Wacker Chemie Aktie

Ladies and gentlemen, welcome to the Wacker Chemie AG Q1 2026 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Joerg Hoffmann, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Welcome to the Wacker Chemie AG conference call on our first quarter 2026 results. Dr. Christian Hartel, our CEO, and Dr. Tobias Ohler, our CFO, will walk you through the presentation. The press release, our IR presentation, and detailed financial tables are available on our web page under the Investor Relations section.

Please note that management comments during this call include forward-looking statements involving risks and uncertainties. We encourage you to review the safe harbor statement in today's presentation and look into our 2025 annual report for information on risk factors. All documents mentioned are available on our website. Chris?

Good afternoon, everyone. Thank you for joining our earnings call for the first quarter of 2026. Despite the ongoing weak demand in many of our customer industries, Wacker had a solid start to the year. Group sales came in at EUR 1.41 billion, 5% below last year. This was primarily due to FX headwinds. On the other hand, EBITDA climbed by 45% year-over-year to EUR 173 million. The primary driver of the higher EBITDA was our PACE cost program, followed by pull-forward effects from customers.  We have made good progress with our PACE program so far, and we have benefited from lower spending and costs already in the first quarter.

The aim of the program is to achieve annual savings of more than EUR 300 million in 2028. PACE is designed to sustainably enhance Wacker's competitiveness. Our efforts are focused on reducing our fixed manufacturing and administration costs. We are lowering technical spend and addressing over-scoping. We are optimizing structures in operations by merging units, tightening budgets, and cutting discretionary spending.  We implement, for example, in procurement, new bidding systems to foster greater competition among suppliers. Yet our efforts go beyond pace and pure cost savings.

We are simultaneously streamlining our structures and processes and sharpening our business model. All of this makes Wacker fit for purpose and enhances our long-term competitive position.  While the cost savings were the primary driver of the strong growth in EBITDA, pull-forward effects from advanced customer orders supported the better-than-expected first quarter results. In mid-March, markets responded quickly to the conflict in the Middle East. Supply disruptions drove up raw material and energy prices. Our procurement teams pivoted quickly to secure critical materials.

We quickly announced price increases to counter rising costs. Applying lessons learned from the unprecedented raw material inflation during the COVID period, we have a playbook at hand. We can draw upon that, and it helps us navigate through current challenges.  Both silicones and polymers saw customers' advanced orders pulling them forward into the first quarter. This was likely triggered by security of supply concerns and longer shipping times from Asia.

The other 2 segments did not see any meaningful pull-forward effects. Polysilicon continued with its strong growth in semi with the new edging line strengthening our leading position. BioSolutions benefited in the first quarter from the timing of contracts. Here, the overall market remains challenging, and we remain focused on filling existing capacities.  

Now, before I move on to the guidance on the next page, let me highlight a new investment that enables sustainable solutions. In Japan, we have just commissioned a new production line for thermally conductive silicones. This will allow us to meet growing demand for specialty silicones in applications such as batteries for the e-mobility sector.

The performance of batteries is affected by heat, and our thermal interface material, known as Tennessee are essential high-performance materials and battery packs. EVs show strong growth, and this new asset positions us well.  

Now moving on to the guidance on Page 4. We confirm our full-year 2026 EBITDA guidance while adjusting our sales expectations upwards.

We now anticipate sales to increase by a high single-digit percentage as we raise prices in chemicals to effectively counter high raw materials.

Our absolute EBITDA expectation is unchanged, and we expect EBITDA to be in the range of EUR 550 million to EUR 700 million.  With a solid start to the year, we are on track to reach our full-year expectations. That said, our outlook continues to be subject to a high degree of uncertainty. This is clearly due to the unprecedented developments in the Middle East and the still unresolved U.S. trade proceedings on imports of polysilicon and its derivatives. 

 

In summary, we remain confident and alert. We have confidence due to the steps we've taken. We are addressing raw material inflation with price increases and cutting costs on the PACE. However, we are cautious about the development of end markets. We know that conditions can change unexpectedly. Our responsibility is to navigate whatever challenges arise with agility and discipline. With that, let me hand over to Tobias, who will discuss the group and segment performance in more detail.

Thank you, Chris. Welcome, everybody. Looking at the profit and loss statement. Sales during the first quarter of 2026 were EUR 1.41 billion. Group sales were down 5% year-over-year, mainly due to the negative FX effects. EBITDA came in at EUR 173 million versus EUR 119 million a year ago. Chemicals grew earnings by 18% year-over-year. EBITDA reached EUR 166 million, up from EUR 140 million a year ago. The improvement was driven primarily by pace.

Cost savings supported the higher gross profit and lower SG&A expenses. Higher sales and utilization rates in March due to the pull-forward effects also supported the positive earnings development. 

Others held back the reported EBITDA by minus EUR 30 million versus the minus EUR 51 million last year. This year's lower charge in others resulted from the lower CO2 compensation offset, or, in other words, the credit to the divisions.

In the first quarter, this offset was around EUR 18 million versus EUR 40 million a year ago. After depreciation of EUR 120 million, EBIT came in at EUR 52 million. All told, net income was a positive EUR 15 million, equating to an earnings per share of EUR 0.21. We are pleased with the initial successes achieved in our PACE cost program. However, we remain at the beginning of this program, and we need to continue to work hard to reach our interim goal of achieving EUR 200 million in savings in 2026.

Looking at Page 6, our balance sheet continues to show a solid financial structure with EUR 3.82 billion in equity and a high level of liquidity of EUR 1.44 billion. Our liquidity position was clearly supported by our targeted efforts to reduce investments in working capital last year.

In the first quarter of 2026, net working capital increased by EUR 119 million over year-end 2025, reflecting seasonality in our accounts receivable. Inventories were largely flat.

Now, looking at the operating segments, starting on Page 7. At Silicones, sales in the first quarter of 2026 were EUR 708 million, down 5% year-over-year. This was primarily due to the negative FX effects. 

On the other hand, the first quarter sales were 17% higher quarter-over-quarter due to seasonality. At EUR 117 million, EBITDA was up 13% versus the prior year. This increase was primarily due to the pace as well as higher volumes. The emerging Middle East conflict led to significant pull-forward effects towards the end of the quarter. Due to the recent raw material inflation, we announced price increases in the quarter.

We have updated our 2026 Silicones outlook. Despite negative FX effects, we now see sales being a low single-digit percentage higher due to higher volumes and prices. Our expectation for the EBITDA margin is essentially unchanged, and we continue to see a slight dip slightly above prior year. From today's perspective, end market demand in many customer segments remains weak, and our announced price increases will primarily offset raw material inflation without altering our overall absolute earnings expectations significantly. 

 

At Polymers, sales were EUR 333 million, 8% lower than last year and up 7% on the previous quarter. Sales in the first quarter of 2026 were held back year-over-year by FX effects, softer prices and overall lower volumes. EBITDA, on the other hand, increased by 33% year-over-year on cost control and lower raw material costs. As seen in silicones, pull-forward effects led to improving order intake at the end of the quarter, and we announced price increases to address raw material inflation.

We have updated our 2026 polymers outlook. Sales are now expected to be a low double-digit percentage higher than prior year. Higher prices due to raw material pass-through will be partially offset by negative FX effects.

Our EBITDA margin expectation is essentially unchanged and is forecasted to be slightly higher than prior year. As in silicones, the higher sales are not forecasted to have a significant impact on full year EBITDA due to the raw material inflation from today's perspective. At BioSolutions, sales were EUR 100 million, up 9% year-over-year due to project timing. EBITDA in the first quarter of 2026 came in at EUR 13 million, benefiting from higher sales and cost management. The timing of project completions also supports the quarterly result. Some projects in the fourth quarter of 2025 were pushed into Q1. And at the same time, some projects scheduled for the second quarter were completed ahead of time.

Our outlook for the full year 2026 for BioSolutions is unchanged. We see sales up by a high single-digit percentage with an EBITDA at around EUR 30 million. The market environment remains challenging, and we remain focused on strengthening our commercial activities, filling capacities and on cost management. At polysilicon, sales in the first quarter of 2026 came in at EUR 226 million, 8% lower year-over-year due to lower prices for solar and continued low demand for solar.

Semi, on the other hand, continues strong. Our semi volumes are growing nicely and the new etching line is performing very well. This asset clearly supports our business' overall resilience and strengthens our leading market position.

EBITDA was EUR 23 million in the first quarter. This level of earnings is comparable to the past few quarters. The better mix and good cost performance were able to offset the higher energy costs this year. For 2026, our outlook in polysilicon is unchanged. We expect sales to be a low double-digit percentage higher than prior year. EBITDA is forecasted to be at the prior year level despite higher energy costs in the year. Earnings are supported to be significantly higher in semi sales and from efficiency gains. On the other hand, solar remains challenging. As Chris said, our outlook does not include any significant effects from trade policies.

Now let's look at the development of our net financial debt on Page 11. In the first quarter of 2026, we generated a gross cash flow of EUR 77 million, driven by typical seasonal pattern in chemicals, higher trade receivables held back the gross cash flow by EUR 108 million. Inventories were largely flat. Cash flow from investing activities came in at EUR 109 million, significantly down from EUR 197 million a year ago. Our major investments were concluded last year. CapEx will be around EUR 300 million in 2026 versus EUR 466 million last year. Our focus is now on filling the new capacities, and this should allow us to keep CapEx well below depreciation levels for years to come.

At the end of the quarter, we ended with net debt of EUR 964 million.

Before we start with the Q&A, let me summarize. We had a solid start to the year and even surpassed our own expectations due to push-forward effects from advanced customer orders. The first quarter EBITDA shows clear progress towards our full year forecast and the cost savings under PACE by delivering tangible savings. We are at the beginning of this cost program, and we need to remain focused and work hard to achieve our ambitious goals. I am confident that our efforts here will sustainably enhance Wacker's competitiveness.

Against this backdrop, demand in many of our customer industries remains weak overall, and the crisis in the Middle East increases macroeconomic uncertainty. Raw material and energy prices have climbed meaningfully. Although order intake has improved, visibility remains short, volatility is high, and unseen risks may arise from the Middle East conflict. Therefore, our full-year outlook is subject to a high degree of uncertainty from geopolitics, supply chain risks, demand stability, and trade policies. Now we are happy to address your questions.

[Operator Instructions] Our first question comes from Anil Shenoy from Barclays.

The first question is on pre-buying, which you said was mainly in silicones and polymers. I was wondering if you could just give us some color on which products in these segments have seen the most pre-buying, like in silicones, whether it was the standard silicones or more downstream silicones. Similarly, in polymers, if you saw any advantage from the backward integration into VAM in Europe. So any color on that would be very helpful.

Secondly, I was just wondering about Q2 and the impact of price increases, the raw material inflation, and the timing difference between them. You increased the prices of silicones and polymers at the end of Q1. So I'm assuming that, that will impact in Q2. In that case, when would you see the raw material inflation? Would it be sometime in Q2? Or have you already started seeing it? So in effect, I'm trying to understand, is there a possibility of a windfall gain in Q2 and possibly Q3 as well?

Anil, a very good question, Tobias here. Starting also with the first question on the pre-buying of silicones and polymers. I mean, it was when we had the call for the full-year results, just mid-March, and the real surge in order intake came around that period. And that's why our sales were running EUR 50 million higher than expected in March, and that is both covering silicones and polymers. To be frank, it's broad-based. I would rather say it's focused on the region Asia, where we have seen the strongest impetus also for silicones and polymers, but you can't pick a segment. And it's been both for specialty silicones and standard silicones.

I mean there was not so much change in the portfolio and the mix.

With respect to the price increases, we reacted really immediately after that, yes, inflation on the cost side was appearing and coming towards us. But you can be sure that, yes, it rolls through the supply chain with a time lag. So it has not been affecting us cost-wise in the first quarter. But also, the price increases, I mean, which we announced in the first quarter, were not effective in the first quarter. I mean, maybe in Asia or in China, where you have monthly or weekly or even biweekly pricing. But beyond that, no meaningful raw material and energy impact yet on the cost side, and no meaningful pricing effect yet on the sales side. There will be, yes, over the course of the second quarter and then in the latter half of the year, a much more significant impact from that.

And maybe, Anil, let me add on that on the pricing side. As we said in the speech, I mean, I think we have a good playbook in place for bringing in these price increases. Many peers did the same thing, which I think creates, overall, a constructive pricing environment, yet it's not something that is super simple. Of course, you have to convince your customers. It's day-to-day hard work, and our teams are working on it. So our aim is really to be successful here.

The next question comes from Christian Faitz from Kepler.

Two questions, please, on 2 segments. First of all, in Polymers, you're now forecasting a sales increase in the low double-digit amount. I'm just trying to get my head around this with a minus 8% performance in Q1. Has business since then so dramatically improved that this is now a possibility? I mean, in mid-March, you still saw a pretty much flat development, if I remember correctly. So we would have to count on significant improvements throughout the entire year. 

And second, in BioSolutions, can you give us any idea about the timing effects you flagged in Q1, i.e., the project delays from Q4 feeding into Q1 and the pull-forward projects that were originally planned for Q2'26? On your EBITDA forecast of just about EUR 30 million for this year, isn't this a bit conservative considering the robust performance of Q1, where you also mentioned cost management as a key factor? And would that not hold for the remainder of the year and thus lead to higher profitability in BioSolutions?

