Ladies and gentlemen, welcome to the Wacker Chemie conference call, Q2 2026. My name is Yusuf, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and that this conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star followed by one on your telephone. For operator assistance, please press star and then zero. The conference must not be recorded for publication or for broadcast. At this time, it is my pleasure to hand over to Jörg Hoffmann, Head of Investor Relations. Please go ahead.
Thank you, operator. Welcome to the Wacker Chemie AG conference call on our second quarter 2026 results. Christian Hartel, our CEO, and Tobias Ohler, our CFO, will take you through the presentation. The press release, our IR presentation, and the detailed financial tables are available on our website under Investor Relations. Management comments during this call include forward-looking statements involving risks and uncertainties. Please review the safe harbor statement in today's presentation and the 2025 annual report for information on the relevant risk factors. Chris?
Good afternoon, everyone. Thank you for joining us today. The market environment remained challenging in the second quarter. Demand was still subdued in many end markets, while geopolitical tensions added volatility to energy, raw materials, and logistics costs. Against this backdrop, our focus was clear: strengthen competitiveness, improve operating performance, and maintain financial discipline. That focus delivered results. Group sales increased to EUR 1.52 billion, up from EUR 1.41 billion a year ago. EBITDA, before the pension accounting effect, rose by 53% to EUR 175 million, compared with the EUR 114 million in last year's result. PACE, our project on cost, was the main driver of this improvement, supported by pricing, higher volumes, and better operating performance in the chemical sector. This was not a result of a broad market recovery. It was a result of actions within our control.
Despite the uneven demand, volatile input costs, and currency headwinds, we protected margins by driving cost savings, and we adjusted prices when necessary to pass on higher cost. Reported EBITDA was EUR 211 million and includes a EUR 37 million non-cash effect from introduction of a capital option in existing pension plans. EBITDA before specials amounted to EUR 175 million. Included in the net income figure of EUR 350 million are significant non-operating Siltronic related effects totaling some EUR 243 million. Now, looking at our operating performance in the second quarter and first half of this year, PACE remains central to our progress. We reduced expenditure through tighter budgets, procurement efficiencies, lower technical spending, and structural measures. We also reached an important agreement with the Workers' Council on the reduction of 1,600 positions in Germany.
The related personal savings will become visible mainly from 2027 onwards. We remain committed to achieve savings of more than EUR 300 million by 2028. Savings in the first half amounted to EUR 85 million, with a EUR 45 million contribution from PACE in the second quarter. At the same time, we are streamlining our structures and processes and sharpening our business model. In our chemical divisions, we focus on specialty products, in the polysilicon division of the semiconductor market, and in our life science division, Biosolutions, on innovative biotech applications. This will enable us to form the basis for future growth. Progress is visible across the businesses. We are improving today's performance while focusing the portfolio on profitable growth. In chemicals, PACE-related savings, disciplined pricing, and an improved mix strengthened the profitability. In Biosolutions, our priority is to convert the project pipeline, fill our capacities, and improve cost performance.
In polysilicon, semiconductor-grade volumes continue to grow while solar remain weak. We are managing that contrast with strict cost, inventory, and capital discipline. We had expected greater clarity on U.S. trade policies for polysilicon by now, but the process is taking longer than anticipated. This continued uncertainty is affecting customer purchasing decisions and is holding back volumes. It also limits our ability to take long-term strategic decisions. Before turning to the outlook, let me briefly mention some important customer recognition of our sustainability work. Wacker received L'Oréal's Energy Award in the raw materials category. By reducing the CO2 emissions from silicon metal production in Norway through renewable energy, biogenic carbon, and potentially also carbon capture in the future, Wacker reduces financial risks and creates opportunities to grow with strategic customers. It also strengthens our value proposition for customers seeking differentiated lower carbon solutions.
