Wacker Chemie AG

Thank you, Operator. Welcome to the Wacker Chemie AG conference call on full year 2017.

My name is Jörg Hoffmann, I'm the 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.

The presentation is available on our webpage under www.wacker.com under the caption Investor Relations. Before they begin, allow me please to point you to the Safe Harbor statement beginning of the deck.

With this, let me now hand you over to Dr. Staudigl, our CEO.

Dr. Staudigl?

Ladies and gentlemen, welcome to our full year 2017 conference call. We ended the year with a result well above our original expectations with sales of €4.92 billion.

We achieved an EBITDA of over €1 billion. 2017 saw a major change in our portfolio.

The deconsolidation of Siltronic in March last year marked a watershed moment in the history of our company. Chemicals now make up three quarters of our sales.

Our focus is clearly set on driving further growth in these segments. CapEx targeted to expand our strong business positions will provide the basis for sustainable superior performance.

On a group level though, the plan to keep CapEx below the declining depreciation levels over our planning period. As many of you expected, this should result in strong cash flows over the next years.

We intend to share this cash generation with our shareholder as you can see in our dividend proposal. We will propose a dividend of €2.5 per share with a €2 bonus at the annual general meeting in May.

Wacker Chemie is financially strong. We met or exceeded our guidance last year.

We delivered a strong performance in 2017 with over €1 billion in EBITDA and great progress on cost and efficiency programs. Also including the proceeds of the Siltronic transaction.

We have cut our net financial debt in half. The dividend proposal displays the two components of our dividend policy.

On the one hand we are committed to play out around 50% of net earnings and additionally we will use dividends as a tool to manage our leverage towards the target range of 0.5 to 1 points EBITDA. And most important, the increased dividend proposal also reflects how optimism regarding the future development of Wacker Chemie.

In our core businesses we saw last year an exceptional drive in silicones as market tightness benefited our operations in the second half of the year. I think it is remarkable that this segment from 2014 to 2017 grew sales by 27% and doubled its EBITDA contribution to over €440 million.

This is the success of our combined strategy of cost leadership and especially focus generating above industry growth. Polymers coped in 2017 with higher raw material.

Also here with the volume growth at high levels with some price increases agreed late in the year. From 2014 to 2017 sales grew here by 19% in EBITDA by 34%.

On Page 3, you'll see the overall strong performance of our chemical business with profitability well above target margin of 16%. As we see ample opportunity for organic growth chemicals will be the clear focus of CapEx for the next year.

We suffer the setback in polysilicon in the incident in Tennessee in early September last year that shut down our new sites. Despite this, we performed exceptionally well with our German plants achieving record cost levels in Q4.

We now plan to ramp our Tennessee operations up again in Q2 getting to full production towards the end of Q3. In the course of 2018, we expect to be fully reimbursed by our insurance for the financial impact following the incident.

Yet 2018 will not be without challenges. The road faces complications in international trade.

We find the recent news flow on this topic disturbing. Our position on trade remains solid.

We believe in the power of free-trade allowing companies to compete on their capabilities and provide customers with best performing products at attractive prices. We recently imposed tariffs on silicon metal imports into the U.S., and it tends create similar hurdles for trade in Europe are late concerns.

Our reaction to these attempts to curb competition in silicon metal is that we will continuously expand our backward integration into this key raw material. Our ongoing expansion in Norway is a part of this drive.

Looking into 2018, we see raw material inflation over 2017 and expect headwinds from currencies. In total, we expect low single-digit growth in sales as we are capacity constraint in our biggest segment Silicones, and we plan somewhat lower prices in polysilicon.

Full year EBITDA for the group should come in higher than last year by mid-single digits. As some volume, better pricing, cost performance and equity results support earnings.

With this, let me hand you over to Tobias.

Welcome to our full year 2017 call ladies and gentlemen. Since we pre-released our numbers over months ago, I will speak to a few comment on group financial and present the segment outlook before we Q&A.

First off, let's have a look at how we performed last year on Page 4. As you see we pretty much fit our last guidance.

We reported over €1 billion in EBITDA. Our net cash flow was actually capped at prior-year level and including the Siltronic proceeds, we cut net financial debt in half.

So in summary, 2017 was another strong year for Wacker, instilling us with confidence for the future. Moving on to the P&L on Page 5.