Christian, Tobias here, starting with your first question on the dynamics in Polymers. As I mentioned before, the cost increases start to kick in in the second quarter and then for the remainder of the year. And the same goes for the price increase. From the order of magnitude, guided by sales around the prior year level to up low double digit in Polymers, you can calculate that we are talking about a 3-digit million number that we need to increase our sales prices. And as Christian mentioned, we have the playbook in place that is different by region. While we work with surcharges in Europe, we have super dynamic pricing in Asia and formula pricing in the U.S. So we will see that impact that we are significantly above the prior year, starting in the second quarter in Polymers.

BioSolutions?

Yes, on your BioSolutions question. So BioSolutions delivered the EUR 30 million EBITDA in Q1 and the EUR 100 million in sales. And yes, you're right. This benefited from the project timing in both directions, as you pointed out, some Q4 projects were completed in Q1, and some Q2 projects finished ahead of schedule and went into the Q1 numbers. I would say it is the nature of the CDMO and pharma project business. Therefore, for Q2, we would expect a step down from Q1 because the projects scheduled originally for Q2 have already been completed.

The pipeline continues to develop, and we have project activity throughout the year. The full year target of around EUR 30 million, we believe, remains appropriate.

And if you make the math then and the EUR 17 million, which is remaining, that would be roughly EUR 5 million to EUR 6 million per quarter. That would actually be consistent with the run rate we saw in Q2 and Q3 of last year. And don't forget, we still see the CMO market remains challenging. Also, don't forget, because you asked for the cost-effectiveness. The BioSolutions division already started cost measures 2 years ago. So the PACE savings are not one-to-one related to BioSolutions for this year, and in the following years, some of these effects have already been achieved. Therefore, we still believe that the target guidance is the right one.

The next question comes from Peter Spengler from DZ Bank.

I have 2. First on polysilicon and Asian PV demand. So could you elaborate on what you are seeing in the Asian market outside of China, specifically, is the recent increase in energy pricing leading to an acceleration in demand for PV installation in Southeast Asia? The second question is on your U.S. polysilicon import situation. Could you provide us with an update on the situation there? And I'm particularly interested in your perspective on current inventory levels and any shifts in customer purchasing behavior?

Peter, thank you for your questions. Let me start with the PV demand. You mentioned Southeast Asia. I think in general, I would say that the world at the moment is recalibrating its view on renewables in general and especially on solar. And I think we will probably see an uptick in overall PV demand. That would be my personal view on this. And of course, this is a positive at the end of the day for our business. I guess that a lot of the PV demand in Southeast Asia will be supplied from China. That would be my estimate.

On the solar side in the U.S. in 2032, I mean, there's actually not so much more update. You know that the DOC filed the report to the President that was at the end of March, and the President now has 90 days to give a final solution, a final answer on this. We don't know in which direction it goes. I think we just have to wait until this is the outcome. And this also impacts customer behavior. So I would say it's fair to say that everybody now is in a wait-and-see mood, as to what comes out of that 32 decision.

Peter, with respect to your questions on the inventory levels in polysilicon, I had mentioned in my speech that the overall inventory was largely flat, and that is to be divided into the chemicals being slightly up because of seasonality and preproduction, also ahead of some turnarounds, and polysilicon inventory levels down. So the solar demand is soft, as we mentioned, but we are running all plants at minimum utilization that is possible. And from that, we were in the position to at least slightly reduce our polysilicon inventories in the quarter.

The next question comes from Matthew Yates from Bank of America.

A couple of questions, please. The first is around the cost base. I was just looking at the headcount numbers you disclosed in the release. 

I think you're down about 300 positions since the start of the year. And correct me if I'm wrong, I think we talked about 1,500 targeted in totality. Just wondering how to think about the lag in people leaving and coming off the payroll? Or put another way, of the EUR 200 million or so cost savings targeted for this year, can you give us a number of how much you realized already in the first quarter, and then we can think about what's still to come?

The second question was specifically on polymers, and I guess, the concept of net pricing. It's a little bit confusing to me, at least, that if I take something like VAM, there are some regions where you're long, and there are some that you're short. In the past, you've seen significant squeezes when raw mats have gone up, but I understand you have sort of changed some of your contracts to have higher frequency repricing. The guidance today hasn't changed in terms of still expecting margins to be a bit higher this year. Is that because you're still waiting to see how much raw mats move? Or are you confident that you can pass through whatever is necessary as far as you're aware today?

Matthew, Tobias here for the first question on pace. As we said, the overall target is to achieve savings of more than EUR 300 million starting or being fully effective in the year 2028, gross savings. And for this year, 2026, we are targeting EUR 200 million. So we had a good start in pace, and we have some good progress, but the savings profile is not linear, definitely. So we already began implementing some pace measures in late 2025. And the more effective ones are the non-personnel measures on budgets, on technical spend, and on some structural procurement savings. So these are already effective. There's also exactly the effect that you were seeing in the numbers, that we have reduced headcount. We have reduced headcount abroad. We have also slightly reduced headcount in Germany, but that is still a minor part of the savings.

So if I put it together, for the first quarter, we could say we have roughly EUR 40 million. And then we have to increase the run rate, and we are confident that we can achieve EUR 200 million for the full year because the personnel measures will kick in mostly in the next year.

As you know, we are still in discussions with the workers' council. It's not concluded yet, but headcount reduction in Germany will have a major impact starting in 2027. But we had a good start in Pace as an efficiency program, and that's a lot of self-help that is supporting our overall guidance also for this year. We are on a good trajectory and confident of reaching the EUR 200 million for the year.

Matthew, on your question on polymers, yes, I mean the answer is we expect that we can pass through the raw material price increases, which we see. I think, as we said in the beginning, I think there's a playbook on how we can do this. I don't know if your question alludes to can we get more on that? I think it is too early to say because, as a reminder, I mean, that's what we said also at the beginning of the year, there is still, in the end, a weak demand pattern globally. So if that shifts or not, it is not foreseeable right now. Therefore, our assumption is that we are able to pass through the raw material price increases, which would then lead to an increase in the absolute EBITDA, but changes in sales and the margin.

The next question comes from Sebastian Bray from Berenberg.

My first one is on the polysilicon business and the semiconductor grade here. So Wacker looks like it has just over 50% market share in this area. And yet its market cap is dwarfed by most other significant players in the semiconductor industry, including players like Shin-Etsu.

Can I discuss if there are any plans to increase the degree of market capture of value capture here, either by pricing up on new customer contracts?

My guess is that some of the new volumes from the semi line came in at higher incremental pricing or to partner with the assets. So there are a few players in the U.S., amongst some Tesla, that seem to be interested in the polysilicon value chain. My second question is on the silicone standards. Back in the 2018, 2019 period, when there was a last big shortage of these products, from memory, Wacker had about EUR 100 million of EBITDA, which was a temporary fly-up margin. I appreciate that the European methanol prices on the input side have moved somewhat, but why wouldn't this also be the case in 2026?

Okay, Sebastian. Let me start with your first question on the semi side. Yes, I mean, as you know, I mean, Semigrad is a very successful business, and it continues to develop very positively. Volumes are up year-over-year, and we expect the same thing this year. The hedging line is progressing very well. Long-term contracts are in place. And of course, you can be sure that on the new pricing on the new contracts, we try to improve our position.

Your question on the market cap, I would say that is not, in my view, so much driven by the pricing or potential pricing increase on semi, but more on the overall strategy regarding the solar. I mean, at the moment, we are in a phase where solar has a big question mark. We wait for the 232 decision, which could give a very clear decision on where to go. And we have a very clear strategy on the semiconductor side on poly that this is the future business for us.

You also mentioned the question on other opportunities. And yes, I mean, there are obviously lots of big news around, and we have to see how these visions at the end of the day actually materialize. We are definitely happy to speak to anyone about new opportunities and what we can bring to the table. On the silicones, Sebastian, I can take over. You mentioned the last shortage in silicon standards in 2018 and '19.

I think the last shortage was '21, '22. So there was one more reason. But the shortage was a shortage. And there, I see the difference. What we are talking about today is that the methanol price goes up by, I think, not even 50%, but methanol in the cost structure, it's the second largest raw material after silicon metal, it's methanol. So it's below 20% of production cost. And that doesn't drive -- if it has an impact, it would also lead to pass-through, first of all, because methanol is a global commodity.

Also, considering the specific situation that China imports methanol from the Middle East, I would also consider that China produces a lot of methanol from coal. So we haven't seen it so much on the silicon standards side so far. There is a bit of an uptick in prices stemming from price movements in China at the end of last year, and that now also comes to Europe. So there is a firming up of prices in standard products. I wouldn't call it a shortage yet. And as a general remark, again, our portfolio strategy is to focus on specialty products. So the exposure to silicon standards is also not that big.

The next question comes from David Symonds from BNP.

I think I'm only left with one rather short-term question, which is, could you just talk about how April trading compared to the second half of March? And I know it's not customary to guide on the second quarter, but could you potentially give some indication of whether you would expect it to be higher or lower than Q1?

Tobias, you saved this one for luck. As we said, Q1 was positively influenced by pull-forward effects from customers ordering for their own supply safety. As I said before, the impact was significant in March. So we had the spike in order entry in March, and that has, yes, come down now again in April. So April is back at the level of January and February.  So from that perspective, we are not giving any guidance for the second quarter. But if you take out roughly EUR 20 million of pre-buying effects, which supported our EBITDA in the first quarter, you definitely need to consider that amongst all the moving parts that we discussed. 

So the first quarter was not yet affected by cost inflation, nor by our own price measures. And then you have a little bit of seasonality in the second quarter, but you typically have some maintenance ongoing in the second quarter. So I would summarize that overall, the pull-forward effects are one-off. They are borrowed from the second quarter. So I expect the second quarter to be lower than the first quarter.

[Operator Instructions] The next question comes from Chetan Udeshi from JPMorgan.

My first question was just going back to the previous question of David, and you kindly gave us some indication on the order books. I was just curious, would you say the orders going down is just a reflection of pre-buying going away? Or do you actually see some customers just basically, there is the first sign of maybe demand destruction coming through at these elevated price levels.  

And the second question, there has been this view that this may not be applicable as much to your silicones business, perhaps or maybe to your polymers, but the shortages of NAFTA oil will be much more pronounced in Asia versus Europe, and hence, you have more supply reductions in Asia, which will be good for European producers. And Wacker is probably one of the more European-exposed in that respect. Do you see evidence of that? Do you see more evidence that your competitors are having to shut production much more in Asia than what you've seen so far?

Of course, you've not seen many production cuts in Europe. But do you see signs that some of your competitors in Asia are seeing bigger production cuts at this point?

I can start with the second, which is specific to Asia. And I would argue, yes, there is -- in the polymer segment, there are some competitors more impacted than we are. So that's the opportunity for us in a weak overall market environment to capture some share. But I see that as temporary, and you need to see how that develops over time.

I think it's more complex to answer that question for Europe. I mean, there's not so much coming on the polymer side, I mean, you don't ship dispersions, which are liquid and heavy from Asia to Europe, and powder also, there's a very limited impact on the European market. 

 

But on the silicon side, what I have heard is it's less of a reduced production from Asia, but because of longer logistics from Asia to Europe, the ships still arrived so far, but there might be a gap because there's just chips missing because they are stuck in the Middle East.

That's to be seen in the second quarter, but so far, not material.

If I follow up, you source acetic acid, and you source ethylene in Europe for your VAM production. I mean, with the big surge we've seen in the cost of VAM and acetic acid, what is your strategy? Are you still buying them? Are you buying the VAM itself from the market? How are you dealing with the very, very high raw material inventory in your polymer business in Europe, especially?

As you said, Chetan, we are a VAM producer, and we are buying acetic, but we are also a net buyer in Europe of VAM. So we have more demand than we can cover with our captive production. And yes, for sure, we tried to price at market prices because the VAM asset also needs to return on its capital that is employed. But as I said before, it's still early in the first quarter. We announced price increases. It needs to be seen how they materialize in the second quarter.

Yes. Chetan, that brings me to your first question, as Tobias just pointed out, we have to see how these passes actually materialize in the second quarter. I mean, from today's perspective, as we said, I mean, the less order intake we see for Q2, especially for April, at the moment, we would say has a lot to do with the preordering, just moving the orders from April into March.  So far, I would not see demand destruction. But it's definitely an excellent point you brought up, and there are a lot of experts talking to economists on this.

Where is the triggering point for demand destruction, especially in a weak market environment, which we see today? I cannot give you a great answer on that. We don't see it at the moment. And I think Q2 and Q3 will be crucial in seeing how the order intake will develop, and also with respect to how the raw material prices will develop. But yes, overall, I would say risks are today clearly higher than they were yesterday, and yes, to see.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Joerg Hoffmann for any closing remarks.

Thank you all for joining us today and for your interest in Wacker Chemie. Our next conference call for the second quarter 2026 results will take place on July 30, 2026. As always, don't hesitate to contact the IR department if you have further questions.

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Ladies and gentlemen, welcome to the Wacker Full Year 2025 Results Conference Call. I'm Robert, your Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Joerg Hoffmann, Head of Investor Relations. Please go ahead.

Thank you, operator. Welcome to the Wacker Chemie AG conference call on the full year 2025 results. Dr. Christian Hartel, CEO; and Dr. Tobias Ohler, our CFO, will walk you through the presentation. The press release, annual report, our IR presentation and detailed financial tables are available on our web page under the Investor Relations section. Please note that management comments during this call include forward-looking statements involving risks and uncertainties. We encourage you to review the safe harbor statement in today's presentation and our 2025 annual report for information on risk factors. All documents mentioned are available on our website. Chris?

Hello, everyone, and thank you for joining us for our full year 2025 results call. In 2025, we reported sales of EUR 5.5 billion and EBITDA before special items of around EUR 529 million. This result was in line with our guidance, which we revised in October. Although we ended up in line with our guidance and the market expectations, let me be clear, this is not where we want to be. This also clearly applies to our annual result at minus EUR 805 million. The profit and loss was impacted by approximately EUR 705 million of restructuring provisions and impairments.

