Wacker Chemie Q3 Earnings Call Highlights

Key Points

• Strong third-quarter performance: Sales rose 9% to €1.47 billion, while operating EBITDA excluding a €35 million polysilicon contract-cancellation gain increased 63% to €182 million. Pricing, improved product mix and cost savings offset subdued demand in several markets.
• Cost savings are supporting earnings: Wacker’s PACE program delivered €145 million in savings through the first nine months, with approximately €200 million expected for full-year 2026. The company reaffirmed its €625 million–€750 million EBITDA forecast and expects to finish in the upper half.
• Polysilicon remains challenged: Lower solar volumes and pricing, high energy costs and inventory reductions continue to weigh on the business, while U.S. policy has not yet created sufficient demand for domestic polysilicon. Net debt is expected to decline to about €200 million by year-end as the company maintains disciplined capital spending.

Wacker Chemie ETR: WCH reported higher third-quarter sales and operating earnings as pricing actions, product mix improvements and cost savings offset subdued demand in several end markets and continued volatility in energy, raw-material and logistics costs.

Chief Executive Officer Christian Hartel said group sales rose 9% from a year earlier to €1.47 billion. Reported EBITDA was €217 million, including €35 million of special income in the polysilicon business from the cancellation of a solar contract. Excluding that item, operating EBITDA increased 63% to €182 million from €112 million a year earlier.

“Demand stayed subdued in many end markets,” Hartel said, while geopolitical tensions continued to contribute to cost volatility. He said the company was focusing on measures it can control, including operating performance, competitiveness and capital allocation.

PACE Savings Support Earnings

Wacker said its PACE cost and efficiency program generated more than €60 million of savings in the third quarter and €145 million in savings during the first nine months. Chief Financial Officer Tobias Ohler said the company expects approximately €200 million of PACE savings for full-year 2026.

Ohler said the savings counted under PACE are structural rather than temporary. Most of the savings achieved in 2026 have come from non-personnel measures, while a larger share of labor-related savings is expected to take effect next year. Wacker has an agreement with its workers council to reduce 1,600 positions in Germany over three years, he said.

After depreciation of €114 million, third-quarter EBIT was €103 million. Net income reached €87 million, or €1.68 per share.

Wacker reaffirmed its full-year EBITDA guidance of €625 million to €750 million and said it expects to finish in the upper half of that range. Ohler said operational performance would otherwise point toward the upper end, but the company expects higher bonus accruals tied to stronger-than-expected target achievement. He also noted that approximately €70 million of one-time income recorded during the year would not recur.

Segment Results Reflect Pricing, Mix and Cost Actions

• Silicones: Sales increased to €729 million, supported by pricing, mix and foreign exchange effects. EBITDA rose 35% year over year to €116 million, helped by pricing, mix and cost performance. Wacker continues to expect mid-single-digit percentage sales growth for the full year and an EBITDA margin above the prior-year level. The company is targeting growth opportunities in e-mobility, healthcare and electronics, though Ohler said the third-quarter EBITDA margin of about 16% should not be viewed as a new floor.
• Polymers: Sales reached about €381 million and EBITDA increased 58% to €75 million. Higher prices, lower operating costs under PACE and raw-material volatility supported earnings. Ohler said the quarter’s margin was above average and should not be extrapolated, adding that the result did not reflect a construction-market recovery. Volumes were broadly similar to the prior year, he said.
• Biosolutions: Sales were €100 million, with growth driven by biopharma and life-science chemicals. EBITDA was €8 million. Wacker continues to expect around €30 million of full-year EBITDA. Management said it is seeking to improve commercial execution and deepen customer relationships to fill capacity in its contract development and manufacturing platform.
• Polysilicon: Sales were approximately €225 million. Reported EBITDA was €44 million, including the €35 million contract-cancellation gain. Semiconductor-grade volumes rose by a double-digit percentage, but lower solar volumes, lower solar pricing, high energy costs and inventory reductions continued to weigh on profitability.

Wacker maintained its expectation for polysilicon sales to be similar to the prior year, with EBITDA close to the prior-year level including special income. Ohler corrected an earlier reference to sales growth, saying that double-digit growth applies to semiconductor volumes rather than total polysilicon sales.

Management said the company’s reduction of solar-grade polysilicon inventories has constrained earnings because production is running at low utilization. Ohler said inventory levels in the business were down 25% from a year earlier.

U.S. Polysilicon Policy Remains Unresolved

Hartel said the U.S. Section 232 proclamation issued in August, which established a minimum import-price program and tariffs on polysilicon derivatives, has not yet achieved its intended goal of revitalizing U.S. polysilicon production.

“It does not incentivize the use of U.S.-made polysilicon,” Hartel said. Wacker remains in discussions with the U.S. administration and continues to evaluate two potential paths for the business: a semiconductor-and-solar scenario or a semiconductor-only scenario.

Management said a workable framework would need to create meaningful near-term demand for U.S.-made material, including incentives for buyers outside the U.S. to use American polysilicon. Hartel said the company would not rush a decision on its operations until there is greater clarity and certainty.

Cash Flow and Capital Allocation

Net financial debt declined to €261 million at the end of September, and Wacker now expects it to fall to around €200 million by year-end. Net cash flow totaled €476 million in the first nine months, aided by €355 million in proceeds from reducing the company’s Siltronic stake to below 15% and a €120 million liquidity effect from revised funding arrangements for phased-retirement obligations.

The Siltronic holding will now be measured at fair value through other comprehensive income rather than under the equity method. Future valuation changes will be recognized in equity, while future dividends will be recorded in profit and loss, Ohler said.

Wacker reported approximately €2 billion in liquidity and a 49% equity ratio at the end of September. It expects 2026 capital expenditures of about €300 million and said future annual capital spending will remain below depreciation, in a range of €300 million to €400 million.

Hartel said the company’s REFOCUS strategy is intended to make Wacker “leaner, faster, and more efficient,” with targets including GDP-plus growth, a structural EBITDA margin of 15% plus or minus two percentage points, and a return on capital employed above 10% and above its cost of capital.

About Wacker Chemie (ETR:WCH)

Wacker Chemie AG, together with its subsidiaries, provides chemical products worldwide. It operates through four divisions: Wacker Silicones, Wacker Polymers, Wacker Biosolutions, and Wacker Polysilicon. The Wacker Silicones division offers silanes, siloxanes, silicone fluids, silicone emulsions, silicone elastomers, silicone resins, and pyrogenic silica. The Wacker Polymers division provides binders and polymeric additives, such as dispersible polymer powder and vinyl acetate-ethylene dispersions, which are used in construction, paper, adhesive, paint, coating, and basic chemical industries.

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