Phoenix Solar announces major restructuring

In light of the continuing difficult market conditions, the German photovoltaic company, which specializes in EPC, project development and distribution, has said it will restructure its business away from "a number of loss making operations".

Joachim Fleing , investor relations representative for Phoenix Solar told pv magazine that from a workforce of 409 as of December 2011, around 115 employees will remain on with the company after the restructuring.

Of the jobs to go, 100 – operational and administrative – are located in Germany. Both the company’s components and systems, and power plant businesses will be divested. However, it has said it will continue to focus on its "profitable" operations and maintenance business in Ulm, in addition to developing new business models for its project and distribution businesses.

In Spain and Italy, "significant" reductions have been made. Fleing would not disclose the job losses involved in these regions, but did say that Phoenix Solar will continue to operate "on a low level" there. The decision was made on the back of market uncertainties in these regions, and "challenges in reaching earnings targets".

Furthermore, the company’s Oman office has been closed. Again, the number of job losses incurred was not shared. Recently, Phoenix Solar completed the design and installation of a 3.5 MW photovoltaic park in the region. Fleing said that since the project is now operational, there is no particular reason to stay in Oman. He added that the company is still looking for new business in the region and can establish new companies when and where they are needed.

Overall, Phoenix Solar sees the U.S. and South East Asia as its growth markets of the future. Regarding Asia, Fleing said that Thailand, Malaysia and Singapore – "the cornerstone of our Asian business" – are of most importance.

Fleing could not divulge the market share of the U.S. and Asia, however he said that the while company expects business to grow strongly in these regions, it is not yet significant. In Europe, Phoenix Solar’s subsidiaries in Greece and France are said to be both well-positioned and profitable.

Financing

Phoenix Solar has said it will continue to secure financing for the group. It has, however, had to reorganize its corporate financing, including amending contract agreements with lending banks. This involved "slightly" reducing financing volume down to €126 million and extending the credit lifetime from March 2014 to March 2015.

These extra expenses, totaling around €8 million, have impacted the company’s preliminary 2012 financials, thus resulting in a negative EBIT of around €32 million, compared to the forecast of negative €19 million to negative €25 million. 2013 revenues, meanwhile, are expected to reach €160 million to €190 million, as opposed to €280 million to €310 million. It still expects to see an EBIT between negative €5 million and €0 million.

Management changes

CEO Andreas Hänel, who was also founding director of Phoenix Solar, has resigned from his position, effective February 28. He will remain on as a consultant to the company, however. In his place, Bernd Köhler will take over the reins on March 1. He will also continue to serve as CFO.

Murray Cameron, meanwhile, will remain member of the Board of management, and stay on as company COO, and as CEO and president of Phoenix Solar’s U.S. subsidiary.

"The discontinued operations made significant operating losses in 2012. This did not come unexpectedly. But the ongoing adverse market effects and the regulatory changes in disfavour of photovoltaics made it increasingly unlikely that the expected increase in shipments which was needed for a return to profitability would actually come to occur – in spite of numerous efforts by staff and management. Therefore, we had to react with the severe cuts we are now executing although this means to dismiss many qualified employees," commented Köhler.