Owing to the negative result and in line with our dividend policy, we will propose to the AGM on May 6 that no dividend will be distributed. In this environment, we did not try to get back on course with incremental adjustments. We took bold steps to get Wacker firmly back on a path to success. Before I address our cost reduction efforts and guidance, let me quickly highlight our sustainability initiatives on the right side of the page. Wacker achieved top scores in the latest annual ESG assessments. By achieving an A rating in the CDP climate assessment, Wacker now has risen to the top of more than 21,000 companies worldwide.

External ratings are important for us, and our leading sustainability profile is a differentiating factor in the market. Now on to Page 4. As you know, chemicals remain under pressure worldwide. This is especially true in Europe. Demand stayed weak across many industries. Uncertainty was particularly high. Trade and geopolitical tensions led many customers to delay orders and postpone investments. At the same time, we faced structural challenges on top of the cyclical downturn. New competitors are entering the market. There is overcapacity in many standard chemical products. In Europe, we have excessive regulations and high energy prices that are not internationally competitive. Both reduces Europe's competitiveness versus the U.S. and Asia.

In this market environment, we must transform ourselves. We need to set Wacker firmly back on a path to success by significantly lowering our costs and strengthening our competitiveness for the long term. To strengthen Wacker's competitiveness, we launched the largest cost-cutting project in our history under the name PACE in October last year. The goal is to reduce production and administrative costs by more than EUR 300 million annually with a focus on labor productivity, maintenance and engineering, production-related services and procurement. We are making good progress and already expect to achieve EUR 200 million of savings already in 2026.

By now, all measures are clearly defined, and we have already begun with the implementation phase. By the end of 2027, all measures should be implemented. Headcount reductions are unavoidable. More than 1,500 positions will be produced -- reduced worldwide. Most of them are at our sites in Germany. The ambitious program will put us back on path and will secure Wacker's place among the leading -- world's leading specialty chemical companies. Now let's move on to the guidance on Page 5. For 2026, we forecast modest growth with group sales up by a low single-digit percentage. EBITDA is expected to be in the range of EUR 550 million to EUR 700 million. Our forecast assumes that markets remain challenging, while we deliver tangible savings from our PACE Cost program.

Please note that the outlook does not include potential impacts from the recent developments in the Middle East, which cannot be reliably determined today. CapEx is expected to be around EUR 300 million and well below last year. Now that many of our larger investments are completed, we have shifted our focus to filling capacities. Net cash flow is expected to be positive and significantly higher than last year. This will lead to clearly lower net financial debt by year-end. We are acting with discipline. We are tightening our cost base. We are improving our capital efficiency. And we are sharpening our focus on areas where we can win, especially in specialties and technology-led applications. Yet cost cutting alone cannot secure our future.

We will continue to invest, accelerate innovation and build the foundation for sustained profitable growth. Looking to Page 6, you can see that we have invested to expand our global leadership positions. We advanced our specialty strategy by bringing new silicon production facilities online across our global setup. In polymers, we invested in new VAE capacities in the U.S. In BioSolutions, we have sharpened our innovation edge with our new biotech center in Munich. In polysilicon, our new etching line strengthens our standing as the undisputed global market and quality leader for ultra-pure semi-grade polysilicon.

We are particularly excited about this new facility. We are positioned very well here to support semiconductor growth driven by strong demand for high-performance chips used in AI applications and many others. Before I hand over to Tobias, let me highlight on Page 7, our focus areas going forward. In order to develop our potential even better, we formulated 3 overarching strategic priorities in spring 2025 that show us the way forward. These set our course and reinforce our ambition to lead, to innovate and to grow in the years to come. First, we elevate our business model and value proposition. In Chemicals, we are intensifying our focus on specialties. Here, we can clearly differentiate ourselves and create superior value for our customers.

Polysilicon, our focus is firmly on the semiconductor market. In Biosolutions, we are focused on advanced biotech solutions for health and nutrition applications. In all these areas, we can provide customers with high-performance solutions addressing the megatrends of today. Second, we unleash the potential of our structure and processes. We are committed to becoming faster, more efficient and more agile. To achieve this, we are harnessing the full potential of digitalization, automation and AI across our operations. These technologies are not optional. We see them as essential drivers of our future competitiveness. Third, we excel with our people and culture. We foster a performance mindset with active entrepreneurship and accountability. We build global player capabilities through energized and empowered teams. We will succeed as One Wacker through strong collaboration across diverse teams.

Our strategy is clear. The measures we are taking today will have a lasting impact. I have full confidence in our ability to shape the transformation ahead. We not only have the right technologies and solutions, but above all, we have the right team. And now to our employees around the world, on behalf of the entire Executive Board, I would like to thank you sincerely for your commitment, your resilience and professionalism making the difference. Looking ahead, 2026 will remain challenging. It is critical that we stay on course. Markets will not wait. Speed is essential. 2026 will be the year of execution driven by spirit, speed and confidence. Now let me hand over to Tobias.

Thank you, Chris. Good afternoon, everyone. Looking at the profit and loss statement. Sales in 2025 were EUR 5.5 billion with a reported EBITDA of EUR 427 million. EBITDA before restructuring expenses was down 29% year-over-year to EUR 529 million. Both sales and earnings were impacted by lower volumes and prices in some cases as well as by negative currency effects. In 2025, we booked approximately EUR 700 million in impairments, write-offs and restructuring expenses. These charges are reported throughout the profit and loss. Let me walk you through the main elements of those items now.

EBIT came in at minus EUR 180 million, and this includes in addition to the restructuring expenses of EUR 103 million, also asset impairments totaling EUR 102 million. Among other items, EUR 89 million goodwill impairment in our Biosolutions business was booked. Below the EBIT line, there were 2 significant effects. First, we recognized an impairment of our stake in Siltronic, resulting in a charge of EUR 308 million. Second, we recorded a write-off of deferred tax assets in Germany totaling EUR 194 million. In the appendix, you can find detailed notes outlining the specific amounts. It is important to point out that from the roughly EUR 700 million in total charges, some EUR 600 million are noncash.

The remaining EUR 103 million is the PACE restructuring provision. This amount should cover the expected costs here, and we do not expect further provisions for this program in this year. With the valuation adjustments taken at the end of 2025, we have significantly derisked our balance sheet. After all those special items, net income came in at minus EUR 805 million. Clearly, this result is a call to action. As Chris spoke about, we have initiated a comprehensive cost program pace. We are making good progress here and expect significant savings already in 2026. Looking at Page 9, we ended 2025 with strong financials with a high level of liquidity at EUR 1.48 billion and with EUR 3.76 billion in equity.

Our liquidity position was clearly supported by our targeted efforts to reduce investments in working capital. Total investments in working capital were 11% lower year-over-year with both inventories and receivables being markedly lower. Inventories were EUR 268 million lower and accounts receivables were EUR 76 million lower. This was a great effort which clearly paid off, but this also clearly weighed on fourth quarter margins, particularly in the 2 chemical divisions. Liquidity was further strengthened by our successful placement of the EUR 435 million Schuldschein with 3-, 5- and 7-year tranches. This is part of our established strategy of having well-balanced debt maturities.

Compared to the end of 2024, the balance sheet total is 11% lower. The largest changes stem from the same measures that impacted the profit and loss and consequently, also our shareholder equity position. Despite last year's negative net income, we maintained a solid financial structure with a healthy equity ratio of 45%. Now looking at the operating segments, starting on Page 10. At Silicones, sales in 2025 were approximately EUR 2.73 billion, down 3%. At EUR 336 million, the full year EBITDA was 1% below 2024. Last year, we saw weak order intake and uncertainty weighing on key end markets such as automotive construction and consumer-related industries such as textiles. At the same time, imports from Asia into European commodity markets intensified.

For 2026, we expect sales in silicones to be at the prior year level with higher prices and volumes being offset by negative FX effects. The EBITDA margin should come in slightly above the prior year level from cost savings. On Page 11, full year sales in Polymers were EUR 1.38 billion, 6% below the prior year. EBITDA declined by 19% year-over-year to EUR 158 million. Performance was defined by lower volumes, negative FX effects and lower ASPs. Over the course of 2025, end markets remained largely unchanged. Construction-related powders showed small growth year-over-year, while Western Europe and China remained weak here.

Consumer-related dispersions faced lower demand. For 2026, we expect sales in polymers to be at the prior year level with higher volumes and partially higher prices being offset by negative exchange rate effects. We expect the EBITDA margin to be slightly higher than the prior year from cost savings. On Page 12, sales in BioSolutions were EUR 360 million, down 4% year-over-year. EBITDA decreased to EUR 21 million from EUR 35 million a year. Earnings over the course of 2025 were impacted by soft demand in established products and reductions in biopharma. Low utilization rates weighed on our performance. The fourth quarter EBITDA also saw negative effects from our inventory management. For 2026 in BioSolutions, we expect sales to be high single-digit percentage higher than prior year with an EBITDA at around EUR 30 million.

The market environment remains challenging. We will stay focused on strengthening our commercial activities, filling capacities and cost management. On Page 13, full year sales in polysilicon came in at EUR 883 million, 7% lower year-over-year. EBITDA decreased to EUR 96 million. This was due to low solar demand and very low plant utilization rates. We stayed focused on tight inventory controls. We actively took steps to adjust production with the goal of reducing inventory in stock while maintaining minimum production volumes. On the positive side, semi developed very strongly. Volumes were up by a double-digit percentage higher than prior year. With our new etching line, we are positioned very well to support semiconductor growth driven by strong demand from data centers and AI.

For 2026, we expect sales in polysilicon to be a low double-digit percentage higher than the prior year. EBITDA is forecasted to be at the prior year level, and this despite higher energy costs this year due to lower CO2 compensation. Earnings are clearly supported by significantly higher semi sales and efficiency gains. On the other hand, solar remains challenging with no significant effects from trade policies included in our outlook. Let's move on to Others on Page 14. For 2025, the Others EBITDA came in at minus EUR 185 million. This figure includes the restructuring provision of EUR 103 million for PACE, which was booked in the fourth quarter. Excluding this, the other EBITDA would have come in at minus EUR 82 million, and this is lower than last year, driven by the lower absorption of group infrastructure costs and low hydroelectricity output.

As you can see here, the CO2 compensation scheme held back the others EBITDA during the first 3 quarters of last year. And then in the fourth quarter, when the payment for CO2 compensation arrived, we saw a reversal of the debits to others of the first 3 quarters. This dynamic in the fourth quarter of 2025 is not as evident as in 2024 due to the masking effects of the paid provision. This year, the effects of the CO2 compensation on our quarterly results will be more muted. We calculate with about EUR 70 million compensation for the full year, about EUR 90 million less than last year. For the full year 2026, Others EBITDA, there's anyhow no effect from the CO2 compensation. So we forecasted for 2026 Others EBITDA minus EUR 50 million as we see a continued underutilization of infrastructure.

Now let's look at our net financial position on Page 15. In 2025, we generated a gross cash flow of EUR 543 million. Gross cash flow was supported by targeted initiatives to reduce the investment in working capital. The cash flow from investing activities was EUR 546 million, including the dividend payment of EUR 124 million, we ended the year with a net debt of EUR 886 million. Looking at Page 16. For the first quarter of 2026, we see sales at about EUR 1.35 billion with an EBITDA between EUR 140 million and EUR 160 million as compared to the EUR 119 million last year. Days are expected to be lower due to the significant exchange rate headwinds, while EBITDA comes in higher year-over-year with cost savings coming through.

As Chris stated, recent events in the Middle East and volatile energy markets clearly increased uncertainty. Energy and raw material prices have climbed in the past week, creating new headwinds. To reliably service our customers, we will look to pass on the higher cost as we have done in the past. Forecasting the impact of these effects reliably is not possible at this time. Before we start with the Q&A, let me summarize. Our strategy and the measures we have taken will prove effective and put Wacker back on the road to success. Wacker has repeatedly demonstrated its ability to adapt successfully to new circumstances time and again. I'm therefore convinced that we will successfully navigate the challenges that lie ahead. Thank you, and we look forward to your questions.

[Operator Instructions] And the first question comes from Christian Faitz from Kepler Cheuvreux.

Two questions, please. First of all, in polysilicon, what is the current split roughly between semi grade and solar grade? And the second question is actually pertaining to current conditions in the light of the Iran conflict. Would you see demand for your construction geared products being impacted by the heightened conflict? If I look, for example, at basic things like cement, which has been considerably up recently on back of this conflict, higher overall construction costs might hamper construction activity worldwide. What is your take on this? And actually, what do your salespeople see in the very recent weeks in terms of demand momentum?

Okay. Christian here on your first question, I mean, we don't disclose on detail the split between semiconductor and solar. But what I can tell you is, I mean, we had double-digit growth in semi last year. And also, we will expect double-digit growth in semi into -- going into this year. I mean, if you look at the numbers and make an estimated calculation or guess, I think you can see that today, we are already selling more semiconductor, not only in sales, but also in volume. But that's all I can say on this matter.

Well, on the -- maybe let me start with a general comment on the conflict in the Middle East. I mean, this is certainly not adding more certainty, but adding another layer of macroeconomic uncertainty. And it's on energy pricing, it's on raw material availability, logistics and also, I think, on end consumer demand. And for us, it's still too early to have a kind of a clear picture and to have numbers on that. I mean we are obviously diligently working on it. And as we said in the speech, have not included into our full year guidance. But I can tell you, I mean, at the moment, I would say it's not really adding optimism for 2026, especially not in the short term.

