25 March 2013
• Difficult market environment in 2012
• Substantial cost reduction programmes executed
• Net sales 2012 of CHF 645.2 million and EBITDA of CHF -33.2 million within guidance published respectively in March and November 2012
• Net result of CHF -115.9 million
• High equity ratio of 57.1%
• Strengthening of balance sheet and liquidity through capital increase, which is already fully underwritten by a banking syndicate
Meyer Burger Group reached net sales of CHF 645.2 million in fiscal year 2012 within a very difficult market environment for the solar industry. The Group suffered a loss on EBITDA and net result levels in 2012 due to the sharp decline in net sales. EBITDA amounted to CHF -33.2 million and the net result to CHF -115.9 million. Despite this loss, equity stood at CHF 628.1 million and the equity ratio was 57.1% as of year-end 2012. Meyer Burger's cost base will be reduced by about CHF 50-60 million (on annual basis compared to fiscal year 2012) following the initiated and largely completed cost reduction measures.
Cash and cash equivalents amounted to CHF 134.5 million as of 31 December 2012. The Group entered into a loan agreement secured by mortgage certificates for the partial refinancing of the investment costs of its new technology and production site in Thun, which led to a cash inflow of CHF 30 million during March 2013. In order to further strengthen the balance sheet and liquidity of the Group, the Board of Directors will propose a capital increase for gross proceeds in the amount of CHF 150 million through the issuance of new registered shares that will be offered by means of subscription rights to the existing shareholders. A banking syndicate has undertaken to underwrite all new shares that will be issued in connection with the capital increase subject to customary conditions.
In 2012, an estimated 30GW of new photovoltaic (PV) capacity was installed at private and commercial end users, increasing the total globally to over 100GW (EPIA report February 2013). In the longer term, leading industry associations and organizations such as EPIA assume that global installed PV capacity will rise to between 200 and 350GW by the year 2016. Despite this solid demand for end installed capacity, enormous overcapacity produced by solar cell and solar module manufacturers in past years still remained. These customers were therefore very reluctant to invest in new production equipment.
Meyer Burger Group reached net sales of CHF 645.2 million (previous year CHF 1,315.0 million) in this difficult market environment. This was in line with Meyer Burger's expectations and corresponds to the net sales guidance that was published in March 2012 (CHF 600-800 million). The revenue breakdown by region remained relatively stable compared to the previous year, with an 81% share of net sales being generated in Asia (previous year 80%). Europe accounted for 16% of net sales (previous year 17%) and the remaining 3% came from customers in the USA (previous year 3%).
Meyer Burger launched two comprehensive optimisation and consolidation programmes in March and November 2012 to adapt its sales units, production sites and centres of competence to the current market environment. In addition, the entire organisational structure was simplified. The measures initiated and also largely implemented in 2012 will reduce the company's cost base from 2013 onwards by around CHF 50-60 million per annum (compared to fiscal year 2012).
The Group employed 2,186 people on a full-time basis as of 31 December 2012, representing a decline of 22% compared to year-end 2011. The number of temporary employees was also reduced from 267 positions to 79 as of the end of 2012. Personnel expenses for 2012 were CHF 214.7 million (previous year CHF 194.7 million). The increase compared to the previous year is due to the full consolidation of the Roth & Rau companies for the entire reporting period 2012. In the previous year, Roth & Rau’s operating expenses were only included in Meyer Burger Group's consolidated income statement from 9 August 2011 onwards, since prior to this date the Group’s share in Roth & Rau was less than 30% and the participation was recognized under investments in associated companies.
Other operating expenses declined to CHF 103.8 million (previous year CHF 134.9 million). The decline is mainly due to lower transportation costs as a result of the reduced business volume, lower maintenance expenses, less external services used and the initial positive effects of the cost reduction measures.
In a like-for-like comparison of the two years, the operating expenses declined by 32% compared to fiscal year 2011.
