Speech Dr. Staudigl (PDF | 61 KB) - Wacker Chemie

Not for Release before March 16, 2011, 10:30 a.m.
Annual Press Conference
for 2010
Speech by
Dr. Rudolf Staudigl
President & CEO
Wacker Chemie AG, Munich
March 16, 2011
Munich, Germany
Check against delivery!

Good morning ladies and gentlemen, welcome to our annual press conference.
In 2010, the world economy recovered from the deepest recession since WWII
more rapidly and dynamically than anticipated. The first six months, in particular,
1
saw a rapid upswing. Looking at the full year, GDP grew substantially across every
region – especially in Asia, which reinforced its role as the engine of the global
economy.
WACKER benefited greatly from the momentum on Asian markets. Robust de-
mand for polysilicon and semiconductor wafers boosted our business in the re-
gion. Over the past few years, our chemical divisions have hugely expanded their
production capacities, particularly in China. As a result, we can supply our cus-
tomers there more intensively with locally-manufactured products.
Overall, WACKER generated sales of over 4.7 billion euros in 2010. Up 28 percent
against the previous year. This growth was due to brisk demand for WACKER
products in all our major target industries. Our sales record was mainly fueled by
Siltronic’s robust gains and WACKER SILICONES’ and WACKER
POLYSILICON’s strong performance.
Earnings outpaced sales by a wide margin. EBITDA – earnings before interest,
taxes, depreciation and amortization – amounted to about 1.2 billion euros in
2010. Almost double the prior-year figure. The EBITDA margin rose to over
25 percent, returning to 2008’s high level. Earnings growth was primarily sup-
ported by stronger sales volumes and revenues. High capacity utilization positively
impacted specific production costs.
All in all, WACKER ended 2010 with net income of half a billion euros. Another
record result. Each business division contributed toward this success. Sales and
earnings at all units were considerably better than in 2009.
Our semiconductor business generated especially robust growth. Siltronic bene-
fited from strong electronics demand from industry and consumers. Sales soared
more than 60 percent to over 1 billion euros. Stronger sales volumes made for
Check against delivery!

2
significantly higher capacity-utilization rates. As a result, manufacturing costs were
lower than a year ago. Equally important, prices for some silicon wafer diameters
exceeded prior year’s levels. All these factors helped Siltronic generate an
EBITDA of almost 90 million euros. In 2009, it had posted a loss of over
160 million euros. Naturally, this improvement is not the end of our efforts. We will
continue working on increasing the profitability of our semiconductor business.
Siltronic, though, is definitely on the right track.
Our chemical operations performed very satisfactorily – especially our silicones
division. Here, demand for our products was particularly strong – across every in-
dustry and region. In full-year 2010, we generated silicone sales of almost
1.6 billion euros – 28 percent more than a year earlier. Earnings rose even more
sharply than sales. At 230 million euros, EBITDA was 46 percent above the prior-
year level. Earnings were primarily fueled by strong sales-volume gains and our
low specific production costs.
Despite 2010’s subdued construction-sector trend, our polymers division increased
its sales by 9 percent – to over 800 million euros. This growth was mainly fueled
by strong demand for dispersions and dispersible polymer powders. EBITDA also
rose. Earnings, however, were held back by much higher ethylene prices.
At our biosolutions division, sales climbed to over 140 million euros – up
36 percent. EBITDA more than doubled. There were two reasons behind this
strong performance. First, demand was very high in every product segment. Sec-
ond, 2010 was the first time that gumbase had been fully consolidated in the divi-
sion over an entire year. Previously, this operation had belonged to our polymers
division.
Last but not least, I come to our polysilicon division. In 2010, it reinforced its role
as a growth driver and earnings engine for the whole Group. Robust demand, es-
pecially from the solar industry, and additional production output boosted the divi-
sion’s sales by 22 percent to almost 1.4 billion euros. Compared to 2009, we pro-
duced a third more polysilicon in 2010 – over 30,000 metric tons in total. Earnings
growth was even slightly stronger than sales. EBITDA rose by 41 percent to
Check against delivery!

