The conference is now being recorded. Welcome to the Wacker Chemie AG conference call, Q1 2024. At the moment, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Now, I 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 first quarter of 2024 results. Dr. Christian Hartel, our CEO, and Dr. Tobias Ohler, our CFO, will take you through our prepared statements momentarily. The press release, the IR presentation, and detailed financial tables are available on our webpage 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 press release, presentation, and our 2023 annual report regarding risk factors. All documents mentioned are available on our website. Chris?
Welcome, everyone. As you saw in 2023, economic headwinds and lower prices over last year defined our quarterly results. In 2024, we started with the low exit rates of the previous year, 2023, and as a result, sales and EBITDA for the first quarter are markedly lower year-over-year. On the other hand, sequential developments are more promising. When we published our full year results in March, we provided a trading update on the first quarter of 2024. In line with our expectations, sales came in at EUR 1.5 billion. Group EBITDA, on the other hand, came in at the upper end of our expectations. This was primarily good business development on the one hand and some positive effects in the Other segment. Group EBITDA increased by 27%, quarter-over-quarter to EUR 172 million.
This is up from EUR 135 million in the fourth quarter of last year. The higher earnings were driven by strong growth in the operating segments. Chemicals EBITDA came in at EUR 137 million, which is up approximately 2 times from the EUR 69 million in the preceding quarter. Chemicals demand was clearly higher quarter-on-quarter. This is in part seasonality, but also due to customer restocking from very low levels of inventory. Demand, especially for specialty silicones, developed positively in the first quarter. In polymers, we see typical quarter-on-quarter improvements from seasonality. As we discussed on previous calls, Biosolutions is focused on starting up our new mRNA facility in Halle. While the segment continues to see upfront costs weighing on its results, the first quarter EBITDA of EUR 5 million was supported by a better product and contract mix.
Polysilicon also showed a strong sequential improvement. EBITDA came in at EUR 43 million, up from EUR 21 million in the previous quarter. The results continue to be defined by low prices for solar-grade Polysilicon. While we see some positive effects from lower energy costs, the underlying performance of Polysilicon has been constant over the past two quarters. Actually, year-end effects held back the previous quarter, and Tobias will give you some more flavor shortly. So all told, our business came in at the upper end of our expectations, and some tentative economic indicators show business conditions are improving. Now, looking at our businesses, demand was markedly stronger quarter-over-quarter. However, this trajectory has not continued in April. We continue to see overall weak markets, uneven order patterns, and low prices defining our results. As you saw in this morning's press release, we confirmed our full-year guidance.
While the first quarter results may point to the top end of the EBITDA range of EUR 600 million-EUR 800 million, we remain cautious. We respond to the weak market environment and low prices with consistent cost discipline. We continue to pursue a restrictive hiring policy and are focused on streamlining processes to make them more efficient in cutting our material costs. Before highlighting some of our accomplishments on the next page, I would like to congratulate the Silicones team on receiving the Fountain Award at one of China's largest trade fairs for Personal and Home Care ingredients. Our team has developed a new silicone elastomer gel that contains more than 80% renewable raw materials, and that, of course, is a great opportunity of our specialty silicones business.
That product gives you a silky feel on your skin and also on hair care, and is a further proof of our strategy. While I've spoken a lot about lowering our CO2 footprint at Wacker in the past, developing sustainable products is also a core part of our strategy. By 2030, 100% of our products will meet defined sustainability criteria. That's the target. Last year, 94% of our products fulfilled already these criteria, up from 83% in 2020. We will actively improve our product portfolio and to continue to lower our carbon footprint, provide our customers with innovative, sustainable solutions. Now, looking at our cost-saving and efficiency measures on the next page. A clear focus on cost and efficiency is essential for Wacker to stay competitive in the global market.
Our efforts are concentrated under our Wacker Operating System, WOS, where we focus on reducing our specific operating costs. We awarded several teams at our annual Wacker Operating System conference earlier this year for their remarkable achievements. To give you some examples on that. Silicones, the team was able to sustainably cut the amount of steam required in the distillation process. This one project alone saved 83,000 tons of steam last year and reduced our CO2 emissions by 26,000 tons. In Polymers, our colleagues in Nanjing optimized steam production by leveraging waste gas incineration. This project also reduced CO2 emissions substantially. In Biosolutions, our colleagues in Amsterdam increased utilization rates and improved maintenance at the biopharma site. And lastly, in Polysilicon, the team in Burghausen was able to drive process improvements, significantly increasing the output in semi-cleaning.
