Q-CELLS ANNOUNCES RESULTS FOR SECOND QUARTER 2011
Sales revenues in the second quarter increase steeply compared to the previous quarter
Operating loss due to significant one-off effects
Negative EBIT expected for full year despite market recovery in the second half of the year – positive EBIT target for 2012
Package of measures for lowering production and administration costs
Andreas von Zitzewitz - new Executive Board member responsible for Production and Technology
Bitterfeld-Wolfen, Germany, 10 August 2011 – Q-Cells SE was able to increase sales revenues significantly compared to the extremely weak first quarter, but recorded another operating loss in the second quarter due to the continuing price drop and considerable one-off effects. The Company expects a negative EBIT for the full year 2011 despite signs of a recovery in the markets. A package of measures, which includes streamlining the organisational structure and optimising costs, should help the Company return to operating profit in 2012, which is still expected to be a difficult financial year.
Q-Cells SE was able to significantly increase sales revenues in the past quarter compared to the first quarter of 2011. The Company generated sales revenues of €316.0 million in the second quarter (Q1 2011: €125.1 million), mainly on account of strong systems business. Due to the difficult market situation and further price drops in the second quarter however, Q-Cells recorded a negative EBIT. In addition, significant one-off effects had a negative impact on operating income in the second quarter of 2011. Considerable impairment charges were carried out on property, plant and equipment as well as write-downs on inventories to account for changed market conditions. In the second quarter, impairment charges on property, plant and equipment of the German production sites amounted to €139.7 million, and €73.2 million for Group inventories. One-off effects, including expenses in connection with onerous contracts of €43.6 million, came to €256.5 million in the second quarter. The Company recorded a total operating loss of €307.7 million in the second quarter (H1 2011: €-318.3 million), as a result of idle costs due to low capacity utilisation and the price drop for cells as well as modules. Adjusted by one-off effects and idle time costs the operating profit (EBIT) in the second quarter amounted to €-24,4 million. After interest and taxes, the loss for the second quarter of 2011 amounted to €354.8 million (H1 2011: €-395.8 million).
“In the first half of the year, the difficult situation in the European market hit us particularly hard. I expect competition to remain tough in the coming year with no significant changes to demand, but we will be in a much better position to deal with it,” said Nedim Cen, CEO of Q-Cells SE. “I am convinced that the strategy of further developing Q-cells into a photovoltaic solutions provider is the right way to go.”
Package of measures to be implemented
In response to the difficult market situation and negative results in the first half of the year, the board of directors today decided on a package of measures for the further strengthening of the Company’s competitiveness. This program is subject to approval by the supervisory board. At the end of last year, Q-Cells completed a comprehensive restructuring programme, during which the Company focused on its core business, generated significant savings and expanded its module portfolio. After production was cut back in the second quarter of 2011, the now planned package of measures resharpens.
The planned measures aim to significantly reduce the production costs of solar cells and modules. To achieve this, Q-Cells is focusing production on high-performance systems, particularly at the Company’s Malaysian site, which will run at full capacity in the second half of the year. Production capacities for solar cells at the Company headquarters in Bitterfeld-Wolfen will be permanently reduced to 50 %. The module production line for crystalline Q.PEAK high-performance modules is currently being ramped up in Bitterfeld-Wolfen. With immediate effect, Q.SMART thin-film modules with CIGS technology are being produced at full capacity again on the blueprint production line at the subsidiary Solibro. The Company is aiming for total production capacities between 1.0 to 1.2 gigawatt in 2012.
Research and development is being expanded to include the full spectrum from solar cells to solar systems and applications to become even quicker at developing marketable products with competitive system costs. System solutions such as flat roofs, car ports and system kits are to be used in particular in the business segments Residential and Commercial & Industrial, which Q-Cells aims to expand significantly. Sales activities will also focus even more strongly on customer groups and international target markets and sales structures will be simplified.
The overall objective of the package of measures is to reduce complexity. In addition, Q-Cells is constantly working on reducing costs for production as well as for the procurement of raw materials and solar wafers. In Administration, 25 % to 30 % of costs are to be saved by pooling tasks and streamlining the organisational structure and processes. The Company aims to avoid enforced redundancies when streamlining the organisational structure and adjusting production. Temporary workers are no longer being employed since adjusting production in April. Around 90 employees are currently changing over to the new solar module production that was started up in July.