When comparing Phoenix Solar AG’s Q1/2016 revenue with the quarter of the same period in 2015, growth has been impressive. Year-on-year revenues almost doubled. But in comparison to the last three quarters of 2015, turnover was much lower – ranging between a bit over a third and less than a fourth. Gross profit and earnings were even worse than in the previous four quarters – and pale in particular in comparison to Q4/2015, when the company was able to be in the black.

CEO Tim Ryan emphasized, “Our target for the full year remains an increase in revenues of more than 50 percent.” Adding, “Clearly we must continue to accelerate sales.”

Sales doubled – but only year-on-year

Phoenix’s revenues increased by 102% to €9.9 million in Q1/2016, from €4.9 million in the first quarter of last year. But when looking in particular at Q3 and Q4/2015, it dramatically fell from €42.4 million and €37.2 million, respectively.

This, says the German company, was primarily because of a boost from the US Investment Tax Credit (ITC) in its largest market, which was extended only in December 2015. “Up until that point, developers and project owners made a tremendous push to realize as much revenue as possible in 2015 and then again in 2016,” said Ryan, continuing, “With the ITC extension for another several years, some of this pressure has been taken off the market, and we are feeling the effects.”

Gross profit margin down

But Phoenix experienced a gross profit margin decline to 6.8% in the reporting quarter, down from 18% in Q1/2015. The management explained, “In the previous year’s quarter, the utilization of a warranty provision and the reversal of contingencies reduced the cost of materials, thereby generating an extraordinarily high level of gross profit. In the first quarter of 2016, by contrast, the cost of materials was burdened additionally by subsequent one-off project costs.” The quarterly result attributable to shareholders amounted to minus €3.7 million compared to minus €3.4 million in Q1/2015, which means losses per share of minus €0.50 (Q1/2015: minus €0.46).


Financing extended

Despite this, the group’s negative EBIT slightly improved to €-2.5 million in Q1/2016 as against €-2.6 million in the same quarter the year before, while the negative EBIT margin changed to -24.9% compared to -52.5%. At the same time, the Group generated positive cash flow of €2.9 million versus negative €2.4 million in Q1/2015, which was mainly due to a reduction in current receivables of €5.0 million and an increase in financial liabilities of €2.0 million.

In March, the company also got financing extended by its banks until September 30, 2018. It now has a €101 million financing facility, including a syndicated loan of €85.4 million and other bilateral cash and bill guarantee lines.

Power plant business soared

Power plants added €8.8 million, accounting for 88.9% of total revenue, while the components and systems segment contributed €1.1 million or 11.1% of the total revenue. While power plants increased their share in the group revenue from 50.7% last year in the same period, components and systems dropped big time from 49.3% in Q1/2015.

USA – the biggest market

The US contributed the main part to Group revenue at €7 million, up from €1.1 million in Q1/2015. Asia-Pacific generated €1.9 million, up from €1.6 million. While the Middle East generated €1 million, there was no revenue reported in this region a year earlier, it only started in Q4/2015. “We are optimistic for the Middle East Region, which now has taken off after several years of uncertainty. We have a strong and developing pipeline in two core markets there, Turkey and Jordan,” said Ryan. Next to its core market, the US, Asia-Pacific remains “central to our strategy,” he added.

Free order book position

The company seems confident of its growth in the next quarter as some of its newly acquired projects are ‘just entering their ramp-up phase, with accelerated revenue growth to be realized beginning in the second quarter’. As of March 31, 2016, its free order book amounted to €189.4 million, over 44% higher than the €131.2 million as of March 31, 2015. During Q1/2016, Phoenix signed €2 million worth of new orders. It pointed out that its free order book position as of March 31, 2016 includes one order for which construction permit has been pending.

Guidance confirmed

“After the end of the first quarter 2016, thecontinued high level of market growth did not necessitate a revision of the 2016 forecast,” Phoenix Solar said. For the full year, the management reiterated that it expects to achieve revenues between €180 to €210 million with EBIT in the range of €2 to €4 million.