Maybe Tobias can give a little bit more flavor on the effects. But I think in general, I would say the conflict is more weighing on the overall demand situation. And we have to see how long it goes and maybe then it could reverse an additional demand, as you said, on the construction, but it's too early to conclude.

I think in general -- Tobias here, in general, we have seen the typical seasonal pattern with quarter-on-quarter development and also with order intake. And yes, you could argue that order intake from some very smart buyers is a little bit pulled into the system right now, trying to avoid potential price increases, but I wouldn't count too much on that very short-term movement. So I think we are not in a position to have a good scenario on what does that mean for end market demand.

So I mean, the days are really super volatile as we all experienced them. And I think the more pronounced effect will be on energy and on raw materials. And as I said in the speech, we have our mechanisms in place to pass it on to our customers. And we also believe that our competitors will be largely in the same position as we are. So it's nothing specific to Wacker. It's specific to the entire landscape of competitors.

And the next question comes from Thomas Wrigglesworth from Morgan Stanley. Two questions, if I may.

The first question, if we can just talk a little bit about the cost savings and what you've baked in of the EUR 200 million gross savings for 2026? And how -- do we start small and then that -- and we finish on a much stronger exit rate. So your thoughts and forecast there would be very helpful. Secondly, just on the polysilicon moving parts. Specifically, we understand semi grade is doing well. But could you share with us on the solar side, is the business steady now and set to be steady for 2026? Do you have visibility on those volumes? Or will you have to flex with the market as things progress?

Okay. Thomas, thank you for your questions on the -- I will start with the cost savings on PACE and Tobias will continue. So first of all, I think what needs to be clear, we started the PACE project in Q4 of last year. Yet we also worked on cost savings throughout the year, of course. I mean we have the WOS program. And also, we started measures last year like a hiring freeze in Germany and in the U.S., which is also something which we already see today in the numbers.

I think that's important to keep in mind that we are already worked since last year on cost measures seeing effects already now in Q1. And yes, I mean, in general, you can say on the PACE, I mean, it's progressing. We implemented measures in China. You can say in China is already finished. In the U.S., we did a lot already. And in Germany, we are also in the negotiation with the workers' council. And once we have a clear solution here, we can implement even more measures. So yes, it will be increasing throughout the year.

And EUR 200 million -- I mean, we also worked on nonpersonnel measures, and these are typically effective more quickly, structural savings, lower budgets for various items from technical spend to -- it's not a game changer to travel. But these effects we already see at the start of the year, but through more personnel measures coming effective throughout the year, there should be a slight progression in this year, reaching the EUR 200 million in total savings.

And on your question on the poly side, as we said, I mean, growth is largely coming in 2027 from the semi side, which is progressing very well. Solar will remain challenging, and we have no significant effects from trade policies, i.e., the Section 232 included. And as we also said last year in the call, we had long-term contracts in 2025. We do have long-term contracts in 2026 on the solar side. So yes, I mean, it will remain a challenging business, but we see it more on a steady side.

Just as a follow-up to that, is there a need for a strategic review of the solar business? Or is it -- or is the growth in the semiconductor side strong enough now that you feel that you'll just grow into your semi business and the solar business doesn't need strategic review, it will just shrink proportionally to a point where it's not meaning -- where it's less material?

Well, I don't think it needs a strategic review because the strategic review is already done and the strategic review has a very clear answer. If there is a positive Section 232 announcement that could open for the next year is an opportunity for us in solar, which we will obviously continue. If the Section 232 is not in a positive way, then it is very clear that solar will not be a continued business for us. And we also said, in this case, we probably have one plant too many on the poly side.

Okay. And do you have a hard stop as to when Section 232 arrives or not because it's rolling...

Sorry, but we are obviously not deciding the 232. It's the Department of Commerce and the President of the United States. So if you want to have an exact timing on that, better to ask them than us, if I may say so.

And the next question comes from Matthew Yates from Bank of America.

A couple of questions, please. The first one on the Silicones division. Can you give me the capital employed of that business? I don't think you've disclosed at the divisional level what the capital employed is in the past. But I'm particularly curious in the context of you've spent EUR 1 billion in CapEx since 2021 in that business. So I'm trying to understand the current return on capital and maybe thinking about where that could get to over the midterm.

The second question, just to follow up a little bit on the earlier discussion around Energy & feedstock, specifically as it relates to methanol, which if my chemical knowledge is right, I think you use that as an input, both directly and indirectly in the Silicones and Polymers business. Can you just shed some light on how you go about sourcing that as a feedstock? I take your point on this as an industry-wide issue, but do you have any reason to believe that Wacker sort of logistics and relationships would be any sort of competitive advantage or disadvantage in the sort of degree of methanol cost inflation you might see over the coming weeks and months if this crisis goes on?

Matthew, on the second part, I can give you an answer on the -- I'll try to give you an answer on the methanol side. But first of all, none of our competitors in the silicone space is kind of backward integrated into methanol. So all of these guys like us are procuring methanol. Methanol is a super commodity globally available from many, many sites. We also have a sourcing strategy, obviously, which is multisource, multi-region.

So from that perspective, I do not expect major advantages or disadvantages, although I cannot argue for our competitors. But I would say methanol is a rather liquid commodity, which is easily valuable. There might be impact on the pricing side, which we see from the conflict in the Middle East. Typically, our raws are linked to index prices, and that's typically also what I would expect from our customers. And as we probably also competitors are trying to put the higher cost or pass the higher costs on to the customers. That's at least what we will try to do.

Matthew, Tobias here, on the capital employed, as you already said, we are not publishing that on the segment level. But your observation is completely correct. So we invest substantial amounts in silicones for good reasons. We see growth opportunities. But in this environment, we haven't been filling those sufficiently. And that's why our performance is sub cycle for both EBITDA margin and for EBIT margin. And going forward, the focus will be to increase utilization and as part of the PACE program to work on the fixed cost structure, also specifically in silicones to improve performance because historically, with the segment, and we -- I think as part of the Capital Markets Day in 2022, we had some numbers on the 2 segments, silicones and polymers combined.

We do have the potential of earning twice cost of capital in this. And our strategy going forward go more for specialties is also asset lighter. And this means that we are truly, I mean, targeting this. And the upstream for us is just a feeder, and this is not core strategy. And for that reason, we will also not put any further money in that beyond maintenance CapEx. So that's how I can describe it with respect to our ambition also to bring Silicones ROCE back to historic performance.

Okay. And if I can just follow up because today, you have taken various impairments across the business, most notably Biosolutions, which was also an area you invested money into. Why have you not taken impairments in the silicones business? Where does the degree of confidence come from that ultimately the investments you've been making in recent years will provide a reasonable return?

Because if you look at the cash-generating units, Matthew, you have a decent coverage. There's no need to, yes, take impairments on that, completely different in those segments where we took action. So we are very confident that our asset values are, yes, really justified also by future cash flows.

And the next question comes from Sebastian Bray from Berenberg.

My first one is on polysilicon. The decision about whether to close a plant seems to be tied to when Section 232 comes to an end. What is a bad outcome for Wacker that could trigger the closure of the plant? My understanding is that the investigation is pretty likely to introduce some quite hefty barriers to entry in U.S. solar. Perhaps there are some concerns around the ramp-up of United Solar projects, domestic U.S. capacity additions. I think Tesla has been looking at the polysilicon market more recently. My second question is on silicones. How has this business been going in the first 2 months of the year? And have the price increases announced by Wacker largely been implemented successfully?

Sebastian, Christian, on your first question on the Section 232, what would be a bad outcome? Well, a bad outcome, I can tell you, would be that there's essentially no restriction or very limited restriction on material coming into the U.S. You can argue how likely that is, but I think it is -- I don't want to speculate on it. Obviously, you have some information, which you referred to. That will be a bad outcome. And then we have to take a decision to step out of the solar space and to close one of our sites.

Sebastian, on silicones, the first 2 months of the year, they are below prior year in sales, mainly from that huge change in exchange rate. I mean we had a USD 105 in last year. In the first 2 months, now we were at close to USD 120 now at USD 116. So that makes a huge difference and standard prices are still low, also lower than prior year. So there's also a headwind from there. But as I said before, we are -- against all this headwind from sales, we're expecting EBITDA for the first quarter to be at a similar level than last year from the cost savings coming through.

And as Christian explained, we started the PACE program in Q4 officially, but we started to work on some measures even before. And especially with respect to external spend, also, we are starting very cautiously on technical spend on travel and so forth. And this helps. And that's why, yes, results will be better. Also, we -- with the destocking in the second half of last year, we can also run production now at a higher level to serve the demand. And that also, as you know, gives you a bit of an uplift in profitability. So I think it's a decent start in challenging environment, mainly from self-help from our side.

And the next question comes from Chetan Udeshi from JPMorgan.

I'm a bit confused on your silicon guidance because you're saying standard prices are down year-on-year, volumes are down. So how is the EBITDA flat? I mean, I don't know if the self-help is so substantial. And if it is so substantial, can you quantify it? I mean you said EUR 200 million of gross savings. How much of these do we think stick in terms of net savings? I think your inflation should be something like EUR 70 million, EUR 80 million a year, I suppose. So I'm just curious, are we talking about EUR 120 million, EUR 130 million of net savings? And is that more front-end loaded, which is helping your numbers?

The second question I had was on polysilicon. So you said Q1 sales again, high single digit down year-on-year, but EBITDA close to last year. So what's going on, especially with the energy cost also increasing because of lower CO2 compensation. It just doesn't -- the math doesn't add up somehow. And I was just curious, I was going through your annual report. And it seems your advanced payment from customers have shrunk by half last year. It is a bit counterintuitive given that you started up this new facility for semi grade in Burghausen since I was expecting maybe that number should be going up rather than halving. So what sort of confidence should we have in terms of the filling up of this capacity going forward based on this lower advanced payments?

Okay. Maybe I'll start with silicones. I meant that in the first quarter, I mean, exchange rate is the core headwind. Prices in standard products are still low, but I didn't say that volumes are down. So the stabilization in profitability really comes also from solid seasonal volume recovery plus a lower run rate also of the plant, which gives the according fixed cost dilution and all the cost measures that we mentioned.

And with respect to the savings from PACE, we are trying to understand the net savings. It's obvious that the net savings are pretty close to 100% when you start the program, the net savings get a bit eroded by inflation when you go to the -- yes, to the last years of the program. So we have a very good recovery rate in this year and maybe in 2028, if you account for inflation with personnel and also nonpersonnel costs, yes, there will be an erosion, but net savings would still be above 50% from the program that is effective.

Yes. Maybe on the poly side, so for the Q1 -- well, obviously, what we said, there is double-digit growth we see in the highly profitable semiconductor space. And then, yes, there is a much better cost base despite less CO2 compensation. And where is it coming from? Well, it's coming from measures we took already last year. For example, at our site in Charleston, we reduced headcount already that is taking effect now in Q1. And also keep in mind, last year, we had preoperating costs for our etching line in Burghausen, which we don't have, obviously, this year as the plant is running very well, and we are also getting higher volumes out of this plant.

And with the advanced payments, well, I can't tell you all on the specific details. But I mean, we have contracts, long-term contracts with our customers. And some of these contracts fade out are replaced by new ones. And therefore, I think just looking at advanced payments does not give you a better picture on the quality of the contracts. We have increasing volumes. And what you see actually in the growth of the semi poly business last year and today is based on long-term contracts. And we elaborated on this that we already have contracts that go well into the 30s. And therefore, we are -- we keep very positive on the development on semi.

And the next question comes from Jaideep Pandya from On Field Research.

First question is really around the capacity landscape you see in China, mainly talking about silicones and polymers. I mean, given the increase in cost that we have seen post war, how much of this you think is going to have a structural impact on some of the right-hand side of the cost curve capacity in the extension of the VAM value chain and DMC value chain, if at all, any? And then on the second part of the question, relating to sort of Matt's question around sourcing of methanol.

I mean, if this continues well into next 3, 4 months, how much of this sort of is going to be an issue for you? And then the last question is just around your raw material costs and energy costs. that you've baked in for the year. Could you give us some guidance of what was the current -- or what is rather the current assumption on a year-on-year basis? And any sensitivity around how things have changed post the 28th of February?

So Jaideep, Tobias here, maybe I'll start with the last one, although it's one of the most difficult ones. For sure, I mean, things change quickly. And we also have done some sensitivity, but I don't want to give you a quantification of that. Nevertheless, what I can tell you on the energy side, we are hedged by 3 quarters for this year. So there -- I mean, even when electricity prices and gas prices were going up, I think there's limited impact for this year. And I mean, who knows what's going to happen next year.

On the raw material side, you mentioned that the petchems, also the impact on the Asian -- yes, suppliers, and that links to your first question. I think there will be a general movement of raws up, but we are playing in fields as silicones and polymers where all our competitors do have to buy or to produce at those elevated costs. And for that reason, I think there is a good mechanism and there's a good chance of, yes, of passing that on to customers. Will that be 100% effective? Most likely not. But I think in times of strong raw material costs, typically, chemicals can still perform.

And I think especially with the increase of the raw material prices and costs in Asia, these markets typically move much more quickly also on the sales prices. We have either only spot prices also with our customers or we have monthly price adjustments. So that can be very effective. On the sourcing of methanol, as Christian said, I mean, we as all the others, we are not backward integrated. Everyone has to bear the cost of methanol, and that's part of the DMC cost next to silicon metal. So I think it would move up DMC prices, and it would need to be passed on to customers. I think it's -- from today's perspective, we don't have an availability issue. We are just talking about pricing trends and cost trends.

