Meyer Burger Technology Ltd – 1st Half-Year 2013 Difficult market environment in the first half of 2013Substantial cost reduction measures implementedSolid balance sheet structure with sufficient liquidity and high equity ratio
Meyer Burger Technology Ltd (SIX Swiss Exchange: MBTN) achieved net sales of CHF 90.4 million in a difficult market environment in the solar industry during the first half of 2013. The optimisation and consolidation programmes initiated in 2012 were fully implemented as planned by mid-year 2013. As a result of these cost reduction measures, operating expenses declined by CHF 54.7 million compared to the first half of 2012. EBITDA for the first half of 2013 amounted to CHF -58.6 million and the net result came to CHF -81.9 million. The balance sheet structure is very solid with an equity ratio of 59.8%. Meyer Burger also has a sufficient liquidity base. Cash and cash equivalents amounted to CHF 224.5 million as of 30 June 2013 and together with committed credit lines, Meyer Burger has over CHF 280 million in liquidity at its disposal.
Market environment
The market situation in the solar industry remained difficult during the first half of 2013 and, as expected, Meyer Burger Group’s results for this reporting period were impacted by relatively low customer demand for new product systems and equipment.
With the solar market continuing to consolidate, further ineffective production capacities at solar cell and module producers have been removed, which in turn is leading to a reduction of current overcapacities. There were indications during the first half of 2013 that prices for solar cells and modules were starting to stabilise following a period of strong price declines over the past two years. This is good news for producers who are still in the market and will be an important factor for investment decisions about expansion or new projects.
The global demand and growth of installed PV capacity at private and commercial end-users continues to be robust. Meyer Burger expects the market dynamics to help restore the supply-demand balance for cells and modules over the coming 6-12 months. Various long-term government programmes to promote renewable energies in, for example, Arab countries, India, China, the USA, South America or South Africa will also stimulate growth and lead to a broader global market base.
Meyer Burger expects customers to make new investments in wafer, cell and module manufacturing lines during the second half of 2013 and in 2014, resulting in an increase of its incoming orders and sales. Project transactions have risen considerably and Meyer Burger has achieved incoming orders of over CHF 40 million just in the past six weeks since 1 July 2013 (compared to CHF 82.5 million for the first six months of 2013). These contracts mark an important turning point in customer behaviour. They confirm Meyer Burger’s view, which was already published at the beginning of 2012, that the market will gradually recover and demand for production equipment will increase again from 2013 onwards.
Incoming orders
The volume in new orders amounted to CHF 82.5 million in the first half of 2013 (H1 2012: CHF 128.4 million) and thereby was at a similar level to the incoming orders in the second half of 2012 (H2 2012: CHF 95.0 million). First indications that a recovery in incoming orders is taking place have been observed in July/August of this year, as explained above.
Sales
Net sales were CHF 90.4 million (H1 2012: CHF 307.8 million). Meyer Burger had forecasted substantially lower net sales in comparison to the previous year for the full fiscal year as well as for the first half-year period 2013, at the time of the capital increase. It also indicated that up to three quarters of the expected net sales for the entire year 2013 will become effective during the second half of 2013, due to the project nature of the business and the recognition of sales in accordance with the Completed Contract Method. Meyer Burger again achieved sales in non-PV industries such as sapphire which is used in the production of high precision optic systems (LEDs) in the watch industry, or in microelectronics. However, the total amount of sales achieved during the first half of 2013 was slightly below the company’s expectations.
Operating income after costs of products and services
Operating income after costs of products and services came to CHF 53.2 million (H1 2012: CHF 170.9 million). The margin increased by 3.3 percentage points to 58.8% (H1 2012: 55.5%), which is mainly due to changes in the product mix.
Operating expenses
With a substantial reduction of companies in the scope of consolidation, the merging of operating entities and a decline in personnel of 344 FTE during the first half of 2013, the optimisation and consolidation programmes initiated in 2012 have been fully implemented as planned by mid-year 2013. Meyer Burger expects that the operating cost base for the entire fiscal year 2013 will be reduced by at least CHF 80 million compared to the previous year.
