Wacker Chemie AG

Thank you, operator. Welcome to the Wacker Chemie AG full year 2015 conference call.

My name is Jörg Hoffmann and I am Head of Investor Relations at Wacker. With me are Dr.

Rudolf Staudigl, our CEO and Dr. Tobias Ohler, our CFO who will take you through our presentation in a minute.

But before they begin, allow me to point you to our Safe Harbor statement, which you will find here at the beginning of the deck. With this, let me now hand you over to Dr.

Staudigl, our CEO. Dr.

Staudigl?

Thank you, Jörg. Ladies and gentlemen, welcome to our full year 2015 conference call.

I assume that you all have the slide deck in front of you, so I hope we can get started. Chart #2 summarizes the highlights of Wacker’s performance during the year 2015.

We achieved a good result in 2015 in the face of significant market challenges. Sales surpassed €5 billion for the first time in the company’s history, implying about 10% revenue growth.

We reported an EBITDA of €1.05 billion at the level of last year. Special income from contract cancellations declined in 2015 by about €17 million to €138 million.

The difference was made up by a strong operational performance. In 2015, EBITDA, excluding special income, increased by 9% from €836 million to €911 million.

In addition, the Siltronic IPO, which represents the first step for Wacker towards a more focused portfolio, generated significant cash for us. Foundry conditions last year were challenging as you know.

While a soft euro benefited operations, it also drove our U.S. dollar CapEx up substantially.

Price indices for polysilicon fell by about 30% in just 12 months. Prices at Siltronic stagnated and softened towards the end of the year.

Overall, the global economic activity fell behind expectations. Areas of concern were the waning strength of the Chinese economy as well as the turmoil in the Middle East and the economic effect of historically low oil prices.

Despite these challenges, we kept working hard at our cost base and increased the depth and reach of our product portfolio further. Strategically, 2015 was a watershed year.

We completed the biggest investment in our corporate history, a new large chemical site in the Americas. When we deposited the first product in our Tennessee plant in January, we achieved purity levels matching our established German plants on the first patches.

Now, we are looking forward to scaling up the plant to its full run-rate in Q3. Despite building up this new site, we managed to get here with a solid balance sheet, resulting in a long-term benefit for the group.

As we put the finishing touches to this investment, we are going to reduce our CapEx to about half of what we spent in 2015 and significantly below depreciation. From here, future growth should be less capital intensive as the focus of our CapEx shifts towards higher value-add, leveraging the solid foundation we have built over the last years.

Moving now to Chart 3, the guidance. Let’s look ahead to 2016.

As you may have heard from some of our chemical peers, 2016 presents many challenges and will be another year with difficult macro effects. Despite this, we expect an EBITDA better than 2015, excluding special income from prepayments.

We are looking at another year of sales growth even if that growth is likely to be limited mainly due to lower average prices for polysilicon and wafers. On EBITDA, we want to beat the €911 million we achieved without special income last year.

With CapEx declining from €834 million down to €425 million in 2016, we expect to achieve a significantly positive net cash flow. Given the various challenges in our environment, we regard these targets as ambitious, but achievable.

We are confident that with our well-positioned portfolio, innovation and cost initiatives we can get there. You will note that we have raised our proposed dividends to €2 per share, up 33% over last year.

This implies a payout of about 40% of net earnings. This increase also gives you an indication of our confidence in Wacker’s ability to generate increasing net cash flows over the next year as our cash generation unfolds after the end of our historically intensive growth CapEx program.

Let me now hand over to Tobias for more detail on our financials.

Thank you, Rudi. Moving on to Chart 4, you will see our full year P&L with some comments.

Our gross margin increased substantially by 4 percentage points to 21.3%. Here, you can see the strong operational performance, the contribution from efficiency gains and the effect of currency before hedging.

Given the swings underlying the operating result and the other operating result, let me explain you the main drivers. Number one, we saw a decrease in other operating income, as special income from contract cancellations declined from €206 million in 2014 to €138 million.

Number two, the large deviation in other operating expense includes €150 million of charges related to the preoperational cost of the Tennessee plant. About €90 million of these are EBITDA effective.

Number three, the large swings in currencies touched both operating income and operating expenses. Here, they resulted in a net loss of about €70 million in 2015 after a gain of €50 million in 2014.

On taxes, we had initially guided to a higher tax rate. The final 40.6% was accumulated effect of a number of smaller items combined with favorable changes to tax depreciation policies.

Looking into 2016, with the lower absolute level of profit before tax following higher depreciation, our tax rate should be again about 40% before declining further in the following year. On Chart 5, we are showing our balance sheet in the usual format.

Please note that assets from the Tennessee plant explain the increase of non-current assets. Starting operations will lead to an increase in depreciation to about €720 million in 2016.

The remaining prepayment balance is €453 million. We will either have paid back in kind or canceled or received total prepayments of €1.8 billion mostly by the end of 2017.

Pension liabilities decreased 8%, as the underlying discount rate in Germany used to calculate the value under IFRS went up to 2.75% from 2.3% in the year 2014. Page 6 shows our SILICONES segment.

This segment performed well as currency effects and volume growth later in the year 2015 boosted sales by about 12%. We recorded the highest growth rate in Asia with 20% year-on-year, led by India at 25%.

Looking into the full year 2016, we expect to increase sales and improve margins at the same time as we see a strong product mix and a good cost performance. Now, let’s move on to POLYMERS on Page 7.

This segment saw record results last year from volume increases and cost reductions supported by currency effects. Raw materials in 2015 were a mixed bag, but we were able to recover some of the margin that we lost in 2014.

Here, we see a strong demand driving – drive continuing in 2016. This should lead to a full year EBITDA margin on a similar level as last year.

Currency and volume effects were balanced in Biosolutions. See Page #8.

Full year margin was at 16%, and for 2016 we expect mid single-digit sales growth, with an EBITDA at the same level as last year. At Polysilicon, Page 9, we saw record shipments reaching 56 kilotons, as our plants were fully utilized throughout the entire year.

Volume gains and good cost reduction supported our results. However, these efforts did not fully compensate for lower average selling prices.

In addition, the reported results were held back by increases in preoperational costs at the new Tennessee site and lower special income. That said, if you want to understand the real underlying economic performance in this environment measured in EBITDA, we have to adjust both for the special income and the effect of preoperational costs.

With this adjustment, we achieved a 35% margin in 2014 and a 33% margin in 2015, declining towards the end of the year to about 30%. As expected, the first half of 2016 in Polysilicon will be difficult, as we already have close to full depreciation and fixed costs at our new site in Tennessee, yet volumes will pick up only gradually through the ramp of the plant.

From Q3, however we should see improved economics. Meanwhile, throughout the year we continue to focus hard on cost reductions.

Regarding the outlook, total end market growth looks strong and the Polysilicon price seems to stabilize. We expect to ship close to 70,000 tons in 2016.

Moving to Page 10, Siltronic had their own call yesterday, so I suggest that you look for more detail and color there. In brief, Siltronic saw strong sales in 2015, supported by FX and stable pricing during the first part of the year.

Production costs and productivity improvements lifted EBITDA, while hedging instruments weighed on results. For the full year 2016, Siltronic looks at slightly lower sales, but with a better EBITDA margin.

Looking to Page 11, we are reducing our group CapEx drastically from €834 million in 2015 to €425 million in 2016. Our CapEx in 2015 turned out higher than we had initially expected.

We saw cost increases in our U.S. project.

The main reason for this is the oil and gas boom in the U.S. that put a strain on engineering and pipe installation capacities.

As we finalized the plant towards the end of 2015, we pulled in some of the CapEx originally scheduled for 2016. The good news is that this released the CapEx we had in our plan for 2016.

Let me move to Page 12, our net financial debt bridge. We effectively ended the year 2015 with a net financial debt at the level of prior year.

There are two things to see here. Firstly, operationally when adding to the gross cash flow the changes in prepayments and financial leases, we covered the CapEx in 2015 with a positive net cash flow of €23 million.

Secondly, looking at our financing plan, the proceeds from the Siltronic IPO supported the changes in prepayment levels and financial levers as well as the dividend payout and some FX effects. So overall, this kept net financial debt at the level of prior year.

Looking forward into 2016, our new financial debt guidance is flat again. The reason for this is that our significantly positive net cash flow covers the dividend payout for 2015 and further decreases in prepayments.

Thank you for your attention, ladies and gentlemen. And Rudy will take you now through the rest of the presentation.

Thanks Tobias. Given that we already have most of Q1 behind us, let’s have a look at current trading conditions.

We are seeing in our chemicals businesses order intake and volumes at or above the level of last year so far. For example, silicones, there is good specialty growth supported by strong overall growth in Europe.

In polymers, we see strong volumes. All-in-all, silicones and polymers see good organic growth, particularly when comparing them with other chemical companies.

At Biosolutions, we are seeing good success in marketing new products, coupled with good utilization rates of our assets. Polysilicon saw record monthly shipments this February.

Our German plants here are performing really well with a very good cost performance. Polysilicon runs at full utilization.

Average pricing in Q1 is lower than in Q4. Right now, we do not see any special income from contract cancellations in Q1.

Products from the site in Tennessee are currently under qualification with customers. As mentioned, first product runs have already shown excellent quality levels.

I am happy to see the Tennessee site begin operations. This site will be important for our future growth in silicon based chemistry.

As is to be expected, starting up the site burdens the first half of this year with ramp costs. However, from Q3 onwards, we should begin to see the full potential of the site unfold.

Siltronic benefits from its continued cost reductions and technological leadership. Q1 at Siltronic looks like Q4 last year.

On a group level, we expect Q1 sales of around €1.3 billion, with an EBITDA below Q1 last year, as mentioned before, due to lower polysilicon prices and ramp costs. With this start into the New Year, we are confident to grow our full year sales and achieve a better EBITDA, excluding special income.

Ladies and gentlemen, this concludes the presentation. Thank you for your attention.

We will now be happy to answer your questions.

Operator?

Good afternoon. I am going to start with two main questions.

The first one would be on polymers, we obviously saw a huge gain in the margin from ‘15 to ‘14, could you split that up between FX, mix and raw materials and you say some – in the presentation, you say somewhat over 18%. And in your release, you say that polymers aim at increasing the margin year-over-year so to see where – how we can reconcile the two.

And the second question is more going to be on the Polysilicon segment, you have now invested in a big site where the utilities are there for quite a bit of capacity, could you elaborate with us, because the CapEx per kilogram was very high compared to the peers, to which level would you see the CapEx per kilogram for an increase in Tennessee, if we model that and help me reconcile the depreciation in polysilicon itself, because looking at your run rate of depreciation normally, it would look like that you have an accelerated depreciation in Tennessee versus Germany, so if you could make that clear for me, that would be fantastic? Thank you.

Jean-Francois, this is Tobias speaking. The first question on polymers, I think it’s important to note that we had some headwind in 2014 from rather high VAM prices that we could not fully recover at our customers.

And raw materials turned in last year. I don’t want to give the details on the exact split, but I think as you described it’s a fierce blend of a strong volume performance, especially in our powders business, where we had really above average growth in last year.

It’s lower raw materials, while we are able to hold prices mostly throughout the year and it’s currently exchange. So I think it’s a blend of those three.

And we achieved a 19% margin. I think for the outlook for 2016, we are guiding for an increase in absolute EBITDA and we are trying to keep that margin.

So, the margin in ‘16 should be very similar to ‘15.

Did you manage to keep prices in the first month of the year in POLYMERS?

I mean, the first month is always a little bit early to say what’s going on. So as you know, roughly 50% of the liquid business of POLYMERS, the dispersions, is raw material price index.

So, there will be a pass-through 1:1, but the remainder of the business so more or less 75% is not. And we are in negotiations.

And I think we try to do our very best to keep as much of the value at Wacker, because we are selling value-added products. I think that is pretty clear.

Fantastic.

I take the depreciation question on polysilicon. We are pretty explicit now guiding that our depreciation will increase from €575 million to about €720 million and that basically comes from polysilicon.

I mean, we are now in the process of getting material out. That means that depreciation has already started.

And while we do not have the full run-rate in the first quarter, we are already pretty close to it. And that is basically the increase in polysilicon.

And throughout the next years, depreciation should come down a bit, because some of the assets in Germany will go out of depreciation.

But this means you – if I look, you have an increase roughly then of €140 million in polysilicon depreciation assuming that you have some utilities that you runoff of a long time, it means that you are depreciating the machines faster than 7 years that you were communicating before or is...?

No, no.

No?

I think the order of magnitude about the increase is right and we are depreciating at 8 to 10 years for the equipment.

Okay. In terms of the CapEx per kilogram, you have to keep in mind that a very significant amount of the CapEx in Tennessee, of course, was for preparing the site for future expansions, not only in polysilicon, but also in our other chemical business.

So, a potential expansion would see CapEx very much lower than what you saw after the first half of the site. And then of course, the question still is what is the next step?

There are options. As you might know, we have also developed an excellent granular polysilicon process.

And so we have to wait what the future will bring us, but of course we only will invest if it makes financially sense.

Okay, thank you very much.

Yes, good afternoon. Couple of questions, please.

At polysilicon, looking on the graph and what we can figure out what the CapEx will be in 2016, I would assume that then is all maintenance, so there is nothing left from Tennessee asset started late last year. I would assume that all the CapEx was spent last year.

And then you stressed that in the first half, you would have ramp-up costs and you mentioned the €30 million for the first quarter. Is there anything we have to have in mind for the second quarter as well or do the €30 million cover basically what we have to assume for the full year?

And then you were referring to the prepayments, which in polysilicon will go down to zero by the end of 2017. Could you elucidate whether there is any correlation with the contract you have?

So the more long-term based contract business in polysilicon where you have a defined price or longer term defined prices, will that then come also to an end so that as of the end of 2017, the spot prices in the market will reflect what the prices for your business are? And as the question was asked from my friendly competitor before on the polymers business, I would also like to understand the margin improvement in silicones.

If my math is right, then basically it was a washout between the lower methanol price and the higher silicon metal price, so that the raw materials were not a big driver. So was that all product mix effect and FX or were there other issues in the silicon business as well?

Thank you.

Andreas, to get started with polysilicon CapEx, I think it’s fair to say that for 2016 there is still some remaining activity on the Tennessee side, so it’s not all maintenance CapEx. Maintenance CapEx should be lower than what you see on the bar chart.

Could you say what the maintenance CapEx for the total asset base you will have in the future might be, because we know this business only as a growth business, so there was always a high portion of...

I mean, to give you a number, it’s below 100.

Below 100. Thank you.

For the ramp costs, we are explicit for the first quarter that we see that we more or less have the full fixed cost base in place, but still very little output. So, the number for the first quarter is €30 million.

For the full year, we had said in the last conference call that it should be some €50 million to €60 million, but that should be basically in the second quarter and maybe a very little portion in the third quarter, but it’s not over yet in the first quarter. It is over then when we have 100% capacity utilization and that is something we see at – in Q3.

For the silicon or silicones, you were asking about the margin improvement. You are absolutely right that raw materials were more or less a wash.

So, the improvement was mainly driven by volume growth and the good product mix and currency. And yes, going forward, you have mentioned that methanol prices are low, but recently also silicon metal prices have come down a bit.

And so again your question on polymers?

And then in polysilicon it was, you said that the prepayments will come down to by the end of 2017. I would like to know whether there is a correlation between the rundown of the prepayments and contract business you have.

So obviously, for these prepayments, you had long-term contracts with your clients. And I would assume that the total business model will be more short-term if it comes to this pricing in polysilicon, so more to understand whether in the future the spot prices in polysilicon will be more relevant than they used to be?

I always stated for a number of years already that polysilicon will become a normal chemical business. What that means is that there will be a mixture of, let’s say, more short-term business than quarterly, semiannual, annual contracts, even multi-annual contracts.

And we are seeing that customers of various shapes and sizes request various business models in that regard. And of course, it’s in our interest to have contracts as long as possible.

And sometimes we go into negotiations with the customers on that. The time of prepayments, however is over.

That’s very clear. And so in the future, we will have a mixture of these contracts and also a mixture of materials, of course, for example different grain sizes and also for different applications, for so-called high-performance multi or mono-crystalline processes and so on.

So the total sales will be set up of these, yes, different approaches.

Okay, thanks.

Yes. Good afternoon.

Thanks for taking my questions. I mean the first one related to your dividend policy or cash return to shareholders.

Generally, you mentioned that the dividend proposal also indicates some confidence in free cash flow generation, could you maybe elaborate generally about your dividend policy going forward with significantly lower investment needs also in the next years, whether you would consider also other forms of returning cash to shareholders like share buybacks. Second question partly related to that, you mentioned that the €425 million guidance in CapEx for the running year will include some growth CapEx and probably what’s kind of run rate should we figure out for the group going forward beyond 2016 on the investment side.

And the last question relates to Siltronic, some difficulties to reconcile your guidance with the statements given by Siltronic, I think they are looking for a slight decline in sales, as you said and a slight improvement in margin, as you now also say in the presentation, but in the press release, you are talking about a significant improvement in EBITDA in 2016, maybe you could help reconcile these statements? Thank you.

On the dividend policy, I mean our policy is that we pay out at least 25% of our net profits and this will stay in place. There is not a lot more to add there.

And there are no plans at this point for other, let’s say methods. In terms of CapEx going forward, at this point, I would estimate that a level of €425 million, maybe a little bit higher.

Little bit higher would be something that would probably be reasonable for the next years to model, because I mean our investment policy, of course is to grow in downstream products. And yes, we need to add capacities incrementally there.

So there is more or less stable capacity expansion for CapEx – stable CapEx over the next few years. Tobias, do you want to comment on Siltronic?

André, on Siltronic we definitely talk about the same numbers. We are fully aligned and sorry for any potential confusion.

I would ask you to refer to what the management of Siltronic has said. It’s I think we are seeing a slight decline in revenue and an increase in margins because EBITDA should come in higher than in 2016, just because the cost reduction efforts are ongoing and some of the hedging losses that held them back in 2015 will just disappear.

So it’s the same numbers.

Okay. Thank you.

Yes. Hi, good afternoon.

I have two questions. First of all, looking at the 2017 targets, if Wacker wants to reach an EBITDA margin of 20%, what will be the main driver to achieve this, would you see substantial cash cost reductions in polysilicon or further margin improvements in chemicals, do you have a margin target for polysilicon, keeping current ASPs equal.

And then on the second question is on the current tariff situation with China, how would this impact the polysilicon ASPs, given that you currently cannot export any polysilicon to China, the largest B2B market and also the market with the highest ASPs, what are the chances that you can reach a similar agreement with the MOFCOM that you have for the German polysilicon plants? Thank you.

Martin, with respect to your first question on the 2017 margin, we stated that also in our annual report that our midterm targets are still within reach. That is basically on the basis of our planning that we did in last autumn, which is the last number that we looked at, 2017.

Now we just focus on 2016 and want to deliver on our guidance there. I think for 2017, there are chances, opportunities and I think with macro, that is something, yes, that we consider as a sort of stable environment right [Technical Difficulty] for the year or after 2017.

Yes, I was talking about keeping the ASPs – current ASPs equal, what are the chances that you will reach, let’s say 20% EBITDA margin, given the substantial cash cost reductions you expect with the polysilicon plant in Tennessee now?

I think we – I mean we are just considering now 2016 and assuming that we keep prices at a similar level to Q4. We don’t have the guidance now for polysilicon prices in 2017.

We focus on our cost reduction and we are making very good progress on our cost program.

And of course, I mean assuming for our polysilicon ASP as it is right now, we are still trying to increase pricing – price levels, of course so that the market has to address that. And we will see how the year develops.

On selling material from the U.S. to China, of course right now, we still have these so called anti-dumping margins on U.S.

based material. And therefore, at this point in time we are not planning to sell a lot of U.S.

material into China. But on the other hand, after – or according to WTO rules, we have the right for the so called new shipper review, because I mean we certainly did not dump material out of the United States into China, because we didn’t produce so far.

So it certainly was a very hypothetical assumption by China to come to these so called anti-dumping margins for us. So that’s the strategy going forward.

On the other hand, we have growth in demand in non-Chinese – with non-Chinese customers in the semiconductor and in the solar field.

Okay, great. Thank you.

Hi, I just wanted to follow-up on the CapEx on the outer years there. If we look – let’s say, assuming that you would not invest more in polysilicon, it would mean then that then you would add a lot of chemicals CapEx or Siltronic CapEx, how could that work, is that for €425 million or could you go below or really €425 million is your floor in terms of CapEx and...?

I am sorry, I would not call it a floor, I don’t think its right at this point to make a precise assumption for the next years. Of course, our big investments are simply over.

We will not build new plants anywhere in the world. I think we are – our regional footprint all over the world is excellent now and we can invest in the existing plants, maybe for a little production in India or whatever or in Southeast Asia it could be, but there are no specific plans so far, but certainly not high amount of CapEx.

Okay. And the second…

So, I mean you can assume it’s flat. And then this, again as I said before already includes increase of capacity in downstream assets for polymers as well as for silicones.

So we can think of your total group maintenance CapEx around €200 million?

I think that’s a fair assumption.

Okay. And on the granular poly, because we have been speaking about this several times, I remember in 2011 when you impaired your granular plant in Burghausen and you have been mentioning through conference calls that you have a promising product there.

Can you share a bit more on efficiency and is it cost competitive, because when you impaired the plant, it was not back then competitive?

Well, this was a very small plant with a very low capacity. It still is of course, but we have made progress in the development of the process.

We still are not done with the development, but the promising thing is that it is based on trichloroethylene, our existing raw material also for the Siemens process. So, that means it would be sort of an add-on just as a deposition process, an alternative deposition process.

In your testing phase, do you get the same yield as on Siemens process?

Yes, yes, yes.

So the conversion efficiency is good, okay?

The conversion efficiency is good, but of course, we need to work on all the issues with scaling it up and so on. So, I think that’s a process for the future.

And could you imagine getting to a yield that would make it semi-compatible to the granular process?

Yes, yes.

Thank you very much.

Hello. Hey, thank you for taking questions.

The first question is about Siltronic, how much operating expense do you expect to reduce at Siltronic this year, because you mentioned that the EBITDA improvement this year even though that our revenue will be soft. So, how much expense, OpEx, can you expect to reduce this year?

The number that Siltronic management was guiding for was €30 million to €35 million.

Okay, got it, got it. And the second question is also regarding Siltronic, somebody made an unsolicited offer for Siltronic’s competitor, SunEdison Semiconductor.

So, if other wafer manufacturers such as let’s say LG Siltron acquires SunEdison, which makes you relatively smaller, do you think that you would sell additional stake of Siltronic?

We already stated that our goal is ultimately to sell down shares at Siltronic, but this has nothing to do with potential changes in the market environment.

Okay. So, let me go on.

Yes, I know that you said ultimately you are afraid about that. So you don’t change the timing of selling, is that correct?

We did not make a statement on timing.

Okay, got it. Okay.

And the final question that I have. What are the – regarding silicones business, so it seems like the silicones business is doing good, but do you have like a – could you give me more like color on midterm strategy like any color on which region or what kind of application do you want to increase?

Well, I mean the advantage of the silicones business is that it serves a high variety of individual markets. And as a leading silicone manufacturer, we certainly tried to address all market segments of silicones.

And of course, our strategy is that we put special emphasis on so-called specialty products compared to commodity products. So, everything that requires specialty silicones are focus markets for our silicones business.

Okay. What about pricing?

I know like it depends on – like heavily depends on product mix, but assuming they are the same product mix, what about pricing? So, I know – I remember that pricing was soft, like 4, 5 years ago when like the Chinese guys are expanding capacity.

So what about now?

So pricing in 2015 was more or less flat.

Okay. And what the expectation for this year?

It’s similar. I mean, it’s...

Similar with maybe a little bit price pressure, but it’s very difficult to make forecasts from here, the quarters out. And so we will work hard that – the pressure is not too hard on us.

Okay. Yes, I am asking this question, because the Chinese economy as a whole is a little bit worried.

They are a little bit concerned. So, that’s why I got the – so what about the demand outlook in Asia?

Demand outlook in Asia for silicones is certainly very good, because in Asia per capita, there needs to be a catch-up of silicone demand. And specialties, like in the specialty chemical fields overall will certainly grow faster in Asia, Southeast Asia, in China, East Asia than commodities, but nevertheless, the main portion of the market is still commodity silicones there.