Just one follow-up. I mean we have seen this in the polypropylene or polyethylene market in terms of a bit of a mad scramble for material in the last 10 days or so. Are you seeing that in any of your markets where customers are trying to order as much as they can before prices sort of settle at an elevated level?

I mean, as I said before, in China, I've heard from our division that some smart buyers try to now place orders, but they get rejected. I mean you can't outsmart the industry by placing an order for the entire year on today's cost or today's prices, I think that doesn't work. So yes.

I guess my question was more from an availability. I guess what we are seeing in some of the other chemicals is people are really concerned about the availability and want to reserve volume, which sort of shows there is some demand strength in the underlying markets. So that was sort of my question is, are your customers saying to you, we want the material because we have demand like from our customers. So it was more of the question of volume security rather than price locking.

I think, Jaideep, I would say it's probably still a little too early, at least for the products we have because it's still a weak demand pattern. I think that's -- if you compare it to 2022, I mean, in 2022, we had really strong end markets. And I think people got more nervous more quickly. So far, we don't see it on a broader scale.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Joerg Hoffmann for any closing remarks.

Thank you, operator. Thank you all for joining us today and for your interest in Wacker Chemie. Our next conference call for the first quarter 2026 results will take place on April 29, 2026. As always, don't hesitate to contact the IR department if you have further questions. Thank you.

Ladies and gentlemen, the conference is now over. Thank you for joining, and have a pleasant day. Goodbye.

Ladies and gentlemen, welcome to the Wacker Chemie AG Conference Call Q3 2025. I am Mathilda, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Joerg Hoffmann, Head of Investor Relations. Please go ahead.

Thank you, operator. Welcome to the Wacker Chemie AG conference call on the third quarter 2025 results. Dr. Christian Hartel, our CEO; and Dr. Tobias Ohler, our CFO, will walk you through the presentation. The press release, our IR presentation and detailed financial tables are available on our web page under the Investor Relations section.

Please note that management comments during this call include forward-looking statements involving risks and uncertainties. We encourage you to review the safe harbor statement in today's presentation and our 2024 annual report for information on risk factors. All documents mentioned are available on our website.

Chris?

Hello, everyone, and thank you for joining us on our third quarter 2025 results call. Chemical industry is under pressure worldwide, but especially in Europe. The economic situation is tense and demand is weak. At the same time, the market environment is challenging and competitive pressure is high, especially from China. In addition, the stronger euro creates headwinds.

Like many other chemical companies, we had to revise our full year forecast downward in the middle of the year. All our divisions are affected. Despite these challenges, Wacker remains focused on executing its strategy and safeguarding profitability. Our third quarter performance and our refined full year outlook on the next page reflect the ongoing headwinds.

Sales in the third quarter came in at EUR 1.34 billion with an EBITDA of EUR 112 million. The sum of the 4 operating segments EBITDA amounted to EUR 159 million. This is 18% lower than a year ago and 13% lower sequentially. Despite the lower EBITDA, net cash flow at plus EUR 19 million was markedly better than a year ago. The result was supported by targeted actions to reduce working capital. Utilization rates remain unsatisfactory, and our operations continue to be held back by ongoing macroeconomic and geopolitical headwinds.

Our chemicals segments, Silicones and Polymers saw low demand in all major markets. Polysilicon was held back by weak demand and lower prices for solar products due to still ongoing regulatory investigations. On the other hand, semi continued to see strong demand year-over-year and our new etching line proceeds on schedule.

Before we move on to the next page, let me say that the Chem-X initiative under sustainability marks an important step towards standardizing data for product carbon footprint calculations. Robust PCF data enables us to reliably speak about the sustainability of our products and strengthen our competitiveness.

Now to our refined guidance. Considering the ongoing headwinds and soft order intake, we have updated our guidance. We now see full year sales at the lower end of the EUR 5.5 billion to EUR 5.9 billion range. We expect EBITDA in the lower half of the EUR 500 million to EUR 700 million range. These changes also affect our expectations about net cash flow. Net cash flow will be negative but significantly higher than the prior year.

Our priorities are clear: sharpen focus on specialty chemicals, align polysilicon with semiconductor growth, accelerate efficiency and speed across the entire organization. Immediate measures addressing cash and costs are already underway. In the next step, we have launched a comprehensive project with the aim of significant cost savings. It will primarily target fixed production costs.

We expect to achieve significant cost cuts in production and production-related areas as well as administration. We're also taking a close look at asset optimization across all regions. Measures are currently being developed. We intend to start implementation in the first quarter of 2026. Our goal is clear: restore competitiveness, protect profitability and position Wacker for sustainable value creation.

Let me now hand over to Tobias for a look at the group financials and segments.

Thank you, Chris. Welcome, everybody. Let's now take a closer look at the financials for the third quarter of 2025. Sales in the third quarter were EUR 1.34 billion, down 6% year-over-year, and EBITDA declined to EUR 112 million from EUR 145 million a year ago. This development was primarily driven by lower pricing, foreign exchange and volume mix. Excluding others, which held back the reported EBITDA by EUR 47 million, the cumulative EBITDA of the 4 operating segments came in at EUR 159 million. This is down from EUR 195 million in the third quarter of 2024.

As previously discussed, the main component of the others EBITDA is the CO2 compensation offset. In the third quarter, this was approximately EUR 40 million. As explained before, we expect a refund of these offsets in the fourth quarter of this year. The lower EBITDA and higher depreciation drove EBIT to minus EUR 20 million versus the plus EUR 30 million a year ago. Depreciation has increased in line with investments made over the past couple of years. Many of our major growth projects are by now completed, and our focus is on growth and filling the new capacities.

As already flagged in the H1 report, the German government will gradually lower the corporate income tax from 15% to 10% during the period of 2028 through 2032. This is a welcome development, but it triggers a remeasurement of our deferred tax assets. The lower tax rates led to a deferred tax expense of EUR 30 million in the third quarter of 2025. After this expense, net income was a negative EUR 82 million, equating to a loss of EUR 1.73 per share.

Our balance sheet shows EUR 4.42 billion in shareholder equity and strong liquidity of about EUR 781 million. Since the start of the year, inventories are EUR 173 million lower with efforts to reduce stock levels gaining traction. Looking at our financial liabilities, they are largely unchanged since the start of the year at EUR 1.94 billion. The shareholder equity ratio is 52% and remains at a high level.

After the end of the reporting period, we successfully closed the order book for a new Schuldschein issue with 3-, 5- and 7-year tranches. Settlement is set for November 6. This is part of our established strategy of having well-balanced debt maturities.

At Silicones, sales in the third quarter were EUR 673 million, down 7% year-over-year and 6% below the previous quarter. Following a weak order intake, volumes were largely flat year-over-year. A combination of price, foreign exchange and a weaker mix held back both sales and earnings. EBITDA was EUR 86 million, down 19% versus the prior year. For the full year 2025, we have updated the Silicones outlook. We now expect sales and EBITDA to be a low single-digit percent below the prior year level. In the fourth quarter, we typically see a year-end slowdown. This is nothing unusual, but this time around, we expect a pronounced year-end seasonality due to the ongoing weak order intake.

At Polymers, third quarter performance was defined by ongoing slow markets. Sales came in at EUR 344 million, 6% below last year and 5% below the previous quarter. Sales were held back by a combination of foreign exchange and price as well as lower volumes in consumer-related binders. Volumes in construction-related binders, on the other hand, showed some improvement year-over-year, but remained at a low level. EBITDA came in at EUR 47 million at the same level as last year and ahead of the preceding quarter.

As a reminder, our second quarter performance was held back by a turnaround. For the full year 2025, we have updated our Polymers outlook. We now expect sales to decline by a mid-single-digit percent with a margin below the prior year level. Overall, end market dynamics have not changed and remain challenging. For the fourth quarter, we expect to see the typical year-end slowdown.

At Biosolutions, our performance was marked by a soft demand environment. Sales during the third quarter were EUR 93 million, down 7% year-over-year and 6% higher than in the previous quarter. EBITDA came in at EUR 8 million, down year-over-year and a bit ahead of the previous 2 quarters. The sales and EBITDA performance was primarily driven by the timing of customer project recognition. For the full year 2025, we have updated our Biosolutions outlook. We now expect sales to be similar with the prior year level with an EBITDA of around EUR 25 million. Our focus is on filling our capacities, but we see some customers delaying projects due to market uncertainty.

At Polysilicon, sales in the third quarter totaled EUR 197 million, 6% lower year-over-year and 10% lower than the preceding quarter. EBITDA came in at EUR 18 million. Our performance over the past 5 quarters primarily reflected the low volumes of solar-grade polysilicon sold. Headwinds in solar over this period masked our successes in semi. Here, we continue to show strong growth with volumes being significantly higher year-over-year. For the full year 2025, we have updated our outlook for Polysilicon. Sales are now expected to be a high single-digit percent lower than the prior year with an EBITDA of approximately EUR 100 million.

In Polysilicon, our semi volumes continue to grow strongly and the new etching line is on schedule. Semi is our primary focus and the new facility Burghausen will support strong semi growth. This supports the segment's overall performance, but we still have significant exposure to solar. As we highlighted on the last call, there might be opportunities ahead due to ongoing regulatory changes in the U.S. solar market. We need to wait for the outcome of these investigations only then we will be able to get a reliable view on how our solar demand may develop going forward.

Now let's look at our net financial position. During the first 9 months of 2025, we generated a gross cash flow of EUR 128 million. After cash flow from investing activities before securities of EUR 411 million, the dividend payment of EUR 124 million and some other effects, we ended the third quarter with a net debt of EUR 1.16 billion.

Before we get to the Q&A part of this call, let me make this clear. We are acting decisively. We will reduce CapEx meaningfully going forward. I expect 2026 CapEx to come in well below EUR 400 million. We implement targeted measures to improve our capital efficiency. While we have seen some progress already, we see further room to free up cash tied up in working capital. And we have initiated an ambitious holistic cost project aimed at all our production sites to structurally reduce production costs and administrative expenses.

As Chris already mentioned, we will keep you informed as our plans become more developed. We face a demanding environment, but our actions are clear and focused. By improving cash flow and reducing costs, we will free resources to invest in innovation and specialty growth, strengthening Wacker's resilience and profitability.

Thank you for your attention, and we are now ready for your questions.

[Operator Instructions] The first question comes from the line of Christian Faitz from Kepler Cheuvreux.

Yes. Two questions, please. First of all, can you remind us where at this point, which of your product groups are impacted by tariffs, even only via precursor products? I'm aware that now also Silicones are hit and what else? And is there any estimated financial impact you could provide us for the remainder of the year from tariffs?

And the second question is in Polysilicon. What is the current split roughly between semi grade and solar grade?

Okay, Christian. This is also Christian answering your questions. Now first question on the tariffs. In essence said, not much more development on the tariff side. And I mean, we communicated already that we expect an impact -- a direct impact of EUR 20 million to EUR 30 million for the full year. And which is, I think, more important, we also expect that we can pass this on to our customers, most of it.

And I think it's also fair to say that probably the bigger financial impact goes from the indirect effect, meaning that there is less demand because of uncertainty of these tariffs. But of course, that is much harder to get a grip on. Yes. And so nothing really kind of new.

On the mix between semi and solar, I mean, we don't disclose these numbers. But as Tobias also mentioned, we see quite good growth this year. And although we don't speak about next year, I can assure you we will also see growth in the semi side next year. And of course, solar depends on the regulatory decisions.

The next question comes from the line of Chetan Udeshi from JPMorgan.

I was just looking at your Q3 numbers, and I was surprised at the comment of solar polysilicon ASP down Q-on-Q. Why is it down? Because you're really not selling to the Chinese customers. So why is the ASP falling in that business?

The second question I had was, you're talking about pronounced seasonality in Silicones in Q4. I mean you've not really seen any seasonal pickup through this year. So why would you see a pronounced seasonality in terms of decline? I mean, I'm just curious, are the orders getting worse in October so far compared to what you would normally expect for this time of the year? And is that mainly a function of weaker volumes? Or is it more that you see incremental pressure on pricing in Q4, which is driving that pressure?

Chetan, Tobias here, trying to answer your 2 questions. The first is on the ASP trend for solar, as we have referenced a sequentially lower price. I think you can find that also in the international price index, if you look at that, there's a little bit of a downtick. And as we have that also in mind when setting the price with our customers, we are also impacted by that.

The second question is a bit broader, Chetan, on the overall seasonality, I would say all regions and industries see volumes that are lower than last year and the market dynamics haven't changed. So overall, in all industries and regions, customers are very cautious. And I think that sluggish macroeconomic behavior leads to a sluggish macroeconomic environment. And with respect to the current trading that we see, we had the weakest orders in August. So September and October were above that, but they were flat. And if I compare that to the order pattern of last year, we had an uptick in October. And then we had an uptick in November, and we haven't seen that in 2025 so far.

And that's the reason why we are cautious to assume a year-end slowdown. So it wouldn't be surprising to see customers working on their inventories. And I mentioned we are working on our inventories. So don't be surprised if that is the broad picture that we feel in the market. So that's why assuming a slowdown and inventory management is our key assumption for the fourth quarter.

Maybe can I ask one more on your Polysilicon business. Again, what I'm seeing as a dynamic is some of the Western polysilicon companies, Hemlock, OCI, they seem to be going down the chain, doing their own wafers, using their own polysilicon and trying to sell the wafers in the U.S. and maybe other Western world. Is this something you will consider as part of your strategy to use your solar polysilicon? Or you would rather just shut it down if there's not enough demand for solar polysilicon, especially one of your plants in Germany, which is focused solely on the solar part?

