Troubles resurface at centrotherm photovoltaics

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Beleaguered PV equipment supplier, centrotherm photovoltaics, has given a cryptic account of deterioration in revenue expectations over the next two years having recently reviewed its order backlog.

The company implied in a statement that specialist market research firm forecasts for a recovery in capital spending had not materialised and that capital expenditure plans had been pushed out further than previously guided, meaning that centrotherm’s previous revenue forecasts for 2014 and 2015 would not be met.

However, since entering insolvency proceedings in July, 2012 and successfully restructuring in Jaunuary, 2013, which resulted in the company becoming majority-owned by its creditors, centrotherm has not publicly provided any financial results or stated what its earnings forecasts for the period had been.

Order backlog depletion

In its final financial report for the first quarter of 2012, centrotherm had booked a massive €255 million 116MW turnkey (wafer/cell/module) production plant with CEEG, a subsidiary of Société Nationale de l'Electricité et du Gaz (Sonelgaz) in Algeria. The single order increased centrotherm’s order backlog to over €500 million.

In the same month that the company exited insolvency proceedings that order was officially cancelled. Centrotherm has not officially announced any further equipment orders or cancellations.

However, the equipment sector as a whole remains in the worst downturn on record with extremely limited orders as manufacturers throughout the supply chain remain in cash preservation mode, due to overcapacity and limit capital expenditure to equipment maintenance levels only.

Many equipment suppliers have as a result adjusted order backlog figures over the last 18 months, not least due to many tier two and three producers in Asia closing down or becoming 'zombie' companies.

Module manufacturers have also been clear in quarterly conference calls throughout 2012 and 2013 that capacity expansions are not planned due to the overcapacity situation and that cash preservation would be the norm until a return to profitability and industry consolidation, coupled to increased demand, would bring about a supply/demand balance.

Market forecasts and recovery

Market research firms have also highlighted on regular occasions that a recovery in capital expenditures is highly unlikely in 2013, despite the length of the equipment downturn.

NPD Solarbuzz, in particular, has been more pessimistic about an eventual recovery in spending throughout the downturn phase, only recently forecasting a potential recovery in equipment orders in the second half of 2014.

Back in 2012, research firms in general had been expecting a recovery in orders, potentially late 2013 or by mid-2014. However, downstream growth was not strong enough, nor was the level of consolidation achieved in the industry as large as expected.

As far as centrotherm is concerned, a recovery in equipment orders was mooted to happen sometime in 2014, without providing details.

The company noted, also without providing details, that its ongoing restructuring efforts and fixed-cost reductions – in line with its unspecified liquidity available – “provide a good basis for the future development of the company”.

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