Bitterfeld-Wolfen, 13 August 2009 - The photovoltaics company Q-Cells SE (QCE; WKN 555866) has presented its half-year report up to 30 June 2009. Following the considerable decline in business performance for Q-Cells SE in the first six months of the current year, the Board of Management is introducing a comprehensive set of measures to fundamentally improve the company’s performance. As already stated, sales in the first half of the year fell from 579.5 million Euro in the previous year period to 366.2 million Euro. A profit in business operations (EBIT) of 119.1 million Euro in the first six months of last year is countered by an operating loss of -47.6 million Euro over the same period in 2009. Influenced by a further write-down in connection with the sale of its share in Renewable Energy Corporation ASA (REC) in May, the period loss incurred for the first half of 2009 was 696.9 million Euro. The production volume has remained almost constant at 272.2 MWp in comparison with the first half of 2008. Q-Cells’ business was harmed by negative pricing trends in the industry and reduced customer volumes. Q-Cells International, a fully consolidated subsidiary of Q-Cells SE, performed generally better and continued to grow rapidly building solar parks. The company achieved an EBIT of 8.0 million Euro during the half-year on sales of 128.0 million Euro and, amongst other projects, is currently erecting Germany’s biggest ever solar park in Strasskirchen in Bavaria with a capacity of around 54 MWp.
“The business performance shows how quickly and dramatically the markets have changed for us. In order to take rapid and comprehensive countermeasures, we have developed Q-Cells Reloaded, a three-tier set of measures with which we will adapt Q-Cells to market conditions which have structurally changed. The aim is to grow profitably at a sustainable rate again in the medium term,” says Anton Milner, CEO of Q-Cells SE. Milner further says: “Of course we feel the pressure on prices that comes from overcapacities and the financing of major projects which remains sluggish because of the financial crisis. We will tackle these and other issues most resolutely in the context of Q-Cells Reloaded.” In addition, operating profit has been affected by long-term contracts with wafer suppliers which have been working to the company’s disadvantage, by manufacturing partly at too high costs by international comparison and also by comparatively high overheads.
“Q-Cells Reloaded” Set of Measures
The set of measures comprises the following:
1. Adjust capacity and lower costs
As a result of the oversupply of silicon wafers, the market price for this preliminary product in the short-term has, since the beginning of the year, been below the price level that Q-Cells agreed with its suppliers in its contracts for 2009. In the first half year alone this resulted in a competitive disadvantage of around 50 million Euro. In 2010 the contracts will be brought into line with the market price so that this disadvantage will largely be eliminated. In addition, the cost structure of the older generation production lines at the Thalheim location lies around 30% above the usually accepted level in international competition. This is mainly the result of substantial scale effects which could be achieved with larger production lines and the technical condition of the old equipment. For this reason the Board of Management has decided to shut down these production lines. Together with the necessary reduction in overheads in all areas, around 500 jobs will be cut permanently. Short-time work will continue to be in operation at the Thalheim plant depending on the market development. Altogether a reduction of production cost of 25% will be achieved with these measures.
2. Strengthening of technology position
Q-Cells is focusing its research in the solar cell sector on projects that are marketable and where success can be expected in the short to medium term. Most recently an efficiency of 18.3% was achieved for monocrystalline cells. “On this basis, we will achieve a 20% efficiency in our R&D lines by the end of 2011”, explains Gerhard Rauter, Member of the Executive Board and responsible for production. Within its technology portfolio Q-Cells will in the future concentrate on the thin-film companies Solibro (CIGS) and Calyxo (CdTe), where it controls these companies. The Executive Board of Q-Cells has requested that Calyxo proves its technological potential in mass production by the end of 2009. The efficiency of Solibro’s best thin layer modules has most recently been 11,7%. Solibro started mass production in 2008 and has since then produced about 9 MWp of thin-film modules. For its other investments, Q-Cells will continue working with partners to further expand these companies.
3. Securing medium-term liquidity reserves
In order to create sufficient room to manoeuvre for the transitory phase until the beginning of 2011, Q-Cells’ in-house financing is to be reinforced. All investment projects, especially those for 2010, will be reviewed again and the capital commitment in projects and stocks reduced. In contrast to the original plan, Q-Cells expects a reduced outlay of up to 300 million Euro. “We are able to reduce the cash requirement by around 200 million Euro through tight working capital management in production and in the project business. We can avoid a further cash outflow of up to 100 million Euro through a reduction in our investment programme,” says Dr. Nedim Cen, CFO of Q-Cells SE.
“After the great successes in the start-up period, for which we also have to thank a unique team, we now face some big challenges. To steer Q-Cells safely through the crisis and give the company a long-term perspective at the Thalheim location, these measures, including a cut in personnel, are unavoidable. We appreciate that this is a very painful step to take. At the same time we are even managing to create new positions in the Research & Development, Sales & Marketing and thin-film companies so that in future we will be able to differentiate ourselves from our competitors even more strongly by having a technological edge”, Milner concludes.
With the change in the photovoltaic markets, new sectors and regions will also open up. In addition to its core business Q-Cells will in future engage more in systems integration by building on the project business of Q-Cells International which is already a well-known player in the market. Milner: “We will be offering our own system know-how to selected markets.”