Well, Chetan, we have a clear strategy focusing on semiconductor polysilicon. And I think that has been proven to be quite successful with the market share of about 50% globally. And now with the very successful ramp of our new etching line, leading into further volume growth also next year and quite some long-term agreements we have with our global customers. So from that perspective, that is the clear focus we have, the clear strategy we have on Polysilicon.

The solar side, we see as an opportunistic opportunity and the Section 232 investigations, once there is a final ruling, this might be an attractive opportunity to continue. But I think it very much depends on the 232 ruling. And before that, I think it doesn't make sense to talk about further downstream integration.

But even if it would come, if it would be attractive, then we would follow this opportunity. And then I would say there's also no need for an additional downstream investment. So from that perspective, we stick with semi. That's our strategy. We follow up on the opportunity which might arise from 232 solar in the U.S., but no downstream investments into the solar chain.

We now have a question from the line of David Symonds from BNP Paribas.

Yes, a couple for me, please. So just following up slightly on Chetan's question. Struggling to follow the development of the Polysilicon division a little bit. EBITDA virtually halved quarter-on-quarter despite the semi line running quite well. Could you maybe say whether -- I mean I think some of these contracts in the solar business are probably starting to roll off. So was there a material step down in the solar volumes that you did quarter-on-quarter? That's question one.

And then question two, bear with me because it's a little bit of a long one, so apologies. But if I look at Silicones, EBITDA was down 20% year-on-year in the third quarter. It set to be down 40% year-on-year in the fourth quarter based on your updated divisional guidance. And coming into the first half of 2026, the comp from this year is very tough. So EBITDA was up 40% in Silicones in Q1. Q2 in Silicones, there was a EUR 20 million one-off.

So if I sort of follow that math through, I think you have a EUR 50 million to EUR 60 million headwind in Silicones alone just from sort of mechanical comps next year, which is around sort of a 10% EBITDA drag at group level. And I'm just thinking, is there a chance that EBITDA could actually be down in 2026 overall for the group? Maybe you could comment on that and on any sort of mitigating factors that might benefit you next year.

Okay. David, on the -- on your first question on the solar side. So we do have solar LTAs for this year, and we also have solar LTAs for next year to come. And that's the good part of it. And I think as we said before, the 232 decision, hopefully soon, will give us some more clearance and guidance on this segment. Yes.

David, Tobias here for the Silicones question. I mean you are trying to move towards '26. I think that's far too early. As you know, we typically give guidance in March next year. But nevertheless, your observations for Silicones, I'm happy to comment on these. I mean, you see a significant slowdown in the second half. Why is that? Because we have a drag on, as we described on the top line. I talked about adverse effects from volume mix and exchange rate and some -- also some price, I mean, all 3 together.

But on the other hand, also in the second half, we see the impact of our efforts to reduce working capital. And if you run at lower utilization, just to get that under control, you get a lower absorption on fixed costs. And that definitely makes it not a good way to think about the run rate for next year. So it's far too early. We have many moving parts. As Chris mentioned at the introduction, I mean, we have embarked on a comprehensive cost program, exactly focusing also on the fixed manufacturing costs. So I would be not in the position now today to talk about any '26 hint on how the profitability might move.

Understood. And then maybe just on that working capital point, I mean I noticed that payables as a percentage of sales is actually down quite a lot last year -- versus last year. Is there anything that's changed there? Or what's meaning that payables seems to be running at a much lower level this year?

Payables are running lower also from our reduced investment levels. I mean that is a huge swing factor. As I mentioned, going forward, we are targeting '26. And that type of guidance I can't give because we are just right in the midst of the planning discussions. We will be far below EUR 400 million in next year. And I mean that -- I mean decline in investment also plays a major role why payables are running lower.

The next question comes from the line of Sebastian Bray from Berenberg.

I have 2, please. The first is on the pricing in specialty silicones more broadly. I've played with this data in different ways, but it looks as if at the margins, the specialties pricing may have started to slip a little. Is this fair? And what can be inferred about behavior moving into 2026?

My second question is on the cost savings measures that have been announced and in particular, as they relate to Biosolutions because we're focused on Polysilicon and if Wacker can maybe shut a production line or what goes on there? But if I take the amount of capital invested in Biosolutions over the last decade, the company could have bought back as a rough guess, 1/4 of its stock at the current stock price with it. What is going on in that segment? And what are your thinking in terms of what is on and off the table when it comes to making potential savings? Could you shut a Polysilicon line? Could it involve divesting parts of Biosolutions? What are your preliminary thoughts?

Sebastian, Tobias here to start with your first question on Silicones and pricing in specialties. I think there is not big movement in pricing. I think if you look at the overall development throughout the year, we had a very strong start in the year with a strong mix. But if you look at the overall margin progression in specialties, I think it's rather flat.

So from that perspective, it is flat and unsatisfying today because of the low utilization. And that is the topic also of that comprehensive cost program that we are trying to address our fixed cost base. And for that reason, no view into '26 again, as I said before, guidance will be disclosed in March, as always.

Sebastian, let me answer your second question and maybe for clarification. So this ambitious and holistic cost project, which both I and Tobias talked about is for all the divisions. So it's not specific only for Polysilicon or only for Biosolutions. It's also for -- it's for the whole group. Therefore, it's kind of really comprehensive and ambitious.

And it is on the -- especially on the cost -- sorry, on the production cost side. Now your question was more specific on what could we do on Biosolutions and on Poly. And I think that's a totally different topic because on the solar side, I think on the Poly side, it is very clear, as we mentioned before, strategy on semi. If there would be a very clear decision that there is no attractive solar market left for the Western players like us, then yes, you are right. We would have probably one plant too many for our semi strategy. And hopefully, we get an answer from a 232 decision.

On the Biosolutions, I think we have a totally different situation. Although the utilization is also not satisfactory at the moment, we do see potential for growing this business. And I think at the moment, it is more by a very soft market environment, which we and others face. But we work very diligently on acquiring new projects in the pharma space, sometimes it takes more time. We have a pipeline working on it. And so that's what makes me confident about this and optimistic about this segment, but it might take more time than we have originally anticipated.

That's helpful. Just as a quick follow-up. Can you give any guidance on energy cost relief year-on-year expected for '26 for at current hedging, prevailing spot rates and so on?

Again, Sebastian, it's rather early. But I mean for energy, we do have our hedges. We see market prices trending down a bit. So there should be some relief on that. On the other hand, energy costs will be higher next year due to the lower CO2 compensation because that is always coming with a time lag from lower production as a reference. But on the other, there might be some positive changes from regulation. So again, as I said before, it's too early to give you a precise guidance for this cost next year. And the same goes for raw materials, slightly trending lower, but too early for guidance.

[Operator Instructions] We now have a question from the line of Tristan Lamotte from Deutsche Bank.

I was just wondering if we could see material upside to EBITDA from demand for Polysilicon for semis in 2026? Or is it more kind of the case that most of these capacities are already filled and therefore, it's not really going to move the dial and the pricing is fairly stable and on multiyear contracts? So I'm just kind of wondering about the materiality of potential upside.

Okay, Christian (sic) [ Tristan ]. Again, Christian, I'm happy to answer Christan's (sic) [ Tristan's ] questions. And the answer is yes. We do -- although we don't want to talk about guidance for 2026, I think this is the exception we can really make. We do see an upside to EBITDA from the semi side because of increasing volumes to be sold next year, coming also from our hedging line.

And maybe second, I was wondering if you could just talk a little bit more about where you're seeing pressure from China? And is there any reason that you're seeing why that additional pressure should go away at some point? Or is this kind of the new normal?

Yes, it's a very, very good question, especially the second part of the question. For the first part, where do we see pressure from China? Yes, it's in some chemical segments. And I would say more also on construction-related and standard product-related stuff. And the main reason is an underutilization of assets in China and a weaker-than-expected market development in China. So we see volumes from China pressing into Europe. Obviously, not so much into the U.S. because of the tariffs.

The question is, will it go away? I'm cautious on that. At least we prepare with our cost program to be -- to stay competitive and not to hope for that everything will come back. I think that's the right and cautious approach you should take in such a situation. And of course, we fight on the market for the volumes. And I think here also our very clear strategy on more specialties, on more elaborated products working together with customers is the answer in reducing the share of -- which can be taken by the Chinese or other competitors.

[Operator Instructions] Ladies and gentlemen, there are no more questions at this time. I would now like to turn the conference back over to Joerg Hoffmann, Head of Investor Relations, for any closing remarks.

Thank you, operator. Thank you all for joining us today and for your interest in Wacker Chemie. Our next conference call on the full year 2025 results will take place on March 11, 2026. As usual, we intend to publish our preliminary numbers at the end of January or the beginning of February. As always, please don't hesitate to contact the IR department if you have further questions. Thank you for your interest.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Wacker Chemie Q2 2025 Conference Call. I'm Vicki, the Chorus Call operator. I would like to remind you that all participants have been in listen-only mode, and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Joerg Hoffmann, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Welcome to the Wacker Chemie AG conference call on the second quarter 2025 results. Dr. Christian Hartel, our CEO; and Dr. Tobias Ohler, our CFO, will walk you through the presentation. The press release, our IR presentation and detailed financial tables are available on our web page under the caption Investor Relations.

Please note that management comments during this call include forward-looking statements involving risks and uncertainties. We encourage you to review the Safe Harbor statement in today's presentation and our 2024 annual report for information on risk factors. All documents mentioned are available on our website. Chris?

Hello, everyone. Thank you for joining us on our second quarter 2025 results call. During the second quarter, demand in many customer sectors was weak and competition was intense. There were no economic tailwinds either.

Trade policy uncertainties are slowing economic development, and there are no signs of a recovery yet. In this challenging environment, with ongoing macroeconomic and geopolitical uncertainty, we lowered our full year outlook on July 18.

Furthermore, the situation was compounded by the unfavorable development in the euro-U.S. dollar exchange rate since the beginning of the second quarter and our expectation that the current exchange rate level will remain unchanged. Our second quarter performance and our updated full year outlook reflect these headwinds.

Sales during the second quarter reached EUR 1.41 billion, with group EBITDA at EUR 114 million. The sum of the 4 operating segments EBITDA totaled EUR 182 million. Although, this reflects an 11% decline year-over-year, it also shows a 7% sequential increase over the previous quarter. Sequential gain was primarily driven by an insurance compensation in silicones, but also supported by some seasonality in polymers and much higher semiconductor polysilicon volumes.

Before we move to the full year outlook on the next page, let me address our most recent initiative in sustainability. We just launched a new tool that allows us to calculate the carbon footprint of our products per the Together for Sustainability guideline. With this PCF tool, we can provide customers with reliable and standardized carbon footprint data for our products.

Customer feedback has been incredible so far with customers requesting PCFs for thousands of products. We see our leading sustainability credentials as a way to differentiate ourselves in the market and to strengthen relationships with key customers by helping them to meet their own sustainability targets.

Now, moving on to our guidance on Page #3. As you saw in our July 18 prerelease, we updated our full year outlook to account for ongoing trade-related volatility and currency headwinds resulting from a strengthening euro. We now forecast sales between EUR 5.5 billion and EUR 5.9 billion, with an EBITDA range of EUR 500 million to EUR 700 million. Due to lower EBITDA, we expect net cash flow to be more or less balanced and net debt to come in significantly higher than last year.

Chemical industry faces unprecedented challenges, and we are not immune. We are counting -- we are countering these challenging market environment with a clear focus on growth, cash and cost initiatives. We will drive profitable growth by intensifying our sales activities, customer interactions and innovation. We relentlessly seek out new customers and new applications, always with an eye to achieving profitable growth.

We will improve cash flow generation by reducing and optimizing investments and implementing working capital measures such as targeted reductions in inventories and accounts receivable. And we will reduce our costs by driving productivity and optimizing our plant utilization rates, so we can run our assets at the highest level of efficiency and profitability. Also, we will continue to align our entire organization with the new underlying framework conditions.

Three strategic priorities will help us to ensure our success. First, we are forging ahead with our specialty strategy. This means that we will be focusing even more on those products and solutions that set us clearly apart from our competition. These are often developed on a customer-specific basis, have a greater depth of added value and achieve higher margins.

Second, we are boosting our efficiency and speed. It's no longer enough to simply have the best solution. We also need to be able to launch it quickly. Speed has become the decisive factor for success in today's world. We have already implemented effective programs to improve our performance and we will be exploiting further potential also by making systematic use of digitalization and automation opportunities.

Third, we will further strengthen the Wacker's team abilities and skills. Today, especially with everything becoming faster and more digital, this is essential.

In these uncertain and volatile times, a clear path is needed. Here at Wacker, we have it, and we are following it. Together, we will continue to work on the solutions of tomorrow with expertise, customer proximity and innovative strength.

With that, I'll turn over to Tobias for a deeper dive into our results.

Thank you, Chris. Welcome, everybody. Before I begin, let me address some changes in the way we present our numbers. We have prepared the first half year and the second quarter results applying a revised presentation of our investment results in the profit and loss statement.

Investment income or equity income is now reported under financial results instead of operating results. The most visible effect from this change is that the investment result from our stake in Siltronic is no longer relevant for EBITDA and EBIT. The reclassification also affects how we record dividends received in the cash flow statement.

We implemented this change to enhance the transparency of our operating performance and improve comparability with the peer group companies. There is additional information on these changes in the appendix of this presentation and the notes section of the first half year report. Also in the Excel file published this morning on the Wacker website, you will find the restated numbers.

Having addressed that, let's now look at the profit and loss, which shows the restated second quarter 2024 figures of EUR 155 million versus the EUR 160 million we reported last year. So the overall effect is quite small.

