The first quarter of 2009 showed benefits of these measures on profitability. Whereas WACKER’s first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) fell 46% year on year to EUR157.8 million (first quarter of 2008: EUR291.1 million), the figure nevertheless reflected the advantages of lower material costs and personnel expenses, as well as more favorable raw-material and energy prices. The EBITDA margin equaled 18.1% (first quarter of 2008: 28.6%). The Group’s first quarter of 2009 earnings before interest and taxes (EBIT) reached EUR58.2 million (first quarter of 2008: EUR198.7 million), with a quarterly result of EUR5.5 million (first quarter of 2008: EUR130.6 million). Earnings per share were EUR0.17 (first quarter of 2008: EUR2.63).

The Group’s Polysilicon business made the largest contribution to first quarter of 2009 sales and earnings. The Wacker Polysilicon division’s sales crossed the EUR300 million mark in a single quarter for the first time ever and EBITDA rose 136%. Nevertheless, the sales and earnings trend declined significantly at all other divisions. The drop was most pronounced for Siltronic’s semiconductor business, where sales were down 64% year on year – with EBITDA declining to EUR-60.0 million.

For full-year 2009, Wacker is expecting markedly lower sales and operational earnings compared with the prior-year figures. How strong this decline will be primarily depends on further demand and price developments at WACKER’s key customer groups. The Group is focusing its investments on its strategic growth projects, particularly the ongoing expansion of Polysilicon production capacity. As of April 30, 2009, WACKER’s investment volume will reach a magnitude of EUR800 million in fiscal 2009.

Regions:

Benefiting from the strength of its Polysilicon business, the Wacker Group saw first-quarter sales in Germany climb some 3% year on year to EUR220.8 million (first quarter of 2008: EUR215.3 million). In the rest of Europe, however, sales fell 23% to EUR202.0 million (first quarter of 2008: EUR260.8 million). Asia remains WACKER’s largest market, though January-March 2009 sales there dropped by 23% to EUR267.0 million (first quarter of 2008: EUR345.6 million). China accounts for over half of WACKER’s Asian sales. In the Americas, Wacker generated sales of EUR162.3 million in the period under review, nearly matching the prior-year level (first quarter of 2008: EUR169.2 million). In this region, Wacker profited from the consolidation of Air Products Polymers, a former partner company, and from the favorable euro/dollar exchange rate. In “Other Regions”, first quarter of 2009 sales totaled EUR20.4 million (first quarter of 2008: EUR28.6 million).

Net Cash Flow and Investments:

Wacker generated a positive net cash flow of EUR70.9 million (first quarter of 2008: EUR-3.2 million) from January-March 2009. Here, a EUR67.9 million increase of customer prepayments and reductions in current assets together with the company’s investment focus on strategic growth projects were the key contributors. Additionally, in first quarter of 2008, a EUR173.4 million payment for acquiring the shares in Air Products Polymers and Wacker Polymer Systems (former partner companies) had affected cash flow in that quarter.

In first quarter of 2009, Wacker invested EUR176.8 million (first quarter of 2008: EUR145.5 million). The focus was on Polysilicon expansion projects at Burghausen and Nünchritz (Germany), as well as on extension of the silicones site in Zhangjiagang (China). Some EUR100 million was spent on the ongoing Polysilicon capacity expansion alone in the period under review. In the medium term, Wacker intends to build a new production plant for hyperpure polycrystalline silicon in the USA to satisfy the increase in demand expected from the solar and semiconductor industries in the years to come. In February, Wacker purchased a plot of land (550 acres or 220 hectares) in the State of Tennessee for this purpose at a cost of close to $20 million.

Employees:

On March 31, 2009, Wacker had 15,851 employees worldwide (December 31, 2008: 15,922), of whom 12,103 worked at German sites (December 31, 2008: 12,110) and 3,748 at international sites as per the end of first quarter of 2009 (December 31, 2008: 3,812). To gain the flexibility needed for reacting to the current demand decline, the Group applied for short-time work schedules at Siltronic AG from January 2009 and at Wacker Chemie from February, 2009 in each case for six months. In addition, the Group is taking every opportunity to reduce personnel costs by not extending limited employment contracts and by terminating contracts with temporary workers. Wacker is also transferring employees from its semiconductor subsidiary Siltronic to other corporate entities.

Business Divisions

In first quarter of 2009, Wacker SILICONES generated total sales of EUR264.9 million (first quarter of 2008: EUR360.3 million). The sales trend was marked by a substantial decline in sales volumes, particularly in the construction and automotive market segments, as well as in the textile industry. In contrast, sales in the medical technology and power generation and distribution segments developed comparatively better. Wacker SILICONES generated an EBITDA of EUR27.7 million from January-March 2009 (first quarter of 2008: EUR64.8 million), thus achieving an EBITDA margin of 10.5% (first quarter of 2008: 18.0%). The year on year earnings drop resulted almost entirely from lower volumes. Favorable exchange rates and lower personnel costs, however, had a positive effect on earnings.

Construction-segment weakness worldwide and seasonal effects of the severe winter in Europe had a noticeable impact on Wacker POLYMERS’ sales. Total sales from January-March 2009 amounted to EUR172.3 million (first quarter of 2008: EUR198.5 million), down 13% year on year. Adjusted for the addition of Air Products Polymers’ dispersion business, the decline was 22%. first quarter of 2009 EBITDA for the division was EUR21.5 million (first quarter of 2008: EUR38.1 million), resulting in an EBITDA margin of 12.5% (first quarter of 2008: 19.2%). The earnings drop vis-à-vis first quarter of 2008 was primarily caused by declining sales volumes and price pressure. In contrast, lower raw material costs and more favorable exchange rates had a positive effect on results. Measures to optimize production efficiency also served to support earnings.