The award shows how sustainability and innovation go hand in hand. Now turning to the guidance. We updated our full year EBITDA range now to EUR 625 million-EUR 750 million. This improvement is driven by the good operating performance in the second quarter and a special effect from pensions. Our confidence is supported by visible operating improvements. PACE is delivering. Chemical is performing well. Semiconductor-grade polysilicon continues to grow. These are meaningful strengths as we enter the second half of this year. Nevertheless, we are realistic about the external environment. GDP and relevant end market dynamics still don't show a true recovery. Competition remains intense. Demand visibility is short. U.S. trade proceedings concerning polysilicon remain unresolved. We will therefore continue to focus on cost control and self-help. Overall, our strategy is gaining traction. We are improving profitability, strengthening cash generation, and positioning Wacker for sustainable, profitable growth.
On September 17th, we will hold a Capital Markets Day in London. Since our last Capital Markets Day, the environment has changed, and Wacker has changed with it. We have reviewed the roles of our businesses, the way we allocate capital, and the financial framework against which we manage the group. In London, we will introduce new group-level targets. We have made substantial progress in strengthening our competitiveness, improving performance, and sharpening our strategic priorities. It's therefore the right time to explain where Wacker is heading and how we intend to create value. With that, let me hand over to Tobias.
Thank you, Chris. Good afternoon, everyone. Second quarter sales increased 7% year-over-year to EUR 1.52 billion, driven by higher prices and volumes. EBITDA before special pension effects rose 53% to EUR 175 million. The strong improvement reflects both savings achieved in our PACE program and higher volumes. PACE contributed about EUR 45 million in the second quarter. Importantly, the quality of our earnings improved significantly. Cost of goods sold remained flat year-over-year despite higher volume. SG&A expenses declined, demonstrating strong cost management across the organization. Reported EBITDA was EUR 211 million, including a EUR 37 million positive pension accounting effect recorded in the other segment. This is due to a newly introduced capital option as payout mode, which lowers our required pension obligation. As a result, others reported an EBITDA of just minus EUR 1 million. For the full year, we now expect the other EBITDA to be minus EUR 15 million.
This is an improvement from our previous guidance of minus EUR 50 million. After depreciation of EUR 115 million, EBIT reached EUR 96 million. Below EBIT, the sale of Siltronic shares and the revaluation of our remaining stake following Siltronic capital increase contributed EUR 243 million to the financial result. We have a slide on this in the appendix, and if you'd like a deep dive, please speak to investor relations. All told, net income reached EUR 350 million, equivalent to earnings per share of EUR 6.86. The second quarter demonstrate that we are structurally strengthening the resilience of the business, creating a stronger foundation for sustainable value creation. Our balance sheet remains very strong. At the end of June, shareholder equity stood at EUR 4.18 billion, while liquidity remained robust at EUR 1.57 billion. Working capital increased by EUR 166 million versus year-end, primarily reflecting the seasonal buildup in trade receivables.
At the same time, inventories decreased by EUR 26 million, despite higher raw material costs, underscoring our continued discipline in inventory management. Pension provisions declined by EUR 58 million year to date to EUR 569 million. This reduction was driven by the new capital payout option and higher discount rates. Overall, our financial position remains solid, with 48% equity ratio and a strong liquidity base. Now, let's turn to the operating segments. At Silicones, second quarter sales reached EUR 757 million, an increase of 6% year-over-year. Stronger volumes and higher pricing more than offset currency effects. EBITDA increased to EUR 123 million. The strong performance was driven by PACE as well as higher volumes, mix effects, and better pricing. The conflict in the Middle East prompted some customers to pull forward orders into the first quarter.
Yet May and June came in above prior year. While orders remain very volatile, the order book is higher than a year ago. This supports our expectations for the second half of the year. Supported by ongoing PACE savings and strong operational performance in the first half, we are increasing our outlook for Silicones. For 2026, we now expect mid-single digit percentage sales growth and an EBITDA margin above the prior year level. At the same time, we remain measured in our assessment of market environment. End markets continue to face headwinds, and we have not yet seen a broad-based improvement in underlying demand conditions. At Polymers, second quarter sales reached approximately EUR 406 million, an increase of 12% year-over-year.
