Ladies and gentlemen, welcome to the Wacker Chemie AG Q2 2025 conference call. I'm Vicky, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing STAR and 1 on your telephone. For operator assistance, please press STAR and 0. 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 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 presentation and our 2024 annual report for information on risk factors. All documents mentioned are available on our website.
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. Great 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/USD 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 €1.41 billion with Group EBITDA at €114 million. The sum of the four operating segments' EBITDA totaled €182 million.
Although this reflects an 11% decline year over year, it also shows a 7% sequential increase over the previous quarter. The sequential gain was primarily driven by an insurance compensation in silicones, but also supported by some seasonality in polymers and much higher semiconductor-grade 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 number three. As you saw in our July 18 pre-release, 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 €5.5 billion and €5.9 billion, with an EBITDA range of €500 million to €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. The chemical industry faces unprecedented challenges, and we are not immune.
We are countering these challenging market environments 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. 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 will be exploiting further potential, also by making systematic use of digitalization and automation opportunities. Third, we will further strengthen the Wacker team's 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 Zetronic is no longer relevant for EBITDA. 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 €155 million versus the €160 million we reported last year, so the overall effect is quite small. Sales in the second quarter were €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 €114 million from €155 million in the second quarter of 2024.
Looking only at the performance of the four operating segments, the added EBITDA came in at €182 million. Others held back the reported EBITDA by €69 million versus the €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 €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 €11 million versus €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 €19 million, equating to a loss of €0.49 a share. Our balance sheet shows strong financials with high liquidity of about €800 million and €4.5 billion in shareholder equity due to typical seasonality and accounts receivable in chemicals and lower payables. Net working capital increased by €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 €1.9 billion. The shareholder equity ratio at 51% remains at a high level. At silicones, sales in the second quarter were about €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 €363 million, 7% below last year. EBITDA came in at €40 million, down from €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 % with a margin at prior year level.
Overall, construction markets remain weak in Europe and Asia, and trade uncertainty is weighing on consumer-related binders. At Biosolutions, sales during the second quarter were €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 €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 Binio 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 €218 million, 6% lower year over year and 11% lower than in the preceding quarter. EBITDA came in at €34 million operationally, essentially around the level of the preceding three 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 €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, yet 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 -€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 €296 million, the dividend payment of €124 million, and some other effects. We ended the quarter with a net debt of €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 are now ready to begin the Q&A.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets when asking a question. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and 1 at this time. The first question from Christian Faitz, Kepler Cheuvreux. Please go ahead.
Yes, thanks very much.
Good afternoon. Good morning, everyone.
My first question is in light of.
The weak U.S. dollar, can you remind us of your hedging policies for transactional activities, that is where you produce, particularly in the Euro region, but for non-Euro markets? I guess my second question is.
Kind of null and void after your.
Comments Dr. Ohler, I was going to try to fish for some silver lining in terms of revival of demand.
Post the summer lull, let.
me know if this is. Post your comments.
Christian, thanks for the two questions and also for the comment on the second. I start with the first one. Our sensitivity to the U.S. dollar is that a $0.01 change is worth about €15 million in revenue and €3 million in EBITDA unhedged. Our typical hedging is 50% for the exposure for a year out. We are not hedging, I mean only to a very small extent. We are hedging longer term. Yes, the famous summer lie. 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. We are one month into the third quarter and summer continues at least, and also the trade discussion continues.
I would be happy to report any uptick also since the weekend, but we haven't seen that so far. I think the overall market sentiment is that we have to 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 orders as 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 these days.
Control the controller boost. Thanks very much.
The next question from Sean McLoughlin, HSBC, please go ahead.
Thank you and good afternoon for taking my two questions. I'd like to just understand a little bit the cash generation outlook I suppose for the second half and your leave as you've given us 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.
To be as yeah, I would start with a cash flow question and also give some.
Early.
Insight into how we want to develop the CapEx going forward. First of all, the cash flow generation, the first half of the year was around about negative €300 million, was poor, no question. We are working towards more balanced overall cash flow for the full year, and there are several levers that come into play. First, it's a program to reduce our accounts receivables. 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. You also are aware that we receive the CO2 compensation, that payment for the reimbursement for the CO2 cost always in the fourth quarter.
All this together should drive us to a more overall balanced cash flow for this year. That is not satisfying, and that's why we are looking into the CapEx needs for years to come. We have completed many strategic projects, and as everyone is aware, we are also underutilized. We can slow down significantly and move somewhere between maintenance CapEx and some very few growth projects, strategic projects. This would be then definitely below depreciation, significantly below depreciation level, which is above €500 million that we see today. 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.
Thank you, that's super helpful.
My second question is on the competitive outlook for polysilicon in the U.S.
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 polysilicon.
In the U.S. and any update on the Section 232 investigation as well.
Thank you.
Joerg.
I'm not sure when I got 100%.
The first part of your question on the competitive side, could you repeat that please?
Yeah. 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. I'm just wondering if you'd notice any change in the competitive dynamics in the U.S. market in general.
Okay.
