Phoenix Solar to focus on rooftop PV after significant Q1 losses


The German company cited lowered demand, due to bad winter weather and changes to feed-in tariffs in key European markets such as Germany, France and Italy as the reasons for its poor performance.

In response, analysts at Jefferies and Company Inc. have said that the company needs to better position itself in the photovoltaics rooftop segment. "Recent legislative changes clearly promote the advancement of small scale roof top systems," they state. "Phoenix is widely respected for its expertise in large scale systems. We believe the company will work hard in the coming months to transition into stronger into the rooftop segment."

They continue: "Checks indicate management has already been very active in bolstering its German staff with specialists from the rooftop arena. In Italy, Phoenix already has a number of rooftop projects under its belt and should be able to take advantage of the Fourth Conto Energia, which favors rooftop arrays."

Financial breakdown

Phoenix Solar’s components and systems segment generated over half of the company’s revenues, having achieved sales worth €17 million. Its power plants segment, on the other hand, contributed €15.4 million, or 47.5 percent, to total revenues.

Meanwhile, 71.9 percent, or €23.3 million, was generated in markets outside of Germany. The company explains that the greatest contributions came from its components and systems business in France, and the power plants business in Italy and Greece.

In terms of photovoltaic modules, the volume sold stood at 18 megawatts (MW) compared with 37 MW in the year-earlier quarter.

EBIT also decreased from €4.6 million to €-16.9 million. Phoenix Solar says the result was burdened by inventory depreciation of €6.1 million, start-up costs of around €1 million for entry into the U.S. market and an increase in fixed costs as against the previous year's quarter.

As a result, EBIT margin came to -52.2 percent as opposed to the 5.7 percent seen in the first quarter of last year. Meanwhile, consolidated result after tax stood at €-12.9 million, compared to €2.8 million last year.

Phoenix Solar’s order book also took a hit, having decreased from €375 million as per March 31, 2010 to €178 million this year. However, this figure does represent an increase of around €20 million from the fourth quarter of 2010.

"The reason for the high level of orders in a quarterly comparison lies in the ‘pull-in' buying effects prevailing in Germany at this time," explained the company in a statement.

This time, the company’s power plant segment pulled in the lion’s share of the orders, having achieved €136 million (March 31, 2010: €148 million). Having reduced significantly, orders in the components and systems segment came to a meagre €42 million as opposed to 227 million as of March 31, 2010.

On a more positive note, Phoenix Solar adds that during the quarter, there was a sharp increase in non-domestic orders to €95 million, up from €54 million in the first quarter of 2010. Adjusted for power plant projects already under construction, orders on hand stood at €52 million on March 31, 2011.

In terms of the second quarter, the company says that the market situation improved only slightly. "Demand in Germany and Italy was also very modest in April," continued the statement.

It added: "Following surging growth in the global photovoltaic market in 2010, Phoenix Solar anticipates that there will be temporary stagnation at a high level (18 to 20 gigawatt) throughout 2011 as a whole.

In the medium and long-term, however, the sector’s outlook remains positive, and the Executive Board anticipates growth in the global market as early as 2012 onwards. Beginning in 2012, the whole photovoltaic sector expects a decidedly positive influence to emanate from the nuclear catastrophe in Fukushima in Japan. The Phoenix Solar Group will also benefit from this development."

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