730 million euros. A key factor here was our technological-leadership position,
which enables us to produce top-quality polysilicon at a very low cost. Although
German feed-in tariffs for solar energy have been reduced, our poly business has
3
remained constantly strong. In 2010, we concluded a series of high-volume, multi-
year contracts – at attractive prices and involving prepayments by customers for
future deliveries. As a result, our entire plant capacity – both existing and under
construction – will be almost fully utilized until the end of 2014.
Ladies and gentlemen, I have completed my review of divisional developments.
Now, I would like to return to the Group’s financial statements and look at key data
from the statement of cash flows.
Net cash flow reached over 420 million euros in 2010. This means: we funded our
capital expenditures – almost 700 million euros in total – entirely out of our own
cash flow. This success reflects both the strength of our operations and the strong
rise in advance payments by customers for future polysilicon deliveries.
I think, ladies and gentlemen, that these figures speak for themselves. WACKER
is in extremely good financial shape. From this position of strength, we success-
fully concluded, or strongly advanced, some key investment and portfolio meas-
ures in 2010.
By purchasing a silicon-metal site in Holla, Norway, we took an important step to-
ward securing our raw-material base. Acquired from the FESIL Group in mid-2010,
the site has an annual capacity of about 50,000 metric tons. This means that we
now cover almost a third of our silicon needs through captive production. The ac-
quisition, which cost about 65 million euros, is a good investment – especially in
times of rising silicon prices and ever-tightening raw-material markets.
In November 2010, we officially launched siloxane production, with our partner
Dow Corning, at Zhangjiagang. This milestone marks the completion of our key
investment project in the highly promising Chinese market. The investment and
start-up costs were higher than originally planned. One needs to bear in mind that
Check against delivery!

this is a very extensive, integrated production complex that was built, in effect, on
a greenfield site and in a new market.
With the completion of this project - which promises additional growth potential -
we have, however, fully met our goal of being able to supply customers in the re-
gion more effectively from the world’s largest integrated silicone site. At the same
4
time, we prepared the ground for further expanding our silicone business in China
and across Asia.
In 2010, we also pushed ahead with production-capacity expansion for polysilicon.
In April 2010, we officially started up Burghausen’s Expansion Stage 8, and
achieved its full capacity of 10,000 metric tons in the second quarter. The con-
struction of our polysilicon plant in Nünchritz progressed very well last year. At the
moment, we are busy installing the production equipment, and will bring the plant
on stream before year-end, as planned. In December 2010, we decided to build a
new polysilicon plant with an annual capacity of 15,000 metric tons in the US State
of Tennessee.
As you see, ladies and gentlemen, our main focus remains on growing through our
strengths – whether in Germany or in the world’s main economic regions. Our fig-
ures also reflect this clearly. In 2010, WACKER generated 81 percent of its sales
through customers outside Germany. That’s almost 3.9 billion euros.
With 36 percent of Group sales, Asia remains our largest market – and the one
with the strongest growth. Our sales in this region amounted to over 1.7 billion eu-
ros. Thanks to strong demand among chipmakers, our silicon-wafer business per-
formed particularly well. We generate close to 60 percent of our Asian sales in
China, including Taiwan. Sales in Greater China almost reached the billion-euro
threshold for the first time. Solar-grade polysilicon business was very robust there
– because China is home to numerous solar-cell and module manufacturers. India
was another region where we posted double-digit growth.
Check against delivery!

5
In our European markets outside Germany, sales climbed sharply in 2010 – reach-
ing almost 1.2 billion euros. Since we supply products to virtually every industry,
we benefited widely from the economic rebound.
In Germany and the Americas, we also achieved double-digit growth. In Germany,
our silicones division, in particular, reported above-average growth. In the Ameri-
cas, sales were fueled by semiconductor and chemical business, and by solar-
grade polysilicon.
Robust customer demand and higher plant utilization led to an increase in the
Group’s workforce. Employee numbers rose by almost 700 last year. Other con-
tributing factors included our acquisition of the silicon-metal plant in Holla and a
silicone site at Jincheon in South Korea. On December 31, 2010, WACKER had
16,300 employees worldwide – just under 5 percent more than a year earlier. Of
this total, some 12,200 work in Germany and about 4,100 elsewhere in the world.
Ladies and gentlemen, I have arrived at the end of my review of Group developments
last year. It is no exaggeration to say that WACKER is in stronger shape than ever
before in its history. That applies to our operative performance, and to the Group’s
assets and financial position. Our equity ratio climbed to almost 45 percent. As for net
financial liabilities – which is the balance of liquidity and financial liabilities – we
posted a surplus of over 260 million euros, as of December 31, 2010.
Given the Group’s very good earnings performance and good financial position,
we think we are justified in raising the dividend significantly. At the Annual Share-
holders’ Meeting, the Executive and Supervisory Boards will propose distributing a
dividend of 3 euros and 20 cents for 2010. The resultant distribution ratio is a third,
based on the net income allocable to Wacker Chemie AG’s shareholders.
We will suitably reward our employees, too, for the Group’s success, through vari-
able-compensation components. During the economic crisis, our employees made
pay-related concessions. By doing so, they helped mitigate the demand slump’s
impact on the Group. Now that the Group is doing well again, it is time to finan-
cially recognize our employees’ commitment and hard work. The profit-sharing
Check against delivery!

