Wafer price declines in 2H to hit PV Crystalox Solar’s profitability

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Having noted a 45% price decline for bare wafers from May to June this year, PV Crystalox Solar said it was currently operating below breakeven level and expects further pricing pressure in the second-half of the year could lead to incurring an operating loss in the second half. Despite challenging business environment, the wafer producer posted a 23% increase in wafer shipments in the first-half of the year to 204MW, compared to the same period (165MW) a year ago. PV Crystalox posted revenue of €129.6million, up 16% compared the prior year period. EBIT was up by 161% to €24.3 million. Wafer production capacity also increased, reaching a nameplate capacity of 535MW. The company is expanding capacity to 750MW by early 2012.

“Our performance in the first half underlined the progress we have been making in recent years to diversify our customer base and to reduce our costs,” commented, Dr Iain Dorrity, PV Crystalox Solar’s Chief Executive Officer. “Despite significantly reduced global market demand, we have increased shipments and delivered a strong improvement in profitability. Looking ahead, industry volumes are expected to pick up in H2 but the pricing pressure seen recently is persisting and we are currently operating below breakeven. We are taking measures to counteract these difficult conditions and we are hopeful that developments in a number of markets will lead to increased demand and more favourable trading conditions in the medium term.”

The company noted it had been successful in diversifying its customer base, noting that shipments to customers in Asia exceeded 80% of revenues in the first-half of 2011, while Japan, Taiwan and China each account for over 25% of revenues. In 2009, PV Crystalox’s customer base was dominated by Japan at nearly 60% and only a small number of key accounts.

PV Crystalox reported that ASPs down approximately 6% below prior year levels, supported by 10% improvement in manufacturing cost reductions and in-house polysilicon supply, which cost lest than from suppliers.

Cost reductions are expected between 5-10% in the second-half of the year, while its polysilicon production plant in Bitterfeld, Germany is expected to operate at nameplate capacity of 1,800MT for the remainder of the year, supporting cost reduction efforts.

Annualised polysilicon output averaged 1,475MT during the first five months of 2011, prior to scheduled maintenance shutdown in June.

PV Crystalox expects total 2011 wafer production to be in the range 400MW-450MW. 

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