Meyer Burger Technology Ltd – 1st Half-Year 2012

Results with net sales of CHF 307.8 million in line with expectationsEBITDA CHF 4.6 millionSolid balance sheet structure with sufficient liquidity and high equity ratioTargets for the entire fiscal year 2012 confirmed from today’s point of view

Meyer Burger Group reached results for the first half of 2012 that are in line with its expectations. These were achieved within a very difficult market environment for the photovoltaic industry. In view of the continuing overcapacities at cell and module manufacturers, many customers remained hesitant in terms of ordering new production equipment during the period under review. Net sales for the first half of 2012 amounted to CHF 307.8 million (CHF 575.0 million in H1 2011) and at EBITDA level, the Company reported a profit of CHF 4.6 million (CHF 154.9 million in H1 2011). For the first time in its successful corporate history since its IPO in 2006, Meyer Burger recorded a loss at Group earnings level of CHF 34.2 million (profit of CHF 76.6 million in H1 2011). The balance sheet structure remains very solid with an equity ratio of 54.2%. Meyer Burger Group also commands a high liquidity position. Cash and cash equivalents amounted to CHF 238.6 million as at 30 June 2012 and together with committed, un-used credit lines and possibilities for a mortgage loan, Meyer Burger Group has over CHF 300 million in liquidity at its disposal.

Meyer Burger Technology Ltd (SIX Swiss Exchange: MBTN) reached results for the first half of 2012 that were in line with its expectations. The extremely tense situation in the photovoltaic industry and the fierce consolidation process which had begun in the second half of 2011, continued, as expected, unabated in the first six months of 2012. In view of the continuing overcapacities at cell and module manufacturers, many customers remained hesitant in terms of ordering new production equipment in the first half of 2012.

Incoming orders, order backlog

After incoming orders had already substantially declined in the second half of 2011 owing to the market situation for solar cell and module manufacturers, they increased by approximately 44% in the first six months of 2012 compared with the second half of 2011. In comparison to the first half of 2011, in which a historic peak result of CHF 787.6 million had been achieved, the volume of incoming orders for new manufacturing equipment amounted to CHF 128.4 million in the first six months of 2012 (a deviation of 84% against H1 2011). The order backlog as at 30 June 2012 amounted to CHF 672.6 million (CHF 909.9 million as at 31 December 2011).

Sales

Net sales amounted to CHF 307.8 million (CHF 575.0 million in H1 2011). The decline in sales of about 46% was within the scope of the Company’s expectations and, proportionately for the half-year period, is also in line with the Company guidance for net sales that was published in March 2012. Asia was once again the most important customer region with 77% of net sales. Europe provided 18% of net sales while customers in the USA accounted for another 5% of net sales.

Operating income

The operating income after costs of products and services reached CHF 170.9 million (CHF 306.5 million in H1 2011). The margin increased by 2.2 percentage points to 55.5% compared with 53.3% for the first half of 2011. This increase is mainly attributable to new revenues from software sales and services, individual projects with exceptionally high margins, non-recurring effects from structural changes within the Group and changes in the product mix.

Operating Expenses

Personnel expenses increased to CHF 114.6 million in the first half of 2012 (CHF 82.5 million in H1 2011). This increase is due in particular to the full consolidation of the Roth & Rau companies (CHF 43.2 million of personnel expenses at Roth & Rau in H1 2012). In the previous year’s period, the Roth & Rau personnel costs were not yet taken into account in Meyer Burger Group’s consolidated financial statements as the participation at that time was below 25% and was reflected in the balance sheet as “investment in associated companies”. On a like-for-like comparison, personnel expenses were therefore reduced by about 13%.
 
The Group employed 2,538 people on a full-time basis as at 30 June 2012, representing a decline of about 9% compared to year-end 2011. In addition, the number of temporary employees was cut from 267 as at 31 December 2011 to 117 as at mid-2012. The remaining, relatively high number of temporary employees is due to temporary needs of additional staff in certain regions. The reduction in the total number of employees is in line with the focussing and optimisation programme that was already announced in March 2012.
 
Other operating expenses declined to CHF 51.6 million in the first half of 2012 (CHF 69.1 million in H1 2011). The consolidation effects regarding Roth & Rau companies accounted for CHF 18.3 million. If compared like-for-like, operating expenses declined by about 52% against the previous year, which is mainly attributable to lower transport costs, as a result of the drop in business volumes, and lower expenses for consulting services.       

EBITDA and EBIT

Net sales development and the implementation of the optimisation and consolidation programme have resulted in Meyer Burger achieving an EBITDA of CHF 4.6 million (CHF 154.9 million in H1 2011). The EBITDA margin amounted to 1.5% compared with 26.9% in the previous year’s period.
 