Sales growth was dominated by volumes but in the second half of last year price improvements also kicked in. Nevertheless, overall 2017 was slightly pricing negative for us.

Despite this and rising raw material, our gross margin increased to 19.4%, largely result of successful cost reductions and better plant utilization. Other income did not see special income from cancelled prepayment contracts.

Siltronics good results, raised income from investments and associates to €44 million and as depreciation declined EBIT increased by over 25% to €424 million. Income from continuing operations which is our yardstick for dividends as Rudy explained increased by about 40% to €250 million.

Earnings per share from continuing operations went up to €4.85 cents per share. Our balance sheet on Page 6 changed as Siltronic exited the portfolio.

Please note that our 2016 balance sheet was not restated. Total assets are now at €6.8 billion, pensions were down €490 million to €1.6 billion.

From the de-consolidation of Siltronic and as discount rate in Germany rose to 2.09%. Moving on to the segments, the slides are relatively self-explanatory.

Let's focus on the outlook for the segment. One word of caution though on currencies, given that we hedge on a legal entity level, our segment results will be presented with the full impact of currency which is important at some segments may experience bigger effect on a quarterly basis than the FX effect on group level of less than €5 million in EBITDA for a $0.01 change in the U.S.

Dollar to Euro exchange rate. In silicones, we expect low single digit percent growth in sales, but with an expanding EBITDA margin as we run our capacities flat out.

Please note that this outlook includes an effort accounting effect from IFRS-15 which eliminates about €40 million in sales compared to last year. We see EBITDA in silicones rising by mid single digit percent from positive pricing, despite increases in silicon metal and currency effect.

Silicon metal appreciate following Chinese environmental reforms, and tightness for graphite electrodes. Looking more broadly at the business, we see great opportunities to further develop silicones.

We have improved our business considerably over the last few years and now we see room to further expand and solidify our market position. This is why we are looking at higher CapEx in silicon for the next years.

CapEx will increase from €140 million in 2017 to about €230 million. This step up in CapEx follows the communicated expansion in fuel silica, and silicon metal as well as considerable downstream and debottlenecking activities for our growing specialty business.

We also look at ways to expand our existing siloxane capacity to meet our growing needs for this material and to better service our customer’s growing businesses. Overall, this may increase CapEx for growth in silicon a bit further in 2019 and 2020, but group CapEx would stay below depreciation as previously communicated.

On Page 8 in polymers, we look to mixing a digit percent sales growth in 2018 largely driven by volumes as our market and applications continue to grow nicely. EBITDA will be hit by higher raw material prices and exchange rate.

Our pricing initiatives are successful and supportive, but may not fully compensate for raw material inflation. We look at an absolute EBITDA in polymers at the level of last year, despite a scheduled maintenance for major production unit in the second quarter.

Recent increases in raw material provide an additional challenge. BIOSOLUTIONS on Page 9 expect an EBITDA below €30 million with a mid single digit percent sales growth.

Growth is largely in nutritional product. Additional opportunities come from biopharmaceuticals.

We are making progress on the integration of our new fermentation asset in Spain with plant overhauls and reviews complete. As we take on the full workforce and begin operations, we will initially see somewhat higher costs, holding EBITDA in the segment back.

The market for polysilicon continued to see strong growth. Semiconductor demand is strong and global installations are driven by the cost efficiency of solar power.

The appendix of this presentation on Page 19 shows where we see solar PV growth in 2018. We see the PV industry as fundamentally healthy with a clear growth trajectory.

For our polysilicon business, we remain conservative - view on pricing and we calculate with lower average prices for 2018. With sales volumes constrained to the last year's levels, this implies a high single digit percent decline in sales.

Absolute EBITDA however is expected to surpass last year following good progress on our aggressive cost reductions and insurance compensation. We expect full utilization again and see Tennessee coming back online in the second quarter.

Before we move on, we need to address the nature of the insurance compensation for the Tennessee incident. The purpose of this insurance is to make us whole again.

In other words, to put us into a financial position as if the incident had not occurred. To that end, we determined jointly with our insurance, the damage of the plant, the cost to rebuild the assets, and the amount of foregone profitability.

In that sense, the insurance compensation is for the additional cost and for the earnings, we would have had without the incident. As you can see in the notes of the annual report on Page 166, we received an advance payment from our insurers in the amount of $100 million after the end of the reporting period.