Sales in the second quarter were EUR 1.41 billion, down 4% year-over-year, primarily due to exchange rate, pricing and volume effects in polymers, polysilicon and biosolutions. In silicones, sales decreased by 1% year-over-year despite somewhat higher volumes.

Customers have taken a wait-and-see approach due to trade uncertainty. Order intake was volatile throughout the second quarter, and we have not observed any improvement so far. This had effects throughout the entire P&L. EBITDA declined to EUR 114 million from EUR 155 million in the second quarter of 2024.

Looking only at the performance of the 4 operating segments, the added EBITDA came in at EUR 182 million. Others held back the reported EBITDA by EUR 69 million versus the EUR 50 million charge a year ago. The higher charge resulted from the lower absorption of group infrastructure and higher currency hedging costs.

As previously discussed, the main component of the others EBITDA is the CO2 compensation offset. In the second quarter, this was about EUR 40 million. As before, we expect this will be refunded in the fourth quarter of this year.

Lower EBITDA and higher depreciation drove EBIT to minus EUR 11 million versus the EUR 38 million a year ago. Depreciation has been increasing in line with investments in the past couple of years. Many of our major growth projects are now completed, and our focus is on filling the new capacities, improving cash flow and driving profitable growth. All told, net income was a negative EUR 19 million, equating to a loss of EUR 0.49 a share.

Our balance sheet shows strong financials with high liquidity of about EUR 800 million, and EUR 4.5 billion in shareholder equity. Due to typical seasonality and accounts receivable in chemicals and lower payables, net working capital increased by EUR 135 million since the end of last year.

Inventories overall are somewhat lower, largely driven by targeted reductions in stock levels. Financial liabilities are largely unchanged since the start of the year at EUR 1.9 billion. The shareholder equity ratio at 51% remains at a high level.

At silicones, sales in the second quarter were about EUR 713 million, down 1% year-over-year and 4% below the previous quarter. EBITDA was up 16% versus the prior year and slightly ahead of the first quarter. This was primarily due to the low double-digit euro-million insurance compensation in connection with supply chain issues that held us back in 2024. Absent that insurance payment, the second quarter EBITDA would have been well below the preceding quarter due to trade uncertainty and exchange rate.

While overall volumes were somewhat higher quarter-over-quarter, a combination of exchange rate, price and mix effects held us back both in sales and EBITDA.

As we cautioned on the last call, the largest headwinds facing chemicals may come from the indirect impact of tariffs. Silicones are at the start of many value chains. And when customer products are impacted, we too will see lower demand.

For the full year 2025, we have updated our silicones outlook. We now expect sales and EBITDA to be at the prior year level. The updated outlook essentially underpins our expectations that markets will remain challenging for the remainder of the year.

At polymers, sales in the second quarter were EUR 363 million, 7% below last year. EBITDA came in at EUR 40 million, down from EUR 59 million a year ago. The year-over-year development of sales and EBITDA was driven by exchange rate and volumes in consumer-related dispersions.

On the other hand, volumes in construction-related powders were more stable year-over-year and showed some improvement compared to the previous quarter. This improvement was due to seasonality and supported a modest sequential increase in EBITDA despite the VAM turnaround.

For the full year 2025, we have updated our outlook for polymers. We now expect sales to decline by a low single-digit percentage with a margin at prior year level. Overall, construction markets remained weak in Europe and Asia and trade uncertainty is weighing on consumer-related binders.

At biosolutions, sales during the second quarter were EUR 87 million, down 11% year-over-year and 4% lower than the previous quarter. Nearly all businesses were affected by softer market demand.

EBITDA came in at EUR 5 million, somewhat higher year-over-year and stable compared to the previous quarter. For the full year 2025, we have updated our biosolutions outlook. We now expect sales and EBITDA to be at prior year levels. Our focus remains on filling capacities, and we have achieved several commercial wins so far this year.

Recently, we announced a partnership with BENEO for the production of human milk oligosaccharides, also known as HMOs. Wins like this support our overall longer-term goals.

At polysilicon, sales in the second quarter totaled EUR 218 million, 6% lower year-over-year and 11% lower than in the preceding quarter. EBITDA came in at EUR 34 million, operationally essentially around the level of the preceding 3 quarters.

The development of sales and EBITDA was primarily due to significantly lower volumes of solar-grade polysilicon sold. The headwinds here overshadow our ongoing success in semi, where we continue to show strong growth.

For the full year 2025, we have revised our outlook for polysilicon. We now anticipate sales at the prior year's level with approximately EUR 100 million in EBITDA. In polysilicon, our semi volumes are growing strongly and the new etching line is proceeding in line with our expectations.

Semi is and remains our primary focus, but solar remains challenging. We have reduced further our capacity utilization. Demand for solar has been weak for over a year now, but the situation remains uncertain, especially in the U.S. There might be opportunities ahead due to recent regulatory changes. We need to await the outcome.

Now, let's look at our net financial position. In the first half of 2025, we generated a gross cash flow of minus EUR 5 million. Trade receivables driven by the typical seasonal patterns in chemicals as well as payables held back the cash flow. After cash flow from investing activities of EUR 296 million, the dividend payment of EUR 124 million and some other effects, we ended the quarter with a net debt of EUR 1.1 billion.

Before we start with the Q&A, let me summarize. The headwinds we and our peers are facing are well understood. In this environment, it is essential that we utilize every tool at our disposal to control costs, improve cash flow and at the same time, drive profitable growth.

We have launched comprehensive initiatives addressing both direct and indirect costs. Many of our larger strategic investment growth projects are now complete and our focus shifts to filling these new capacities. This paves the way for lower CapEx going forward.

Lower costs free up resources so we can invest in innovation, sales, technical service and marketing. We do this to drive specialties growth and to improve the financial performance and resilience of Wacker.

Operator, we're now ready to begin the Q&A.

[Operator Instructions] The first question from Christian Faitz, Kepler Cheuvreux.

My first question is, in light of the weak U.S. dollar, can you remind us of your hedging policies for transactional activities, i.e., where you produce particularly in the euro region, but for non-euro markets?

And I guess, my second question is kind of null and void after your comments, Dr. Ohler. But I was going to try to push for some silver lining in terms of revival of demand post the summer lull. But again, let me know if this is null and void post your comments.

Christian, thanks for the 2 questions and also for the comment on the second. I'll start with the first one. So our sensitivity to the U.S. dollar is that a EUR 0.01 change is worth about EUR 15 million in revenue and pre in EBITDA unhedged and our typical hedging is 50% for the exposure for a year out. So we are not hedging -- I mean, only to a very small extent, we're hedging longer term.

And yes, the famous summer lull, I mean markets are difficult to read. What I can say is that the order intake has been really very poor since the start of May, and it has remained volatile and short term, and there's no improvement also throughout the entire month of July. So we are one month into the third quarter and summer continues, at least and also the trade discussion continues. So I would be happy to report any uptick also since the weekend, but we haven't seen that so far.

So I think the overall market sentiment is that we have to, yes, maneuver through this volatile environment. And as I said before, we are doing everything. We are focusing on profitable growth also on the short-term opportunity, we try to catch as many -- as many orders possible in this environment. We are focusing on cash reducing CapEx and working capital. And for sure, we are working on cost. The market is not very benign in these days.

Yes. Control the controllables.

The next question is from Sean McLoughlin, HSBC.

I'd like to just understand a little bit the cash generation outlook, I suppose, for the second half and your levers. You've given us a very helpful indication of where you can effectively try to pull back on spending cash.

I'm just wondering, could you, first of all, let us know what is a maintenance CapEx figure? What is the minimum CapEx that you can spend if you pull back? And is there any flexibility on any expansion CapEx that you're currently involved in, particularly if we don't see a rebound in EBITDA through the second half? That's the first question.

So, Sean, Tobias here. I would start with the cash flow question and also give some early insight into how we want to develop the CapEx going forward. I mean, first of all, the cash flow generation in the first half of the year was around about negative EUR 300 million was poor, no question. And we are working towards a more balanced overall cash flow for the full year. And there are several levers that come into play.

First, it's the program to reduce our accounts receivables. I mean, there will be also some help of seasonality, but there's also additional efforts in shortening payment terms. The second is inventory reductions where we have launched a program reducing inventories. And this means also beyond the polysilicon inventories. It is basically focusing on the other divisions. And we will invest less in the second half.

And you also are aware that, we receive the CO2 compensation, that payment for the reimbursement for the CO2 cost, always in the fourth quarter. So all this together should drive us to a more overall balanced cash flow for this year. But still, that is not satisfying, and that's why we are looking into the CapEx needs for the years to come. We have completed many strategic projects.

And as everyone is aware, we are also underutilized, so we can slow down significantly and move somewhere between maintenance CapEx, and some very few growth projects and strategic projects. And this would be then definitely below depreciation, significantly below depreciation level, which is about EUR 500 million that we see today. But I don't have a precise number for this going forward today, but we are working hard on getting it for some years to a much lower level given the realities that we face.

That's super helpful. My second question is on the competitive outlook for polysilicon in the U.S. Your U.S. peer is making what appears to be a strategic push to supply the U.S. market more aggressively. I'm just wondering how this might change competitive dynamics for semi and solar poly in the U.S.? And any update on the Section 232 probe as well?

Sean, I'm not sure whether I got 100% the first part of your question on the competitive side. Could you repeat that, please?

Yes. Your main U.S. peer sounds like it's making a strategic push to increase supply in the U.S. for both solar and semi, if I've understood it correctly. And I'm just wondering, if you've noticed any change in the competitive dynamics in the U.S. market in general?

Okay. Yes, I mean, we also saw the announcement. To my understanding -- and again, I mean, for the details, of course, you have to ask them not us -- my understanding is they are going forward in the value chain of solar using existing capacities for polysilicon to enter the field of wafers of cells and ultimately modules, which I think is a sign of a belief in the solar market in the U.S., which we are also still propagating.

I think the U.S. market, there are some uncertainties now with the big beautiful bill, for example, on the solar outlook, but we are still pretty confident that the U.S. PV market will remain relevant as solar is the cheapest and most scalable form of energy production in the world and also in the U.S., and the demand of energy is definitely rising. So, from that perspective, I think these announcements show there is an opportunity also in the U.S. market for PV.

On the semiconductor side, I mean, as Tobias stated, we are running pretty well, pretty good. We inaugurated our new etching line in Burghausen just 2 weeks ago. It's running really on track. And that's one of the reasons why we're expanding the capacity there. And it ensures that we remain the quality leader in this segment, which is our prime target segment, the semiconductor area.

Then your second part was, is there an update on the Section 232? Well, I mean, the 232 investigation that is one of the recent trade investigations that also Tobias was referring to. Currently, I have to say we need to assess these investigations, and also the outcome of these investigations, which is not yet defined. And upon that, we can see how that moves further.

The next question is from Thomas Wrigglesworth, Morgan Stanley.

First question, if I may, is there's been quite a mixed reaction from the industry as to the statements around policy support, both from the EU and/or what might be happening in Germany. I'd be keen to get your take as to where you see the basis for optimism in those statements and what you think can change and will change and how quickly?

The second question I have is around polysilicon. Clearly, things are bad on the solar side and could improve on the semi side. But obviously, if we assume the EUR 100 million base run rate, are there temporary factors in there that you're having that are allowing you to make that level of profitability, i.e., it could -- outside of a change in -- massive change in costs, could it get worse? Or is that genuinely a floor level that you could just leave it alone at this point and it would run at EUR 100 million? Or is this a business which could still see further pressure because contracts might roll off that aren't renewed or pricing on the solar side is reset lower? I'm just trying to get a sense of the kind of the floor of earnings for that business, whether the current environment improves or not?

Okay. Thomas, let me start with the first question on the policy support from the EU and from Germany. And definitely, you hear me talking positive on what's going on in recent months. On the EU side, there was the chemical industry strategy package and meeting with Ursula von der Leyen, which we also participated. And you can clearly see and feel that, there is much more openness for supporting this enormously important industry for Europe. So, the understanding is definitely there.

And also, if you talk, for example, on the German industry power pricing, there has always been a long discussion with the EU Commission on regulatory approvals for that. That is now has been developed under the state aid framework for the clean industrial deal. And I think that's a massive move forward.

Now, you hear me also saying, what I always say with politics, a great first step, great signals, great movement, but we needed to be finalized and we needed to be signed and implemented to really see these effects.

And same is true on the German side with, again, industry power price. We are now also in a phase where we also bring in our input to politics to hopefully work out something which would be beneficial for the industry and hence, for Germany and for Europe as I'm still convinced this energy question could be really a game changer for the European economy and for the German economy. So you hear me positive with a little caution on the implementation side.

Thomas, Tobias here. On the polysilicon question with respect to profitability, so we guided for this year that we would end around EUR 100 million. And as you can see from the numbers, we had around about EUR 60 million in the first half of the year. So, there's EUR 40 million left to come to that number divided by 2 for the quarter. So, as I said in the speech, so we are assuming that we are running at a similar level going forward.

But as I also said, there is uncertainty. I mean, we are not knowing how the solar market is developing. So, it could move up, it could move down. And I think it's not a good use of time to speculate on that today.

Our core -- and this is my emphasis -- is the semiconductor strategy going forward. And we have invested in that. We are seeing substantial growth year-over-year. We would continue to see that in next year and the years to come. If that was the only business, we would adjust capacities accordingly. But there's no need to think about that today because the solar could have an opportunity. And there are questions around this, whether that would be an opportunity or not. So, I think we can adjust accordingly and in any case of the developments.

The next question is from David Symonds, BNP Paribas.

