Q-Cells revises revenue, capital spending and production targets

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The ongoing financial constraints, specifically in the area of project finance for large-scale solar installations, has forced Q-Cells SE to make its third successive downward revision to revenue projections for 2009. The company now expects revenue of between €1.3 billion and €1.6 billion, down from its previous guidance of €1.7 billion to €2.1 billion. Production targets have also been revised. Q-Cells now expects production to reach between 600 and 800MWp, compared to 800MWp to 1GWp, previously guided. Capital spending has been halved, down from €800 million to €400 million, resulting in ramp push-outs and a focus on product quality optimization in 2009.

Consolidated Group sales in the first quarter were €224.8 million, down 17% year-on-year. Production in the quarter reached 150.8MWp, approximately flat to the previous quarter.

Q-Cells executives noted in a conference call that sales volumes were increasing month-on-month in the second quarter. Strong demand is expected in the second half of the year as access to project finance begins to ease. However, the revisions made to Q-Cells’ forecast for 2009 are due to the recovery not being as strong as previously expected.

Anton Milner, Q-Cells CEO, noted that 2009 would be a ‘dip-year’ compared to his previous belief that the PV market would continue to grow, albeit at reduced levels. He also noted that there were high module inventory levels in the supply chain and price volatility remained. Q-Cells had approximately 60MW of inventory, existing the first quarter.

Key focus of attention, according to Milner was “managing for cost not for growth” in 2009. Major cost control programs being implemented should generate savings of between €50 and €70 million. The company has also successfully renegotiated polysilicon and other raw material contract prices. A reduction in working hours in German manufacturing plants had also been instigated to reduce inventory build and reduce costs.

Capital spending would be limited to preparations for a return to growth in 2010. Milner noted that expansion plans in cell/module production in Malaysia would be slowed, while expansions in thin-film subsidiary Solibro, would continue.

Milner noted that Solibro thin-film modules had recorded 11.3% efficiency levels in a Photon magazine module test, the highest figures recorded. Milner said that 12% efficiencies were seen in the lab with further improvements expected.

Construction of new 90MWp Solibro production line was going according to plan and expected the ramp to start in the fourth quarter of 2009. When fully loaded, Q-Cells said the plant had the potential of generating €1 per watt by the end of 2010.



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