This funds on advance payment on future settlement, they are a strong indicator that the insurers recognize our claims. However, as a true adjustment will take appropriate time, the exact timing of the P&L recognition for the compensation is yet uncertain.

Page 11 covers our cash flow bridge as you can see we more than half our net financial debt in the course of last year. Leverage by year end was below 0.5 times EBITDA and such outside our target range.

Page 12 shows our guidance, again in more detail. Please note our expectations on net cash flow which will be clearly positive but declines with higher CapEx.

You should also note expectations of higher earnings per share in the wake of lower depreciation, contribution from associates and a positive underlying profit trend. With this, let me hand you back to Rudy.

Yes, thank you Tobias. Yes, we have started a digitization drive throughout the organization which is result in better operating efficiencies and enhance customer experience.

Our focus is on continuing cost reductions, especially polysilicon made great steps forward to our targets in the last months, in the new business development and chemicals. 2018 started well with strong demand in chemicals, net positive pricing and a good performance in polysilicon.

For the first quarter we now expect sales of about €1.2 billion with an EBITDA clearly above last year.

This completes the presentation today. Ladies and gentlemen, thank you for attention so far.

We'll now be happy to answer your questions. Operator?

Just a question around the insurance claim, if I may. Are you likely to recognize in your EBITDA this year the portion of the insurance claim that compensates for loss of earnings and the cost to fix the plant or is it just the loss of earnings?

Thank you.

Tobias speaking, it’s both. If I put us in a position at if the incident hadn't happened and so it covers both the plant rebuild and repair and the business loss that occurred from the volume that we lacked to serve our customers.

And are you able to give us a kind of a range and maybe not specific numbers but at least a range as to what the portions are in these two brackets?

No, we don't want to do this. For your understanding, first, I mean we didn't give any split for 2017 as we didn't recognize much.

And we will not do that for 2018 at this moment as the plant is not running yet and the insurance adjustment is still in the process. So I hope for your understanding.

I would have two, please. One is on the extent of integration and your other costs to be observed in BIOSOLUTIONS.

What impact in EBITDA terms does this have for 2018? And secondly, that polymeric Q2 shut down for 2018, if this didn't occur, what would be the impact?

What would be the impact on EBITDA, i.e. how much higher would polymer EBITDA for 2018 be versus 2017 guidance if the shutdown were not occurring?

Thank you.

So Sebastian I take two questions. The BIOSOLUTIONS impact from the integration of the new side I would quantify it as a mid single digit euro million number impact on profit.

And the polymers maintenance, that is something that only occurs every three to four years. So it's a major overhaul of the production unit and this is a double digit, low double digit number, €1 million.

And again, on one-off and ramp-up costs. Does the insurance cover the cost in ramping back up the Tennessee facility?

Or is there any margin impact above basically what we already would have in the model of the accident hadn't occurred for the cost of getting this facility back online and running by about September 2018? Thank you.

So your overall sense of the interest to put - is that hadn't happened. So that includes also the process until we get back to full capacity when the incident happened in September last year.

Again, just wanted to clarify a few things on that insurance payment. So did you say you received $100 million or €100 million and will all of that be recognized in EBITDA for this year?

That's the first question? And second question was just looking at your guidance on silicone’s EBITDA growing mid single digit year-on-year, I mean based on what it seems at the moment the pricing is going up quite materially in silicone.

So are there any other offsets besides probably the known FX impact which is also impacting sort of EBITDA growth in silicones? And probably if I can squeeze one technical question on FX, can you spilt out what is the impact from FX.

I know you said a $0.01 is less than €5 million impact on EBITDA how much of that is in polysilicon and how much is in chemical divisions combine? Thank you.

Chetan, for the insurance advance payment that we see beginning of the year, I mean this is for everything. I mean, the advance payment for both the rebuild of their damaged equipment and for the business loss and it's in U.S.

dollars, so not Euro. And so, you cannot - as we also have the cost for the rebuild you cannot say, it's one to one EBITDA.

So that doesn't work like that. But we cannot give any more details on that at that moment.

The silicone guidance shows a mid single digit increase and that is despite a headwind from FX. And silicon is, we don't give the FX sensitivity for other divisions.

But it's the biggest sensitivity of the group. And if you take that together with the headwind from increasing raw material cost, we see higher silicon metal prices for example.

I think the overall price increases that we see on our sale site overcompensate that by far. So that's why we come to that guidance.

And can you give what is the sensitivity on polysilicon side in terms of FX.

It's less sensitive. As we bill in Euro.

Andreas Heine from MainFirst, I have basically three questions. So just to confirm you say Q1 is substantially higher in earning that is then obviously excluding the insurance payments?

And could you explain a little bit also your net debt outlook? I guess that includes still prepayments coming down and looking into the current portion of the prepayments they show a 60 something million.

And maybe, also what you expect as, what your half year net working capital outflow this year was pretty high, last year was 125 million, should we look at a singular number also for in 2018? And last but not least, on your EBITDA guidance.

You said that in the polysilicon you will have the same volume as in the year before in the annual report you were referring that the lost volume from the Tennessee plant is 6 kilo tons. So that would imply that you had a 74 kilo tons last year to get to the same amount you would have to have an even faster ramp up than only reaching full capacity in Q3.

Could you elucidate on this guidance please as well? Thank you.

Andreas for the first quarter that was your first question - I mean that excludes insurance recognition. So we would see EBITDA significantly higher which could argue at something like 10% above prior year excluding this effect on the insurance.

The second question, yes the current portion of prepayment is around €60 million and that is something that we would also see in the net financial debt. So we show net financial - or the net cash flow excluding this prepayment effect, but in net financial debt those €60 million would miss.

That's right. And then for understanding our cash flow.

I think, it's a fair assumption that the networking captive moves off 2017 our rough guidance also 2018. So you can work with the similar number.

And for polysilicon I hand over to Rudy.

It's very hard to really predict such a ramp up. So we just take some assumptions.

Of course, we will be very careful in order to make sure that we reach the necessary quality of the product as fast as possible. And reaching the quality as fast as possible for that we could compromise one of the other ton of polysilicon.

So it’s just a rough estimate but the NOL capacity once the facility will be running at the capacity we wanted to run is something like 20,000 tons and yes we are right, this year the same amount of last year then we should be able to produce 14,000 tons, I’m pretty optimistic but there is no guarantee yet but I think we should come close to that, we’re exceeding.

Just one from me, could you please help quantify the expansion in Siloxane capacity and then also clarify if this is within your CapEx guidance? Thank you.

We are evaluating an expansion in Siloxane right now and if we look at - let’s say 2020 the expenses are certainly within the guidance.

Two questions if I may. First one is on polysilicon.

On the cash cost position there at the CMD in September you mentioned that you expect another 30% reduction in cash cost from 2017 to 2021. Are you still on track to reach these savings and could you possibly comment on how the focus on monotype polysilicon also the incident in Tennessee may affect the target.

And second question is on your backward integration in silicon metal, how much of your total silicon metal needs do you currently source from Halle? And how much will this approximately be when you have finished the expansion there?

Thank you.

We still expect the same on the cost reduction in polysilicon and we are on track. The incident in Tennessee does not get us off-track and in terms of the backward integration, it will certainly increase over time but we cannot predict the details because we are doing one significant step right now, we are certainly planning another significant step.

So it will come over time, this is not something that can be done within two years and right now we - let’s put it this way, when our existing expansion is completed it will be around one-third of our capacity, of our demand.

And firstly, in your outlook, you mentioned in BIOSOLUTIONS that food and nutritional supplements will be the main growth drivers. And what about the cost of manufacturing business?

And so I also expected this to be an important growth driver after you recently announced a long-term contract with a pharma company. Or is this maybe something more for 2019?

And secondly on Siltronic. Do you have any timing yet for the divestment of your remaining parts or the share price is currently at all-time high and it has a good visibility for the next 12 months, at least.

So it will be interesting to know your view on that. And thirdly, on the VAM pricing environment.

So in the second half, there's several ramp-ups in ethylene. Do you think this will also have an impact on VAM and prices going down as a result?

Well let me answer the question on Siltronic first. Siltronic is very successful on the market and I think the idea was the right thing to do and was very successful.

The continuation of the share price growth was good. We have sold major portion of Siltronic at a very good level, and I think it’s very good to have Siltronic as a minority portion in our portfolio, so there are no efforts right now to sell further shares of Siltronic.