So, the first one just on the guidance in silicon. So, you've mentioned that you're not seeing any improvement yet in July. But if I look at the silicones guide, I think it actually implies a step down in the third quarter, even considering the -- taking out the one-off in 2Q. So, can you talk a little bit about what you're expecting for silicones for the rest of the year and what's underlying the guide?

So the guide is basically assuming, as you said, no improvement, and we had a one-off boost, low double digit from the insurance compensation in the second quarter. If you take that out, you come to a number for the third quarter, which is somewhat lower. And then, I mean, as there is volatility in the market, we would assume some seasonal slowdown in the fourth quarter as it is quite typical. And from that perspective, we come to a number that is close to our prior year number.

It could accelerate. We don't assume that. I mean, as you know, in that environment, it could also become worse. We don't assume that neither. So that's why we point towards a performance which is close to our last year's performance.

Understood. And then my second question, I was surprised to see -- you mentioned cost-saving measures. I was surprised to see that employee numbers actually increased in the quarter by around 70 positions, I believe, in all divisions, except for biosolutions. Will the cost savings measures include some OpEx savings as well as the CapEx savings?

Definitely, we would be looking at that, David. And I mean, the increase in this year is basically also for the ramp of new capacities. Just take our semiconductor investment for polysilicon that had to be manned. And for that reason, we had seen a slight increase for all the strategic investments. But going forward for looking for cost savings, we look through the entire P&L going from operating costs down to the functional costs below the gross profit. And yes, that would also include potential reductions in the numbers.

Understood. And if I could possibly squeeze one more in. It's coming back to Thomas's question on polysilicon and the sort of the trough rate, if you like. My understanding is you entered short-time work in polysilicon in October last year. And usually, this is a 12-month measure, I believe, unless of extreme circumstances and you could extend that to 24 months. So in the guidance, have you assumed that you're going to be bringing those people back to work? Or is the assumption that the short-time work will be extended to 24 months?

So that is a super detailed question. We do have some flexibility here how to maneuver through this regulatory framework. And we are definitely running, I mean, at very low utilization today. And as we said, we are trying to balance the low demand with our production, and we will do the best to optimize here.

The next question from Matthew Yates, Bank of America.

I'd like to follow up on a few points that have been raised already. I guess, firstly, maybe to continue on David's theme about the increase in the cost base. If we look at silicones, obviously, you've invested a lot of money in new capacity. Thomas referenced that in the context of depreciation that the plant is now starting up.

How much additional fixed cost or operating costs are you now carrying in that business? Because I would imagine, if your revenue is flat, your utilization is, therefore, significantly worse than it would have been a year or 2 ago before you had that additional capacity. So how much is that weighing on, particularly if we thought about EBIT margins rather than EBITDA margins? And then I've got a follow-up after.

Matthew, Tobias here. That is very detailed. I don't have a precise number on that. But fundamentally, you are absolutely right. It is weighing on gross profit that we are having new capacities coming with depreciation coming with fixed costs, coming with staff, and we are not fully utilized yet. And that is one of the reasons also why gross profit has not moved towards the right direction in this year.

And as I mentioned in -- one of the questions before, we are actually looking at that, trying to address that going forward.

Okay. Second point, I'm not sure if it was yourself or Christian, who made the statement earlier about there's no need to think about closures today because so they still might have opportunities. I guess, I'm wondering at what point does your patience run out on that view where you have to take a more radical measure, whether that's even feasible, if there's too many interlinkages with the rest of the portfolio?

And just on the Section 232 point, sorry if this is more of a legal or a political question, but Section 232 has transformed the steel market in the U.S. into one of the most profitable markets in the world. And so when I see them launching a Section 232 investigation on poly, that conceptually sounds quite interesting. But what is your understanding as to the difference Section 232 could make versus what's happened so far around sort of the AD/CBD rulings, which frankly haven't achieved anything?

And when it says polysilicon, its derivatives, is your understanding that this also covers things like wafers and modules? Because I guess importing polysilicon isn't actually the issue in the U.S. market. It's these more downstream form factors, if you will.

Okay, Matthew. So your second question that was on the decision on the poly demand, and I think it's very much what Tobias already elaborated on.

I mean, at the moment, we are running at a low utilization rate. we have an EBITDA of about EUR 100 million, and it's not a greatest number for sure. But I think there is still that opportunity out there, as I mentioned, on the solar market. And as long as we see this opportunity on the solar market, also driven by regulation, there is a potential for us to have an attractive market. And as long as we have the opportunity for an attractive market, I think it makes no sense to idle or shut down capacity. So that would be kind of, if you want a decisive point for taking that decision. And as I said, we don't see it right now.

Now, on the Section 232, I mean, the U.S. Department of Commerce is currently initiating quite some of the Section 232 investigations to secure the supply of strategic raw materials for national security purposes for the U.S. And as you mentioned, indeed, one of the last one was polysilicon and its derivatives.

So you also asked for the derivatives. It has not been, to our knowledge, have officially defined in the announcement. What we assume is that it may refer to wafers and ingot cells and modules in the solar supply chain, and also to wafer and ingots and potentially chips not yet assembled into electronic devices. And as you rightly stated, the import of polysilicon per se is not really the big issue because there is not much of an import today to the U.S.

So what could be kind of an impact? That's kind of what I hence or what I from your question. Well, first of all, I think we have to analyze the investigation in itself and then, of course, the outcome. But I think it's kind of fair to say that if there would be a truly effective 232 on polysilicon and its derivatives that it would help us to economically produce polysilicon in the U.S. and potentially also in Europe. So that could have a positive impact definitely. But again, we have to see it's not yet closed, and it's not yet finalized the decision on it.

The next question is from Chetan Udeshi, JPMorgan.

First one is just -- I mean your comments suggest we should probably be looking at third quarter broadly in line with second quarter, except for that one-off in silicone. Is that right? So, EUR 100 million EBITDA. Or can it be even below that, do you think in Q3?

The other question was just going back to this power price discussion in Europe. I'm just curious if, let's say, you get a subsidized EUR 50 per megawatt hour price in Germany for electricity. Is that a material tailwind for you? Because I think you do already get some sort of subsidy in Germany already, maybe mainly on CO2 cost compensation. But I'm just curious, is EUR 50 a big tailwind for Wacker, if you were to get it?

So, Chetan, Tobias here for the question on the Q3 EBITDA. And I think your calculation is, I mean, sort of, aligning very nicely to my messaging. Q3 is similar to Q2. I mean, we would see some pluses or minuses in the various segments. Insurance compensation would be a minus for silicones. For polymers, we had a turnaround slight plus, biosolutions similar, polysilicon, no real change. I said EUR 40 million for the second half, so maybe EUR 20 million for each quarter.

So, I think if you take others, our -- and this then leads over to Christian's answer to the second question, others is normally burdened by the CO2 compensation offset, which is EUR 40 million. So overall, a similar number for EBITDA for the third quarter, that's how we see it today.

Okay. And Chetan, on your second question on our pricing discussion in Europe, yes, I mean, as I mentioned, I think the good news is that the EU Commission is willing to accept something like this in Germany. And it's under the CISAF agreement, this chemical industry -- sorry, the Clean Industry Act State Aid Framework, and what we know so far, there is a proposal out, which as you mentioned, is a EUR 50 that will be the lowest level. There are some caveats into it, like it is only for 50% of the procured power. And also, you have to kind of reinvest 50% of that.

If you would keep it in that kind of original idea, I think the effect for us would be not really big as you mentioned because we have other means today. But we see it more as a starting point of a discussion with also the German government and the EU Commission because if you have -- if you implement a new tool, which brings exactly the same like the old tool, probably the necessity is not that high. And therefore, we would go into discussions to make something more meaningful out of that.

The next question from Tristan Lamotte, Deutsche Bank.

I was just wondering if you think that the reported plans to close down underutilized Chinese polysilicon capacity, if that's actually likely to take place and if the mechanism that's been proposed, whether that mechanism could actually work? And say this does go ahead, where do you think prices in China could go? And could that really be enough to bring those prices up to the much, much higher ex-China price that you currently transact at?

And then the kind of follow-on from that is, does this China supply side reform actually matter for you at all?

Okay, Tristan, very good and not simple question to answer. First of all, let me say, I think that in general, if there are measures in place that reduce overcapacity in the world, that is per se positive.

Now, your question was, does it work the concept which we hear about in China? That's something I cannot answer today. It's an interesting concept, I would call it. It has some ideas on reducing, I think, the capacity of about 1 million tonnes, which is substantial nevertheless, and that goes then into the second part of your question.

Today, we talk about a 3.5 million tonnes of capacity. So taking out one is significant, yes, but it would still leave 2.5 million tonnes in the market which would be enough for 1,000 gigawatts of solar. And keeping in mind that I think last year's installation was more in the range of 500 to 550, you could still call that a significant overcapacity.

But nevertheless, I think it's the right move. And also what I hear since the beginning already of the year is that the Chinese government is very much keen and interested in doing something on it. I think it is seen as a challenge. And whether you call it anti-involution, which is a difficult word, some call it the red race or some call it cutthroat competition, I think every measure that reduces is positive.

Will this first step, this announcement lead to similar prices to the outside China index? I'm not so sure about that, especially in the short term. And is it beneficial for us? I mean, today, we don't really sell much volumes to China, but I think it would have an indirect effect, which is positive increasing price levels of polysilicon for solar.

The next question from Sebastian Bray, Berenberg.

I have 2, please. The first is on polysilicon inventory. I'm thinking about the rate at which the company would like to reduce this or would be able to reduce this inventory. And could we end up with a situation where the EUR 200 million, EUR 300 million of excess inventory that's currently on the books just stays there for 2 or 3 years if the market conditions remain unchanged?

The reason that I'm asking this is that with an eye towards 2026, I'm thinking, well, there might be a recovery in the segment. The cost could go down. There's some government support, but there's still the underlying issue that the current level of production is not really making a dent in the inventory pile.

My second question is on the other line. Could you give us an idea of what the underlying number is now ex-Siltronic, assuming that the group utilization doesn't really improve? Is it about minus 50 to minus 60 a year?

So I give it a try, Sebastian, on the poly inventory. I mean you have seen us reducing utilization throughout the year and keeping inventories in check, and that is following the soft demand that we have experienced throughout the year. And as we mentioned before, we would continue to adjust accordingly.

So given the uncertainty in the environment, we could reduce quickly if there's a demand hike, and then we would -- as those products are already close to customers, we would sell it quickly. If that doesn't happen, we would continue to adjust production.

And even if we would have the inventory for longer, I think I come to it, I mean, there is -- there's no degradation. I mean this product is of quality for years, and we would then have to wait longer and be patient until we can sell it off. But rest assured, we would adjust capacities accordingly and utilization.

On the second question on the other line, we mentioned that our overall guidance for the year is, I think, minus 40 million from a lower utilization. It used to be minus 20 million. But given the overall, I mean, lack of absorption of infrastructure costs, we have set it at minus EUR 40 million.

And then you have that effect between the quarters, Q3, Q1, Q2, we have that offset for the CO2 compensation that gets reversed in the fourth quarter, as you know.

The Siltronic result, to be clear, is not part anymore of the others line as it was before, and we have adjusted that also for the comparable numbers for last year.

That's helpful. If I might follow up on the inventory point. So I imagine that the utilization of the segment is around 40% or so at the moment, although I appreciate you might not want to give a number. When we talk about the balance of protecting EBITDA versus clearing inventory, is it possible that this utilization rate could go lower in your view or the company would be more minded to protect its EBITDA level?

It goes back to last year where we consciously decided from the uncertainty point of view to rather continue production at a higher level, thus protecting EBITDA and taking a strategic stock position.

In this year, it's different. We adjusted production accordingly. So also taking the burden of the low utilization into the EBITDA, but protecting cash and keeping inventories despite the weak demand environment in check, and that would continue going forward.

We have a follow-up question from David Symonds, BNP Paribas.

Just a couple more on Siltronic, if I may. I think there's been a bit of a rumbling in the market that they could, at some point, look to raise equity. I'm not expecting you to speculate on that, obviously, but perhaps you could comment on whether you would look to -- whether you want to maintain the current level of stake in Siltronic, whether you would do that through any kind of process by them?

Well, I mean, David, there's no real change in our strategy regarding Siltronic. I mean we decided a couple of years ago to reduce our share in Siltronic, which we still believe is a good company, no doubt about it. And we had this good deal on the table with GlobalWafers, which has not been approved by the German authorities, unfortunately.

So there's no rush for us now to sell off any material stakes in that. We are open for discussions. But to be honest, I think geopolitically, it might be world is not getting become easier. And so we see it as a valuable financial asset. And again, no rush to sell off anything.

Okay. Understood. And then just on the value of the stake, I think the implied stake value from the market cap is now considerably below the balance sheet value. What would trigger a write-down on that? And now that you've moved Siltronic from the earnings line, I assume the write-down would still go through your earnings as opposed to through the financial line, but maybe you could confirm that.

So we did an impairment test at the close of the half year, and we performed the valuation of our shares. And based on the forecast cash flows, we determined that there's no need to adjust the valuation at this point in time. And yes, for sure, we would have to repeat that exercise at the year-end.

But you're right, David, it would definitely still affect our P&L, but would not go through the EBITDA or EBIT line in the P&L.

That was the last question. I would like to turn the conference back over to Mr. Hoffmann for any closing remarks.

Thank you, operator. Thank you all for joining us today and for your interest in Wacker Chemie. Our next conference call on the third quarter 2025 results is scheduled for October 30. As always, don't hesitate to contact the IR department if you have further questions. Thank you.

Ladies and gentlemen, the conference call is now over. Thank you for participating. I wish you a very nice rest of the day.