (LOW CASE)
Electronic Demand
0
2010
2011
2012
2013
2014
2015
Sources: market surveys, industry announcements, WACKER estimate
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Decreasing Prices Open Up New Markets – USA and Asia with
Highest Growth Potential
Country
2011
2012
2013
2014e
2015e
0.9 – 1.1
2.2 – 2.4
0.7 – 0.9
5.0 – 6.0
8.6 – 10.4
1.2 – 1.8
2.2 – 2.7
1.2 – 1.8
5.1 – 7.3
9.7 – 13.6
1.1 – 1.3
13.5 – 14.5
1.1 – 1.4
8.8 – 9.4
6.5 – 6.8
4.6 – 5.9
~44 – 50 GW
1.3 – 2.0
14.0 – 16.5
1.9 – 2.9
9.3 – 11.5
7.2 – 9.6
5.6 – 8.6
~49 – 65 GW
France
Germany
Italy
Europe other
Europe total
1.7
1.1
0.6
7.5
7.4
3.3
19.9
7.6
3.6
4.9
17.2
3.3
1.1
5.8
10.8
Australia
0.8
1.0
0.9
China
India
2.5
4.8
12.9
0.4
0.9
1.0
Japan
1.3
2.5
6.8
USA
1.9
3.3
4.8
Rest of World
1.3
2.1
2.8
28 GW
32 GW
40 GW
Total
Sources: EPIA 02/2012, 05/2013, 05/2014, Industry announcements, WACKER estimate
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Competitive Pressure drives Cost and Conversion Efficiency –
WACKER leads in Cost and Quality
Usable Ingot Length (%)
Production Costs (%)
Solar Cell Efficiencies (%) Cell Efficiency
Mainstream Multi
Distribution
Mainstream Mono
25
high-purity Polysilicon
Super Mono
100%
Number of cells
86%
20
76%
low-quality Polysilicon
66%
15
cells with
price discount
cells with price
premium
Ingot Yield
10
60%
70%
80%
90%
2004 2006 2008 2010 2012
Cell efficient
Higher quality
 longer usable length
 lower cost per wafer
Higher quality supports
greater efficiencies
 lower cost per wafer
Narrow distribution and
higher mean
 lower cost per wafer
Source: WACKER estimates
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POLYSILICON Expansion Tennessee (Poly 11):
establishing a Platform for Future Growth in the US
Tennessee – 20kt p.a.
Lower Electricity Cost in US (indexed)
100
Germany = Electricity Price
+ FiT Surcharge (2013)
+ Grid usage fee
+ Other charges
US =
List price
TN provider
June 2014
38
 Planned ramp up of Polysilicon production
in 2015
 Currency diversification for the Group
 Growth platform for chemical
products in the USA
Germany (Industry HighVoltage)
USA (TN)
Assumptions: Data based on Year end 2012, USD/EUR: 1.35
Source: WACKER estimates, market data
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Strong Focus on Cost and Productivity – Process Innovation
Specific Energy Consumption (kWh/kg)*
Labor Productivity (kg/h)*
Index = 100
Index = 100
100
-36%
+270%
71
370
292
64
100
2005
2013
2017e
2005
2013
 New deposition reactors
 Economies of scale
 New conversion reactors
 Yield improvements
 New process design
 Automation
* Solar polysilicon process only, indexed weighted ø of all plants
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2017e
* Total average for all sites, direct labor including analytics
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POLYSILICON:
Maintain Leadership in Cost and Quality
Our Roadmap 2017
 Competitive pressure drives module cost and conversion
efficiency
1
Cost
 Cost reduction roadmap implemented to maintain WACKER’s
leading cost position
 C-Si-PV moving towards efficiencies above 20% (module)
2
Quality
 Pricing differentiates between polysilicon qualities
 Develop products for all crystallization technologies in close
cooperation with our customers
3
Customer
 Keep broad customer portfolio to react flexibly on market changes
 Expand capacities according to market demand
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Siltronic:
The Way Forward
 Rising demand for 300 mm
 Continuous cost reduction programs in place
 Customer focus – recognized for outstanding performance
 Siltronic strategy - Focus on cash generation
 Target 2012 to 2017: Sales growth ~2% CAGR / *EBITDA margin >20.0%
