3W Power down 3% year-on-year, but up 14.6%

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3W Power, the holding company of AEG Power Solutions (AEG PS), today issued preliminary results for Q1 2012.Order intake was down 3% year-on-year, but up 14.6% compared to the previous quarter. Revenues for the first quarter were also down by 3% at €83.5 million (Q1 2011: € 86.4 million) and EBITDA was €-2.8 million (Q1 2011: €2.3 million), which includes one-time expense items of €1.8 million. The one-time items consist of restructuring charges for the telecom converter business, write-off of receivables due to a solar customer insolvency and certain legal fees.

“Q1 was negatively impacted by a temporary delay in solar projects due to the financial crisis and by underperformance in our telecom converter business. With resuming growth, our RES business segment will return to double-digit EBITDA margins and with the restructuring of our DC telecom converter business unit (CVT), our EES business segment will return to positive EBITDA margins in Q2. In addition, shared cost will be under strict scrutiny for the remaining quarters. As of Q2, AEG Power Solutions will be back on its profitable growth track”, comments Horst Kayser, CEO of 3W Power/AEG Power Solutions.

The company states the RES segment as a whole was up 15% year-over-year. Orders for the power controller department in Q1 2012, has been credited to the sale of AEG PS’ Thyrobox M power supply solution to a poly plant in Asia and a poly plant in EMEA in 2012 and 2013 respectively. In addition, AEG PS has booked an order for the Thyrobox H2 hydrolysis power supply for a 6MW hybrid power plant in Northern Germany. It will remain a strategic priority of RES to diversify the power controller business beyond polysilicon applications. While this order intake is encouraging, the continued weakening of the spot market for polysilicon for its customers indicates an oversupply situation that will have to be closely monitored over the next few quarters.

Orders in the solar business unit for Q1 2012 were at a similar level for Q1. As previously announced, orders in India are already above 2011 full year levels and orders from growth regions (Eastern Europe, India, Southern Africa, USA) are expected to offset and over-compensate expected market contractions in Western Europe.

RES revenue for the quarter was € 33.0 million compared to €38.2 million in Q1 2011. As sales in the power control systems business unit were up 40% in Q1 2012 compared to Q1 2011, RES' revenue decline has been attributed to an expected revenue decrease in the solar business unit in Q1 2012 compared to the same period last year after low order intake in Q4 2011. The company claims the shortfall was specifically caused by a delay in deliveries to large key customers, due to customer difficulties in securing financing given the European debt crises. However, deliveries resumed towards the end of Q1, which should bode well for Q2 and beyond.

In energy efficiency solutions (EES), the group achieved revenue of €50.5 million in Q1 2012 (Q1 2011: €48.2 million).

Order intake for Q1 2011 in EES was 16% below previous year Q1. 3W Power blames the shortfall on traditionally lower Q1 telecom activity and additional cutbacks and delays in certain telecom customers' investment plans. Orders are expected to recover in Q3 and Q4 for telecom sales to reach previous full year levels.

EBITDA for EES in Q1 2012 was €-0.8 million (Q1 2011: €1.1 million). However, Q1 2012 EBITDA broke-even, excluding the restructuring charge of €0.9 million for the telecom converter business. EES will return to positive EBITDA in Q2 as 3W Power expects gross margin will continue to improve due to product cost improvements and above-average growth of profitable service business.

Kayser reports, “We remain focused on executing our profitable growth. We are excellently positioned both regionally and technologically to capture opportunities in the renewable markets, especially in growing global solar markets and the trend towards electrical energy storage and smart grid solutions. For 2012, the company continues to anticipate growth in its key markets and reaffirms its expectation of revenues in the range of €430 to €460 million and an EBITDA margin in the range of 9% to 11%.”

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