Wacker Chemie sees slight decline in sales and earnings for 2024

Credit: REUTERS/MATTHIAS RIETSCHEL

Adds share price move and analyst comments in paragraphs 12-14

March 12 (Reuters) - Germany's Wacker Chemie WCHG.DE said on Tuesday it expected a slight dip in sales and profit for 2024, though shares of the chemical maker jumped on signs of a good start to the year.

"I believe the company has indicated a robust start to Q1 2024 - some encouraging signs in my view from silicones segment," said Berenberg analyst Sebastian Bray.

Investors appeared to concur, sending shares up 6.5% in morning trading.

Still, the company anticipated business development to slow slightly compared to last year, and 2024 sales to come in between 6 billion and 6.5 billion euros.

Wacker Chemie, which supplies polysilicon for roughly half the world's chips, expects 2024 annual earnings before interest, taxation, depreciation and amortisation (EBITDA) of 600 million to 800 million euros, against 824 million euros in 2023.

The Bavarian-based company said it expected weakness in the market to continue with lower selling prices, but also expected volume growth and positive product-mix effects at its chemical divisions.

It confirmed the preliminary results for 2023 it posted in January, with EBITDA dropping 60% year-on-year to 824 million euros for 2023.

It said that EBITDA for the first quarter is expected to be at the level of the prior quarter, while sales are seen at 1.5 billion euros for the first two months of 2024, lower than 2023.

"The weak economy continues to affect customer order trends in numerous application fields," Chief Executive Christian Hartel said in a statement.

Hartel said that while demand for silicones picked up in some customer sectors at the start of the year, there was still some constraint in the construction industry.

Chemical companies have been under pressure for over a year, forced to reduce inventories on lower demand from industrial clients as energy prices soared.

In the long-term, Wacker Chemie expects sales of over 10 billion euros with the EBITDA margin exceeding 20%.

The company will propose an annual dividend of 3 euros per share, down dramatically from 2022's dividend of 12 euros per share during a record year for profits.

According to analysts at JP Morgan, Wacker Chemie's first-quarter guidance was better than expected and noted it reflected a stronger order intake in the first quarter, especially in silicones.

($1 = 0.9144 euros)

(Reporting by Antonis Pothitos and Anastasiia Kozlova in Gdansk; Editing by Michael Perry and Bernadette Baum)

((antonis.pothitos@thomsonreuters.com; +48 58 769 65 78;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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