At a meeting held yesterday, the German company pushed forward additional measures to rapidly and sustainably improve its earnings and financial strength. These include reducing its number of subsidiaries from 26 to 12, and cutting its workforce from 1,350 to under 1,150. Specifically those subsidiaries in China, Taiwan, India, Korea and Singapore will be closed. "In future, local customer support in Asia is to be provided by Meyer Burgers sales and service companies," said Roth & Rau in a statement released last night.
Meanwhile, it added, "To safeguard the companys market presence, the sales and service employees will be taken over by Meyer Burger. By merging their sales activities, the companies can pool their competencies and generate personnel and administration cost savings." This measure will affect the production company in Italy, and the sales companies in Australia and the U.S. "In Germany," continued Roth & Rau, "the complexity of the group structure is to be further reduced by merging companies."
Furthermore, it said that 15 percent of the 420 jobs at its Hohenstein-Ernstthal location in Germany, will be lost. "The Management Board regrets these measures extremely, but views them as indispensable to ensure the companys competitiveness in an ever tougher market climate. Furthermore, material and other non-personnel costs will be reviewed across all production companies to generate further cost savings."
Through the changes, Roth & Rau expects to make annual savings of 18 million from 2013. It will, however, incur one-off restructuring expenses of 3 million (charge on earnings) this year. It added, "Provided that the underlying framework does not deteriorate even further, the measures initiated will create the conditions necessary for significantly lowering the Groups breakeven and for returning to sustainably positive earnings."
In terms of financing, Roth & Rau says that existing guarantee credit lines had to be restructured following the majority takeover by Meyer Burger Technology AG. As such, it terminated the existing syndicate loan agreement worth 75 million and secured bilateral guarantee credit lines worth 42 million from Meyer Burger via German banks.
Furthermore, it said that as of January 10, 2012, Meyer Burger additionally issued a "binding letter of comfort" in favor of the Roth & Rau Group. "This secures the allocation of liquidity by Meyer Burger Technology AG up to a maximum amount of EUR 50 million should the need arise," explained the German company.
Having already been affected by the "drastic" decline in demand for its solar modules and systems, Roth & Rau announced at the start of last November that it had introduced shorter working hours for at least six months and was reviewing its CRiSP cost and structure optimization program.
The financials
Based on its preliminary figures, Roth & Raus consolidated sales dropped from 285 million in 2010, to 208 million in 2011. New orders net of cancellations, meanwhile, amounted to 153 million, a significant drop from the 537 million seen in 2010. Orders on hand also fell, from 336.5 million in 2010, to 141 million last year, and EBIT was negatively affected, having sharply dropped from -27.3 million to -107 million.
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