Meyer Burger Technology Ltd - Earnings of subsidiary Roth & Rau AG hit by additional special items and difficult market environment
Profit warning by Roth & Rau AG regarding the 3rd quarter 2011Earnings of Meyer Burger Technology Ltd at EBITDA level only marginally affectedRe-evaluation of participation in Roth & Rau within the scope of consolidationControl and/or Profit Transfer Agreement with Roth & Rau AG will not be further pursuedMeyer Burger Technology Ltd continues to have strong balance sheet
Roth & Rau AG achieved earnings for the third quarter of 2011 that were again heavily affected by special items and the current difficult market environment in the solar industry. Roth & Rau published a profit warning and, according to preliminary results for the third quarter 2011, incurred a loss at EBIT level of EUR 52 million. Included within this loss are non-recurring value adjustments on trade receivables and inventories and depreciation on intangible assets as well as provisions for contractual risks and structural measures in the total amount of EUR 45 million.
The difficult market environment for cell and module manufacturers during the third quarter 2011 lead to a large proportion of Roth & Rau’s current projects not being concluded according to plans, as some customers delayed their final acceptances. This impacted sales and earnings. Roth & Rau achieved total sales of EUR 54 million for the third quarter 2011 and EUR 146 million for the first nine-months 2011 (previous year period EUR 189 million), respectively.
Measures already implemented
Roth & Rau has already reacted to the substantial decline in demand and has implemented reduced working hours at its production facilities. This reduced working hours’ measure is limited to a half-year period for the time being. This will enable the company to react flexibly and at short notice to a potential rebound in customers' readiness to invest. The existing cost and structure optimisation program is being reviewed by the new management board of Roth & Rau AG and will for the most part be continued and accelerated. The program targets the creation of more flexible cost and organisational structures in the long-term so that fluctuations in demand by customers can be absorbed in a much better way.
Roth & Rau AG will publish its detailed interim report on 15 November 2011 for the nine-month period ended 30 September 2011. However, the company already pointed out today that potential additional special item effects of approximately EUR 15 million cannot be ruled out for the fourth quarter 2011.
Effect on the consolidated income statement 2011 of Meyer Burger Group
Meyer Burger Group fully consolidates Roth & Rau AG into its consolidated financial statements 2011 and in the opening balance sheet as of the date of the completion of the takeover at the beginning of August 2011. The participation held by Meyer Burger prior to this date had been recognised in the balance sheet as investment in associated companies.
All assets of Roth & Rau AG are recognised at fair value in the opening balance sheet of Meyer Burger Group as per the balance sheet date 9 August 2011. The value adjustments on trade receivables and inventories and the depreciation on intangible assets mentioned in the profit warning by Roth & Rau have been considerably impacted by the changed market environment. First signs for the value adjustments and depreciation of the respective assets already existed at the time of the change of control and the depreciations and provisions are therefore included in the opening balance sheet.
The proportion of the total loss incurred by Roth & Rau as per 30 September 2011, which is included in the consolidated financial statements of Meyer Burger Group, will only have a limited effect on the Group’s earnings at EBITDA level. However, Meyer Burger will have to carry a proportional loss of approximately EUR 14 million for the period July to 8 August 2011 at the level of results from investments in associated companies. Potentially negative earnings effects by Roth & Rau AG during the fourth quarter 2011 will also have to be fully consolidated.
Due to the changes in the market environment for solar cell and module manufacturers during the past few months since the launch of the public tender offer, Meyer Burger will also have to re-evaluate the intrinsic value of its participation in Roth & Rau AG. In particular, Meyer Burger Group will carry out an impairment test on the goodwill of Roth & Rau AG within the scope of the annual financial statements 2011. It appears, from today’s point of view, that impairment on goodwill in an amount of approximately EUR 40 to 60 million might become necessary, which would be charged to the income statement 2011 as a one-off item.
Strong balance sheet
Meyer Burger has equity of CHF 760.5 million and an equity ratio of 58.4% as of 30 June 2011. Cash and cash equivalents of the Group are currently at more than CHF 250 million, even after the purchase of the participation in Roth & Rau AG which had been settled by cash. The Group has no interest-bearing liabilities and is able to draw on a confirmed credit line of CHF 180 million at any time. Therefore, the Company continues to have a very sound financial basis. Additionally, the combined Group possesses a unique technology portfolio within its industry and will be able to use the existing large market opportunities as soon as the industry recovers from the current market situation.
Control and/or Profit Transfer Agreement will not be pursued any further
In the current very difficult and highly volatile market environment, the new management board of Roth & Rau AG – who has been in charge since 3 October 2011 - will focus entirely on a fast and sustainable improvement of the operating and financial performance of Roth & Rau.
Profitability of Roth & Rau is substantially below the previous expectations of Meyer Burger Technology Ltd. The Board of Directors and the Executive Board of Meyer Burger Technology Ltd have therefore decided to no longer pursue a control and/or profit transfer agreement with Roth & Rau AG in the current environment of the solar industry and stock markets. The management board of Roth & Rau AG was informed accordingly by Meyer Burger Technology Ltd (through its subsidiary MBT Systems GmbH). All preparatory work is discontinued.
Additional information:
Werner Buchholz
Head of Corporate Communications
Tel +41 (0) 33 439 05 06
w.buchholz@meyerburger.ch
About Meyer Burger Technology Ltd
http://www.meyerburger.com/
Meyer Burger is one of the world’s leading providers of innovative systems and production lines for photovoltaics in the solar industry and for the semiconductor and optoelectronic industries. Highly efficient wafers made from silicon, sapphire and other crystals are required in these three markets to manufacture solar modules, switching circuits or high-performance LEDs. The Group’s core competences encompass a broad range of production processes, machines and systems that are used for the production of ultra-thin, high quality wafers, for the inspection and measurement of solar cells, for laminating, soldering and testing of solar module and for building-integrated solar systems. With the acquisition of Roth & Rau AG, with its cutting-edge products and technologies for the next generation of crystalline silicon solar cells, Meyer Burger Group is further expanding its market leadership along the entire photovoltaics value chain. The merger of the two companies creates a full-line system provider which covers the most important technology elements in the photovoltaics value chain, from crystalline silicon to complete solar systems, specifically in the production processes of wafering, solar cells and solar modules. The Group’s comprehensive range of products includes a worldwide service network with wear and tear parts, consumables, re-grooving services, process know-how, customer support, after-sales services, training and other services. As a globally active company, Meyer Burger Group is represented in Europe, Asia and North America in the respective key markets and has over 2,500 employees since the Group’s expansion in August 2011.
Meyer Burger has its headquarters and the production facility of MB Wafertec (Meyer Burger Ltd) in Switzerland, while the group companies, Meyer Burger Automation GmbH, Hennecke Systems GmbH and AMB Apparate + Maschinenbau GmbH have their headquarters and production facilities in Germany. Diamond Wire Materials Tech, Inc. has its headquarters in Colorado Springs, CO, USA. The production facilities of 3S Modultec, 3S Photovoltaics and Pasan are also located in Switzerland, while Somont is located in Germany. The recently integrated Roth & Rau Group has its headquarters in Hohenstein-Ernstthal in Germany and has subsidiaries in Germany, Italy, the Netherlands, USA and various far Eastern countries. The entire Meyer Burger Group has subsidiaries and own service centres in Germany, Norway, Spain, USA, China, Japan, Singapore, South Korea, Taiwan and India. In other important markets, the Company relies on selected independent agents. The registered shares of Meyer Burger Technology Ltd are listed on SIX Swiss Exchange (Ticker: MBTN).
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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.
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