centrotherm photovoltaics restructures after posting loss in 2011

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Despite an 11.9% increase in revenue for 2011, centrotherm photovoltaics reported a preliminary operating loss of €19.8 million on sales of €698.5 million. Its silicon and wafer segment and its thin film module segment took the brunt of the losses, leading to a major restructuring operation that will include job losses. centrotherm said it experienced order postponement and cancellations of some projects as a result of the current solar shakeout, which contributed to missing revenue guidance of €710 million and a small profit for the year.

“We failed to achieve the targets we set ourselves as a result of the surprising deterioration in the market and financial circumstances, particularly during the last few weeks of the year,” remarked Robert M. Hartung, CEO of centrotherm photovoltaics. “I am nevertheless pleased that we won new orders against the sector trend in our traditionally strong Solar Cell & Module business and that we grew our revenue by 50 percent in this segment.

“We have positioned ourselves very well for the future in strategic terms with our focus on our core competencies, a strong large-scale project business and by directing our sales efforts towards the MENA countries. We believe that photovoltaics is quite clearly on a medium- and long-term growth path due to rising energy demand worldwide, and the turnaround in energy policy that has started. We aim to benefit from this with a streamlined and efficient organization.”

The company said that adjustments to individual large-scale projects within its silicon and wafer segment, primarily polysilicon-based plant business, amounted to a loss of €75.0 million. The drastic decline in polysilicon prices has forced higher-cost producers to shutter plants and others to delay or have projects delayed.

silicon and wafer segment revenue dropped drastically from €201.7 million in 2010 to just €57.9 million in 2011.

In the thin film module segment, the company reported in increase in revenue of €32.7 million, compared to €18.0 million in 2010. EBIT improved to a negative €21.4 million, compared to a previous year loss of €37.4 million loss.

Management highlighted that it had decided to close the thin film module segment at its Blaubeuren, Germany, site and to transfer some of its operations to Asia, noting this was the main potential market area for thin film in the future. No further details were provided in a statement.

In contrast, revenue in the solar cell and module segment exceeded expectations as revenue reached €607.9 million in 2011, against €404.5 million in 2010. However, management noted that mostly in the fourth quarter it experienced postponement and cancellations, requiring a revaluation of inventories, which led to a fall in segment earnings to €71.9 million, compared to €91.6 million in 2010.

centrotherm reported €423.4 million in new order intake in the 2011 financial year, with a significant 90% of orders placed within its solar cell and module segment.

The order book position stood at €423.0 million as of December 31, 2011, of which €234.6 million was attributable to the solar cell and module segment, €176.1 million to the silicon and wafer segment, and only €12.3 million to orders generated in the thin film module segment.

Restructuring and cost reduction

Due to the market dynamics, centrotherm photovoltaics is restructuring much of its operations, while attempting to reduce costs on weaker sales expectations. Management said it had started short-time working in the production area, as well as significantly reducing costs across the entire group with the planned reduction of 400 jobs by mid-2012.

Management structures are also to be streamlined and optimized. The refocusing entails centrotherm photovoltaics' concentrating on its solar cell and module segment, as well as in the semiconductors and microelectronics markets and its silicon and wafer segment.

“The course of our business the past 2011 financial year shows that we were unable to decouple from the difficult sector environment, despite our excellent market position and technological strength,” commented Dr. Thomas Riegler, CFO of centrotherm photovoltaics AG. “We are still in a turbulent market environment characterized by moderate order intake. This requires us to flexibly adjust our organization capacities in order to maintain our future competitiveness.”

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