The WACKER Group’s Prospects

According to our projected scenario, we expect the world economy to grow in 2018. Most momentum will come from emerging markets in Asia, with stable growth in Europe and the USA.

Investment Spending and Production

In 2018, our capital expenditures will focus on production plants for intermediates and downstream products. WACKER’s priority is to grow its business organically. We continue to see good organic-growth potential for applications and in markets. Capital expenditures of around €470 million in 2018 will be higher than last year, but will remain below depreciation. Most investment spending will be for WACKER SILICONES. Some 55 percent of capital expenditure is aimed at securing the continued growth of our operating activities and 45 percent is for optimization and modernization projects.

At WACKER SILICONES, we are constructing a new pyrogenic-silica plant in Charleston, Tennessee (USA). Other projects include facilities to manufacture liquid silicone rubber in Burghausen (Germany) and Zhangjiagang (China). We are also building a new silicon-metal facility in Holla (Norway). At WACKER POLYMERS, we are expanding VAE dispersion plants in Nanjing (China). Further projects include a new dispersion plant and spray dryer in Ulsan (South Korea). WACKER BIOSOLUTIONS is modernizing a large-scale fermentation plant acquired in Spain.

In 2018, we will conclude several investment projects and bring the facilities on stream.

Maintenance costs will amount to about €400 million in 2018.

Future Products and Services

WACKER POLYMERS is intensifying its activities in polymeric binders for sophisticated coating and construction applications. In particular, demand is rising globally for functional additives used in water-repellent construction materials and impregnating agents. Market researchers at Lucintel expect the global market for waterproofing coatings to grow at an average annual rate of 4 percent, reaching around US$24 billion by 2021. We aim to expand our market position in this segment with our specialty dispersions. They are used in hydrophobic coatings that reliably protect kitchens, bathrooms and foundations against moisture.

Global demand for functional paints and coatings is also increasing. The specialty dispersions we have developed for stain-resistant floor and wall coatings enable a wide variety of stains – such as red wine, ketchup and oil – to be wiped away easily and, in most cases, completely. According to Research and Markets, this coatings segment will grow by 6.6 percent a year on average and will account for sales of US$4.6 billion by 2026.

In the construction segment, WACKER SILICONES has three pillars for growth: chemical products for construction coatings and materials; silicone sealants; and silane-modified hybrid polymers. Construction chemicals focus on new impregnating agents and construction coatings for cement-bound industrial flooring. Our silane-modified hybrid polymers also have a bright future. They are becoming increasingly important as a technology platform for formulating construction sealants, industrial high-durability adhesives, coatings, and waterproofing membranes. For example, in 2017, we launched an innovative hybrid polymer for formulating joint sealants that are elastic and extremely flexible, and bond well. According to MarketsandMarkets, these polymer-based adhesives and sealants will see annual volume growth of around 9 percent.

In the wound-dressing market, experts project growth of 6 percent annually through 2021. To meet this demand, WACKER is developing specialty silicone gels and silicone-resin-based adhesive systems. For large or chronic wounds, the medical sector is increasingly turning to silicone-coated wound dressings. We also anticipate volume growth in silicone additives and processing aids. Such additives are needed to develop innovative polymer compounds. We are developing new silicone products in the cosmetics and personal-care sectors. In Asia, our focus is on silicone elastomer gels for formulating skincare products and make-up. In China and India, we are expanding our portfolio of silicone fluids and emulsions for shampoos and conditioners. Asia has already become the world’s largest market, with the value of goods sold exceeding €100 billion.

Wacker Biotech has developed a reliable, state-of-the-art process that will enable Chiesi, a pharmaceutical-industry customer, to produce its Retavase^® biopharmaceutical in a safe, cost-efficient manner to supply the US market. The product obtained approval from the US Food and Drug Administration (FDA) in late 2017. The medication is used to treat acute heart attacks in adults. For pharmaceutical company Fresenius Medical Care, Wacker Biotech has developed an industrially scalable process for manufacturing a special antibody fragment used in apheresis products for selective dialysis. A study by Persistence Market Research indicates that the biologics sector will expand by an average of 9 percent a year to reach about US$275 billion by 2020.

Demand for high-quality polysilicon will also grow over the coming years. Crystalline solar cells have the dominant position worldwide. They are made of multicrystalline silicon in most cases, but demand for monocrystalline cells is increasing continuously. Such premium products are highly efficient and generate more electricity from the same amount of sunlight. WACKER, as a technology leader, is very well positioned here. With our hyperpure polysilicon, we are ideally placed to supply the fast growing segment for monocrystalline cells.

Research & Development

The Group’s research and development work remains focused on key strategic projects. WACKER intends to spend 10 percent of its R&D budget on key projects in 2018 (2017: 11 percent). Our R&D work prioritizes the highly promising fields of energy, electronics, consumer care, biotechnology and construction applications. Energy storage and renewable energy generation will be a strong point of focus.

We introduced the WACKER Silicone Award in 1987, and will be presenting what is now the 17th such award in September 2018, during the 9th European Silicon Days in Saarbrücken (Germany).

Digitalization

We will move WACKER’s digitalization program forward with a wide range of individual projects across the entire company. To enhance customer management, we are introducing a new customer information system.

Employees

We expect employee numbers to grow in 2018 due to expanding production capacities at WACKER SILICONES and WACKER POLYMERS in Asia and at the Charleston site in the USA. Prudent personnel planning will remain a priority.

Sustainability

WACKER’s sustainability goals for the next few years are described in the Non-Financial Statement. An additional goal as of 2018 is to lower specific nitrogen oxide emissions by 25 percent in the period until 2022. In 2018, the regional focus of WACKER’s sustainability management activities will be on the Americas, where we will examine environmental, health and safety aspects at individual sites. In 2019, the focus will be on Europe.