The growth was primarily driven by prices while volumes grew slightly and the regional mix improved. EBITDA increased to EUR 69 million. The improvement was supported by PACE and a positive inventory effect. Polymers performance demonstrates the execution strength of our team. Faced with a rapid increase in raw material costs, they successfully applied our proven playbook, enabling us to recover cost inflation quickly and effectively. This disciplined approach protected margins and allowed us to service our customers. As with Silicones, the conflict in the Middle East prompted customers, particularly in Asia, to pull orders forward into the first quarter. As a result, order intake declined sequentially in the second quarter. Our order book continues to be higher than a year ago, but it is short-term in nature. At the same time, market conditions remain volatile.
Raw material prices in Asia had largely retreated from the highs reached earlier this year. Against this backdrop, we have updated our outlook for Polymers. The situation in the Middle East is again more uncertain, and energy and raws move up again. For the full year, we now expect Polymers sales to increase by a mid-single digit %. EBITDA margin is expected to be above the prior year level due to PACE-related savings and the strong operational performance during the first half of this year. That said, we remain cautious on demand. Construction markets continue to be weak, particularly in Europe and China, and customer order patterns remain short-term in nature. At Biosolutions, second quarter sales reached EUR 99 million, an increase of 13% year-over-year.
Growth was driven by pricing measures to offset raw material inflation, as well as higher biopharma project-related business. EBITDA came in at EUR 7 million, supported by disciplined cost management. Our full-year outlook remains unchanged. We continue to expect high single-digit % sales growth and an EBITDA of around EUR 30 million. While market conditions remain competitive, we relentlessly work on converting the opportunity management pipeline into revenue, increasing utilization of available capacity, and further improving our cost base. At Polysilicon, second quarter sales were approximately EUR 226 million, up 3% year-over-year. Growth was driven by higher semiconductor-grade sales volumes, which offset lower solar-grade polysilicon prices. EBITDA came in at EUR 11 million. Strong semiconductor demand and cost savings supported the result, but profitability remained impacted by lower solar pricing, higher energy costs, and solar inventory destocking.
The solar market remains challenging, characterized by weak demand and low capacity utilization across the value chain. In addition, ongoing regulatory uncertainty continues to limit visibility. Against this backdrop, we have updated our outlook for Polysilicon. For 2026, we now expect sales to increase by a high single digit % year-over-year with an EBITDA close to the prior year level. Earnings will be clearly supported by a double-digit % volume growth in semi and PACE-related savings. Both help to offset the substantially higher energy costs this year. Now let me turn to the net financial debt and cash flow. In the first half, gross cash flow increased to EUR 193 million, reflecting the significant improvement in earnings. Working capital reduced gross cash flow by EUR 88 million, primarily due to the seasonal increase in trade receivables.
At the same time, lower inventory levels released EUR 47 million in cash despite higher raw material costs. This highlights our continued focus on inventory management. Cash flow from investing activities before securities amounted to EUR 19 million. Proceeds from the sale of Siltronic shares contributed EUR 185 million of cash offsetting capital expenditures of EUR 172 million during the period. Looking ahead, we continue to expect capital expenditures of approximately EUR 300 million for the full year 2026. With our major expansion projects now completed, our focus has shifted to filling capacities and operational efficiency. This allows us to run CapEx clearly below depreciation. At the end of June, net financial debt stood at EUR 722 million, supported by earnings, disciplined capital spending, and continued cash generation in the second half of the year. We expect net financial debt to decline to around EUR 500 million by year-end.