Yes. I mean we also saw these announcements. 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 on the big beautiful build, 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. From that perspective, I think these announcements show there is an opportunity also in the U.S. market for PV. On the semiconductor side, as Tobias stated, we are running pretty well, pretty good. We inaugurated our new etching line in Burghausen just two 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. Your second part was the update on the Section 232. The Section 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. Upon that, we can see how that moves further.
Thank you.
The next question from Thomas Wrigglesworth, Morgan Stanley. Please go ahead.
Thank you very much for the opportunity to ask questions. 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. Obviously if we assume the €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 that is 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 €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 value, the floor of earnings for that business, whether the current environment improves or not. Thank you.
Okay, Thomas, let me start with you with the first question on the policy support from the EU and from Germany. You hear me talking positive on what's going on in recent months on the EU side, there was the chemical industry package and meeting with Ursula von der Leyen, which we also participated. You can clearly, clearly see and feel that there's much more openness for supporting this enormously important industry for Europe. The understanding is definitely there. 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 now has been developed under the state aid framework for the clean industrial deal. I think that's a massive move forward.
You hear me also saying what I always say with politics, a great first step, great signals, great movement, but we need it to be finalized and we need it to be signed and implemented to really see these effects. The same is true on the German side. 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, enhanced 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. You hear me positive with a little caution on the implementation side.
Tobias here on the polysilicon question with respect to profitability. We guided for this year that we would end around €100 million. As you can see from the numbers, we had around €60 million in the first half of the year. There's €40 million left to come to that number, divided by two for the quarter. As I said in the speech, we are assuming that we are running at a similar level going forward. As I also said, there is uncertainty. We are not knowing how the solar market is developing. 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. 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. I think we can adjust accordingly in any case of the developments.
Okay, thank you very much.
The next question from David Simmons, BNP Paribas, please go ahead.
Hi, thank you very much for taking the questions. The first one just on the guidance in silicon, you've mentioned that you're not seeing any improvement yet in July. If I look at the silicon's guide, I think it actually implies a step down in the third quarter, even considering taking out the one-off in Q2. Could you talk a little bit about what you're expecting for silicon for the rest of the year and what's underlying the guide?
The guide is basically assuming, as you said, no improvement, and we had a one-off boost, low double digit, from the insurance compensation second quarter. If you take that out, you come to a number for the third quarter which is somewhat lower. As there is volatility in the market, we would assume some seasonal slowdown in the fourth quarter as it is quite typical. From that perspective, we come to a number that is close to our prior year number. It could accelerate. We don't assume that, as you know, in that environment it could also become worse. We don't assume that neither. That's why we point towards a performance which is close to our last year's performance.
Understood, thank you very much. 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. 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. 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. Yes, that would also include potential reductions in the numbers.
Understood. If I could possibly squeeze one more in, it's coming back to Thomson 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 measurement. I believe in less of extreme circumstances you could extend that to 24 months. 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?
That is a super detailed question. We do have some flexibility here in how to maneuver through this regulatory framework, and we are definitely running at very low utilization today. As we said, we are trying to balance the low demand with our production, and we will do the best to optimize here.
Understood, thanks very much.
The next question from Matthew Yates, Bank of America, please go ahead.
Hey, afternoon everyone. 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. With plants now starting up, how much additional fixed cost or operating costs are you now carrying in that business? I would imagine if your revenue is flat, your utilization is therefore significantly worse than it would have been a year or two ago before you had that additional capacity. How much is that weighing on, particularly if we thought about EBIT margins rather than EBITDA margins? I've got a follow up.
After Matthew, to be as. 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. That is one of the reasons also why gross profit has not moved towards the right direction in this year. As I mentioned in one of the questions before, we are actually looking at that, trying to address that going forward.
Okay, thank you. 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 solar 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. 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. When I see them launching a Section 232 investigation on polysilicon, that conceptually sounds quite interesting.
What was your understanding as to the difference Section 232 could make versus what's happened so far around the AD CVD rulings, which frankly haven't achieved anything. When it says polysilicon, its derivatives, is your understanding that this also covers things like wafers and modules? I guess importing polysilicon isn't actually the issue in the U.S. market, it's these more downstream form factors, if you will.
Thank you.
Okay, Matthew, so your second question, that was on the decision on the Polydimat, 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 €100 million. It's not the greatest number for sure, but I think there is still that opportunity out there, as I mentioned on the solar market. 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. As long as we have the opportunity for an attractive market, I think it makes no sense to idle or shut down capacity. That would be kind of, if you want, a decisive point for taking that decision. 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 these 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 ones was polysilicon and its derivatives. You also asked for the derivatives. It has not been to our knowledge officially defined in the announcement. What we assume is that it may refer to wafers and ingots, cells and modules in the solar supply chain, and also to wafers and ingots and potentially chips not yet assembled into electronic devices. As you rightly stated, the import of polysilicon per se is not really the big issue because there's not much of an import today to the U.S. What could be kind of an impact? That's kind of what I hence from your question.