* pro forma, excluding restructuring 2012
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Siltronic:
Focusing on 300 mm and Asia
Sales Development (€m) – 5 years
Value Chain
WACKER
Polysilicon
Siltronic
Ingots
Wafer
Key Markets
Semiconductors
1,600
1,025
1,200
800
992
638
869
743
400
0
2009
2010
2011
Sales Semi
2012
2013
Sales non Semi
Competitive Landscape 2013
Market Characteristics
Silicon Wafer Market Share (on USD basis)
 Semi and silicon wafer markets move in tandem
Global Wafers 6%
Others 6%
Siltronic 14%
 Historic silicon market growth of 8-12% CAGR with
last 3 years moving sideways
LG / Siltron 10%
 High volatility both annually and quarterly
Sun Edison 11%
 300 mm continues to grow while legacy diameter are
trending down
S.E.H. 27%
 PC era coming to an end. Market growth increasingly
coming from smartphone and tablets
SUMCO Group 26%
Source: Gartner (June 2014)
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Source: Siltronic estimates
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Siltronic: Industry Volume Development - Flattish in Past Years,
now Rising
Development of Wafer Diameters (mn cm² per month 3MMA*)
4,000
3,500
mn sqcm / month
3,000
2,500
SD
200 mm
2,000
300 mm
1,500
1,000
500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: SEMI up to Sep 2014; since Jul'12: data includes total GlobalWafers group
* 3MMA three month moving average
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Siltronic: Leading Wafer Area Growth - Shift from PC to
Megatrend Mobility
Wafer Demand 2013, bn. cm²
Growth 2015 vs. 2014
Ø ~ 5%
Mobility
18.5
PC and periphery
14.0
Living
10.5
Industry
5.5
Automotive
5.0
Storage
Others
3.5
1.5
~ 15%
~ 0%
~ -5%
~ 10%
~ 10%
~ 0%
~ -15%
Source: IHS Silicon Application Market Forecast Tool (Q3 2014, 25.08.2014)
2014 – A Year of Transformation
November 2014
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Siltronic:
300 mm Continuous Cost Reduction Program
Siltronic 300 mm variable Costs, relative per Wafer
-9%
-12%
-16%
>-10%
2010
2011
2014 – A Year of Transformation
November 2014
2012
2013
2014e
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Siltronic Strategy:
Focus on Cash Generation
Create
Harvest
2005 - 2012
2013 onwards
 High capital intensity
 Focus on 300 mm in Asia
 300 mm expansion
 No 450 mm investment
 Strengthen market position
with JV
 Continue rationalization outside
of Asia
 Leading edge technology
 CapEx below depreciation
 CapEx above depreciation
 Strategy: Focus on low capex and 300 mm in Asia
2014 – A Year of Transformation
November 2014
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WACKER:
The Way Forward
 Financial Targets for 2017
 Financial Stability & Profitability
 Summary: The Path to 2017
 Outlook 2014
2014 – A Year of Transformation
November 2014
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WACKER Financial Targets for 2017
Sales of €6.0 – 6.5 bn with Profit above Costs of Capital
Sales
2012
2013 guidance
2013
2014 guidance
2017 target
4,635
~ 4,500
4,479
Mid-single-digit
% increase
6,000 – 6,500
~6%
CAGR
EBITDA
795
Lower
679
Approx. 1,000
1,200
~20%
Margin
17%
Lower
15%
Substantial
Increase
to over 20%
ROCE
5%
lower
2.2%
Significant
increase
> 11%
24%
~ 500
11%; 504
Approx. 550
Below
depreciation
CapEx
(% of sales)
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November 2014
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Balance Sheet:
Financial Stability – Target Capital Structure
Group Balance Sheet – Target Structure 2017
Drivers
Drivers
 Equity ratio: Historical level ~40%
Non-current
assets
Equity
 2013-2017: CapEx below
depreciation
 Depreciation of certain polysilicon
assets accelerated from 2012
onwards
Financial debt
incl.
