MEMC predicts challenging 2012, as it announces flat financials

16. February 2012 | Industry & Suppliers, Markets & Trends | By:  Becky Stuart

MEMC Electronic Materials Inc. says both its fourth quarter (Q4) and full year (FY) financials reflect the "challenging" market environment it encountered in 2011. While the company believes it is well positioned for the future following its production and staff cutbacks, it forecasts another difficult year.

Forced to introduce significant cutbacks at the end of 2011 in order to cope with the market conditions, MEMC has endured a rough 12 months, with setbacks seen in both the semiconductor and solar markets. Specifically, the wafer and silicon manufacturer says revenue for its solar materials business segment has declined "sharply" both sequentially and year-on-year. The reason cited was "significantly weaker" wafer pricing and volumes. These challenges are expected to remain this year.

MEMC CEO, Ahmad Chatila, commented, "Although solar interconnections roughly doubled in 2011 and we expect strong growth in 2012, uncertainty regarding feed-in tariffs and credit markets in Europe will remain challenging in 2012."

In light of this, MEMC has said it will not issue specific revenue and earnings guidance for 2012. It did predict, however, that it will connect solar systems worth less than 100 MW in Q1. "Approximately 50 MW will be recognized for non-GAAP revenue," said the company. It adds that it expects the average price of solar systems to be $4.25 per watt.

The financials

Of MEMC's overall GAAP revenues earned in Q4 – US$717.8 million – the solar materials segment reaped $108.6 million, a 46 percent decrease from Q3 2011 and a 61 percent decrease from Q4 2010. Going forward, MEMC says that "solar wafer sales to external parties are expected to decline to minimal levels due to the company's strategic shift to primarily supplying wafers for internal consumption by SunEdison, as well as the previously announced global restructuring, including the expected closure of the polysilicon manufacturing facility in Merano, Italy and the capacity reductions in the Portland, Oregon and Kuching, Malaysia facilities."

In addition to revenue decreases, the segment also recorded a huge operating loss of $729 million, compared to a loss of $65.3 million in Q3 2011, and an operating profit of $38.1 million in Q4 2010.

As of January 1, 2012, the solar materials segment was combined with SunEdison.

SunEdison performed relatively well in comparison. Q4 GAAP revenue was said to be $381.3 million, compared to $48.4 million in Q3 2011, and $307.6 million in Q4 2010. The increase was attributed to the sale of several large solar projects. Q4 2011 non-GAAP revenue, meanwhile, was $435.6 million, up from $391.2 million in Q3 2011 and $407.0 million in Q4 2010. 

Despite this, SunEdison recorded a Q4 2011 GAAP operating loss of $433.7 million, compared to a loss of $29.6 million in Q3 2011, and $5.9 million in Q4 2010. Furthermore, its adjusted non-GAAP operating income for Q4 2011 was $13.2 million, compared to adjusted non-GAAP operating income of $36.4 million in Q3 2011 third quarter and $61.6 million in Q4 2010. 

The company ended Q4 2011 with a pipeline of three gigawatts. As of December 31, 2011, it says that 255 megawatts were under construction. 

Chatila ended on a positive note, "Our operations and pipeline in the most promising, stable markets, and our brand recognition position us for long-term growth in solar. Through productivity and restructuring efforts, we will be positioned for both semiconductor, and eventually solar, market upturns."


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