Now, these projects are just a few examples of the hundreds implemented last year. Continuous cost reduction is not about big wins, but about addressing every opportunity to become more efficient, more efficient day by day. Since the inception of our WOS program over 20 years ago, we have addressed thousands of individual projects. These have resulted in over EUR 800 million in savings. We also have set ourselves ambitious targets for 2024. If our targets are successfully achieved, we should see further improvements in the cost base. Now, before I hand over to Tobias, let me sum up quickly. We saw a good operating performance in Q1 based on higher volumes and customer restocking. Difficult conditions, however, persist. Order intake continues to be uneven and does not provide a stable foundation for an improved outlook.
But despite the uncertainties we are currently facing, I'm convinced about the success of our setup and strategies. We are confident about our future performance to continue to make strategic investments for our future growth. We do this because we have confidence in our products, in our markets, and of course, in our people. Global megatrends such as renewable energies, electro mobility, digitalization, and biopharmaceuticals, will drive demand for our products and solutions. We remain committed to our growth targets up to 2030. Now, to Tobias for further details on our results.
Thank you, Chris. Welcome, everybody. Looking at the profit and loss, sales during the first quarter of 2024 came in at EUR 1.5 billion, down 15% year-over-year. As you can see on the right-hand side of the slide, pricing alone cost us about EUR 300 million in revenues.
A large share of this decline is due to polysilicon. Higher volumes, particularly in Chemicals, somewhat helped to offset lower prices. Compared to the previous quarter, sales were up approximately 10% from customer restocking and seasonality. As Chris mentioned, we saw higher volumes in Chemicals quarter-over-quarter and year-over-year. This supported our earnings, but low prices left their mark throughout the figures. First quarter group EBITDA was EUR 172 million, 39% lower year-over-year. Sequentially, it was 27% higher. When looking at the sum of the four operating segments, EBITDA, the sequential growth was even higher. The cumulative EBITDA from silicones, polymers, Biosolutions, and polysilicon came in at EUR 185 million versus EUR 100 million in the previous quarter.
Looking at the Other segment, it came in at -EUR 13 million in the first quarter, including at-equity contributions and a stronger utilization of infrastructure, Other came in better than expected. The better performance partially offsets charges in connection with the embedded cost of CO2 in our energy bills. As explained on the last call, once we receive the CO2 refund for the fourth quarter, the cumulative charges over the first three quarters of the year will be reversed. So much for Q1. For the full year, 2024, there is no change in our expectations. We expect the Other EBITDA will be at about -EUR 20 million.... Now looking at the last line items in the P&L, including the contribution from Siltronic and some positive effects in Silicones, the results from investments was EUR 12 million.
Taxes were EUR 14 million, and net income was EUR 48 million. This equates to earnings per share of EUR 0.89. Our balance sheet shows strong financials, with EUR 1.3 billion in liquidity and EUR 4.7 billion in shareholder equity. Net working capital increased by about EUR 200 million compared to the end of last year. This primarily reflects higher accounts receivable, which follow the development of sales. In addition, we have some inventory build-up ahead of the turnaround in Silicones in the second quarter. At Silicones, sales in the first quarter of 2024 decreased by 7% as lower selling prices offset the higher volumes year-over-year. Compared to the seasonally weak fourth quarter, the pickup in specialty volumes drove sales to EUR 710 million in the first quarter.
This represents an increase of 16% over the preceding quarter, and was mainly due to customer restocking from very low levels. At EUR 81 million, the Silicones EBITDA is well above the past few quarters. Higher specialty volumes, improved utilization rates, lower raw material costs, and an at-equity contribution supported the improved earnings. We have updated our Silicones outlook for 2024. We now expect a high single-digit EBITDA margin up from our previous forecast of a mid-single-digit margin. However, we expect prices to continue being low in the short term due to weak end market dynamics and ample upstream capacities, keeping standard prices in check. Considering that the short-term benefits of customer restocking support the first quarter, the first quarter EBITDA may not be a good base for forecasting the full year. Also, the turnaround will hold back the second quarter.
