Citing difficulties in the market environment and customer project delays as a reason for the company’s poor third-quarter figures, Roth & Rau has reported an expected loss at EBIT level of €76 million for the three-month period. In response to this news, Meyer Burger has decided to cease steps it had been taking towards a control and/or profit transfer agreement, while Roth & Rau takes steps to regain financial stability.
According to the company’s news release, Roth & Rau will place “all of its efforts into adapting its cost and organisational structures as quickly as possible to secure a rapid, sustainable improvement in its earnings and financial position.”
Peter Frankfurter, CFO of Roth & Rau, commented, “Given the significant downturn in new orders in recent months and the substantial losses incurred at Roth & Rau AG, we see Meyer Burger's decision as an opportunity to focus even more closely on our strategic realignment and targeted turnaround”.
Consolidation of results
Meyer Burger’s balance sheet continues on its steady course to meeting 2011 expectations; 2011’s net sales are expected to be in the region of CHF 1.2 billion with an EBITDA margin of between 23% and 25%. However, this figure excludes those of Roth & Rau, which has started to address the massive losses it has incurred by implementing reduced working hours at its production facilities.
Consolidated financial statements for 2011 issued by Meyer Burger Group included Roth & Rau’s figures, citing the completion of the takeover of Roth & Rau AG as taking place around the beginning of August 2011. The financial woes being experienced by Roth & Rau have led Meyer Burger to question the value assigned to the former’s assets, citing that: “[t]he value adjustments on trade receivables and inventories and the depreciation on intangible assets mentioned in the profit warning by Roth & Rau have been considerably impacted by the changed market environment.”
Although Meyer Burger’s balance has not been hugely affected by Roth & Rau’s third-quarter figures, the former will have to carry a proportional loss of approximately €14 million from July to 8 August 2011, as well as any further losses incurred for the fourth quarter of 2011.
Meyer Burger Group plans to conduct an impairment test on the goodwill of Roth & Rau in relation to the latter’s end-of-year financial statement for 2011. It is expected that impairment on goodwill of the order of €40 to €60 million may be required, and Meyer Burger will write off this fee as a one-off charge on the income statement for 2011.
Roth & Rau plans to publish an in-depth interim report on November 15, which will detail its financial earnings and losses for the nine-month period from January 1 to September 30, 2011. Nevertheless, the company has warned that a possible further loss of up to €15 million for the fourth quarter of 2011 should not come as a surprise at the end of the year.