Equipment suppliers hit hard11. November 2011 | Markets & Trends, Global PV markets | By: Jonathan Gifford
Suspensions or cancellations in photovoltaic manufacturing capacity expansions or new plant builds are hitting equipment suppliers hard, in a new analysis from Solarbuzz.
In its PV Equipment Quarterly report, the industry analysts have observed that Book-to-Bill ratios, for photovoltaic equipment suppliers, have hit an all-time low of 0.44 percent. Solarbuzz said, "This signals an end point to the most recent photovoltaic equipment spending cycle".
The Book-to-Bill ratio indicates demand, in the form of new-order-intake figures, against income from recognized shipment revenues. The 0.44 percent readings indicate only that only USD$44 million in new bookings are being received for every USD100 million in revenue from shipped orders.
While particularly low, the figures are partly attributable to strong tool shipments in the second quarter of 2011. However, the trend identified by Solarbuzz is of declining demand trending towards a spending downturn through 2012.
Senior Analyst at Solarbuzz Finlay Colville says that while equipment suppliers in the past have weathered storms in the past, some will not survive. "This industry downturn is so severe and the excess capacity so large that it will embrace not just a period of low capacity utilization, but also corporate failures that will be necessary to take capacity out of the system."
In an observed nuance, Solarbuzz reports that polysilicon tool suppliers may buck the trend. Citing, "high barriers to entry, long plant build outs, and finite periods between tool shipment and revenue recognition", the company observed that polysilicon equipment spending is different from ingot/wafer and cell/module spending. Polysilicon equipment suppliers’ Book-to-Bill ratio is forecast to remain about parity for the remainder of the year and in 2012.
On a company level, Manz revised down its earnings forecasts for 2011 on the back of weak solar equipment demand. The company reported that while other new business segments have been exceeding earning projections, the solar business is in danger of dragging the company into the red for 2011.
Manz founder and CEO Dieter Manz told pv magazine that he remains confident in the company’s solar business: "We are convinced about our technology, we are in a downturn for solar, but this downturn will end."
centrotherm also reported last month that while it hopes to achieve a "slightly" positive EBIT margin for 2011, EBIT margins have halved since last year to just four percent.
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