Sales in Polymers were EUR 372 million, 13% below last year, mainly driven by lower prices, led by raw materials. Average selling prices were stable compared to the previous quarter, and higher volumes underpinned the 9% sequential sales growth. Seasonality and some restocking drove volumes up quarter-over-quarter. As the utilization improved, EBITDA in the first quarter climbed to EUR 56 million, up from EUR 32 million in the previous quarter. Overall, we see relatively good demand in Asia, outside China and the Americas, while Europe and China continue soft. For 2024, our outlook is unchanged. At Biosolutions, sales during the first quarter of 2024 were EUR 72 million, down 6% year-over-year. First quarter sales were supported by growth in Bio ingredients, but were held back by Life Science Chemicals.
EBITDA during the first quarter came in at EUR 5 million, supported by a better product and contract mix. Our results continued to be held back by upfront costs from our new mRNA facility in Halle, Germany. We are making good progress there, and the facility will be ready by mid-year. For this facility, we expect to receive a reservation payment as part of the German Pandemic Preparedness Program. As disclosed at the beginning of April, the team reported a success in winning a first project for this new site. We will supply our customer, Pantherna, with an active ingredient based on mRNA and lipid nanoparticles. They run a development project to combat acute respiratory distress syndrome. Our full-year outlook for Biosolutions is unchanged. Polysilicon reported sales of EUR 300 million during the first quarter, 32% below prior year.
The primary driver for this were significantly lower solar prices. Sequentially, sales were flat, with ASPs and volumes being comparable. EBITDA increased to EUR 43 million, up from EUR 21 million in the prior quarter, with some support from lower energy costs. Year-end effects in Q4, such as provisions and other effects, further add to explain the sequential improvement as prices for solar materials stayed challenging. As discussed on the last. These efforts are ongoing, and our first quarter results still reflect a significant exposure to the market prices in China. Our full-year outlook for polysilicon sales and EBITDA is unchanged. Now, let's look at our net financial position. In the first quarter of 2024, we generated a gross cash flow of EUR 56 million. Gross cash flow was held back by investments in working capital following the development of sales.
In addition, some inventories were built ahead of the silicones turnaround in the second quarter. Cash flow from investing activities was EUR 183 million versus the reported CapEx figure of EUR 117 million during the quarter. The difference between the two figures is due to the timing of cash payouts for investments. We made payments in the first quarter for investments recorded in CapEx in last year. We ended the quarter with a low net debt of EUR 308 million. So before we start with the Q&A, let me summarize. Wacker is well-positioned financially and strategically. Our development work with customers continues as we expand and, and improve our specialties portfolio. We look to the future with optimism, and we continue to invest in growth to better service our customers once the cycle improves.
Thank you, Tobias. Before we move into the Q&A, let me remind you that to please limit yourselves to two questions at a time in the queue, so that everybody on the call gets a fair shot to ask a question. You may return to the queue afterwards. Thank you for your understanding. Operator, we are now ready for the Q&A.
We now begin the question and answer session. Anyone wish to ask a question may press star one on their telephone. We will let you to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. In the interest of time, please limit yourself to two questions. The first question come from the line of Sebastian Satz with Citi. Please go ahead.
Yes, thank you very much. Good afternoon, everyone. Two questions then from me, please. First, on silicone, could you please give us just a little bit more color on what you're seeing in your order book, for the second quarter so far, in particular, with regards to your specialties business? Just want to better understand, how the earnings progression is gonna look from here, given the point you made around siloxane prices falling. And if you could potentially also remind us where your share of specialties is today compared to where it was in the peak. And then the second question would just be an update on the discussions, with your solar customers that you've just alluded to. Should we still expect them to move to the ex-China price by year-end?
Or what's the likelihood of some of them being converted a little bit earlier than that? Thank you very much.
Hi, Sebastian, Tobias speaking, and starting with the silicones question. As we reported, a very solid start into the year, with silicone up in specialties volumes, sequentially and against prior year. We now see that in April, we are still at a good level, but that's not as strong as we saw it in Q1 so far. So there is some element of that restocking of customers that is now not continuing into the second quarter. In principle, that is also the reason why we do not want to see you extrapolate from the first quarter for the full year, because in addition to that little softer demand volume that we see, we have a turnaround in the second quarter that will limit us in volumes.
That means that normally we try everything to sell as much specialties as possible. So in the second quarter, definitely the focus will be on specialties as we are limited on the upstream part of our business. But I caution a bit on the EBITDA development for the second quarter, because normally such a turnaround that we have could have an impact of, say, EUR 20 million. It very much depends now on how demand develops in May and June. And yeah, we are doing everything to bring up the specialties share. And I think the key improvement also in the first quarter, in comparison to the fourth quarter and in comparison to prior year, was the development in specialty volumes. And I think,
So-
Over to you.
