Sunways struggling to curtail losses as going concern risks increase

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PV manufacturer Sunways continues to make quarterly losses, unable to match product cost reduction efforts with falling prices driven by overcapacity and demand weakness in core European markets.

Sunways has reported revenue in Q3 2012 of only €11.5 million, more than a 50% decline against the same quarter last year. The operating loss (EBIT) was negative €11.2 million compared to negative € 11.8 million. Operating losses (EBIT) for the first nine months of 2012 amounted to a negative €24.5 million, compared to an EBIT negative €21.6 million, in the same period of 2011.

The company noted in its nine-month 2012 financial report that as a result of additional losses and impact on its overall liquidity, “going concern risks have increased against the second quarter of 2012”.

A deal was also struck with majority investor LDK Solar, which is itself struggling with losses and high debts, allowing Sunways a 12-month deferral on liabilities that are in the range of €20 million.

Michael Wilhelm, Sunways Chairman, said: “Against this background, a 12-month payment deferral granted by the LKD Solar Group will support the funding of Sunways. Furthermore, another agreement relating to financial support for our company was entered into with our majority shareholder a few days ago.”

The company said that the loan deal was from a shareholder to the tune of €5.8 million.

“We will not lose sight of our objective to again achieve profitable growth – although, due to the massive deterioration of prices, this can currently not be achieved in all product segments. Our objective for the entire fiscal year 2012 continues to be to stabilise the development of sales volumes and sales revenues and to reduce our losses compared to the fiscal year 2011. The achievement of this target is subject to risks, in particular in view of the year-end impairment test,” added Wilhelm.

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