EBITDA for 2012 came to CHF -33.2 million (previous year CHF 278.4 million) and was within the range of the most recent guidance as of November 2012. After depreciation and amortisation, EBIT was CHF -135.4 million (previous year CHF 116.7 million). The net result amounted to CHF -115.9 million (previous year CHF 35.8 million), of which CHF -111.1 million is attributable to the shareholders of Meyer Burger Technology Ltd. The net result represents a loss per share of CHF 2.33 (previous year earnings per share of CHF 0.86 on a diluted basis).
Total assets declined by CHF 276.6 million to CHF 1,100.8 million (31 December 2011 CHF 1,377.4 million). This was primarily due to the changes in inventories (CHF -38.3 million), trade receivables (CHF -42.6 million), intangible assets (CHF -71.2 million) and cash and cash equivalents (CHF -125.7 million). As of 31 December 2012, cash and cash equivalents amounted to CHF 134.5 million.
On the liabilities side of the balance sheet, customer prepayments went down to CHF 62.0 million (previous year CHF 229.4 million). Non-current financial liabilities were CHF 133.0 million (previous year CHF 8.3 million) and reflect the liabilities regarding the straight bond issued in May 2012. Equity as of 31 December 2012 came to CHF 628.1 million (previous year CHF 762.5 million). The equity ratio at year-end 2012 was still at a high level of 57.1% (previous year 55.4%).
Meyer Burger entered into a loan agreement in the amount of CHF 30 million, secured by mortgage certificates, in order to partially refinance the investment costs of the new technology and production site in Thun, which led to a cash inflow of CHF 30 million in March 2013.
Proposal for capital increase
The Board of Directors has decided to propose to the Annual General Meeting, to be held on 25 April 2013, a capital increase for gross proceeds in the amount of CHF 150 million, in order to further strengthen the balance sheet and liquidity of the Group.
A banking syndicate has undertaken to underwrite all new shares that will be issued in connection with the capital increase subject to customary conditions. Assuming the approval of the proposed capital increase by the General Meeting, the new shares will be offered to the existing shareholders through subscription rights. The definite terms of the subscription price, number of shares to be issued and the subscription ratio will be determined immediately prior to the Annual General Meeting and communicated in the morning of 25 April 2013.
The subscription rights shall be tradable on SIX Swiss Exchange from 29 April until 6 May 2013. The exercise period of the subscription rights is expected to be from 29 April until 7 May 2013, 12:00 noon (CET). The first trading day of the new registered shares is expected to be on 8 May 2013. Payment and settlement of the new shares is expected to be on 13 May 2013.
Clear guidance regarding net sales in 2013 is difficult due to the market situation and the conservative recognition of sales applied by Meyer Burger Group (Completed Contract Method). Net revenue from the sale of machinery and systems is usually recognised at the point when a final acceptance test protocol has been signed by the customer at the destination. For this reason, net sales from new orders received during fiscal year 2013 will most likely become effective during the second half of 2013 or at the beginning of 2014. Meyer Burger expects net sales in an amount of about CHF 400 million for the current year 2013, whereby the larger part will be recorded during the second half of the year. Incoming orders and the related customer prepayments will therefore be important for the Group and in terms of cash flow during 2013. Meyer Burger expects a significant increase in incoming orders compared to the previous year 2012 due to the initial signs of a market recovery.
Most of the optimisation and consolidation programmes announced in the past year have already been implemented and the remainder will be completed by mid-2013. These measures already make an impact. The substantial reduction in operating costs also lowers the break-even point, so that break-even on the EBITDA level can be expected on net sales of about CHF 500 million. If and when the solar sector recovers, the additional operating potential is correspondingly high.
Meyer Burger is well positioned with proven systems and new technologies such as Diamond Wire, Heterojunction and SmartWire Connection and commands the broadest and most advanced technology and product portfolio in the photovoltaic industry. The company expects to sign various contracts for integrated production lines including Heterojunction lines during fiscal year 2013, as well as contracts regarding newly developed products such as diamond wire saws in the near future. The planned capital increase strengthens the financial flexibility of Meyer Burger Group and ensures further investments in the Group’s technology leadership and the development of the various markets.