First of all, I think we have to analyze the investigation in itself and then of course the outcome. I think it's kind of fair to say that if there would be a truly effective 232 on polysilicon and its derivatives, it would help us to economically produce polysilicon in the U.S. and potentially also in Europe. That could have a positive impact, definitely. Again, we have to see, it's not yet closed and it's not yet finalized, the decision on it.
Thank you both.
The next question from Chetan Udeshi, JPMorgan, please go ahead.
Yeah, hi, thanks for taking my questions. First one is just when your comments.
Suggest we should probably be looking at.
Third quarter broadly in line with second quarter except for that one-off in silicones. Is that right? You know, €100 million EBITDA or can it be even below that 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 €50 per megawatt hour price in Germany for electricity.
Is that a material tailwind for you? I think you do already have.
Some sort of subsidy in Germany already, maybe mainly on CO2 cost compensation. I'm just curious, is €50 a.
Big tailwind for Wacker?
If you were to get it.
Gigante for the question on the Q3 EBITDA and I think your calculation is, I mean, sort of, yeah, aligning very, very nicely to my messaging. Q3 is similar to Q2. 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 slide plus biosolution, similar polysilicon, no real change. I said yeah, €40 million for the second half, so maybe 20 for each quarter. If you take others and this then leads over to Christian's answer to the second question. Others is normally burdened by the CO2 compensation offset, which is €40 million. Overall a similar number for EBITDA for the third quarter. That's how we see it today.
Okay. On your second question on the power pricing discussion in Europe, as I mentioned, I think the good news is that the EU Commission is willing to accept something like this in Germany. It's under the CSAF agreement, the Clean Industry Act state aid framework. What we know so far is there is a proposal out, which as you mentioned, is €50. That would be the lowest level. There are some caveats to it, like it is only for 50% of the procured power and also you have to reinvest 50% of that if you would keep it in debt, kind of the original idea. I think the effect for us would not be really big, as you mentioned, because we have other means today.
We see it more as a starting point of a discussion with the German government and the EU Commission because 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.
Okay, thank you.
The next question from Tristan Lamotte, Deutsche Bank, please go ahead.
Hi, thanks for taking my question.
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? Could that really be enough to bring those prices up to the much, much higher ex-China price that you currently transact at?
The kind of follow on.
Does China supply side reform actually matter for you at all? Thanks.
Okay, Tristan, very good, very good.
Not a 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 has some ideas on reducing, I think, the capacity about 1 million tons, which is substantial nevertheless. That goes into the second part of your question. Today we talk about 3.5 million tons of capacity. Taking out 1 is significant, yes, but it would still leave 2.5 million tons in the market, which would be enough for 1,000 gigawatts of solar. 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. 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. Whether you call it anti-involution, which is a difficult word, some call it the rat 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 this, especially in the short term. 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.
Thanks a lot.
The next question from Sebastian Bray, Berenberg, please go ahead.
Hello.
Hello, good afternoon and thank you for taking my questions. I have two, 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 its inventory. Could we end up with a situation where the €200 million, €300 million of excess inventory that's currently on the books just stays there for two or three years if the market conditions remain unchanged? The reason that I'm asking this is that with an eye towards 2026, I'm thinking 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. My second question is on the other line.
Could you give us an idea of what the underlying number is now? Exsultronic. Assuming that the group utilization doesn't really improve, is it about minus €50 million to minus €60 million a year? Thank you.
I give it a try. Sebastian, on the poly inventory, you have seen us reducing utilization throughout the year and keeping inventories in check. That is following the soft demand that we have experienced throughout the year. As we mentioned before, we would continue to adjust accordingly. 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, sell it quickly. If that doesn't happen, we would continue to adjust production. Even if we would have the inventory for longer, I think I come to it, I mean there is no degradation. This product is of quality for years and we would then have to wait longer and be patient until we can sell it off. 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 from a lower utilization. It used to be minus 20, but given the overall lack of absorption of infrastructure costs, we have set it at minus 40 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. We have adjusted that also for the comparable numbers for last year.
That's helpful.
If I might follow up on the inventory points, 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. This year it's different. We adjusted production accordingly, 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.
That's helpful. Thank you for taking my questions.
We have a follow-up question from David Simmons, BNP Paribas. Please go ahead.
Hi, sorry, 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 do that through any kind of process by them.
I mean David, there's no real change in our strategy regarding Soltronic. I mean we decided a couple of years ago to reduce our share in Soltronic, which we still believe is a good company, no doubt about it. We had this good deal on the table with Global Waref, which has not been approved by the German authorities unfortunately. 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 my world is not getting become easier.
And.
We see it as a valuable financial asset, and again, no rush to sell off anything.
Okay, understood. 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? 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.
We did an impairment test at the close of the half year, and we performed a valuation of our shares. Based on the forecast cash flows, we determined that there's no need to adjust the valuation at this point in time. For sure, we would have to repeat that exercise at the year end. You're right, David, it would definitely still affect our P&L but would not go through the EBITDA or EBITDA line in the P&L.
Understood. Okay, thank you.
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 AG. 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.