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SOLON presents figures for the first half of 2009
- Consolidated revenue of €119.4 million
- Earnings before interest and tax (EBIT) falls to minus €52.6 million
- Adjusted net profit shrinks to minus €45.2 million (excluding one-off items from the write-down of investments)
- Strong operating cash flow in the second quarter (€29.3 million)
Berlin-based SOLON SE (ISIN DE0007471195) today published its interim report for the period ended June 30, 2009. The first six months of the year were characterized by the noticeably lower demand for solar technology in comparison with the previous year and a sharp drop in selling prices. While demand for solar modules picked up noticeably in the second quarter, the market for solar power station technology continued to suffer from the greatly reduced availability of finance for large-scale projects, a consequence of the financial crisis.
The continuing market difficulties are reflected in the figures reported by SOLON SE: consolidated revenue at €119.4 million was down 71 percent on the previous year (H1 2008: €410.6 million). Gross operating revenue in the first six months of the year fell by 69 percent to €136.6 million (H1 2008: €446.9 million). In the first half of 2009, the Company's total output was 39 megawatts, of which 21 megawatts were produced in the second quarter. The share of consolidated revenue generated by the Components segment rose to 67 percent in the reporting period, while the share yielded by Systems Technology fell to 33 percent. The share of consolidated revenue generated outside Germany amounted to 48 percent.
Earnings before interest, tax, depreciation and amortization (EBITDA) fell to minus €42.7 million (H1 2008: €37.0 million). Earnings before interest and tax (EBIT) dropped to minus €52.6 million (H1 2008: €31.5 million). Both results include one-off items amounting to minus €30.3 million resulting from the sharp downturn in sale prices in the first half of the year. These losses derive from the write-down of inventories as well as the sale of old stock below manufacturing costs.
Net financial income came to minus €74.2 million in the reporting period (H1 2008: minus €4.3 million). This includes one-off losses totaling €64.9 million from the write-down of investments. These losses partly relate to charges arising from the insolvency of Silicium de Provence S.A.S, and partly to a revaluation of the indirectly held investment in Austrian Blue Chip Energy GmbH entailing a write down of around €12 million.
Net profit excluding minority interest amounted to minus €110.1 million (H1 2008: €17.9 million). Not including one-off items from the write-down of investments, adjusted net profit excluding minority interest came to minus €45.2 million. Adjusted earnings per share was minus €3.61 (H1 2008: €1.43).
The continuing decline in receivables from the Spanish and Italian business along with a drop in inventories led to a fall in working capital compared with the first quarter of 2009 as well as a strong increase in operating cash flow. The latter improved to minus €10.3 million for the period to June 30, 2009 (H1 2008: minus €27.4 million). In the second quarter, there was a positive operating cash flow of €29.3 million (H1 2008: €18.0 million).
Net debt was reduced slightly in the second quarter despite the countering effect of investment activities totaling around €11 million. An agreement was reached with the banks providing credit regarding the current financing arrangements. Talks are currently in progress to secure the medium-financing of the Group. This will enable the Group to streamline and drive forward its business activities in an economic environment that remains challenging.
As a response to poor growth figures since the beginning of 2009, SOLON launched an extensive restructuring program with the support of external consultants in the second quarter of the year. The program encompasses a wide range of strategic measures as well as measures to improve the Company cost structure, including the focusing of manufacturing and sales activities on the core markets of Germany, Italy and the USA, various personnel measures (cutbacks in contract and temporary employees, introduction of reduced working hours at several sites across the group, waiver of variable salary components by the management team and large sections of the workforce) and the review into a potential spin-off of the Austrian production company SOLON Hilber Technologie GmbH. The aim of these measures is to generate cost savings of around €15 million, which will first become effective in 2010, and to make the Company more competitive in a sustained period of tough market conditions. In the first six months of 2009, other operating expenses were reduced by around 22 percent on the same period of the previous year (excluding foreign currency charges and restructuring costs).
The Company anticipates a continued upturn in business over the course of the year. SOLON's component sales are benefiting from the strong revival in demand for solar modules for private and large-scale commercial rooftop installations, particularly in Germany, where revenue from the segment rose dramatically in the second quarter of 2009. The solar power plant business, however, continues to suffer from the reduced availability of credit required to finance large-scale solar projects. Nevertheless, demand is gradually picking up here as well. SOLON has recently announced a number of contracts with new clients. Deals with the Californian energy provider PG&E and the Norwegian company Statkraft have also given SOLON a foothold in an up-and-coming segment of increasing importance in the international market. Due to the long lead times of large-scale projects, however, these new contracts will only begin to yield significant revenue from 2010.
Given the ongoing economic difficulties, the Management Board once again deems it appropriate not to publish an up-to-date forecast of revenue and profit expectations for 2009 as a whole.
SOLON SE's full interim report for the period ended June 30, 2009 can be downloaded from the Company's website (www.solon.com).
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