As of 30 June 2013, Meyer Burger employed 1,842 people on a full-time basis, representing a decline of 27% compared to mid-year 2012 and 16% compared to year-end 2012. In addition, Meyer Burger employed 36 temporary staff (30.06.2012: 117 temporary staff). Personnel expenses for the first half of 2013 were reduced by CHF 30.1 million compared to the previous year period and amounted to CHF 84.8 million (H1 2012: CHF 114.9 million).
Other operating expenses declined to CHF 27.0 million (H1 2012: CHF 51.6 million). The decrease is mainly due to lower transportation costs as a result of the smaller business volume, lower external R&D expenses, reduced rental charges, the release of a provision no longer required, and the positive effects of the cost reduction measures in conjunction with the optimisation programmes.
EBITDA, EBIT
EBITDA for the first half of 2013 was negative as expected, despite the substantial reductions in operating expenses. EBITDA for the first half of 2013 amounted to CHF -58.6 million (H1 2012: CHF 4.4 million). Depreciation and amortisation totalled CHF 40.3 million (H1 2012: CHF 51.8 million), of which CHF 10.5 million was for depreciation of property, plant and equipment and CHF 29.8 million reflects scheduled amortisation of intangible assets, which resulted mainly from the M&A activities of the previous years. At EBIT level, Meyer Burger posted a result of CHF -98.8 million (H1 2012: CHF -47.4 million).
Financial result, taxes
The financial result, net, amounted to CHF -0.4 million for the first half of 2013 (H1 2012: CHF -1.0 million). Financial expenses include interest expenses for the straight bond (CHF 3.2 million), other interest expenses (CHF 1.1 million) and other financial expenses (CHF 1.0 million). Financial income includes unrealised positive foreign currency translation effects (CHF 4.8 million) from the valuation of intercompany loans to foreign subsidiaries and interest income (CHF 0.2 million).
Taxes for the first half of 2013 amounted to a tax income of CHF 17.3 million (H1 2012: CHF 14.0 million), which is mainly attributable to the reduction of temporary differences in intangible assets and the capitalisation of loss carry-forwards due to the negative taxable results of subsidiaries.
Net result
The net result for the first half of 2013 came to CHF -81.9 million (H1 2012: CHF -34.4 million). The net result represents a loss per share of CHF 1.38 (H1 2012: loss per share of CHF 0.70).
Balance sheet
Total assets increased by 5.1% compared to year-end 2012 and amounted to CHF 1,156.6 million (31.12.2012: CHF 1,100.8 million). Cash and cash equivalents were CHF 224.5 million. Net liquidity as of 30 June 2013 stood at CHF 60.7 million (31.12.2012: net liquidity of CHF 0.7 million). In addition, the Group has committed credit lines from which it can draw CHF 60 million in cash if required.
On the liabilities side of the balance sheet, non-current financial liabilities increased by CHF 30 million to CHF 163.1 million (31.12.2012: CHF 133.0 million), due to the loan agreement for the partial refinancing of investment costs of the new building in Thun. Equity amounted to CHF 691.2 million, representing an equity ratio of 59.8% (31.12.2012: CHF 618.1 million and 56.1% equity ratio).
Outlook
The long-term growth drivers and prospects for photovoltaics remain intact and have been further accentuated; solar energy will continue to grow and become an increasingly important alternative and quickly available source of energy and part of the global energy mix. Supported by government programmes to promote renewable energies and development plans in various countries, today’s end-user market (installed end-user capacity) will evolve into a global market over the upcoming years and will continue to show dynamic growth rates. Based on this growth, with prices for cells and modules stabilising, and especially with today’s available technologies that will introduce a new era, Meyer Burger expects the PV equipment market to also gradually recover.
The short-term outlook for the remaining part of 2013 remains challenging. From today’s point of view, Meyer Burger cannot uphold the earlier net sales guidance of CHF 400 million for fiscal year 2013. Various project orders that the company expects during the second half of this year will only become relevant in terms of net sales in 2014, due to the recognition of sales in accordance with the Completed Contract Method. Meyer Burger had a much better start into the second half of the year with a volume of incoming orders of over CHF 40 million in the first six weeks since 1 July 2013. Based on current project discussions Meyer Burger forecasts an increase in incoming orders compared to the previous year (2012: CHF 223.4 million). The company also expects to sign contracts for heterojunction as well as further orders for the new SmartWire connection technology and for integrated production lines.