prepayments
Pension
provisions
 DIO: ~50 days and
 DSO: ~50 days despite increasing
globalization
Working
capital
 Minimum level for operations
Liquidity
2014 – A Year of Transformation
November 2014
 Dividend policy: in general,
minimum 25% of net income
 Prepayments almost fully repaid
by 2017
 Target: Net financial debt = 1x EBITDA
 Impact of IAS 19 considered
Liabilities /
other accruals
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Profit & Loss Statement:
Improving Profitability through 2017
WACKER P&L 2013 (€m)
€m
Sales
Cost of goods sold
Gross profit from sales
Gross profit margin (in %)
Selling expenses
Research and development expenses
General administrative expenses
Other operating income
Other operating expenses
Targeted Development until 2017:
2013
4,479
-3,815
664
15%
-272
-174
-112
255
-210
Operating result
Equity result
EBIT
Interest result
Other financial result
Income before taxes
Income taxes
Net income for the period
151
-36
114
-27
-57
31
-89
6
EBIT
Depreciation/amortization
EBITDA
114
564
679
2014 – A Year of Transformation
November 2014
 Gross profit margin with increase
of up to 550 bps, driven by
 Accelerating growth in specialties
 Improving market environment
in POLYSILICON
 Lower D&A in relation to sales
 Limited overhead growth – SG&A
to decrease to less than 7% of sales
 EBIT growth compensates higher interest
expense
 Tax rate reverting back to statutory tax rate
mid-term (~30%)
 Prior to Poly 11 ramp-up: Tennessee
investment reduces ROCE by up to 150 bps
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Aggressive Cost Roadmaps: Targeting > €100m in 2014
Measures
Chemicals
POLYSILICON
 WOS WACKER Operating
System: targeting continuous
cost decrease in specific
operating costs
 Raw Materials: expanded
supplier portfolio
 Raw material and energy cost:
optimized yields, loss reduction,
raw material and energy
recovery, process optimization
 Electricity: reduced
consumption
in major process steps
(conversion, deposition)
 Labor: reduce set-up times and
non-value-added activities
 Personnel Expenses:
continuous productivity
improvement
 Logistics: lean processes,
optimized packaging
 Technical spending: optimize
inspection cycles, spare part
storage
 Supplies: expanded supplier
portfolio
 Maintenance Expenses: standardization, spare parts logistics
(sourcing/storage level)
Siltronic
 Raw materials and energy
costs: optimize specific raw
material and energy
consumption, increase yield
 Supplies: reduce consumption
of supplies
 Labor: reduce personnel costs,
set-up times
 Site loading rules
 Process optimization across
the entire value chain
 Process yield enhancement
 Asset utilization: debottlenecking
 Total expected cost savings 2013: €200m  reached €225m
2014 – A Year of Transformation
November 2014
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Price Decline over €1 bn within Two Years (22% of Sales) –
Mainly in POLYSILICON
WACKER Group: Sales Development (€m)
5,000
4,910
158
703
4,500
4,635
270
366
301
Price
Volume
91
4,479
Currency
2013
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2011
Price
Volume
2014 – A Year of Transformation
November 2014
Currency
Spalte1
2012
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The Path to 2017:
WACKER Is an Attractive Investment
2017
Advanced
Materials
 Leading market shares
and global presence
Compelling
Growth
 Lower CapEx
 Growing share of chemicals
specialty products
Strong
Cost Position
Sales
€6 - 6.5 bn
(~6% CAGR)
EBITDA
€1.2 bn
(~20% margin)
 Well defined cost roadmaps
 Well positioned to harvest
the solar opportunity
ROCE
>11%
Leading
Market
Positions
2014 – A Year of Transformation
November 2014