Before we begin with the Q&A, let me close with a few key messages. Our priorities remain clear: achieve PACE-related cost savings, improve capital efficiency, and only allocate resources to differentiated businesses where Wacker can create sustainable value and profitable growth. The improvement in earnings this year has been driven by our execution as well as the pension effect. As we move into the second half of this year, we have the confidence in our ability to execute but remain cautious on geopolitical developments. PACE, pricing actions, and stronger operational performance have delivered tangible results. Reflecting on this progress, usual year-end seasonality, and the special effect from the pensions, we raised our full-year EBITDA guidance to a range of EUR 625 million-EUR 750 million. That concludes my part. We look forward to your questions. Operator.
We are now open to Q&A.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 then two. Participants are requested to only use handsets while asking a question.
Either.
Anyone who has a question may press star one at this time. Our first question is from Christian Faitz, Kepler Cheuvreux . Please go ahead.
Yes. Thanks very much. Good afternoon, Christian, Tobias, Jörg, and team. I understand you are doing a great job controlling the controllables, yet there are quite a few non-controllable factors in the world these days. Hence my two questions, please. First, your forecast of high double-digit percentage growth for polysilicon for fiscal 2026, what kind of growth levels do you have to make this happen with a run rate growth of -2.6% at H1 and at least Q4 2025 having a relatively high base? The same would, by the way, be true for your EBITDA forecast for this division. What will make the segment significantly more profitable in H2 versus H1? My second, more broader question, what kind of demand trends are you currently seeing in your key customer industries, i.e., construction and electronics, aside from solar?
Christian, Tobias here. I would start with the second question, then maybe start also with answering the first question. Demand trends in construction remain weak. If you look at our Silicones division and if you look for the stronger parts, it's definitely around the electronics that we see growing strongly. It's healthcare. It's energy. It's coatings. In general, construction, industrial applications, consumer applications are still muted. No big momentum from there. I think it's mirrored in the polymers performance, where construction is sort of okay in Europe, but we have seen still a very weak market in China, for example. There's no turnaround from our perspective on the construction side.
Okay.
I think that for the chemicals, and I start with polysilicon, the bridge into the second half. Obviously, we have lowered our guidance given that there is still so much uncertainty around solar. There is no tiny impulse to improvement, and that is why we get more cautious on that. We have been doing everything now to work down on our inventory, running at low utilization, and that is definitely a drag to profitability. I am happy that our inventory is now 20% lower than it was a year ago, despite that very weak environment. What is growing nicely is our semiconductor business. We had seen roughly a 10% increase in the first half of this year. Given our contract structures, we also see a sequential improvement into the second half, and that will support us also coming to that growth for the overall segment.
We would need some solar sales, to be frank and clear on this. In the fourth quarter, we would need to have some impact from 232. As we are just working down our inventory, we would not turn up the production run rate for any solar change, unless there is a fundamental change in demand. I think majority of profitability and drive comes from our semiconductor business and the cost savings. That is why we get a bit more cautious on the full year, given that the first half had not seen any positive impact on the solar side.
All right. Very helpful. Thanks, Tobias.
The next question comes from Chetan Udeshi, JPMorgan. Please go ahead.
Yeah. Hi. Thanks for taking my questions. The first one was on polymers. You mentioned in your presentation some inventory effect, which I suppose is the inventory evaluation of the existing stock. How are you thinking about firstly, can you quantify that? Second, can that become a possible headwind into Q3 that you don't see that repeating in terms of contribution? The second question is on silicones. Just looking into Q3, if you probably can just help us how you see sequentially trends in terms of sales, EBITDA by division, because we've seen quite a sharp pullback in silicone prices in China, for instance, in the last one and a half months. Do you think silicones can see stable profitability, or should we model something lower? Just general comment around how you see the third quarter dynamics.
Well, Chetan, good question. Let me start with your last question. You don't give specific guidance on the segments for the quarter, but as Tobias pointed out, we had this peak in order entry in March for both chemical divisions, and since then, it's lowering down. Yet for silicones, it's still above last year. What you have to take into account is there's a typical kind of summer seasonality, especially in Europe, which might drag a little bit on the sales. That will be definitely an effect for the third quarter. Your comment on the pricing in China, correct. Keep in mind, this is only for standard products. The DMC prices are falling. Standard products, majority of our portfolio today is very much in the specialties, which is not one-to-one affected by these effects.
