Despite the easy comparables, management increased its guidance once again, especially on the profitability level. The beat to consensus was not meaningful (top line: +2.5%; profitability: 0%), but the reported figures were above our expectations. Silicones was a quite nice surprise. Polysilcon seems to be on its way to historic heights.
Companies: Wacker Chemie AG
Wacker, like its peers, had a head start into beating its own rough guidance as well as our expectations and consensus, which was mainly attributable to significantly higher volumes as the passing on of higher raw material prices did not make a meaningful contribution. The top-line development helped the profitability line, which was additionally supported by the ongoing cost-cutting programme. As we felt a certain conservatism in the earlier guidance, it looks to us as if management has greater
Or Polysilicon’s ‘reincarnation’, which is expected by management looking at the strong profitability guidance and the potential contributors.
The high dividend proposal (€2.00 per share; AlphaValue: €0.50) looks to us like a sounding for a strong 2021. As Wacker had already announced preliminary figures (not very difference to this), the focus lies on the details and the 2021 perspectives.
After today’s management presentation, we have become more confident for 2021.
Wacker Chemie’s preliminary figures confirmed our expected profit increase in Q4, bringing Polysilicon’s EBITDA back into the black, also on a FY basis. The chemicals divisions painted a mixed picture in the last quarter, but all remained on the profitable side. Our top line as well as EBITDA expectations were beaten. The same was true for consensus.
Wacker’s Q3 figures showed a clear profitability improvement in Polysilicon and Polymers was a real positive surprise. We had expected a stronger performance in Polysilicons, but the figures met our punchy expectations at group level. Consensus was beaten.
Wacker’s reported figures confirmed our broad picture of the company. The weaker performance was mainly driven by lower volumes rather than lower prices. The implemented cost-cutting measures did not really materialise. Consensus was barely beaten.
We value Wacker’s first virtual Investors Day as a good approach to communicate with investors, but it failed in a key aspect: helpful information. In essence, management did not provide additional strategic guidance nor additional figures. Our expectations might have been too high, but some cost figures on the months-ago announced cost-cutting measures would had been highly appreciated as, on the contrary, Wacker is willing to accept Polysilicon’s cash drain also for an undefined future.
Wacker has been working on its still loss-making polysilicon business, but the losses have not gone go away. Thankfully, Wacker is also active in the oil-based value chain, which gave EBITDA quite a nice push in addition to some lower corporate costs. In the light of the pandemic, management initiated some measures (lower capex) as expected.
The Q1 figures were better than expected, especially profitability, which is also true for consensus.
... but excludes the potential effects from COVID-19 and the cost-cutting programme. The reported FY figures were pretty much in line with those already communicated. Management’s dividend proposal does not reflect confidence. We understand that Wacker is struggling with the potential COVID-19 impacts, but that the (positive and negative) effects from the cost-cutting programme are still not determined, which does not look very professional to us.
In a manager’s training (?) book there is usually a chapter on how a manager should behave in an ‘emergency’ situation. It looks to us as if Wacker’s management has done just this. The announced efficiency programme pulls the ‘usual’ strings, but we don’t see the additional strategic announcements. So the proposed measures (local ones still have to be accepted by German employee representatives) are unlikely to be very meaningful.
Wacker’s preliminary report confirmed our cautious view on company’s management as we think a necessary (?) write-down is one thing, but not providing a strategic solution for the ailing polysilicon business is another thing. The photovoltaic business value chain has become dominated by Chinese companies for many reasons over the past year, but there are only some small business adjustments in this regard. We highly recommend any kind of solution for Polysilicon.
It is a confession! The announcement of the impairment of Polysilicon’s assets is waving the white flag to Chinese competitors, which dominate the largest photovoltaic market with some friendly governmental help. On the other hand, the announcement confirms your view on the company, which has remained too long in the polysilicon business without any good response to the changing market environment. As already announced, a cost cutting plan will be put in place and we recommend the publication of
After the most recent profit warning (a few days ago), one may have thought there was just one contributor forcing management to cancel its guidance, but the Q3 report shades more light: the other large divisions also have issues here and there. But Polysilicon still remains a tumbling giant. Nevertheless, management has failed to provide more information about the announced cost cutting / fitness programme.
Management clearly missed the right time to define the right strategy for Polysilicon. It looks to us as if the division will turn out to become a money tomb, despite the fact that it has good access to the largest photovoltaic market, China. The recent profit warning and the initiation of a cost-cutting programme underpin our view: should Polysilicon still stay with the company? We would say: PolysilEXIT!
Additionally, management will miss FY guidance and adjusted it accordingly.
...on the recovery of the (Chinese) PV market. Polysilicon’s positive EBITDA contribution seems to be becoming a fleeting star, which had some help from a positive one off. Silicones were a bit less profitable than expected owing to pricing pressure in standard products. Helped by the one-off, profitability was above our expectations and beat consensus.
Despite management’s confirmation of the FY top -line and profitability (EBITDA) guidance, some adjustments (higher D/A and tax rate) are resu
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Companies: AFC Energy plc
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Companies: ITM Power PLC
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Companies: Strix Group PLC
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Companies: FO 88E DEC EME GTC TRIN UOG WEN
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Companies: Alumasc Group plc
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Companies: James Latham Plc
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Companies: eEnergy Group PLC
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Companies: Empresaria Group plc