Meyer Burger: Profitable & More Restructuring

As Meyer Burger Confirms Return To Profitability, It Announces Further Structural Measures To Safeguard Long-Term Profitability
10:06 AM (Beijing Time) - 20. August 2018
Meyer Burger 2018H1 finacials

After a long period of losses, Meyer Burger was able to achieve profitability in the first half of 2018, following cost efficiency measures and discontinuation of non-profitable businesses. But incoming orders were negatively affected by market uncertainties influenced by USA-China trade conflict and 5/31 announcement of Chinese government. (Source: Meyer Burger Technology Ltd.)

Key Takeaways

  • Meyer Burger has confirmed preliminary H1/2018 results with return to profitability after 7 years
  • More restructuring measures are on the anvil as the company aims to reduce break-even level at net earnings to a net sales volume of below CHF 300 million ($302 million)
  • On technology front, the company was able to achieve new heterojunction 72 cell module performance record at 410-watt, on its HELiA platform for CEA INES and introduced several new products in H1
  • 2018 net sales guidance has been reduced to CHF 400 million to CHF 440 million ($402.6 million to $443 million) due to Chinese government policy changes impacting investor sentiment
  • EBITDA margin guidance of about 10% has been retained

In its H1/2018 results, Swiss PV porduction equipment company Meyer Burger Technology Ltd., has confirmed its preliminary announcements: After 7 years, the market leader for PECVD production equipment for PERC cells and next gen heterojunction cell/module production technology has returned to profitability. Sales and EBITDA were better on a year-on-year basis as well.

With incoming orders negatively affected by the market uncertainties influenced by the USA-China trade conflict and the Chinese government’s 5/31 solar subsidy cuts announcement, Meyer Burger said it will be undertaking more restructuring measures, without divulging any details.

Return to profitability confirmed

The management confirmed the preliminary financial results with net sales growing by over 9% in H1/2018 YoY (see Meyer Burger Returns To Profitability). EBITDA jumped up to CHF 29.2 million ($29.39 million) and it garnered the first net profit since 2011, reaching CHF 8.3 million ($8.35 million). Meyer Burger also reported the first positive EBIT since 2012, the EBIT margin reached 6.4%

But the trade conflict between the US and China and the May 2018 announcement by Chinese government negatively affected the business environment leading to uncertainties. This led to a slowdown in incoming orders for Meyer Burger that amounted to CHF 138 million ($139 million) during the first half of 2018, compared to CHF 253 million ($254.6 million) in H1/2017.

Further restructuring

Despite the ‘China effect’ Meyer Burger wants to ‘safeguard long-term profitability’ – that’s why it has announced further structural measures. It aims to reduce break-even level at net earnings to a net sales volume of below CHF 300 million ($302 million). It wants to further increase customer proximity, optimize its global production footprint and increase robustness against market volatilities.

The management said it will share more details about the upcoming structural measures to safeguard long-term profitability on October 16, 2018.

However, these measures will follow the ongoing restructuring process Meyer Burger announced in November 2017, which are on track, according to the company. Meyer Burger contracted Spain’s Mondragon Assembly for its SWCT equipment manufacturing (see Meyer Burger Outsources SWCT Production). The company sold its solar systems business to 3S Solar Plus AG under the leadership of its former executive (see Meyer Burger Transfers Solar Systems Business). And it has entered a manufacturing services agreement with Flex to produce its diamond wire saws in Suzhou, China from January 2019. With this, Meyer Burger will discontinue production at Thun, Switzerland facility as planned by the end of 2018 (see Meyer Burger To Close Down Thun Production).

Technology updates – many new products, new HJT record modules

In collaboration with French research institution CEA INES, Meyer Burger has been able to achieve a new heterojunction 72 cell module performance record at 410 W on its HELiA platform. This module was also designed using bifacial technology, reaching 480 W and presented at Intersolar Europe” (see 480 W HJT Module from Meyer Burger).

Meyer Burger presented several new products it introduced during the SNEC 2018 show in Shanghai in May – a new Diamond Wire Saw with increased throughput and 20% reduced production costs per wafer, new cell coating tools with throughputs over 6,000 wafers/hour, and a wafer inspection system with up to 8,300 wafers per hour throughput.

During its H1/2018 presentation, Meyer Burger pointed to several new products it introduced during the SNEC 2018 show in Shanghai in May (photo credit: Meyer Burger).
During its H1/2018 presentation, Meyer Burger pointed to several new products it introduced during the SNEC 2018 show in Shanghai in May (photo credit: Meyer Burger).

It also highlighted recent sales of its proprietary cell connection system SWCT to produce ‘multi-busbar’ module technology, which it sold in H1/2018 to REC for processing its new n-type cells, Panasonic for its heterojunction cells, and an undisclosed Asian customer.

Outlook

The Chinese government’s decision to cut subsidies for local project development caught Meyer Burger by surprise, like everyone else in the solar sector. This impacted the order intake for H1/2018, and as a result, the management has reduced its 2018 net sales guidance to CHF 400 million to CHF 440 million ($402.6 million to $443 million), while it maintained the EBITDA margin guidance of about 10%.

Meyer Burger believes the China 5/31 announcement will only have short term implications on a global level. It pointed to data from several analysts that expect global demand to grow strongly as of 2019 again. According to SolarPower Europe’s medium scenario over 630 GW will be installed until 2022. Moreover, the global solar dependence on China is expected to lessen – with over 2/3 of solar installations to be installed outside China as of 2019, compared to 47% in 2017.

“The long-term positive growth scenario for the PV industry remains intact and further substantial expansion to the end-installed PV capacity is expected for years to come. The positive trend towards high efficiency in cells and modules will also continue and provide good opportunities for Meyer Burger’s SWCT and HJT technologies,” noted the management.

 

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani