Q1 2012: Conergy restructuring measures show first success
• Sales at € 98m due to decline in prices, EBITDA losses reduced by 32% to € -8m • Current module production setup increases flexibility, gross profit margin stable at 21% • Net cash flow improved to € 5m from € -57m • Positive development in Q2: 16 megawatts project pipeline in Germany
Hamburg, 15 May 2012 – Hamburg-based Conergy sees first successes in the first quarter 2012 from the strategic realignment as system supplier as well as the restructuring measures implemented in 2011. Quality of earnings and important key financial indicators have improved in the first three months of 2012. Especially the overall decline in prices negatively affected sales year-on-year, as expected. Conergy increased flexibility and kept the gross profit margin stable due to the reduced vertical manufacturing depth and the current module production setup in Frankfurt (Oder). Conergy reduced EBITDA losses by a third through improved cost structures. Net cash flow was positive in the first quarter. This is the best figure in a first quarter since the IPO in 2005.
„We are on the right track," said Conergy CEO Dr. Philip Comberg. "We have reduced costs and increased flexibility with our strategic realignment, which has contributed to the improved earnings. We have continued to keep our inventory lean in the first quarter which resulted in a positive net cash flow. We are certainly just at the beginning of the journey and we are aware that we cannot perpetuate all positive developments linearly. However, we are moving forward and are convinced to bring Conergy as system supplier back on track."
Q1 2012: Domestic and international sales development
In the first quarter 2012, prices were more than 40% lower against the prior-year period. This collapse is therefore reflected in the development of sales. In the first quarter, sales came in at € 98m and were therefore below the same period a year ago (Q1 2011: € 163m). Shipments increased in the German market as well as in the Asian and American growth markets. In Europe, however, volumes decreased, leading to an overall decline of shipments from 80 to 70 megawatts year-on-year.
This is due to negative influences in the other European markets, especially in Greece, Spain and Italy, which are affected by the financial and debt crisis and the reluctant granting of credit. Additionally, bad weather conditions and the ongoing subsidy discussions in Conergy’s second largest solar market Italy, as well as the moratorium by the Spanish government, influenced the development of shipments in the first quarter. In total, shipments in Europe were 17% lower compared to the same period in the previous year; sales in Europe were at € 65m (Q1 2011: €121m). Conergy increased shipments in the Asian and American growth markets by 2% and achieved sales worth € 34m (Q1 2011: € 42m).
In Germany, Conergy took advantage from the temporary boom and increased shipments in its dometic market by more than 50% year-on-year. Conergy could thereby partially compensate the decline in prices and achieved sales of € 29m (Q1 2011: € 34m). Declined sales can mainly be led back to terminating toll manufacturing for third parties at the solar module factory in Frankfurt (Oder). In the first quarter 2011, Conergy was able to generate sales of about € 6m in that business. The proportion of foreign business was over 70%.
Q1 2012: Earning development – Gross profit margin, EBITDA, EBIT, net income Despite the massive decline in prices compared to the first quarter in 2011, Conergy achieved a stable gross profit margin of 21% compared to the same period in the previous year (Q1 2011: 21%). This is mainly due to the reduced vertical manufacturing depth with the current setup of the module production in Frankfurt (Oder). The system supplier was able to significantly improve the gross profit margin, especially compared to the full year 2011, in which the margin was on average at 17% four percentage points lower.
As part of the new corporate strategy, reduced structural costs also contributed positively on earnings. With an EBITDA of € -8m, Conergy has reduced the preceding year’s losses by a third (Q1 2011: € -12m). Earnings before interest and tax (EBIT) were at € -12m (Q1 2011: € -18m), net income from continuing operations was at € -15m (Q1 2011: € -22m).
Q1 2012: First positive net cash flow since IPO, increase by € 62m to € 5m For the first time since the IPO in 2005, Conergy generated a positive net cash flow of € 5m in a first quarter. This equals a substantial improvement by € 62m (Q1 2011: € -57m). This positive development is due to, among others, a continuously strict Working Capital Management.
2012: Outlook and 16 MW project pipeline in Germany in second quarter "Subsidy discussions in Europe as well as the ongoing debt crisis have impacted our sales in the first quarter," Comberg said. "The second quarter has started well, and compared to the start of the year we can see a positive development of shipments and sales. Thanks to the effects from the restructuring measures we are right on track and are cautiously optimistic, that we can achieve the goals we have set."
Conergy has added four new major projects to its pipeline with a total capacity of 16 megawatts in the second quarter in Germany. The system supplier will extend the collaboration with Stadtwerke Trier and will construct two plants with a total capacity of 2.2 megawatts. Two other projects with 10.4 megawatts and 3.3 megawatts are to be constructed jointly with private investors.
In 2012, the Management Board expects sales to be lower year-on-year and the EBITDA to improve to a low positive figure.
Overview financial indicators
Conergy delivers solar energy systems from a single source. As a system supplier, Conergy produces all components for a solar installation and offers all services under one roof.
With its modules, inverters and mounting systems, the solar expert creates Conergy System Technology, which is efficient solar energy systems for private or commercial rooftops, as well as for multi-Megawatt Parks. Conergy System Services deliver a “Worry-Free Package” for Conergy solar installations – from “A“ for architectural planning to “Y“ for yield insurance and “Z“ for zero trouble. Conergy’s experts not only install on-site turn-key solar projects, but they also manage the planning and financing, project implementation, system monitoring, operation and on-going maintenance of the project for maximum performance. With this comprehensive technology and service package, Conergy offers yield insurance for its installations. Conergy System Sales brings Conergy premium products to nearly 40 countries. From “A” for Australia to “T” for Tunisia – the solar expert supports homeowners, installers, wholesalers and investors in their efforts to “go solar”. With sales activities on five continents, Conergy has close relationships with all its customers. In 2010, more than half of Conergy’s sales were generated outside of Germany.
Listed on the Frankfurt stock exchange, Conergy employs more than 1,500 people worldwide. Since Conergy’s founding in 1998, it has produced and sold more than 1.6 GW of clean solar energy. Thus, in 2011 Conergy solar installations have generated almost as much power as a nuclear reactor.
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