Meyer Burger returns to profit in H1 but orders weaken
Image by Meyer Burger (www.meyerburger.com).
Swiss solar equipment maker Meyer Burger Technology AG (SWX:MBTN) today reported a return to net earnings in the first half of 2018, but said that the difficult market environment has hit incoming orders.
As a result, the company reduced its guidance for full-year net sales to CHF 400 million-440 million, while keeping its EBITDA margin guidance of about 10%. Previously it targeted 2018 net sales of about CHF 450 million-500 million.
Meyer Burger made net earnings of CHF 8.3 million (USD 8.4m/EUR 7.3m) in the first half, against a net loss of CHF 17 million in the first half of 2017. It said the return to net profit came mainly on the back of its cost optimisation programmes and decisions to discontinue non-profitable business units and products.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) more than quadrupled to CHF 29.2 million and the EBITDA margin improved significantly to 12.6% from 3.3% a year ago. Net sales grew 9.4% to CHF 232.3 million.
Incoming orders, however, were weaker than expected, falling to CHF 137.9 million from CHF 308.5 million in the first six months of 2017. The order backlog declined to CHF 240.9 million from CHF 343.8 million at end-December 2017. The company explained that the intensifying US-China trade tensions, which included new import tariffs on photovoltaic (PV) solar modules and cells, and Chian's May 31 announcement to cut solar subsidies "have led to a currently significant reluctance regarding new investments on behalf of Meyer Burger’s PV customers."
Meyer Burger also said that, as planned, it will end all manufacturing activities at its site in Thun, Switzerland by the end of 2018. It has agreed with Mondragon Assembly Group to outsource the manufacturing processes for its SmartWire Connection Technology (SWCT) and has also signed a manufacturing services agreement with Flex (NASDAQ:FLEX) to produce its PV diamond wire saws in Suzhou, China.
Meyer Burger plans additional structural measures in the second half to ensure its long-term profitability. The measures, to be finalised over the coming weeks, will aim to reduce the break-even level at net earnings to net sales of about CHF 300 million.
The company further said that it will evaluate the decision by the Jiangsu High Court to dismiss its patent infringement claims against Wuxi Shangji Automation Co Ltd regarding its Diamond Wire Management System and will determine its next steps.