Weaker German market and strategic realignment in the module plant dampen results.
In spite of the current and persistently difficult market environment, Hamburg-based system supplier Conergy managed to increase its international sales during the first nine months of the year by 26 % to € 414.5 million (first three quarters of 2010: € 330.2 million). Adjusted for price and currency, that corresponds to an increase in the volume of solar module sales totalling 85 percent as compared to the previous year. Particularly encouraging was the strong growth of 62 percent in Asia, as well as the positive trend in Greece, Italy and North America.
During the first nine months of the year, the company managed to increase total volumes by
roughly 11 percent. However, the welcomed development in foreign markets contrasted with the
persistently weak solar market in Germany. Owing to the decline in demand in Germany and the
sustained fall in price, total sales in the first nine months of 2011 fell by 14 percent compared to
the boom year of 2010, down to € 570.9 million (first three quarters of 2010: € 664.9 million).
Influenced by one-off effects due to the strategic realignment of the module plant and the still
difficult market environment in the third quarter, Conergy’s operating earnings before interest,
taxes, depreciation and amortisation (EBITDA) amounted at the end of September to € -47.2
million (first three quarters of 2010: € 33.6 million), and earnings before interest and taxes (EBIT)
amounted to € -136.4 million (previous year: € 13.1 million). Group earnings after taxes from
continuing operations were € -103.2 million (previous year: € 0.8 million).
Q3: Negative impact from one-off effects due to the strategic realignment of the module production.
The weak German market and the persistently strong price pressure caused by overcapacities in
the market dampened sales results particularly during the third quarter of 2011. Added to that
was the restraint shown by European banks, as a result of the financial crisis, in terms of
financing projects in some countries. In the third quarter, Conergy achieved a turnover of € 182.4
million (Q3 2010: € 275.3 million). The ongoing, substantial fall in prices for modules by more
than 30 percent since the beginning of the year, which ran counter to expectations, diminished
the gross profit margin: It remained stable at 19.5 percent compared to the second quarter of
2011 (Q2 2011: 19.1%). However, it was clearly beneath the previous year’s margin of 23.3 percent.
€ -83.9 million. The one-off effects due to the future focus on module production in Conergy’s plant in Frankfurt (Oder) of € -14.3 million had a negative impact on the EBITDA. As a result, in the third quarter it amounted to € -28.2 million (Q3 2010: € 7.7 million). At the same time, this change in the module plant led to unscheduled depreciations of € -69.6 million, which reduced the EBIT to € -104.9 million (previous year: € 1.0 million). “The changeover will initially give rise to negative special effects,” according to Conergy’s head of finance, Dr. Sebastian Biedenkopf. “But production costs at the site will be reduced significantly in future.”
Conergy board member Alexander Gorski said: “We see ourselves as being well positioned for
the future with the strategic realignment of our module production in Frankfurt (Oder). Thanks to
the reduced manufacturing range, Conergy is making itself considerably less vulnerable to a
possible additional fall in price. That’s an important condition for the future profitability of the plant
and the group. Also, we will continue to consistently reduce our staff and material expenses in all
areas.”
Q3: Non-recurring proceeds from the creditor's haircut has a positive impact on earnings
Non-recurring proceeds from the capital increase in July and the related the creditor’s haircut of €
67.8 million had a positive impact in terms of group earnings. Group earnings after taxes from
continuing operations amounted to € -62.2 million (previous year: € -4.3 million). Resolute
working capital management provided over the course of the third quarter of 2011 a slightly
positive net cash flow of € 10.2 million.
“Thus far, we’ve seen a very difficult solar year for 2011, which has fallen below expectations,”
according to Conergy board member Gorski. “We’re cautiously optimistic in terms of how the
business will develop in the fourth quarter. However, we still see risks due to the financial crisis in
several European countries. As a result of that, there were delays in the financing of projects
over the past couple of months. However, we’re in a good position, thanks in particular to our
excellent working capital management of the past months.”
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