And for the VAM price you’re rightly observed that doesn’t increase now in the first half. I mean that basic comes back to plant shutdowns in also acetic acid which is the key prerequisite material for VAM.

VAM shutdowns in the U.S. and higher gas prices as winter as the Chinese they used gas to heat to reduction pollution and that hasn't effect quite significant impact in gas pricing and this let’s to higher acetic acid prices and so that’s why we look right now at elevated price levels for VAM and that is fee that gas prices normalize or that plants come back on stream or as you said that ethylene capacity is added I think that should ease them pricing in the second half of the year or at least in going into 2019.

And for the biopharmaceuticals, we announced a new contract and we also flag that we would be growing in this segment but, so far we are pretty much capacity constrained. So we’re looking into additional capacity in that area but yes we cannot I mean - we have a great technology that we would need much more capacity.

Thank you very much for your presentation and taking my two questions if I may. First one is I’m sorry for being having a basic question but your appetite to increase your vertical integration into silicon metal.

Now what’s the driver behind that? Longer term do you think that the much market become tighter if China starts to explore less silicone metal is that the primary issue or is there a quality driver that mandates you backward integrate.

And secondly just on silicon, siloxanes are you have any major capacity additions coming into the markets, new Greenfield capacity that start - potentially start to come on stream. Thank you.

Look there are one of the other Chinese players who are talking - at least talking about let’s say from the grass root investments but that remains to be same. On the silicon metal, I mean the driver for to increase - let's say independence of the merchant market is because of the behavior of some of the suppliers, we don’t want us to become a political game?

Do you think that there is a threat global supply and demand balance then note in the China results, one of the largest exporter of silicon metals. Do you think that’s given as a high energy intensity, high call intensity exports do you think it's vulnerable to a change in the appetite to export in the lower income.

We don't expect this to be a reason. I mean certainly most stringent requirements on environmental issues could add little bit on the price of - cost of the Chinese producers which could be translated into some higher prices.

But I think with everything that’s going on in this market, we believe that long-term we are much better positioned, if we control our costs for metallurgical silicon by our own.

Also from my side just some follow-ups on your guidance, in polysilicon your guidance has slightly improved EBITDA for the full-year. Does this include any profit contribution from the insurance or is that the kind of conservative way of – for first and excluding that?

And then also related to that, do you plan in polysilicon at inventory during 2018? So do you plan here in adding inventory in Asia which might not be sold in ’18?

Then secondly, on your guidance with regard to Siltronic, would it be fair to assume that you are taking the Siltronic guidance which is out in the market or is there an additional element of conservatism within your guidance? And then lastly, could you just share with us your currency assumptions for the U.S.

dollar and Renminbi which ratio you’re currently using for today’s guidance? Thank you.

Katja, I will start with the first question on poly-guidance. And as I said before with respect to the insurance, we should not talk about profit contribution from that.

We are compensated for the business cost and we are compensated for the cost of rebuilding the equipment. So that’s why we would not split it out.

We will be put at, if the incident haven’t happened. And I mean it includes this component and I mean the key element of the guidance is that we are conservative also on the price assumption.

So we calculate with lower prices and we need to see what happens. But as we typically say, we do not engage in big price forecasting and that leads to slightly higher EBITDA for the segment.

And part of this also, yes we would use opportunities to increase back again our inventories at the Asian hubs, as we want to be closer to our customers. For Siltronic the second question we do not put into that any more intelligence.

We take the consensus of Siltronic and then we take the 30.8% share of income and deduct from that the depreciation and amortization on the purchase price allocation. And this is roughly €5 million a quarter and then you come to what we use as number.

And on the FX ratios, you are taking the current ones or the average ones from ’17 or yeah, so…

Sorry I missed that. We take 125 in U.S.

dollar and for the RMB would need to come back to you after the call. I don’t have it right in front of me.

But if you put that together, I mean FX it’s quite a move from 113 to 125. And if you add the headwind from raw materials, you come up with €100 million number around that, that we need to compensate in this environment.

And so, it’s less on the FX side more on the raw materials side, but this is all compensated within our guidance.

Good afternoon and a few follow-ups. Unfortunately one more on the insurance payment, can you confirm that the earnings contribution from Q4 from insurance spent will be included in 2018 numbers or would you restate that for 2017?

