Sunways full year outlook bleak


Sunways, which has experienced a tough year to date, was confident that the second half (H2) of 2011 would pick up. However, as the industry is fast realizing, a renewal in demand has not been seen to the extent forecast. As such, on the back of significantly declining sales in H1, the company saw a poor third quarter (Q3).

Consolidated sales, for instance, significantly declined from €58.3 million in Q3 2010, and €38.7 million in Q2 2011, to hit €23.3 million in Q3 2011. EBIT meanwhile, fell from a positive €4 million in Q3 2010, and €-6.3 million in Q2 2011, to a poor €-11.8 million this quarter.

11.4 megawatts peak (MWp) of solar modules, worth €14 million were shipped in Q3 2011. This is in comparison to the 11.4 MWp of modules worth €19.6 million shipped in Q3 2010, thus serving to underline the huge price drops experienced in 2011. For the first nine months of the year, sales and earnings in the segment continued to decline, although the sales volume reported for the period increased by 19.8 percent against the prior year period and production costs were reduced "markedly".

In the solar inverter segment, a sales volume of 38.9 MWp was seen, in comparison to the 68 MWp achieved in Q3 2010. In line with this, sales revenues declined to €7.3 million in Q3 2011, from €16.9 million in Q3 2010.

Sunways’ solar cell business also suffered Q3 losses, with revenues having dropped from €27.9 million in Q3 2010, to €12.1 million this quarter. "Short-time work has been introduced at the Arnstadt plant in early September to adjust production capacities to the current demand," said the company in a statement released.

It added, "Due to the rapid decline in prices for solar cells and solar modules, the module production cooperation with LDK Solar started in late 2010 had a negative impact on the operating result of the solar module segment, as realizable selling prices no longer covered cost prices upon return of the solar modules. In 2011, Sunways supplied the vast majority of its solar cells to LDK Solar for the production of Sunways solar modules and thus accepted an extended value added period for cost reduction reasons."

As many others have reported, internationalization strategies are paying off. For Sunways to date in 2011, its international sales have increased to €42.3 million, up from the €36.9 million seen in the first nine months of 2010. Specifically, the percentage of sales made outside of Europe rose from 28.8 percent in Q3 2010, to 42.5 percent in Q3 2011.

For Q3, however, sales fell from €16.8 million in 2010, to €9.9 million in 2011. Furthermore, Italy and France remained the company’s key markets, with sales revenues in France having more than tripled from €0.6 million in Q3 2010, to €2 million in this quarter.

Looking ahead, Sunways’ expects to experience a negative operating result in Q4 2011, in the lower double-digit million range. Overall, it predicts to generate sales revenues of between €100 million to 120 million for the fiscal year 2011.

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