Chetan, to the inventory question for polymers, you spotted it absolutely correctly from the raw material increase. There's a revaluation that has taken place in the second quarter. I don't see that repeating. I would take it out definitely and not triangulate now based on the second quarter for the rest of the year. It will all depend on how raw materials develop further through the remainder of the year. Given that strong volatility, something like that can happen, and the magnitude is low double digit. It is a portion that is sizable. It takes two to three percentage points of the margin that come from the inventory valuation.
Thank you. If I can squeeze one more, which is a hypothetical question. Something that you have alluded, Chris, previously, which is, if the Section 232 is not favorable, you may end up with a solar plant, which is probably one more than what you need. In other words, you may have to shut some of your solar capacity. I'm just curious from memory, at least, except in the U.S. Both of your German plants for solar polysilicon are integrated with silicone production in the same site. Does that limit your ability to shut a polysilicon plant permanently? I suppose there is some sort of a Again, from my history, I remember there is a closed-loop between polysilicon and silicones in terms of raw materials for/or byproducts from polysilicon going into silicones or vice versa.
I'm just curious, how easy is it for Wacker to shut one of the polysilicon plants, whether in Germany or the U.S.?
Well, Chetan, very valid question, it shows the complexity that we have to take into consideration. It's a very far-reaching decision to be taken. Of course, it all depends on what comes out of that regulatory discussion in the U.S. There could be different scenarios. My former statement, which you correctly repeated, was, if there is no option for solar for us anymore, we would have one plant too many. It would depend on how the distinct ruling of this policy would be on 232 to make a final decision. Yes, in principle, what you say is correct. There is what we call the Verbundstruktur which we have on the German side, which you don't have so much on the U.S. side. Again, we need all the facts on the table to take a decisive decision because it's far-reaching, this decision.
So far, we don't have all the necessary information. Also, I would like to say, there's no pre-decision at this moment in time.
Got it. Thank you.
The next question comes from Anil Shenoy, Barclays. Please go ahead.
Hi. Good afternoon, everyone, and thank you so much for taking my questions. Just the two, please. Just following up on the question before. The first question is, in a pessimistic scenario that the Section 232 outcome does not go your way and you have to shut down one of your plants, if you could give us some color on what kind of cost savings could you make because of that. That's the first question. The second question is on semi-grade polysilicon. With AI CapEx expected to increase by 25% or 30%, that's the kind of number we hear. Your direct customers, the wafer manufacturers, are saying that they're seeing increased demand for 300-millimeter wafers, for which Wacker is a supplier of semi-grade polysilicon.
I'm just trying to understand, could we expect that 25%-30% kind of a growth number for semi-grade polysilicon somewhere in the future, maybe in 2027 or perhaps 2028? If not, what stops the segment from growing that much? Thank you.
Anil, maybe starting on your last question. Yes, AI is obviously driving semiconductor growth, and it's also driving, ultimately, the area growth, the growth in wafers. Please keep in mind, there's always a time lag and inventory, which you can also hear when you talk to the wafer guys. It's not one-to-one from the AI to the wafer. There might be delay of up to one or two years in some cases, what we heard from customers. Therefore, it takes some longer time. Second part, AI is, of course, only one part of AI and the data centers are just one part of the semiconductor growth. It's probably, at the moment, the highest. There are still segments which are growing not as strong. I think recently, the mobile phone sector was not growing strongly. In essence, yes, we see growth in data centers.
We see that the amount of polysilicon which you need for data centers is also increasing. We did some analysis on this, and some numbers indicate that from a data center today to a new data center in 10 years ago, the amount of polysilicon might be four times of that. We see a significant growth opportunity, and that's why we focus on semiconductor strategy going forward. I cannot tell you by quarter when the volumes will come, because it depends on our customers and the customers of our customers. The first question was on
232.
I think the first question was on two. I stepped in, definitely. Tobias here. I think you were trying to figure what measures we would take and how much would that impact and lift profitability in case of a negative scenario and actions on our asset structure. I think it's too early. We don't have a decision on the outcome of that proceeding on the table, and we don't have a customer reaction to that. That also needs to be seen, and for that reason, we cannot give you a number on that today.
Sure. Thank you for your answers.
The next question comes from Sebastian Bray, Berenberg. Please go ahead.
Hello, good afternoon, and thank you for taking my questions. I have two, please. The first is on the silicone segment. As far as I'm aware, Dow has started the final shutdown of the Barry production in the U.K. This is quite a big plant. I think over 200 people were working there. Is there any uplift or benefit that was visible in that in Q2? I'm a bit surprised that the mix was positive in silicones. Is there anything happening or to get excited about in European market in terms of the impact of capacity exits and Wacker Chemie being one of the last men standing in the siloxane industry in Europe? My second question was on polymers. I haven't quite understood why this segment did so well in Q2. I don't think that there were huge issues with competitive raw material supply, maybe to a certain extent.
Can you give some color on whether this was just take some cost out and people weren't anticipating it, or there was a genuine expansion in price cost spreads in the segment? Thank you.
Sebastian, Tobias here. For your first question, as Christian already mentioned, upstream standard silicones is not core of our business. We are focusing on specialty product, and that's why that closure has, from what we see, no significant impact on the business. Yes, we also sell some standard products. Prices have been moving up, and I could also say that into Q3, they are slightly moving up. No really big change, and definitely not to our strategy and not to our overall profitability.
It also needs to be added that in China, for example, standard product prices have been on the decline again. That also will, as regions are communicating, this will also have some impact on Europe and U.S., most likely. On polymers, as I mentioned, to Chetan, the performance was supported by an inventory valuation effect that is low double-digit. If you take that out, it's still a solid performance in the second quarter, but it's closer to the performance of the first quarter. Yes, I would say it's a result of great teamwork. We have been very fast in reacting to the raw material hikes, taking our playbook of increasing our own prices in the various regions with different mechanisms, and that worked out successfully. We kept and protected our business despite the raw material inflation.
In addition, we are successful in the PACE cost savings, and that gives that improved performance against prior year, despite still very slow end market overall. As we discussed, construction is not yet strong in most regions.
That's helpful. Thank you.
The next question comes from Tristan Lamotte, Deutsche Bank. Please go ahead.
Hi. Yeah. First question is, in this scenario, I understand that you said that there could be a bit of a delay, but say the semiconductor polysilicon market tightens. I think most of your contracts are on relatively fixed pricing or some kind of pricing contracts. How much ability do you have to sell at spot if that opportunity arises? Secondly, I know you've kind of alluded to this, but I'm just wondering kind of high level, how you would think about overrunning risks in polymers and silicones and what proportion of the growth that you've seen is kind of structural versus a little bit of temporary fly up due to things like the Middle East conflict. On the end of the Middle East conflict, how much do you think could stay in there? Why shouldn't these businesses be down in 2027? Thank you.
Tristan, maybe I start with your first question on the semiconductor polysilicon. As you know, we typically have long-term contracts, there's quite an interest in continued long-term contracts for our semiconductor polysilicon. We do have, of course, for some customers, which don't want to have so much long-term contracts, availability of spot material. Typically, when you look at our market share, most of these volumes are in long-term contracts fixed. Typically, the experience we have with our customers is it's not like a spot business compared to other commodity type of chemicals. There is a longer supply chain also for the semiconductor customers. From that perspective, I would say I don't see the risk that we kind of miss opportunities because of a stronger demand in the market. Maybe that was what you implied with your question.
Tobias , Tristan, for the chemicals segment and the performance of the first half versus the full year and potential fly up through the situation of the Middle East. I would love to remind what I said in the first quarter conference call that from the Middle East situation, we might have had a tailwind of some EUR 20 million in EBITDA. Is there still tailwind in the second quarter, or has it We had seen the order volatility. I would say it's more or less operational performance. With the one-off effects, with the valuation in polymers, and in silicones, it's rather the result of hard work, paid savings, and good operational performance with volumes and price cost spread. Nevertheless, for the second half of the year, we definitely face the summer season, as Christian said, typically, sales are a bit slower in August.
Then we have year-end seasonality. I would pinpoint to our guidance for the two segments and repeat, we see mid-single-digit sales growth for both silicones and polymers. We see that margins are above prior year. Before we said they are slightly above prior year, now we say they're above prior year. As you had seen in the first half, we had performance in both segments of roughly 16% EBITDA margin. Both segments had a prior year margin of roughly 12%. If we would end at around 15% or two to three percentage points higher than the 12% of last year, you see that the second half is a bit weaker for the seasonality, for raw materials, and so forth. We would still perform in the second half above prior year.
Going forward, as you were trying to pick what's in those segments for next year, I think it's far too early. Structurally, we save costs, PACE is effective, and we would also talk at the CMD in September about what we are focusing on with priorities on market segments where we really can differentiate and steer the business also for growth, for value creation and growth. It's too early to talk about any number for 2027, obviously.
Very helpful. Thanks a lot.
The next question comes from David Symonds, BNP Paribas. Please go ahead.
Hi. Thank you. A couple from me, please. Firstly, just to come back on the polysilicon business. I'm still struggling to understand a little bit the guidance and the Q2 results. Sales were 3% higher, but EBITDA fell materially, which either tells me that the semiconductor-grade polysilicon is lower mix than the U.S. priced solar or that the energy price change was quite material. You did call out energy. If it's energy, I'm just struggling to see why that would get better into the second half, because currently the German electricity price is 40% higher than it was on average in Q2. Just struggling to square the guidance there. The second one, I thought the pricing component in the sales bridge would be higher, to be honest, than EUR 33 million.
It looks like it was actually more of a volume-driven quarter from a sales perspective. You obviously still talk about demand being weak. I'm just wondering if there was any offset to some of the early price announcements that you made quite publicly, whether they reversed quite quickly or whether there were other parts of the portfolio that dragged on the price benefit. Maybe just some comment on how pricing evolved through the quarter would be helpful, too. Thank you very much.
David, Tobias here on your two questions. Second quarter performance of [poison], definitely disappointing. As I mentioned, we had a significant drawdown in inventories. In the second quarter, our mix for semi-grade was not that strong as in first quarter, but it doesn't mean that for the first half of the year, we haven't grown 10%. We have a very strong performance overall on semiconductor, and we see that to continue and also sequentially to improve into the second half of the year. As I said before, solar remains uncertain. That's why we lowered our guidance for the second half, to coming close to the prior year number. For polymers, I think you are about to understand the price announcement and how effective they are. I think it's a bit of a roller coaster that we see in polymers raw materials.
As this is the division that is linked to the olefin chain, we had seen a spike in ethylene and van prices in May, and they now retreated in June, July. Our pricing is as responsive as possible in each respective region. We had weekly daily pricing in China, but as raw material costs now go lower, also we need to adjust prices again. The mechanism is different in Europe, where we work with surcharges, but they then also depend on the raw material inflation, and that's why we also lowered our guidance for the full year because we need to pass on less raw material inflation than we anticipated in May when we had seen the peaks.
I think to add to this, I think the secret really is in that sort of business to be flexible, to have flexible teams on the ground on the sales side. As Tobias pointed out, the volatility in the raws, which we see on the conflict in Iran, which changes kind of biweekly, speed is everything that counts. Certainly our polymers teams prove to be very good on this and also what Tobias mentioned, different dynamics in different regions, much faster movements on the pricing side in Asia and in China, versus the U.S. or Europe where it's much slower.
Thanks very much. If I could squeeze one more in on polysilicon and the energy stuff. Obviously, the 2-3-2 outcome is very unknown. Could you talk about how you're hedged for 2H energy consumption, whether you've got any hedges on at all, or whether it will be a scramble to get some hedges on if you get a positive two-three outcome?
We are hedged now with large portions for the remainder of the year, obviously, and with roughly 75% for next year. The headwind that we are seeing in energy cost this year is mainly from the lower CO2 compensation. I think we have discussed that in one of the first calls
It's EUR 90 million headwind from lower CO2 compensation compared to prior year.
Understood. Okay. Thank you.
The next question comes from Jaideep Pandya, On Field Research. Please go ahead.
Thank you. Apologies for asking the 2-3-2 topic again, but I'm just trying to conceptually understand this. If 2-3-2 goes in sort of your favor and U.S. basically becomes a protected market, that, to me at least, conceptually opens door for new investments, potentially from your large Chinese competitors, which eventually means more competition in the U.S. If it doesn't go in your favor, then anyway, it doesn't go in your favor. I'm struggling to see what's the logic of hanging on, beyond maybe what is, if I may use the language, short-term benefit, maybe for a year or so. Just trying to understand the thinking behind, because I guess strategic clarity on this topic would really help a lot of your investors in this regard. That's my first question.
My second question is around the inventories that you have currently in polysilicon on the solar side, linked to some of the longer term contracts you have on the solar side. When do you expect both these elements to sort of go hand in hand so that we actually see the real performance of your semi business? I.e., how much inventories have you already reduced this year in the first half? When do you expect the full benefit of that to happen? The last question really is around your polymer/silicone, but more importantly, your silicones business. Again, this is a very oversupplied market upstream.
In the context of the PACE program, do you expect that we could think of Wacker becoming really asset light and actually getting out of the upstream siloxane because there is just so much available and focusing really on the customized value-added stuff. Thanks a lot.
Okay, Jaideep. Maybe to start on the last one on the upstream silicone. If I understand correctly, you said there's enough capacity available and we want to go asset light. Yes, we want to go asset light, but going asset light doesn't mean idling existing capacities with a good cost position. Please also keep in mind that on the siloxane production, it's not only siloxane which comes out of that chemical process, but many different silanes, which are an integral part of silicone specialties. I think having a integrated verbund on the silicone upstream is definitely an asset. You have to work on it to get the cost out to be really competitive. That's what we are doing, and what we will continue doing.
What we won't do, I think we have been quite explicit on this as well, we will not invest in further upstream on the silicones side. I think having world-class sites in Europe is definitely an advantage. On your first question on the U.S. regulation. Obviously there are different scenarios which you can think of. I don't believe that there will be a scenario where large Chinese companies will invest in the U.S. It's all about this competition with China, therefore, I don't see that really as a real option. From that perspective, I think there could be outcomes which are favorable for us, where we can load our plants with both semi and solar.
There might be scenarios where solar might be not as attractive, then again, we come into the situation to discuss how to have a future competitive footprint on the semi side. Did we cover all?
Yeah, just a question on the inventories in solar, in poly. When do you expect the full sort of drawdown of your inventories?
I mean, as I said, Jaideep, we have reduced it by 20%, which is significant given the slow demand environment, and we are running sub-efficient utilization at all three plants. It depends on the demand environment. If we can sell it quickly, it's not huge numbers in stock. If there's any uptick, I mean, we had seen historically much higher volumes going quickly in a quarter.
Thank you.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Jörg Hoffmann for any closing remarks.
Thank you, operator. Thank you for attending and showing interest in Wacker Chemie. The next conference call for Q3 2026 is also scheduled for October 29th, 2026. An invitation to our upcoming CMD on September 17th will be sent out soon. As always, please contact the investor relations team if you have any further questions. Thank you.
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