And when you talk about the restocking not having continued, that applies to your overall portfolio for both the standard part as well as the specialties part of it?
I think it mainly applies to the specialties, because on standards, we don't have significant availability anyhow because of the turnaround, so. But it does apply, yeah, to sort of both. But we are limited on the standard significantly from the turnaround situation. Okay, coming to the second question, maybe to add, Sebastian, to the first question, because I think you also had asked on the Chinese standard pricing and the impact on our standards and specialties. And that's something which we commented also in the past. So there is definitely no one-to-one relation between standards and specialties. And there's always a kind of a time delay.
Typically, our customers use it as an argument, and typically, we don't accept that as an argument because with our specialties, which is a very high and a dominating share today, these products are made tailor-made for our customers, and therefore, a one-to-one link to an index price on certain products is, is not viable in our, in our view. Now, on your second question on the solar customers. You know, as we stated in the last call and also in the calls before, and you recall that, you know, until the end of 2022, essentially there was only one poly index, and that was based on the material in China. Now, since the end of Q4 of 2022, then a second index developed, which we then called the so-called Outside China Index.
And, we did some, I think, successful work in 2023, we can say, and we moved a significant volume towards linking these to the Outside China pricing, which in our view, also reflects more the value of our material. And we also stated, as a kind of rule of thumb, that this is around 50/50, the exposure. Now, we also commented that latest by the end of this year, we expect that all of the solar poly volumes won't be related to the Inside China price anymore. You can really rest assured that we work diligently and with high priority on this topic. But at the moment, there's really not much more to provide on details on that.
The next question comes from the line of Jaideep Pandya with On Field Research. Please go ahead.
Thank you. The first one, grade. Could you just tell us what is really happening in your Tennessee plant? What exactly has caused these issues linked to production? And when do you actually expect the production to come back to running in a normal state? And whilst you are offline, what is actually happening in the German plant? In a sense, how much solar volume do you have to sacrifice to service your semi customers, or are you not servicing all your semi customers? That's the first question. And also, if you can just give us an update of when is the etching capacity coming in the semi situation in the second half this year. The second question is a real quick one for Tobias.
Could you tell us what you expect for the rest of the year with regards to your raw materials bill and your energy bill? Just Q1, what was the year-on-year impact for raws and energy? For the rest of the year, how should we model raws and energy? Thanks a lot.
Okay, Jaideep, this is Chris, and I would like to start with the first question. On the site in Charleston, Tennessee, there is a larger maintenance activity, which is end of Q1 and which will also be in the beginning of the second quarter. And this is part of upgrading a program to upgrade the facility, also in respect to having more capacity on the semi side. And this maintenance activity will also limit volumes for the first half of 2024, but overall, we expect for the total year for 2024 to have higher volumes than previous year.
Second part of that question, where you asked about the etching capacity, and yes, we are ramping up that capacity with the new facility in Burghausen, and we expect volumes to be available in 2025. And that will be a significant share of the market, and a lot of this capacity is already under contract. So our clear focus here for our polysilicon is on the semi-etching, highest quality material.
Sorry, just to clar-
Jaideep?
Just to clarify on the semi side then. What you're saying, Chris, is that you were offline in Tennessee in Q1, but, you know, once the plant comes online, you still expect to grow volumes year-on-year in your semi-grade material. Did I understand that correct?
Yes. A-absolutely.
Okay.
Correct. Correct, Jaideep.
Okay.
Correct. Yeah.
Thank you. Thank you.
Jaideep, and on the raw materials and energy, as we reported, full year financials for 2023, I told you that about EUR 500 million, we had lower raw material and energy costs. I mean, we haven't provided a figure for 2024, I think so far, but I could say it's a bit more than half. We don't reach the same magnitude, as the biggest step down was already in last year. And if you look at the sequential development, I don't see big changes throughout the year. So quarter-over-quarter, I think the biggest step down was from Q4 to Q1.
We all know that energy costs are now lower, but given our hedging policy, where we have 80% hedged in for this year and some 60 for next year, it comes more with the fiscal year changes than over the quarters. So I hope that that helps you a little bit modeling your spreadsheet.