Okay, yes. Thank you very much.

Appreciate it.

You are very welcome.

Thank you for taking my questions. Just a quick one.

Could you please give us some additional insight on how depreciation past 2016 will progress either for the group or for the polysilicon segment both would be very welcome due to the fact that the German facilities will be written down in full past – at some point in time, past 2016, I guess, how that is going to develop? Secondly, polymers, we saw that a competitor of yours, Celanese, shutdown its facility in the U.S.

and is planning to open a plant in 2016, which is more or less double the size of the old plant. Still, you are guiding for, let’s say more or less the same EBITDA margin, if I got that correctly and an increase in EBITDA, how does that compute, so do you expect the market to develop strongly also in 2016 or will that be partially be held back because the delta between your product and SBL has come down a bit due to the change in raw material prices.

And quick one lastly, perhaps on the hedging costs you have, not only for Siltronic, but for the group, could you elaborate on how that is to progress in 2016? Thank you.

Oliver, regarding your first question on depreciation, I mean we will see that peak in 2016, depreciation will go up to €720 million as we said and then it should decline throughout the next, I would say 5 years to get back to a level that we have seen before. I think that is how to look at depreciation.

With respect to polymers, you are observing correctly that there has been a competitor shutting a plant in the U.S. or being in the process of shutting it and being in the process of investing another one in Asia.

I think you also know that we have invested in the U.S. and we just have – yes, an additional 85,000 kilotons in our Calvert City plant where we have an ethylene pipeline to connect to the grid and also to have a very cost competitive position there.

So we are very confident that we are seeing good growth in 2016. And especially if you – remember that in 2015, we were a little bit held back by some production issues in the first half.

So I think we are confident despite the SBL price delta against our products is not very much in our favor right now. We are working on the technology.

Our product has properties that are not matched by other latex systems, and that’s why we are seeing still very good growth. But in comparison to other players, I mean you always need to take into account that we are having two businesses.

We have the liquid business and the dry business. And we are a clear number one in the dispersible powders and that’s a business where we also have seen a very strong growth in last year and that is coming from both mature markets and emerging markets.

And then moving on to your question number three, hedging for the group, we are applying a rolling hedging policy. It’s a little bit longer in Siltronic.

It goes out 21 months for the planned net exposure and that will lead to that – in Siltronic, we will still have some negative hedging effects in the first quarter of 2016. And then, as you can see from a rolling approach, I mean the exchange rate has been mostly flat for, yes more than a year now at $1.10 for the euro.

So that will then also disappear, assuming that we have exchange rate of $1.10 then and that is what we are forecasting at. And for the group, so meaning not Siltronic I think we hedge a little bit shorter.

So there is no hedging impact that we see in 2016 that is of any significance.

I am sorry, a clarification one on the depreciation level you mentioned here, you said you will be coming back to past levels, having covered Wacker Chemie for a rather long time now, I have seen a lot of depreciation levels from €332 million to now €725 million, is that let’s say, close to the CapEx level you mentioned, so a bit above the €425 million a year you are earmarking for the years to come, so about let’s say the level of €450 million, €460 million or somewhere in that ballpark, would that be a realistic number for me to use?

No. I think – I don’t have the number in front of me.

It’s more – if you are looking 5 years out, it’s closer to about €600 million. It’s not – maybe a little bit below, but it’s not going back down to the years where we had depreciation of €350 million.

Okay, very clear. Thank you.

Okay.

Hi, I have two questions for me. The first one in regards to the polysilicon output guidance of 70,000 tons, the delta compared to the 54,000 tons, is that all Tennessee or are you expecting further de-bottlenecking in Germany.

And then secondly, more about the supply dynamics in the polysilicon industry, have you seen any further changes to your competitors in terms of their own supply of polysilicon production over the last quarter?

On our increase, I would say it’s mostly Tennessee. There might be some additional output of our German plants, but it’s not significant.

And on our competitors, I mean I think you read the same reports that we do, there is some additional output, but there is also a shutdown of polysilicon plants.

Okay. Thank you.

Sure.