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WACKER: Updated Guidance FY 2014
2013
Outlook
2014
4,478.9
Mid-single-digit % increase
678.7
Approx. 1,000
15.2
Substantial increase to over 20%
6.3
Substantial improvement
Net cash flow (€m)
109.7
Markedly pos. NCF at prior-year level
CapEx (€m)
503.7
Approx. 550
Net financial debt (€m)
792.2
Increase of around 300
Depreciation
564.4
Approx. 600
2.2
Substantial increase
Sales (€m)
EBITDA (€m)
EBITDA margin (%)
Group net income (€m)
ROCE
2014 – A Year of Transformation
November 2014
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CREATING TOMORROW`S SOLUTIONS
3rd Quarter 2014 – Conference Call Note
October 30th, 2014
Q3 2014 – Call Note
October 30th, 2014
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WACKER:
Strong Performance in Q3 supported by Special Effects
in €m
Q3 2014
Q2 2014
% QoQ
Q3 2013
% YoY
Sales
1,232.2
1,242.3
-0.8
1,165.4
5.7
229.5
51.4
28.2%
18.5%
-
14.4%
-
196.3
82.1
139.1
35.1
459.3
15.9%
6.6%
-
3.0%
-
119.0
29.4
304.8
5.4
2,103.7
2.43
0.64
279.7
0.09
>100
347.5*
EBITDA
EBITDA margin
EBIT
EBIT margin
Result for the period
EPS in €
167.9 *
107.0
*incl. retained prepayments and damages from cancelled and reorganized contracts: Q3/13 €13,2m; Q3/14 €92,3m
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November 2014
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Guidance Update: Expect now about €1bn in EBITDA for FY 2014
WACKER
Q3 2014 Comments
FY 2014 Outlook
 All segments with higher sales yoy
 FY sales above 2013
 EBITDA includes €92.3m special effects
 Further focus on cost roadmap
 Capex €153m, mostly for
Tennessee/POLYSILICON
 FY EBITDA margin >20% expected
 Net Cash Flow €178m
 FY tax rate due to ongoing better results
in Germany expected at about 40%
 Net financial debt €906m
 Net income €119m / EPS 2.43€
 Tax rate 34%, driven by higher result in
Germany
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November 2014
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Strong Performance in All Segments
Q3 2014 Sales1)
Q3 2014 EBITDA
2%
17%
18%
4%
2%
52%
Total:
€1,232.2m
23%
10%
20%
Total:
€347,5m
36%
14%
2%
Siltronic
WACKER SILICONES
WACKER POLYMERS
WACKER BIOSOLUTIONS
WACKER POLYSILICON
Others
1)
2014 – A Year of Transformation
November 2014
based on external sales
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Singapore 300mm Integration and Tennessee Expansion Drive
FY 2014 Net Financial Debt up by €300m YoY
Balance Sheet (%)
Assets
Total
€7.0bn €6.3bn
Characteristics 09/30/14
Liabilities
Total
€7.0bn €6.3bn
30%
 Non current assets: €4,742m
 Securities, cash and cash
equivalents: €687m
 Provisions for pensions: €1,582m
35%
 Net financial debt: €906m
66%
67%
22%
 Equity: €2,114m
17%
Equity
10%
13%
Pension
Accruals
Noncurrent
Assets
23%
Current
Assets
24%
Securities,
Cash & Cash E.
10%
23%
 Prepayments received: €731m
 Capex: €343m
Prepayments
22%
Financial
Debt
10%
09/30/14 12/31/13
2014 – A Year of Transformation
November 2014
15%
13%
Accruals &
Liabilities
09/30/14 12/31/13
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EBITDA and EBIT Impact of Special Effects - Overview
2013
Special Effects
Silicones: Siloxane JV effects
Q1
Q2
Q3
Q1
Q2
Q3
13.7
-
-
Polysilicon: Retained prepayments & damages
from cancelled contracts
32.2 23.8 13.2
8.4
114.0
0.0
92.3
EBITDA
32.2 23.8 13.2
22.1
114.0
0.0
92.3
- -31.1
-
-
-
114.0
0.0
92.3
EBIT
-
-
Q4
-
Siltronic: Special depreciation for disused assets
-
2014
-
32.2 23.8 13.2
2014 – A Year of Transformation
November 2014
-9.0
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Raw Materials: Si-Metal Spot and VAM* up, but Methanol down
Ethylene Contract (€/MT) Si-Metal Contract (€/MT)
1,400
