Continued restructuring at Phoenix Solar dents first half-year results

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Still in a restructuring and refinancing phase, designed to make the company more flexible and operate sustainably during dynamic changes in the solar industry, systems integrator, Phoenix Solar reported sales for the second quarter of 2012 as €46.5 million. This constitutes a 57.1% decline when compared to the same period a year ago. The company made a loss of €13.0 million, though refinancing of over €100 million was secured to enable the company to restructure.

On a regional basis, sales from its international business fell by 25.9% to €33.6 million but made up 72.2% of sales in the quarter. 

Phoenix Solar reported that its components and systems segment posted revenues of €19.2 million, while its power plants segment delivered revenues of €27.3 million.

In the first half of the year, Phoenix Solar Group saw its sales decline by 40.1% (€84.4 million), compared to €140.8 million in the prior year period. 

“Our endeavours in the first six months of the year were focused on restructuring our organisation and on bringing our refinancing negotiations to a successful conclusion,” noted Dr. Bernd Köhler, chief financial officer of Phoenix Solar AG. “We view 2012 as a year of transition dedicated to fully implementing our restructuring plan, which will enable us to lay the foundations for a return to future profitable growth in the years ahead.”

Restructuring efforts

Management highlights in a conference call to discuss financial results that a key part of the restructuring efforts included significantly reducing operating costs to achieve operational breakeven at around €300 million in sales on an annual basis.

The reduction in personnel costs and other related operating expenses is planned to be reduced by 50%, or around €30 million per annum, though the impact of these benefits would not be reached until sometime in 2013. The workforce reduction has amounted to 130 positions in Germany.

Having been financially impacted by long-term module supply deals, Phoenix Solar has cancelled all such deals and switched to a more flexible model as price erosion continues.

The total refinancing amounted to €132 million, with a syndicated loan of €100 million agreed with the existing banking syndicate led by BayernLB and five other banks.

Management said that it expected revenue for the year to reach between €210 million and €240 million, with an EBIT loss of between €19 million and €25 million.

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