Yeah, and just why I was asking this is, I suppose you are still holding some of the expensive raw material inventory as of Q1. So I, I was thinking, as you progress through the year in Q2 and Q3 and Q4, at least on the silicon metal side, you would see lower raw material prices. But I guess what you're saying is that sequentially, it will stay stable?
... just Jaideep, it's absolutely, it's a fair point. We have those lagging effects in the P&L. On the other hand, as you just mentioned, silicon metal, that material has just moved up a bit, a bit again from Q4 into Q1. So we see the lagging effect of that also in Q2. So, market prices for silicon metal in Europe and the U.S. have been trending up a bit.
Okay. Thanks a lot.
The next question comes from the line of Chetan Udeshi with J.P. Morgan. Please go ahead.
Yeah, hi. The first question I had was just going back to the discussion on polysilicon. You know, given where the Chinese prices are, can you confirm whether you are actually participating in that market at all? And if you really make money at those prices, because you said 50% of your volumes are still on China index pricing, and I don't know if you actually can make money on those prices. So what is the strategy that you are adopting at the moment in the short run? Are you shipping to China? Are you stopping? And if that's the case, should we be thinking about any impact you might have on the numbers in Q2 and Q3 from what we see in the Chinese solar market?
And just beyond that, I was just curious, you are spending about EUR 700 million or so in CapEx this year. You know, given what we've seen in the industry over the last 3-4 years, does it not sort of, you know, push you to question your assumptions on, you know, mid- to long-term growth of high single digits that you talked about at the Capital Markets Day in 2022? Because it just seems quite a bit off the charts compared to what we've seen for the whole industry, not just for Wacker, from, let's say, 2019 to now, so from pre-COVID to now. Thank you.
Okay. Chetan, this, I would start with your first question again on the Chinese polysilicon market. I mean, when you look at the development of the pricing, of Inside China Index, I think it's fair to say that it's not much fun for everybody that participates in that market, including, and I really want to stress this, including the Chinese players. So, I guess that, you know, nobody is willing to spend too much volume in this unless necessary. And, as we said, and as Tobias also mentioned, we continue to work on getting more on the inside, the Outside China Index, sorry, the Outside China Index, and that will be done latest by end of this year.
To your question, did you sell? I mean, our efforts are ongoing, and if you look at our first quarter results, they still reflect a significant exposure to the market prices, and we gave you that roughly number of 50/50 on that. Chetan, on the CapEx question and, yeah, our volume expectations going forward. I think the guidance for this year to be slightly below prior year numbers with respect to CapEx is very much driven by the large projects that we have in biopharma and in polysilicon for the semiconductor. And as soon as those are completed, we could also cool down a bit on CapEx. But it all depends on the market environment. And as we know, we had seen a very tight market in Chemicals for two years now.
We have had a 2-year correction, which was super long and no end market recovery yet. For that reason, I think it's far too early also to speculate about our 2030 targets. We will definitely give you some updates when we have the Capital Markets Day in September. But we are convinced that we are well-positioned with our portfolio, with mega trends driving growth going forward, and we will adjust our CapEx program in a professional way in order to time-
Mm-hmm
... the next increases into the market demand. So it's very much about the timing. It's not about the if, but it's about the when. And let me add this as well. So we remain committed to our growth and profitability targets, 2030.
Thank you.
The next question is from Andreas Heine with Stifel. Please go ahead.
Yes, I actually have two. The first is on silicones. Could you provide some more insight on what you see in the different end markets? You have many, many different grades for different end markets and regions. I understand that on the whole silicones segment, the order pattern is very uneven and very difficult to extrapolate. But are there some end markets where you really see a recovery and others where it is less the case? That's the first question. And then second, on polysilicon, I obviously do understand what your incentive is to switch from the Chinese spot prices to the international prices. But what should be an incentive for your customers to accept for, let's say, the second half of four times higher price by moving from the Chinese spot prices to the international one?
... Andreas, Tobias here. I would start with the first question. As you know, our silicones business is a GDP-driven segment. And I would say that from our end markets, we had seen a rather broad-based activity, mainly, as I said, restocking from very low levels. And there was, even in construction, which is part of silicone, some higher activity sequentially. While we, in general, stay very cautious on the construction industry in Europe and in China. But overall, there was a good recovery in order intake from automotive, industrial, consumer applications as well. So it is broad-based. So there's not one single industry, just, yeah, driving it and going into the lead.