Depreciation and amortisation totalled CHF 51.8 million, with depreciation of property, plant and equipment amounting to CHF 10.9 million. CHF 39.6 million reflect scheduled amortisation of intangible assets, which resulted mainly from M&A activities of previous years, and CHF 1.3 million reflect other depreciation on intangible assets (mainly software).  

Meyer Burger recorded a loss at EBIT level, amounting to CHF 47.1 million (profit of CHF 125.1 million in H1 2011).

Financial result, taxes

The financial result, net, amounted to CHF -1.0 million in the first half of 2012. Due to a more stable foreign currency situation (mainly EUR, USD), changes in the valuation of intercompany loans to foreign subsidiaries were insignificant. An amount of CHF 29.8 million of unrealised exchange rate losses had to be recognised in this context in the first half of 2011 which is the main reason that the financial result, net, in the previous year’s period was CHF -32.7 million. 
 
The taxes for the first half of 2012 amounted to a tax income of CHF 14.0 million, which is mainly attributable to the reduction of temporary differences due to intangible assets, the capitalisation of loss carry-forwards and generally weaker results from operations (tax expenditure of CHF 15.3 million in H1 2011). 

Group Earnings

For the first time in its successful corporate history since its IPO in 2006, Meyer Burger recorded a loss at Group earnings level of CHF 34.2 million (profit of CHF 76.6 million in H1 2011).  

Cash Flow

In the first six months of 2012, the cash flow from operating activities amounted to CHF -96.5 million (CHF +178.5 million in H1 2011). The cash flow in the first half of 2012 was mainly influenced by a substantial increase in net working capital, which is primarily attributable to the decline in customer prepayments as a consequence of the weaker operating business.   
 
Cash flow from investing activities amounted to CHF -29.4 million (CHF -94.9 million in H1 2011). In the period under review, the investments in property, plant and equipment amounted to CHF -27.2 million, net. This mainly reflects the investments made in the new MB Wafertec production and competence centre in Gwatt (Thun).
  
Cash flow from financing activities reached CHF +105.6 million (CHF +3.8 million in H1 2011). Cash increased by CHF 129.1 million as a result of the bond issue, while CHF 10.1 million were spent for the purchase of further shares of Roth & Rau AG. In addition, the Group acquired treasury shares for an amount of CHF 11.3 million for further strategic projects.

Balance sheet

Total assets declined by about 5.2% to CHF 1,305.5 million compared to year-end 2011 (31 December 2011: CHF 1,377.4 million). Cash and cash equivalents came to CHF 238.6 million. Together with committed, un-used credit lines and possibilities for a mortgage loan, Meyer Burger Group has about CHF 300 – 310 million in liquidity at its disposal.

The equity (incl. non-controlling interests) amounted to CHF 707.8 million as at 30 June 2012, representing a solid equity ratio of 54.2% (31 December 2011: 55.4%). The clear, conservative strategy of the Board of Directors and of the Group Executive Board of retaining a high equity ratio is demonstrating its importance particularly in the current difficult market environment. Meyer Burger Group remains a soundly financed enterprise with strong amounts of liquidity and equity, and it is well prepared to bridge the current difficult market environment and to further strengthen its competitive position.

Continuing long-term positive outlook for the solar industry
Despite the persistent market uncertainties, Meyer Burger Group is convinced that the long-term prospects for photovoltaics remain positive. Globally, we all continue to be confronted with unresolved environmental problems (e.g. global warming), as well as with environmental pollution and risks related to petroleum, coal or nuclear power, which make further initiatives for the use of renewable energies indispensable.
 
New photovoltaic markets, for example in Asia, South America, in Arabian countries and also in Africa will ensure high growth in demand in the coming years and outperform the Western European markets that were the growth drivers in the solar industry in the past. A number of long-term government programmes and initiatives to promote renewable energies are also very positive and will lead to further growth in the industry. In addition, grid parity has already been reached in various important markets, also as a consequence of current low module and cell prices. The costs of solar electricity will continue to decline in the coming years due to new improvements in efficiency and technology. Based on these considerations, Meyer Burger remains convinced that solar energy sources will cover, in the long run, a significant share of global energy requirements both efficiently and in an environmentally friendly manner.   

Meyer Burger Group’s strategic and long-term oriented technology approach of considering the entire photovoltaic value chain and of optimally matching technologies along the various processes (wafer, cell, module, solar systems) strengthens the Group’s market position and gives it a clear competitive edge when the solar industry begins to recover.     

Outlook for the second half of 2012
A short-term estimate for the photovoltaic market remains difficult. There are still overcapacities at cell and module manufacturers, and it is impossible to estimate exactly at this point in time when these overcapacities will be eliminated and new programmes to invest in production equipment will again be launched. On the basis of discussions with its customers, Meyer Burger is expecting demand for its products and solutions to rise again substantially in 2013.
 
In the first half of the year, Meyer Burger implemented a large part of the optimisation and concentration programme it had previously announced. The programme aims for a sustainable reduction of the annual cost base by about CHF 20 – 30 million. Part of this will already become effective in the second half of 2012, the full impact will materialise in 2013. For the second half of 2012, the company is expecting a reduction in personnel and operating expenses which will lead to an improvement in the EBITDA margin. From today’s point of view, Meyer Burger Group confirms its target range for its 2012 guidance and expects to reach its goals in the lower half of that guidance (sales between CHF 600 – 800 million; EBITDA margin between 4 – 8%).

KEY FIGURES FIRST HALF YEAR 2012

Consolidated income statement

in TCHF

1.1.-30.6.2012

1.1.-30.6.2011

Net sales

307 813

Operating income after costs of products and services

170 852

306 483

in % of net sales

55.5%

53.3%

EBITDA

4 645

154 885

in % of net sales

1.5%

26.9%

EBIT

-47 124

in % of net sales

-15.3%

21.8%

Profit for the year

-34 156

76 590

Consolidated balance sheet

in TCHF

30.6.2012

31.12.2011

Total assets

1 305 527

Equity

707 791

762 534

Equity ratio

54.2%

55.4%

Consolidated cash flow statement

in TCHF

1.1.-30.6.2012

1.1.-30.6.2011

Cash flow from operating activities

-96 536

Cash flow from investing activities

-29 387

-94 911

Cash flow from financing activities

105 600

3 836

Change in cash and cash equivalents

-20 322

Currency translation differences on cash and cash equivalents

-1 235

-1 815

Cash and cash equivalents at the end of the period

238 623

Number of employees (FTE) at 30 June 2012 / 31 December 2011

2 538

2 791

The Half-Year Report 2012 is available for download on the Company website www.meyerburger.com under the link – Investor Relations – Financial Reports.

http://www.meyerburger.com/en/investor-relations/financial-reports/ 

For further information please contact:

Werner Buchholz

Head of Corporate Communications

Tel +41 (0) 33 221 25 06

werner.buchholz@meyerburger.com

Ingrid Carstensen

Corporate Communications

Tel +41 (0) 33 221 28 34

ingrid.carstensen@meyerburger.com

About Meyer Burger Technology Ltd

www.meyerburger.com

Meyer Burger is a leading global technology Group. Our innovative systems and production equipment create sustainable value for our customers in photovoltaics (solar industry), in the semiconductor and optoelectronic industries as well as other selected industries which focus on semiconductor materials. The Group currently employs more than 2,500 people across three continents. In our core business – photovoltaics – integrated systems and solutions which increase manufacturing performance and efficiency are the cornerstones of our corporate strategy. The Meyer Burger Group’s industry expertise and leading photovoltaic technologies along the entire value chain encompass all important production processes, systems and equipment for solar production from wafers to building-integrated solar systems.

The Group’s core competencies cover a broad range of production processes, machines and systems that are used for the production of ultra-thin, high quality wafers, for coating and optimizing as well as inspection and measurement of high performance solar cells, for laminating, soldering and testing of solar modules and for building-integrated solar systems.

A worldwide service network including spare parts, consumables, re-grooving services, process know-how, customer support, after-sales services, training and other services completes the Group’s comprehensive product portfolio. Meyer Burger Group is represented in Europe, Asia and North America in the respective key markets and has subsidiaries and own service centres in China, Germany, India, Japan, Korea, the Netherlands, Norway, Switzerland, Singapore, Spain, Taiwan and the USA. The company relies on selected independent agents in other important markets. The registered shares of Meyer Burger Technology Ltd are listed on SIX Swiss Exchange (Ticker: MBTN).

THIS PRESS RELEASE IS NOT BEING ISSUED IN THE UNITED STATES OF AMERICA AND SHOULD NOT BE DISTRIBUTED TO U.S. PERSONS OR PUBLICATIONS WITH A GENERAL CIRCULATION IN THE UNITED STATES. THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER OR INVITATION TO SUBSCRIBE FOR, EXCHANGE OR PURCHASE ANY SECURITIES. IN ADDITION, THE SECURITIES OF MEYER BURGER TECHNOLOGY LTD HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN THE UNITED STATES OR TO U.S. PERSONS ABSENT REGISTRATION UNDER OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE UNITED STATES SECURITIES LAWS.

This press release may contain “forward-looking statements”, such as guidance, expectations, plans, intentions, or strategies regarding the future. These forward-looking statements are subject to risks and uncertainties. The reader is cautioned that actual future results may differ from those expressed in or implied by the statements, which constitute projections of possible developments. All forward-looking statements included in this press release are based on data available to Meyer Burger Technology Ltd as of the date that this press release is published. The Company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.