Wacker Chemie beats Q1 core profit expectations as orders pick up
Adds analyst comment in paragraph 3, details about silicon division in paragraph 6, share movement in paragraph 10
April 25 (Reuters) -German chemical company Wacker Chemie WCHG.DE reported a 39% fall in first-quarter core profit on Thursday, largely due to lower selling prices, but still beat analysts' expectations on the back of an increase in orders and cost-cutting measures.
The speciality chemicals maker reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of 172 million euros ($184.2 million), beating the 150.2 million euros expected by analysts in a company-provided poll.
"I think the shares will react positively to this earnings release. EBITDA beat expectations, and silicones volumes appear to be recovering well. Cash flow performance was lacklustre, but as a whole, these are good results," Sebastian Bray from Berenberg said.
The Bavaria-based company said its first-quarter sales reached 1.5 billion euros, in-line with analysts' estimate, with the amount of incoming orders rising 8% from the previous quarter.
"Our customers have started to replenish their inventories from the recently very low levels. The demand for silicones in particular trended upward in the first quarter," CEO Christian Hartel said in a statement.
Wacker's silicones division's sales in the first quarter were up 17% compared to the previous quarter as customer demand grew. EBITDA more than doubled, due to plant utilisation rates, lower raw material prices, and positive investment income.
However, Hartel added that this could not yet be seen as a "distinct sign of a lasting turnaround."
In March, Germany's chemicals industry body VCI said it expects revenue to fall by 3.5% in 2024 and production to stagnate at a low level, citing high production costs and weak demand.
Wacker Chemie, which supplies polysilicon for roughly half the world's chips, also confirmed its earlier 2024 EBITDA forecast of 600 million and 800 million euros against 824 million in 2023, saying it expects volumes to grow this year, but selling prices to be lower.
The company's shares were seen up 1.9% in early Frankfurt trade.
($1 = 0.9340 euros)
Reporting by Antonis Pothitos and Anastasiia Kozlova in Gdansk; Editing by Kim Coghill, Varun H K and Ros Russell
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