But on the other hand, we also see from that lower order intake in April, and that fits to the picture that we also conveyed six weeks ago, that customers don't talk about the second half of the year.
Mm-hmm. Mm-hmm.
So it's difficult really to get a long-term or longer-term view on their end market, yeah, estimates.
Mm-hmm. Understood. Thank you.
Okay. Andreas, Christian, and let me try to answer your second question on the polysilicon pricing inside, outside China and what's in for the customers. And you know, I would love to answer it in a more general framework. I mean, if you look today at these two markets, and these are two really distinct markets, and the main difference between these markets is the supply-demand balance. On the one hand, you have a Chinese market, which is heavily, heavily oversupplied, resulting in low prices for the end product. And on the other hand, you have a rather balanced market, and from our view, a more fair pricing on that. And the higher price market is mainly driven by U.S. regulation at the moment.
I mean, that's the fact we have to see. On the other hand, the end market for solar modules, also in the U.S., has a different pricing than in China and also in the rest of the world. Therefore, it does make sense to provide an outside China polysilicon and to make modules which are produced outside of China at a higher cost, but also getting a higher price, and that's the incentive for everybody in that value chain.
Thanks.
The next question is from Sebastian Bray with Berenberg. Please go ahead.
Hello, everybody. Good afternoon, and thank you for taking my questions. I would have two, please. The first is, I'd like to probe for comments on restocking effect, assisting Q1 results, and this starting to unwind in Q2. When things were going badly in 2023, a lot of Chemicals companies had difficulty identifying stocking patterns for their customers. What makes the company sure this time is different? And more particularly, why when we talk about the environment still being solid but not quite as good as in Q1, are we talking about absolute terms, i.e., sequential basis trading, or the comparison on a year-on-year basis becoming less positive? And my second question is, just on the China volume uncoupling or China price uncoupling in polysilicon, are you feeling better or worse directionally relative to three months ago on the speed at which this uncoupling can occur? Thank you.
Sebastian, Tobias here on the restocking, question and the sequential development. For sure, it is a, an experience that everyone made last year, that, after a decent start in Q1, Q2 was worse, and then it continued, throughout the year. And there was destocking continuing at, the customers. What we see now, I think, is slightly different. We had seen a restocking from a very low level, into the first quarter, and now if I look at April numbers, these are lower than the average of the first quarter months, but they're still above, prior year in... If I take Silicones, for example, and, that makes me, yeah, look at those numbers differently to last year. But as...
I mean, as all chemical peers reported on a decent start into the year, Q1, and no one changed estimates, I think it's an overall pattern that we are not hearing from customers about the second half, so we stay on the cautious side. But I think it's different, sort of, to last year. Okay, Svend, on your second question, do I feel better or worse with the possibility of decoupling on the pricing side? Let me say I feel confident that we will achieve it latest by the end of the year, and we work diligently on that. But, you know, it's not about whether I feel better or worse. We will achieve it, and we work on it.
That's helpful. Thank you for taking my questions.
We have a follow-up question from Jaideep Pandya with On Field Research. Please go ahead.
Thank you. Just on your polysilicon guidance, right, for EUR 1,300-EUR 1,600. So if I, for the argument's sake, take 75 KT as your volume size, I get a blended price of around EUR 17 per kilo. And I guess semi-grade material, although you don't comment on prices, remains relatively stable. So if I think EUR 500 million sales for semi-grade, leaves me EUR 800 million sales for solar grade. So I'm just trying to understand, are you baking in some degree of improvement in prices in China? 'Cause you still have decent exposure to China. Or are you expecting, as, you know, you progress the year, you will probably sell, I don't know, say, call it 60%-70% volume in second half on international prices, and therefore, the blended price goes up?
'Cause otherwise, I can't really square this, how you're guiding for basically flat sales or the low end versus last year, when prices in China are significantly higher?
Jaideep, this is a complex question. As we said in the last conference call, our guidance, and I rather refer to the EUR 200 million-EUR 400 million in EBITDA, is for sure driven by the mix and the progression through the year. As you know, we started with an EBITDA below EUR 50 million for the first quarter. Christian also talked about maintenance that is going to improve our Tennessee availability in the second half. That is holding us back in the first quarter, end of first quarter and start of second quarter. If you then equate that, yes, we assume a stronger second half, and that is driven by an improvement in mix, say, price mix and product mix, and that is driven by an improvement in product availability.
