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EANS-News: Sunways: First quarter affected by weak demand
· Due to weak demand in the market and high inventory levels, sales in the first quarter failed to meet projections · Core markets in Germany and Italy under pressure · Manufacturing cooperation with LDK Solar fully started
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Financial Figures/Balance Sheet/quarterly report/3-month report
Subtitle: · Due to weak demand in the market and high inventory levels, sales in the first quarter failed to meet projections · Core markets in Germany and Italy under pressure · Manufacturing cooperation with LDK Solar fully started
Konstanz/Germany (euro adhoc) - 12 May 2011 - After the very successful fiscal year 2010, Sunways AG, one of the leading providers of solar technology (SWW:GR, SWWG.DE, ISIN DE0007332207) had to cope with a difficult first quarter 2011. Sales in the period under review markedly failed to meet management´s expectations in the three segments solar cells, solar modules and in particular solar inverters. In combination with partially declining selling prices, this led to a negative operating result (EBIT).
In the first three months of the current year, consolidated sales were reduced by half compared to the prior year quarter, from EUR 44.3 million to EUR 22.2 million. This was mainly due to the weak demand in the market in combination with high inventory volumes at various trade levels. After the turbulent market development in 2010, which was also influenced by significant pull-forward effects, wholesalers and installers had built up substantial inventories they were unable to sell off during the first few months of the current year. "There was a massive stagnation of sales", said Michael Wilhelm, Chairman of the Management Board of Sunways AG.
Such stagnation was due to another reduction of feed-in tariffs for solar power in Germany as of 1 January 2011 as well as to continuing public debates about the alleged grid overload in the event of an increased use of renewable energies which unsettled investors in photovoltaic systems. In Italy, the most important foreign market of Sunways AG, the months-long discussion about further developments in the area of government subsidies also resulted in uncertainty on the part of investors.
In the period under review, the changeover to the new business model pursued together with business partner LDK Solar led to a significant decline in sales in the solar cell segment. In connection with the manufacturing cooperation with LDK Solar started in late 2010, substantial amounts of solar cells were supplied to the Chinese partner. Such shipments, which are not included in quarterly sales but must be reflected in gross performance, accounted for a substantial portion of the change in inventories in the amount of EUR 22.1 million reported in the period under review. "The production of Sunways solar modules by LDK Solar is an important basis for our new business model", explained Wilhelm, Chairman of Sunways´ Management Board. Due to the more favorable cost structure, competitiveness in the solar module segment will improve.
The weak demand at the beginning of the year and solar cell shipments to LDK Solar are reflected in the balance sheet of Sunways AG in the form of an increase in current assets: inventories doubled from EUR 31.3 million (31 December 2010) to EUR 64.2 million (31 March 2011). Liquid funds, in contrast, decreased from EUR 13.8 million to EUR 3.9 million. In the wake of the rise in working capital, short-term financial liabilities and trade payables also increased. The shareholders´ equity of Sunways AG as of the end of the first quarter amounted to EUR 65.6 million (31 December 2010: EUR 68.2 million). This corresponds to a comfortable equity ratio of 47.8 percent.
In the light of sales and orders received in April, the Management Board of Sunways AG on 4 May 2011 deliberately revised its sales prognosis for the entire fiscal year. The Management Board does, however, still adhere to the previously announced target margin: the Company continues to expect an EBIT margin in the lower single-digit percentage range for the entire fiscal year. "We will take all necessary measures on the sales as well as on the cost side to achieve our earnings target", declared Wilhelm.
With respect to the second quarter 2011, the Management Board perceives first positive signs in the major markets. The Company expects that the uncertainty prevailing in Italy, its most important non-domestic market, will be overcome as a decision has been reached on the further development of government subsidies. In Germany, Sunways anticipates that the high supply volume will stimulate end-consumer demand as improved rates of return are to be expected. The next reduction of feed-in tariffs, which will take effect as of 1 July 2011, should provide additional impetus. Furthermore, Sunways intends to enhance its international distribution channels through an expansion of the OEM inverter business and to open up new markets and customer groups.