This is first question. The second question is a follow-up on silicon at the mid-single digit EBITDA guidance that does seem pretty conservative, given the way I read your Q1 guidance sort of very strong start to the year with potentially double-digit growth on EBITDA here.

So what’s your thinking on the slowdown in the next three quarters? And then lastly, on the CapEx guidance beyond 2018 where should we think and what ranges should we think about given the ongoing expansion plans, is it still 400 million to 500 million or at the upper end in the mid-range and thank you.

Patrick, first question on the insurance recognition of Q4, this would be part of ’18, it would not be restated. But as I said before, please understand as we stick to this that we cannot split it out as a plant is not running and the insurance adjustment is still in the process.

But it would not be restated in ’17 for sure. In silicones, I think the trading environment is just fantastic and we would need to see what that gives us over the course of the year.

So as we said, we see it very positive right now in the first quarter.

Yes, on the CapEx as we said we have increased the CapEx this year by little bit over 100 million because we see tremendously positive opportunities especially in silicones projects with a very high ROI or very low payback time. And this is why we are increasing our investment.

Of course, we - if this trading condition continues, we really might want to - yes be able to benefit from that. And if it’s necessary to stay at that level of investment then we can do it in a very profitable way.

And this is why for the time being we see that level. And as we said we want to be below depreciation up until 220.

This is another upper limit for us. So this is the range that I’m seeing.

Can I just quickly follow-up also on polysilicon the guidance. You’re assuming slightly lower average selling prices, does that mean you’re assuming today’s spots in your planning?

And also wouldn’t you argue that the big conservative given the slide you’re showing with expect new installations of solar plants in 2018? And given that there is no capacity is coming on stream in the first half of this year?

I don’t think we are known for aggressive forecasting, so yes I agree that its conservative under the things we’re seeing right now. But it’s better to be on the safe side.

Okay.

You never know what that’s global trading conditions.

I have three questions, two on silicon and one on polysilicon. On silicones just to understand the situation a little bit better, is your current growth currently over the constrained somehow by siloxane as a ability.

So does it mean that you currently mainly expecting to grow via price and mix and not volumes? And the second question on silicones, I’m sorry is the expansion, the potential expansion in siloxane could you give us an rough idea, a direction at least on how long would it take you of the two to expand capacity via Brownfield and how much headroom would it give you.

I know it’s a little bit complicated, but an indication where there is expansion could be going to would be very helpful? The third question on polysilicon it’s regarding your competitor GCL, there was separate statement saying that the technology provided TVA Tepla has transferred technology - also technology to GCL regarding a semiconductor manufacturing capabilities.

I understand that to produce semiconductor wafer you need to high quality polysilicon and the question I have for you is, do you see in the market high quality polysilicon coming from produces who were not able to master this great - just recently, is there were change in the marketplace? This is the question.

Thank you.

To begin with last question. Well.

We certainly do not see big change in the whole environment in this regard. But I understand that the competitor you mentioned is doing more and more mono-silicon growth for photovoltaics.

So they probably would need the high quality polysilicon by themselves. So I do not see that on the market, but its’ probably better to ask them then asked about them.

On the siloxane even a Brownfield project takes, I would say two years once it being started. And in case we decide to do that, and of course we are able, we do something like that and its certainly would be Burghausen and Nunchritz.

And presently, to your first question, of course the growth is by price and mix. We’re certainly constrained in raw materials.

On the other hand of course, we also do let’s say, small scale the bottle making project all the time, so there is some raw material adder ever year but not big screen.

Thanks a lot for one add-on question. Could you share with us how you see for your own polysilicon businesses split from mono-to-multi, so you produce the same volume this year than last year according to your guidance.

Do you think that is the split of the high end material to the low end material of the change within your portfolio and maybe you can change your line how your split is of the high end into the low end, so mono-to-multi compared to the market split please?

Our share of mono is essentially higher than the market split. I think, it’s around 560 to 640.

It wasn't - 2016 was 55% of what we sold to the solar segment for us wasn’t mono and the market at that timing was the 25%.

But our share is growing. So this year we’ve certainly be around 60% mono.

And this mono that is excluding semi, so semi comes on top.

Yes, share in semi is probably around its coming up right now. But overall, I think we are at 30%.

That is 30% market?