And with product availability, there also comes the cost specific cost improvement. And then, if you put all together, we feel confident that we can also reach midpoint of the guidance. And yeah, it all depends on the assumptions. But I don't like to comment too much on how you equate on our split on in volume and what the average price, for obvious reasons, we don't talk about that.
Just a second follow-up on the same topic. Apologies. But, you know, we've seen some announcements from the big players in China for CapEx outside China, be it in the Middle East. There's also an announcement for the U.S. market. So I suppose you guys are striving very hard to switch contracts to international prices, but, you know, on a 3-4-year view, and you're not adding any capacity. So what is then the thought process, really? Because it seems like you may have 2-year window of enjoying maybe this $20-$22 price, but as capacity grows outside China, you probably will end up in the same scenario.
So what is your thought process, and what are your discussions with your customers, who probably are asking you, "Well, you want higher prices, but you're not committing to these markets outside China?
Yeah, Jaideep, yeah, that's a good question, as Chris. Well, there's a lot of announcements of capacity outside of China. I think the first thing you have to keep in mind that this takes time. It takes time, and my assumption would also be that it probably takes longer time for Chinese players also investing outside of China, because it's a different surrounding and a different environment. And therefore, I think we easily talk about a couple of years. I would be surprised to see a 2-year timeframe. I would see it rather in a 3-4-year timeframe. At the same time, the demand for material outside of China, especially in the U.S., I would see as growing.
With you know PV installations growing all over the world and also you know the expectations for the U.S. are big, and therefore, I think also the U.S. market needs more polysilicon. And you know so therefore, I don't see that kind of immediate risk or what you are referring to. And the third, don't forget, our key strategy for polysilicon is the semiconductor market, where we today have a very strong market share, which we want to defend and grow. And also, if you talk about new technologies, new capabilities AI, a lot of new servers needed in the world, that is all super pure polysilicon, which you need for these equipment. So therefore, it doesn't give me a big headache.
Okay, thanks.
Mm-hmm.
... The next follow-up question is from Sebastian Satz with Citi. Please go ahead.
Ah, yeah, thank you for taking the follow-up questions. First one would be on polymers, where your pricing must have been down in the mid-teens, if I'm not mistaken, based on your revenue performance and your comment that volumes were up. I was just wondering, and because your margins declined as well, that means that your net pricing must have been down quite a bit as well. I just wondered what has caused that and how we should think about that dynamic going forward, please. And then the second follow-up was really just on the timing of the IRA payments. When do you expect to hear about them? And if the outcome was positive, when would you book them, please?
Sebastian, Tobias here on the two questions. First, on polymers, you're about right with your estimate on price decline. But we always said that after that net positive spread in last year, that this would turn negative. I can confirm that year-over-year prices are down, but sequentially, quarter-over-quarter, they are rather stable. Not entirely stable, but there's only a smaller negative headwind. For the full year, we assume that raw materials continue rather flattish, and the price deviation against prior year will also narrow. With volume seasonality, we feel confident that with the start of the year, of the 15% margin, that we reach the 15% margin for the full year, as well. The second question on the IRA topic, there's no news from last call.
As I said, we have not baked into the guidance, and we have not filed tax for taxes in the U.S. And as soon as we get into this, we would talk about the amount. But, yeah, no news today.
Perfect. Thank you very much.
We have a follow-up question from Sebastian Bray with Berenberg. Please go ahead.
Hello. Thank you for taking my follow-up. But, Tobias, I'd like to touch on the comments that you made with regards to April trading being lower than the average of the first quarter of the year, but above prior year. Can I please check two things? Does this refer to the Silicones segment or the group as a whole? And is it a reference to volume, EBITDA, or both? And just to double-check, this is if it does refer to Silicones or the group, in either case, is it adjusted for the impact of shutdown in April, or is it just an underlying business development? Thank you.
To put it simply, Sebastian, it was on Silicones, and it was on order intake. So I was not guiding on sales or EBITDA, and the order intake was on revenue and volume, so both.
That's helpful. Thank you very much, Tobias.
Thank you all for joining us today and for your interest in Wacker Chemie. Our next conference call on the Q2 results is scheduled for July 26th. Our Capital Markets Day will be held in September at our main site in Burghausen, Germany. As always, don't hesitate to contact the IR department if you have further questions. Thank you for your interest in Wacker Chemie.
Ladies and gentlemen, the conference is now over. Thank you for your participation. You may now disconnect your lines. Goodbye.