6
bonus for WACKER employees in Germany, amounts to over 100 million euros for
2010.
Ladies and gentlemen, what are our expectations for the current year? In short,
the signs point to continued growth – both for the world economy and for
WACKER.
According to analysts, the global economic upturn will continue during the current
year. The pace of growth, however, will be slower than in 2010. Momentum will be
strongest in Asia, with the large economies of China and India showing sustained
growth. GDP in every other region is expected to be above prior-year levels, too.
Looking back at the first two months of 2011, we share these expectations. In
January and February, the upswing continued to benefit our operations. Group
sales were much higher year on year. In every business field, demand was high
and sustained.
On the downside, the robust recovery is pushing up raw-material costs. In January
and February, the prices for our key raw materials – silicon, ethylene and metha-
nol – were significantly above the prior-year average. At the moment, it is not
really clear how prices will develop. In general, though, we expect costs to con-
tinue to rise. Compensating for this will not be easy. Nevertheless, we are very
confident that we can increase our full-year sales and achieve a very good operat-
ing result for 2011.
Supplying our production plants at competitive prices is a crucial task performed
by our procurement teams. In our Annual Report, there are four examples showing
how the teams strive to strike a fine balance between quality, price and supply se-
curity.
This year, we will meet rising customer demand by bringing new production capac-
ity on stream and by making additional investments. All in all, we are planning to
invest about 950 million euros in 2011. This figure includes the polysilicon capac-
Check against delivery!

ity-expansion projects at Burghausen and Nünchritz, which we announced on
Monday of this week.
The main investment focus will be on our polysilicon division. In the second half
year, we will launch production at our new 10,000-metric-ton plant in Nünchritz.
This milestone will boost our current capacity of more than 30,000 metric tons by
7
25 percent. This year, we will also start constructing polysilicon facilities at our new
Cleveland site in the US State of Tennessee. The production complex will have an
annual capacity of 15,000 metric tons and is to be completed by the end of 2013.
Totaling €1.1 billion, the project is the single largest investment WACKER has ever
made.
A completely new site is, of course, more expensive initially than a comparable
expansion at an existing site, where infrastructure is already in place. Strategically,
though, the new site will make our polysilicon operation much more robust. This
fresh capacity will give us more independence from high energy prices in Ger-
many. And also from exchange-rate fluctuations, since the site is outside the euro-
zone. In my opinion, we can be certain that the additional quantities will be sold.
After all, our customers value the outstanding quality of our polysilicon. We have
already contractually secured virtually the entire output of Tennessee for 2014.
It is already clear that our capacities – both existing and planned – will not be
enough to cover customer needs in the long term. Consequently, we have decided
to increase polysilicon capacities at Burghausen and Nünchritz – by 10,000 metric
tons in total. The investment in this debottlenecking measure amounts to around
130 million euros. We expect the first polysilicon from this measure next year, with
the full additional amount becoming available in 2013. As a result, our total capac-
ity will expand to 67,000 metric tons by 2014 – reinforcing our position as a leading
global supplier.
As in the past, we see opportunities for further growth in our semiconductor and
chemical segments. We expect silicon-wafer demand to increase during the year –
especially in the 300 millimeter segment. New devices, such as tablet PCs and
smartphones, and the growth of image and video applications, will fuel demand for
Check against delivery!

8
memory chips and high-performance processors. This trend should drive our plant-
utilization levels and, possibly, push up prices, too. We expect Siltronic to post
higher sales and earnings in 2011. During the year, we intend to expand capacity at
our Siltronic Samsung Wafer joint venture in Singapore – thereby meeting market
growth in Asia.
Our silicone and polymer business will benefit strongly this year from accelerating
demand in emerging economies – and will generate higher sales, as a result.
Greater prosperity in countries like Brazil, China and India, plus increasing urbani-
zation and infrastructure activity, will fuel our sales volumes for silicones, dispersi-
ble polymer powders and dispersions. We also anticipate higher sales at our bio-
solutions division in 2011. Key growth drivers here include our gumbase business.
WACKER is the global leader in this market – a position we intend to strengthen,
especially in Asia.
Ladies and gentlemen, we have entered 2011 with great confidence and from a
position of strength. The Group is in excellent financial shape. Thanks to our long-
term investment strategy, we have established a very solid basis in the world’s
growth regions over the last few years – above all in Asia. The major global trends
that spur our business are intact. Energy efficiency and renewable energy genera-
tion, the reduction of CO2 emissions, greater prosperity in emerging economies,
and the advance of digitization – all these trends fuel demand for our products
and, in turn, boost growth.
All in all, we expect this year’s sales to exceed the 5-billion-euro threshold. On the
earnings front, higher raw-material costs will hold back growth. And so will start-up
costs at our new polysilicon plant in Nünchritz. Nevertheless, we expect EBITDA
to reach 2010’s high level again.
Ladies and gentlemen, I have arrived at the end of my review. My colleagues and I
will now be available to answer your questions.
Thank you for your attention.
Check against delivery!