The Management Board expects the positive trend to continue during the remainder of the fiscal year. This view is also supported by the results of market participant surveys showing that business expectations have improved significantly for the months to come. The most recent business climate index published by Bonn-based research institute EUPD Research indicated that, after a generally very negative first quarter, 56 percent of the installers, wholesalers and manufacturers interviewed gave a positive prognosis and expected an improvement in the economic situation during the next six months.
The business climate index for the photovoltaics industry determined by EUPD represents the value added levels of the photovoltaics industry with respect to production, distribution and installation. The survey was held from 22 March to 6 April 2011.
Major key figures Q1/2011
Group Sales: EUR 22.2 million (Q1/2010: EUR 44.3 million) EBITDA: EUR -1.9 million (Q1/2010: EUR 6.2 million) EBIT: EUR -3.5 million (Q1/2010: EUR 4.7 million) Consolidated net loss/income: EUR -2.7 million (Q1/2010: EUR 2.1 million) Earnings per share: EUR -0.23 EUR (Q1/2010: EUR 0.18EUR) Sales Germany: EUR 9.4 million (Q1/2010: EUR 37.2 million) Sales rest of Europe: EUR 12.8 million (Q1/2010: EUR 7.1 million) Number of employees (31 Mar 2011): 348 (31 Mar 2010: 313)
Solar cell segment Sales: EUR 7.5 million (Q1/2010: EUR 21.7 million) EBIT: EUR -0.8 million (Q1/2010: EUR 2.8 million) Sales volume: 6.8 MWp (Q1/2010: 17.8 MWp)
Solar module segment Sales: EUR 16.4 million (Q1/2010: EUR 18.7 million) EBIT: EUR -1.1 million (Q1/2010: EUR 0.8 million) Sales volume: 11.7 MWp (Q1/2010: 10.0 MWp)
Solar inverter segment Sales: EUR 3.1 million (Q1/2010: EUR 9.1 million) EBIT: EUR -1.6 million (Q1/2010: EUR 1.1 million) Sales volume: 12.8 MWp (Q1/2010: 37.7 MWp)
Financial calendar 2011 2011/06/16 - Annual General Meeting 2011/08/11 - Interim report as of 30 June 2011 (Q2) 2011/11/14 - Interim report as of 30 September 2011 (Q3)
Forward-looking statements This press release contains statements relating to the future business development of Sunways AG that are based on management assumptions and estimates made at the time of publication. Should the assumptions underlying the prognoses fail to be fulfilled, actual events may vary substantially from forward-looking statements. Uncertainties include changes in the political, legal, economic and business environment, exchange and interest rate fluctuations as well as the behaviour of competitors and other market participants. Sunways does not intend and is not under any obligation to update forward-looking statements on an ongoing basis as these are exclusively based on the circumstances prevailing as of the date of publication.
About Sunways Sunways AG, Konstanz/Germany, stands for consistent use of solar energy to secure long-term energy supply of man in an efficient and sustainable manner. Sunways offers technological competence, performance and highest quality - from single components to complete solar systems. Since its foundation in 1993, Sunways AG evolved into a technology leader in the photovoltaics industry serving international markets. With silicon-based solar cells, inverters, solar modules and solar systems, the company offers all components required for high-yield photovoltaic power generation. With photovoltaic solutions tailored to customers´ needs (transparent and coloured solar cells, building- integrated photovoltaic installations), Sunways turns exceptional ideas into reality. Sunways Production GmbH in Arnstadt/Germany is a subsidiary of Sunways AG; in addition, the group has own branch offices in Barcelone/Spain and Bologna/Italy. In 2010, Sunways AG with about 340 employees realised sales of around EUR 220 million. The shares of Sunways AG are listed at the Frankfurt Stock Exchange (SWW:GR, SWWG.DE, ISIN DE0007332207). For further information, please visit www.sunways.eu/en.
end of announcement euro adhoc --------------------------------------------------------------------------------
Dr. Harald F. Schaefer
Head Corporate Communications & Investor Relations
Tel.: +49 (0)7531 996 77-415
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