The highlight of Meyer Burger's H1/2019 financial report was about a new business model and a potential GW-sales order. If an MoU with REC Solar will be enacted, it would bring Meyer Burger two sources of revenue generation, one by selling production equipment traditionally and another based on profit sharing from module sales from a new multi GW HJT fab order from REC, which it calls a 'disruptive' business model in the PV production equipment segment. Meyer Burger had already signed a strategic partnership with next generation cell technology start-up Oxford PV earlier this year. (Source: Meyer Burger Technology Ltd)
- As per a MoU signed with REC Solar, Meyer Burger will supply GW level HJT and SWCT technology with adequate exclusivity in return for which it will get profit sharing on a per-watt basis for each module sold
- Meyer Burger has dropped plans to shift part of production to China and will instead focus on its German location
- Management confirmed weak demand for PV in H1/2019 pulled down its net sales by 47%; EBITDA was a negative CHF -13.2 million
Preliminary 2019 Results Show Incoming Orders For Meyer Burger Declined By 32% As Net Sales Experienced Organic Decline Of 27%
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A ‘disruptive’ new revenue generating model in the field of solar PV has just been heralded by Switzerland’s Meyer Burger which would guarantee it royalties on every watt of a module sold by its strategic partner REC Solar produced using Swiss manufacturer’s heterojunction (HJT) module production equipment. A memorandum of understanding (MoU) between Meyer Burger and REC ‘for extended collaboration and profit sharing’ was signed on Aug. 14, 2019.
REC Solar was the non-Chinese solar company that had placed a 600 MW HJT and SmartWire Connection Technology (SWCT) production equipment order with Meyer Burger in December 2018 (see 600 MW HJT & SWCT Order For Meyer Burger). The production lines are currently being ramped up, whereas the ‘ramp-up of the first 200 MW was completed within 9 months – a new record for Meyer Burger’s HJT/SWCT technologies,’ said Meyer Burger.
As per announcement by Meyer Burger in its H1/2019 report, the Singapore based vertically integrated module manufacturer plans to increase its HJT/SWCT production capacity for its new HJT Alpha module from 600 MW to a ‘multi-GW’ level using Meyer Burger equipment. The order is expected in late H2/2019.
If this happens as planned, Meyer Burger will offer REC ‘adequate exclusivity’ protection for its technology and in return will get a share on REC’s module sales profits on a per-watt level. This is something that has been agreed upon in principle but would need to be approved by their respective boards. No details were shared about the MoU, that, if enacted, would offer Meyer Burger a second and regular second income on top of the common income from equipment sales.
“This new business model is expected to allow Meyer Burger to both benefit from the commercial value of its disruptive high-efficiency technology as well as protect its intellectual property in the coming years, thereby reducing the risk of commoditization which Meyer Burger has experienced in its main markets in the past,” stated the management.
Meyer Burger announced in its H1 report, that it was able to produce a best HJT cell at 24.75% from a batch with median 24.4% cell efficiency and a 21.7% commercial module efficiency, over 1% point better than any other available HJT and PERC module.
No production move to China
While the MoU with REC Solar promises a sunny future for Meyer Burger, the Swiss solar company experienced a not so sunny H1/2019. “The business development was disappointing due to fierce competition in PERC technologies,” said Meyer Burger.
Meyer Burger’s big issue has been that ‘Chinese customers focus on lowest CAPEX and local suppliers, which ‘succeeded step-by-step in taking over business from Western suppliers for standard PV equipment.’ Meyer Burger said that, ‘after PERC, the commoditization effect is now also seen in wafer inspection systems where local Chinese suppliers offer “good enough” solutions at low prices.’ All that meant a ‘sharp decline of product contribution within 12 months – a 70% volume effect and 30% margin compression.’ Meyer Burger’s conclusion: the ‘projected available profit pool for standard PV equipment is no longer attractive.’
The company shared its change of plans regarding its earlier announced shift to China for some of its production. Due to weak demand and big price drops for equipment for standard cell technologies, Meyer Burger said, it has decided to concentrate its future PV business activities at its largest location in Hohenstein-Ernstthal (Germany), where it produces its deposition equipment.
As already shared in July 2019 in its preliminary results, weak demand in the PV sector, especially from China during the first half of 2019, reduced incoming orders for the company by close to 32% YoY to CHF 94 million ($96 million). On June 30, 2019, its orders on hand were CHF 166 million ($169 million); its book to bill ratio was 0.77 for the reporting period, compared to 0.59 in H1/2018.
Net sales dropped over 47% annually to CHF 122.6 million ($125 million), EBITDA was a negative of CHF -13.2 million ($13.46 million) vis-à-vis CHF 29.2 million ($30 million) a year back. EBIT was down to CHF-21.1 million ($21.5 million) whereas in H1/2018 it was positive at CHF 14.9 million ($15.19 million) (see Meyer Burger: Profitable & More Restructuring). However, Meyer Burger was able to announce a CHF 2 million net result, after CHF -51 million in the previous quarter and its first positive net result of CHF 8 million in H1/2018; but that was due to the sale of the wafering business.
Meyer Burger did not provide any financial guidance for its H2 or full year 2019 results.