Berlin-based SOLON SE presented its figures for the period ended September 30, 2011. Performance in the major solar markets continued to be very disparate in the third quarter of 2011. The market in Italy picked up again robustly after the new Italian feed-in tariff law (Conto Energia IV) was implemented.
By late August, numerous large power plant projects were concluded for the purpose of still being able to benefit from the previous, significantly higher compensation rates. The US solar market, which continues to be dominated by the solar activities of local electric utilities, also showed positive performance and is expected to double once again this year. In contrast, the German market continued to fall short of the expectations for the industry. Demand did pick up in the third quarter; however, the anticipated year-end rally has so far not materialized. In the presence of overcapacity in the market, this resulted in a further significant decline in module prices.
In this persistently difficult market environment, SOLON’s Group revenue declined by 11% to €358.2 million in the first nine months of 2011 (prior-year period: €402.9 million). Sales for the third quarter of 2011 amounted to €136.4 million (Q3 2010: €160.56 million). Some 83% of Group revenues in the first nine months were generated outside of Germany, and 61% come from the power plant business. SOLON sold photovoltaic systems with a total operating performance of 179 MW between January and September 2011 (prior-year period: 194 MW). As of September 30, 2011, SOLON had a total of 798 employees at various locations in Europe and the USA.
In the third quarter of 2011, SOLON generated a positive cash flow from operating activities of €21.4 million, primarily in response to the lower working capital. The operating cash flow for the first nine months improved to a net cash outflow of €5.7 million. For 2011, SOLON expects to achieve a positive cash flow from operating activities.
The EBIT loss amounted to €113.8 million in the period under review (prior-period: EBIT loss of €5.5 million). In addition to the unsatisfactory business performance and the persisting price decline in the market, the operating result was impacted by mostly non-cash one-time effects of €103 million. These resulted for the most part from impairment losses recognized for projects, inventories and prepayments, but also from expenses in connection with the implementation of the restructuring program, including the cessation of production in the USA. Adjusted for these one-time effects, the EBIT loss for the first nine months of 2011 amounted to €11 million.
The net loss for the period was €208.3 million (prior-year period: net loss of €17.5 million) and includes additional non-cash one-time effects of €80 million due to impairments in the investment portfolio as well as expenses related to the financial restructuring. Adjusted for all one-time effects, SOLON reported a net loss after tax for the period under review of €25 million.
Compared to the prior quarter, the Company's net debt decreased slightly by €6.4 million to €396.0 million (June 30, 2011: € 402.4 million). The sale of projects and the write-downs of inventories reduced inventory levels to €96.0 million (June 30, 2011: €142.0 million). Receivables due as of September 30, 2011 decreased to €110.3 million (June 30, 2011: €131.3 million). As a result, working capital declined by €54.3 to €130.0 million compared to the previous quarter (June 30, 2011: €184.3 million), reflecting a ratio of working capital to revenue of 23% for the last 12 months.
Due to the net loss for the period under review of €208.3 million, SOLON's consolidated interim financial statements based on IFRS for the period ended September 30, 2011 show negative shareholders' equity of €103.1 million. This also reflects the negative income contributions (in accordance with IFRS) of subsidiaries. In contrast, the shareholders' equity of the parent SOLON SE as based on the German Commercial Code (HGB) showed a positive figure of €31.1 million as of the reporting date.
In addition to the reduction of net debt, the planned financial restructuring of the Company also provides for strengthening the equity base. The SOLON Management Board plans to press ahead with the successful implementation of this process in the fourth quarter of 2011 and conclude it by the end of April 2012.
The complete interim report of SOLON SE for the period ended September 30, 2011, is available for download from the company’s website (www.solon.com).
