Transition time for Sunways

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Germany-based Sunways has finally released its 2011 financial results, after having postponed their original publication date of April 30. Citing continuing weak market conditions, a demand shift in its target markets, and the terminated wafer supply contracts with Deutsche Solar, the company recorded losses across the board, although the fourth quarter (Q4) of 2011 was said to have seen "record" solar module sales of 22.1 MWp. Overall, the number of employees fell from 344 in 2010, to 332 in 2011.

In terms of its 2011 EBIT, Sunways saw figures dropping from €15 million in 2010, to €-66.1 million. Of this, the solar cell segment accounted for €-42.6 million (2010: €11.2 million); modules €-13.7 million (2010: €-1.7 million); and inverters €-9.8 million (2010: €5.5 million).

Consolidated net loss, meanwhile, hit €62.1 million, significantly down from the net income of €9.3 million in 2010. "The operating result of Sunways AG in the fourth quarter was strongly affected by expenses totaling approximately € 44.0 million, approximately € 34.0 million thereof in the form of transaction-related and other non-recurrent effects," said the company in a statement released.

2011 sales were also affected, having fallen from €222.7 million in 2010, to just €116.2 million. Despite this, the company said its internationalization strategy has helped to stabilize the situation, with the share of sales generated abroad growing from 29.2 to 45.4 percent.

In absolute terms, however, sales revenues of €52.7 million were generated in 2011, compared to €65.2 million in 2010. "The relevant sales revenues experienced a slight decline, but all in all the internationalization of distribution activities had a significant stabilizing effect on the Sunways Group’s business volume," it continued.

Broken down, with a volume of 64.9 MWp (2010: 97.8 MWp), cells accounted for €60.2 million (2010: €108.7 million) of 2011 sales. Having sold 66.8 MWp in 2011, (2010: 54 MWp), modules accounted for €81.3 million (2010: €96 million), and at 139.3 MWp (2010: 191.1 MWp), inverters accounted for €27.5 million (2010: €46.6 million).

"2011 was an extremely difficult year for the entire German solar industry, a fact which is also clearly reflected in our financial statements," stated Michael Wilhelm, chairman of the management board. "Non-recurrent expenses in the context of the transaction with the LDK Solar Group also had a negative impact on the operating result of Sunways. However, we have won a strategic investor for the future who will open up new growth prospects for our company," he added.

At the end of April, LDK Solar Germany Holding GmbH, an indirect subsidiary of LDK Solar Co., Ltd, completed its acquisition of Sunway’s shares. Following the transaction, it now owns around 70.88 percent of Sunways share capital. On the back of the takeover, Sunways said it was able to reach an agreement with its lending banks on reduced credit facilities, which will run until next September.

The company added, "In addition to the waiver of a claim relating to a long-term liability, adequate payment terms were agreed with respect to all goods and services sourced from China. Furthermore, Sunways has received a letter of support from LDK Solar that will expire on 31 August 2014."

In terms of 2012, Sunways does not expect the situation to improve. "2012 is a year of transition for Sunways and the main goal is to stabilize the development of sales volumes and sales revenues, to improve earnings and to realize first visible successes in the context of our cooperation with LDK Solar," continued Wilhelm.

The company added that it was unable to utilize its solar cell production capacities in the first two quarters of the year, due to materials bottlenecks in China, which have negatively affected gross profit. Despite this, it said that inverter sales have "markedly" increased. "Due to the pressure on margins in all segments that continued in the first half of 2012, the operating result generated by the Sunways Group in the first two quarters was negative," it said.