FRANKFURT (Reuters) - German specialty chemicals maker Wacker Chemie on Tuesday said it expects its core profit to decline by up to a fifth this year, pointing to lower selling prices for polysilicon, which it supplies to the solar industry.
Earnings before interest, taxes, depreciation and amortization (EBITDA) will decline by 10-20 percent in 2019 compared with the 930 million euros ($1.05 billion) the group made last year, Wacker Chemie said.
According to Refinitiv estimates, analysts expect EBITDA to rise by 6 percent to 985 million euros in 2019.
“A significant contributing factor to the projected EBITDA decline are lower average prices anticipated for polysilicon this year,” Wacker Chemie said in a statement, adding it expects sales to grow by a mid-single digit percentage from last year.
Shares in Wacker Chemie, whose polysilicon is used to make solar cells, were 9.7 percent lower at 1112 GMT. The group said the 2019 guidance does not include an insurance compensation payment for an explosion at its plant in Charleston, Tennessee.
Sources told Reuters in February that China, the world’s top solar market, offered to reduce its tariffs on U.S.-made polysilicon, a move analysts at Societe Generale say would result in more price pressure.
“We are concerned that without a timely increase in solar installation targets in China, the earnings recovery in Polysilicon will be delayed to 2020,” they wrote on Tuesday, cutting Wacker Chemie to “hold” from “buy”.
Reporting by Christoph Steitz; Editing by Riham Alkousaa and Michelle Martin