2,200
Raw Materials 2013 (€m)
Chemicals
Others
Si Metal
VAM*
Ethylene
2,150
1,300
2,100
1,200
2,050
1,100
2,000
1,000
Source: ICIS, Ethylene Market Price
Europe, free delivered
2014 – A Year of Transformation
November 2014
09/14
05/14
01/14
09/13
05/13
01/13
1,900
Methanol
09/12
09/14
05/14
01/14
09/13
05/13
01/13
09/12
900
1,950
Source: Source: CRU-Provider,
Si-Metal Contract Price Europe free delivered
Costs of top 4 raw materials
21% of chemicals segment
sales
*VAM = Vinylacetate monomer
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Raw Materials: VAM* Shortage Drives up Costs
220%
VAM Avg Spot NW Europe = 878 €/MT = 100 (06/12)
200%
indexed
180%
160%
140%
120%
100%
80%
06/12
10/12
02/13
06/13
10/13
02/14
VAM Avg Spot Asia, ICIS
VAM Avg Spot East China, Chemease
VAM Avg Spot US Gulf, IHS
VAM Avg Spot NW Europe, ICIS
06/14
USA: IHS Spot Export-Avg., FOB US Gulf Coast / Europe: ICIS Spot FD NW Europe / Asia: ICIS Spot CFR NE Asia / China: Chemease Spot, Avg., East China
*VAM = Vinylacetate monomer
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November 2014
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1 Cent Change in USD/€ Exchange Rate had an Impact of €4.4m
on FY-EBITDA in 2013, unhedged*
USD/EURO Development
External Sales and Net USD
Exposure
1.40
2,909
Chemicals
202
1.35
845
1.30
Polysilicon
1.25
736
Siltronic
09/14
07/14
05/14
03/14
01/14
11/13
09/13
07/13
05/13
03/13
01/13
11/12
1.20
09/12
385
Source: www.x-rates.com/d/USD/EUR/hist2014.html
2014 – A Year of Transformation
November 2014
External Sales FY 2013
Net USD Exposure FY 2013
*Standard Hedging policy = 50% of net exposure, 12 months rolling forward
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WACKER: Group Sales 6% above Previous Year
Sales in €m
Q3 2014
Q2 2014
%QoQ
Q3 2013
%YoY
CHEMICALS
780.7
773.3
1.0
732.9
6.5
WACKER SILICONES
447.5
441.2
1.4
429.4
4.2
WACKER POLYMERS
288.0
285.5
0.9
265.4
8.5
45.2
46.6
-3.0
38.1
18.6
WACKER POLYSILICON
252.4
273.2
-7.6
235.7
7.1
Siltronic
216.0
210.4
2.7
197.1
9.6
39.8
39.5
0.8
48.1
-17.3
-56.7
-54.1
4.8
-48.4
17.1
1,232.2
1,242.3
-0.8
1,165.4
5.7
WACKER BIOSOLUTIONS
Others
Consolidation
2014 – A Year of Transformation
November 2014
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WACKER: EBITDA w/o one-offs around 65% above Q3/2013
EBITDA in €m
Q3 2014
Q2 2014
%QoQ
Q3 2013
%YoY
123.1
109.1
12.8
109.6
12.3
WACKER SILICONES
69.5
57.4
21.1
59.2
17.4
WACKER POLYMERS
48.2
43.5
10.8
45.1
6.9
5.4
8.2
-34.1
5.3
1.9
180.3*
87.9
>100
46.6*
>100
33.2
28.1
18.1
5.2
>100
Others
9.1
4.8
89.6
5.2
75.0
Consolidation
1.8
-0.4
n.a.
1.3
38.5
347.5
229.5
51.4
167.9
>100
CHEMICALS
WACKER BIOSOLUTIONS
WACKER POLYSILICON
Siltronic
*incl. retained prepayments and damages from cancelled and reorganized contracts: Q3/13 €13.2m; Q3/14: €92.3m
2014 – A Year of Transformation
November 2014
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WACKER: Issuer, Contact and Additional Information
Issuer and Contact
Additional Information
 WACKER CHEMIE AG
Hanns-Seidel-Platz 4
D-81737 Munich
ISIN:
DE000WCH8881
WKN:
WCH888
 Investor Relations contacts
Deutsche Börse:
WCH
Mr. Joerg Hoffmann, CFA
Tel. +49 89 6279 1633
[email protected]
Ticker Bloomberg:
CHM/WCH:GR
Ticker Reuters:
CHE/WCHG.DE
Mrs. Judith Distelrath
Tel. +49 89 6279 1560
[email protected]
Listing:
Frankfurt Stock
Exchange
Prime Standard
Financial Calendar
11/25/14 – 11/26/14
Deutsches Eigenkapitalforum in Frankfurt
03/17/15 – FY Results 2014
04/30/15 – Q1 Results 2015
05/08/15 – Annual Shareholders’ Meeting
08/03/15 – Q2 Results 2015
10/29/15 – Q3 Results 2015
2014 – A Year of Transformation
November 2014
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