STR seeing growing PV module assembly in Malaysia after US anti-dumping case

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PV module encapsulant material producer, STR Holdings has expanded production at its Malaysian plant to meet growing PV module production in the country after the latest round of US anti-dumping duties on Chinese and Taiwanese made solar cells. 

STR’s Malaysia facility was going to be ramped down as part of its restructuring efforts to reduce costs and return to profitability. However, Joseph Radziewicz, CFO of STR Holdings said in the company’s third quarter earnings call that it had “incurred additional cost to scale this facility back up. In November, we achieved certification with a potential new significant customer for this facility.”

Malaysia is seen as a strong candidate to attract further PV manufacturers to establish production in the country as it possesses a strong PV supply chain infrastructure and is home to tier 1 manufacturer’s such as First Solar, Hanwha Q CELLS and Panasonic. 

STR also noted that it was ramping its first encapsulant material production line in Suzhou, China. 

“During the third quarter, we made significant progress toward getting this facility operational” noted, Robert Yorgensen, CEO of STR Holdings. “We refined our local production processes, hired and trained our workforce, completed the installation and debugging of our production equipment, setup our quality control laboratory and hosted key customer factory audits, which we have passed.”

Yorgensen also noted that encapsulant material shipments also started in November from the new facility and that further customer wins would ensure further increases to production in 2015. 

The new customer was expected to have demand run rate valued at around US$20 million per annum.

Management reiterated that just-in-time (JIT) delivery requirements and preference from large tier 1 module manufacturers to use suppliers that make product in China were behind the reason for having its own plant in China. 

The company also has a manufacturing partnership in China with ZheJiang FeiYu Photo-Electrical Science & Technology Co. 

As the company repositions for potential growth in Asia, Europe has continued to prove difficult as a key unidentified customer was said to have significantly reduced module production in the quarter, due to restructuring and that the company had been acquired. 

Seasonality in the softness in orders across Europe had been noted during the summer but that a recovery in demand was weaker than expected. 

Financial results 

STR reported net sales for the third quarter of 2014 of US$9.5 million compared to US$6.2 million for the corresponding 2013 quarter. The 53% increase was said have been due to an 89% increase in material volume. 

However, net sales decreased by 15% quarter-on-quarter that was said to reflect an 11% material volume decline, and a 5% decrease in ASP’s.

ASP’s have decline 19% since the same period a year ago. However, the company has been gradually switching to paperless encapsulant material production, lower costs and enabling the company to better compete on pricing with its rivals such as First PV in China. The company said that the paperless product mix had reached 42%.

Shipments in the third quarter were said be around 410MW, compared to 460MW in the prior quarter. The company noted that the drop in shipments was due to European demand weakness and a major unidentified customer relocating production to another facility. 

STR reported a net loss of US$3.2 million and had cash and cash equivalents US$22 million at the end of the third quarter. Management noted that cash would be down to around US$18 million by year end and at the expected point of China-based PV project developer Zhenfa’s acquisition of the company.

Zhenfa acquisition update

STR noted that it had received official approvals in the US to become majority owned by Zhenfa and subject to a shareholder vote Friday, November 14 the deal could be completed before the year-end. 

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