Update: Wacker expects silicones revenue to decline as prices drop
German group expects weaker results in 2023 due to global economic slowdown
Munich, Germany – Wacker Chemie AG expects overall group sales, including revenue from its silicones business unit, to decline in 2023 due to slowing demand and a decline in selling prices.
In a statement issued 14 March, the German group said it anticipated that its chemical business would post lower sales this year, due chiefly to declining selling prices.
"We already noted a drop in orders in a number of sectors in the summer, especially in the construction industry," said Wacker in its annual report.
Prices of standard silicones, it added, are dropping in China and Europe and in some segments such as the textile industry, demand is weak.
The situation, Wacker said, makes it difficult to keep prices for its products "at a good level".
"In view of the current economic forecasts, we expect this trend to continue at least in the first half of 2023," it added.
Wacker Silicones, it said, is expected to generate sales of between €3.1 billion and €3.3 billion, down from €3.45 billion reported last year.
The group did not provide an earnings outlook for the business but said the earnings margin is expected to be around 15%, compared to 14.5% reported last year.
In 2022, Wacker Silicones’ sales grew by 33% to €3.45 billion, due mainly to “significantly higher selling prices as well as to product-mix and exchange-rate effects.”
The silicones segment saw earnings rise 59% to €876 million due largely to higher selling prices.
Group-wide, Wacker said 14 March that it expected sales to fall to between €7 billion and €7.5 billion, from €8.2 billion reported last year.
Group earnings are expected to come in between €1.1 billion and €1.4 billion, significantly lower than the €2.0 billion reported last year.
“From today’s point of view, this strong operational growth, which Wacker was able to achieve in the past couple of years, will not continue in 2023,” said the German group.
This, it said, is due to the fact that the global economy has slowed significantly.
Noting volatile economic and political environment globally, CEO Christian Hartel added thnat high energy prices, especially in Europe, continue to impact Wacker’s business.