Sunways sales still shrinking: 2H 2011 losses expected

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Continuous pressure on pricing as demand remains weak has further impacted PV product sales and profits at Sunways. Consolidated sales declined by €35.0 million to €23.3 million, compared to the same quarter a year ago when sales reached €58.3 million. Lower cell manufacturing utilization, inventory write-downs on falling ASPs meant Sunways reported losses € 6.3 million an a negative operating result (EBIT) of €11.8 million in the third quarter.

Although using module assembly capacity at LDK Solar in China, the lead-times between shipping cells for module assembly and receiving modules back to Europe meant Sunways could not cover cost prices. An inventory write-down of €3.8 million was required in the quarter as a result.

Sales outside Germany increased but failed to fully compensate for weak demand in Germany. In the third quarter 2011, Sunways generated sales in Europe (not Germany) of €9.9 million, down from €16.8 million in the prior year period, equating to 42.5% of 3Q sales, up from 28.8% in Q3, 2010.

Sales in France more than tripled from the prior year quarter to €2.0 million due to the distribution cooperation with Wattsol S.A.R.L, according to the company. International sales in the first 9-months of 2011 increased to €42.3 million, up from €36.9 million in the prior year period.

Sunways recorded a module sales volume of 11.4MWp in the solar module segment and generated corresponding sales of €14.0 million. In the solar inverter segment, the sales volume of 38.9MWp fell significantly behind the relevant figure for prior year quarter of 68.0MWp. Solar cell segment sales dropped to €12.1 million in Q311, compared to €27.9 million in Q310.

The company noted it had introduced short-time work at its cell plant in Arnstadt, in early September, to adjust production capacities to the current demand.

Sunways expects to generate sales revenue of €100-€120 million for the fiscal year 2011 and a negative operating result (EBIT) in the lower double-digit million range. Losses have been reported for three consecutive quarters.

“Sunways strongly focuses on restoring and securing the Company’s profitability on a sustainable basis,” commented Michael Wilhelm, Chairman of the Management Board of Sunways. “The objective is to minimize any further negative effects on our earnings and liquidity position. All measures already initiated to reduce costs and ensure liquidity will be further intensified. Additional projects relating to a review and potential adjustment of the business model have already been started.”

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