30% market share for semiconductor capable polysilicon…

And then also referring to what you said in the PV installation which is going up even on the low end quite considerably and having in mind that the market share of mono has increased in the last few years, I would expect this to continue, how do you see then the supply demand situation for the mono business in 2018 and 2019?

Well the demand is high for this application.

Yes, it is growing strongly, it’s aggression is…

Yes definitely, there is lot of interest. There is lot of interest for monosilicon producers for our polysilicon.

And do you see that other players are catching up and getting to these high quality or is that less the case. So here lot of announcements that basically everyone is able to produce this quality but I’m not sure whether this is really representing what you see on the market?

Well I really prefer you speak to them.

First question is regarding the likely or not likely rebuild of inventories in polysilicon, given that you’re planning for similar volume in 2018 compared to 2017 as you’re still under the influence of the Tennessee incident. How likely is it that you are able to build up inventory already in 2018 given that you've just stated that the demand for polysilicon applications is rather strong and obviously you might be able to sell even more than you currently produce?

How likely is it for you to build inventory in such environment and that takes me directly to my second question because you stated to a question of Andreas Heine before that networking capital development in 2018 might be likely to the most we have seen in 2017. In 2017, we saw the depletion of the inventories that you had for Asian customers in polysilicon due to the Tennessee incident, if you’re now talking or not talking rebuilding of those inventories, how will that align with the statement regarding networking capital movement.

And lastly perhaps also in that connection given that you are now at the lower end of your net debt of the bracket, you want to have that given that you are looking at increase in EBITDA and much stronger in the net result. If I look at your 50% cash outs of net income as dividends and you’re likely to - and you want to perhaps remain at the lower level of your net debt target, how likely is it that you would exceed the 50% cash out to investors in dividends in the upcoming years given that you are still looking for positive development and free cash generation in 2018 and most likely beyond that year?

Thank you very much.

Maybe one word to rebuilding of the inventory. There are always two aspects, first of all of course the more material we have from Tennessee, the easier it would be to rebuild some inventory, sometimes we make a strategic decision not or you can also call it a tactical.

I mean not to sell the product into the market right away and rather put it into inventory in order - in our hub in order to be able to be more flexible and provide faster delivery to certain Asian, Chinese customers that you sometimes you might see this type of inventory through that but when the market is strong and the prices is high, we also and then the demand of the customers is there that you get to material then of course we deplete the inventory. So, it’s really a flexible instrument that we’re using and of course the faster tenancy comes up, the easier it is to use it as a flexible instrument.

And that’s why I mean the networking capital guide I mean it’s not only about the inventory, I mean it - we have the attempt and the target to put some more into inventory but we need to see how we can achieve that.

On the dividend as I don’t know whether I mentioned in the press conference today but already mentioned it here because of other similar question - I think the answer is very simple, we will decide and of course discuss with the Board on the dividend. By the end of this year at the latest our dividend policy however remains intact but we want to pay-out around 50% of the net profits and everything else is decided later.

Just a follow up on silicones, where you said your capacity constrained this year and I guess some of your competitors might be capacity constrained as well. So historically silicones in terms of end demand has grown more like 5% or even somewhat higher, we are in a good sort of macro environment this year.

So I mean do you think there is at the movement some sort of substitution happening away from silicones if major suppliers like yourself can’t meet all of the demand and if so what are the other chemical chains that could substitute silicones in some of the applications. And after the CapEx increase this year do you think you will be able to revert back to the - old 6% to 7% volume growth or would that take long term time if of course depending on how the macro does.

I think to assume that a 5% plus minus growth in silicone in the long run is certainly a good assumption, and that will remain intact certainly for the foreseeable future. When you look at the applications of silicones, there is not very much opportunity to replace silicones by something else there are few pockets of applications for example at the very low end of sealants, but this is not something that would reduce the supply constraints just a little maybe.

I think growth is much stronger than let’s say freeing up siloxane by replacing at the very low end.

Will you be able to grow for 5% to 6% volume terms beyond say this year after you add more capacity et cetera?

Yes, absolutely. This is why we are investing.

Thank you, Operator. Thank you all for joining us today and for your interest in Wacker Chemie.

We're looking forward to further discussions with you as the quarter progresses. We will be back with the conference call on Q1 on April 26.

Good bye.