MUNICH (dpa-AFX) - After its competitors Lanxess, Clariant, Evonik and BASF, Wacker Chemie has now also been hit: the chemicals group has to make significant cuts to its annual targets after a weak second quarter. The share price fell by a good two percent on Wednesday.

"The decisive factors for our reduced expectations are the persistently weak demand from customers in numerous user industries, ongoing destocking on the customer side and the lower prices for many of our products compared to the previous year," said company CEO Christian Hartel, according to a statement the previous day. The hoped-for recovery in demand has not yet been seen, he added. Instead, the weakness in demand will continue in the second half of the year.

For the full year, the Executive Board now expects sales of 6.5 to 6.8 billion euros instead of the previously targeted 7 to 7.5 billion euros. Earnings before interest, taxes, depreciation and amortization (Ebitda) are expected to be 0.8 to 1 billion euros. Previously, the Group's management had forecast 1.1 to 1.4 billion. The new figures are below average market expectations, Wacker announced.

For analyst Markus Mayer of Baader Bank, the lowered annual outlook came as no surprise. He said his estimate was already in line with the midpoint of the new target range for operating profit (Ebitda), but market expectations now had to be lowered by 19 percent. Meanwhile, he said, his talks with many investors in recent days had shown that unofficial expectations for operating profit this year had already been below one billion euros.

Based on preliminary calculations, the group made sales of 1.75 billion euros in the second quarter, down from almost 2.2 billion a year earlier. Earnings before interest, taxes, depreciation and amortization slumped by almost 60 percent to 255 million euros. The final results are to be published on July 27.

The chemical sector has been suffering massively from destocking by customers since the fall of 2022. On top of this, consumers are less inclined to spend in the gloomy economic environment, which is weighing on demand and prices.

This is making itself felt in the silicones business - these plastics are used primarily in the electronics industry, by textile manufacturers, medical technology companies and in the construction sector. The construction industry, an important sales market for Wacker's polymers, is also feeling the impact of reduced construction activity due to high interest rates. Polymers are a wide variety of chemical compounds; they are the basis for adhesives, for example, but are also added to flooring, paints and concrete to change properties.

In Wacker's Silicones division, operating profit slumped in the second quarter, falling from 277 to 50 million euros. In the Polymers division, operating profit fell 17 percent to 75 million euros. Business with polysilicon for photovoltaic systems also remained under pressure. In the division's day-to-day business, profits shrank by almost 28 percent year-on-year to 155 million euros.

The German Chemical Industry Association (VCI) had also recently expressed little optimism about economic developments. Production was at a very low level, industry sales had been declining for months, and the lack of orders was causing problems for companies, it said./mne/lew/tav/jha/