SolarWorld Q1/2016

Germany's SolarWorld has provided good sales and shipment numbers in its preliminary business results for the first quarter 2016. With group wide shipments up 62% and touching 341 MW in Q1/2016, from 210 MW during the same period in 2015, it increased consolidated revenue by 42.5% to € 212.6 million, from 149.1 million in Q1/2015.

Lower earnings

On the earnings front it did not look so positive. While SolarWorld said that due to 'improvement in operating performance,' it was able to keep the earnings before interest, taxes, depreciation and amortization (EBITDA) 'almost' stable at € 2.1 million, it actually fell 28% from € 2.9 million in Q1/2015. Earnings before interest and taxes (EBIT) went down further by 13.7% to minus €9.7, from minus €8 million in Q1/2015.

Blame it on the currency

SolarWorld blamed currency losses for the bad earnings numbers. It underlined that if EBITDA was adjusted by currency results that were €13.3 million below previous year's quarter, it would have improved to €6.9 million in Q1/2016, from the minus €5.6 million in Q1/2015. And regarding EBIT, it emphasized that without taking the currency result into account, EBIT would be only minus €4.9 million, compared to minus €16.6 million in Q1/2015. SolarWorld says it had liquid funds of € 182.7 million, down from € 188.6 million, 'after it had made repayments of loans and interest payments in a total amount of € 13.7 million in Q1 2016.'

Shipment growth in protected markets

The strongest growth in shipments came from the US, Germany and some European markets. These are all markets where SolarWorld's products are somewhat protected by import taxes or minimum import prices for Chinese modules. In the US and Germany, SolarWorld operates its wafer, cell and module factories.  SolarWorld also emphasized it won large scale projects in Sri Lanka, France and the US, but it didn't share the capacity or any further details in the press announcement.

Large order book

In the second quarter, SolarWorld has already reached an order backlog of more than 540 MW. It pointed out, "Together with shipments in Q1 (341 MW), SolarWorld had thus more than 880 MW on its books in early April."

Good business outlook

For the whole year, the company has reiterated its forecast to grow 'up to' €1 billion in revenue (2015: € 763 million) with a positive EBIT in the lower double-digit million range. Group wide shipments are expected to increase by over 20% over 1,159 MW it achieved in 2015.

As there is likely no negative news to be expected in the trade cases both in the US and Europe for SolarWorld this year, probably the only thing that could dramatically spoil the solar company's party is if US silicon producer Hemlock succeeds in its efforts at court to enforce payments from the SolarWorld Group for a long-term take-or-pay silicon supply contract of around $770 million. However, SolarWorld said in its 2015 Annual Report under 'Legal Risks' that it 'continues to assess the probability for Hemlock to actually enforce any claims against SolarWorld as low.'