The operating cost base has been substantially reduced as a result of the optimisation and consolidation programmes. The previously communicated cost reduction of about CHF 50-60 million compared to the cost base in fiscal year 2012 will certainly be surpassed. Today, Meyer Burger expects that operating expenses (personnel expenses, other operating expenses) will decline by at least CHF 80 million compared to last year. The savings and customer prepayments from new orders will also improve the operating cash flow during the second half of 2013 and will lead to a smaller cash drain than in the first half of this year.
Despite the fact that 2013 will be another difficult year in the solar industry, Meyer Burger is convinced that the market has been bottoming out and that the situation will brighten up during the second half and in 2014. Meyer Burger is prepared and is the only globally active equipment provider of integrated high-tech manufacturing systems who can offer the necessary, proven and industrialised high efficiency cell technologies which the PV industry will require to master the next technology steps. With the expansion of its group wide technology portfolio, Meyer Burger is now also able to expand beyond subsidised markets and the previously dominant cutting and slicing business as it has established itself across a number of important technologies.
For further information:
Werner Buchholz
Head of Corporate Communications
Phone +41 (0)33 221 25 06
werner.buchholz@meyerburger.com
Ingrid Carstensen
Corporate Communications
Phone +41 (0) 33 221 28 34
ingrid.carstensen@meyerburger.com
KEY FIGURES 1st HALF-YEAR 2013
Consolidated income statement
in TCHF
1.1.-30.6.2013
1.1.-30.6.2012
(restated)
Net sales
90 421
307 813
Operating income after costs of products and services
53 189
170 852
in % of net sales
58.8%
55.5%
EBITDA
-58 560
4 386
in % of net sales
-64.8%
1.4%
EBIT
-98 821
-47 383
in % of net sales
-109.3%
-15.4%
Net result
-81 864
-34 416
in % of net sales
-90.5%
-11.2%
Consolidated balance sheet
in TCHF
30.6.2013
31.12.2012
(restated)
Total assets
1 156 629
1 100 797
Equity
691 150
618 090
Equity ratio
59.8%
56.1%
Consolidated cash flow statement
in TCHF
1.1.-30.6.2013
1.1.-30.6.2012
(restated)
Cash flow from operating activities
-82 339
-96 535
Cash flow from investing activities
-3 699
-29 387
Cash flow from financing activities
175 009
105 600
Change in cash and cash equivalents
88 970
-20 332
Currency translation differences on cash and cash equivalents
1 020
-1 235
Cash and cash equivalents at end of period (i.e. 30.6.)
224 493
238 623
Number of employees (FTE) as of 30.6.2013 / 30.6.2012
1 842
2 538
Note: Restatement of 2012 figures due to changes in IAS 19 (IAS 19rev. – Employee benefits)
The Half-Year 2013 report is available for download on the company website www.meyerburger.com under the link – Investor Relations – Financial Reports & Publications.
http://www.meyerburger.com/en/investor-relations/financial-reports-publications/reports/
About Meyer Burger Technology Ltd
www.meyerburger.com
Meyer Burger is a leading global technology Group specialising on innovative systems and processes based on semiconductor technologies. The Group’s focus is on photovoltaics (solar industry) while its competencies and technologies also cover important areas of the semiconductor and the optoelectronic industries as well as other selected high-end markets based on semiconductor materials. The Group currently employs more than 1,800 people across three continents. Over the past ten years, Meyer Burger has risen to the forefront of the photovoltaic market and established itself as an international premium brand by offering superior precision products and innovative technologies.
The Group’s offering in systems, product equipment and services along the photovoltaic value chain includes the manufacturing processes for wafers, solar cells, solar modules and solar systems. Meyer Burger provides substantial added value to its customers and clearly differentiates itself from its competitors by focusing on the entire value chain.
The Group’s comprehensive product portfolio is complemented by a worldwide service network with spare parts, consumables, process know-how, customer support, after-sales services, training and other services. 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, Switzerland, Singapore, Taiwan and the USA. The Group is also working intensively to develop new markets such as South America, Africa and the Arab region. 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.
