Phoenix Solar posts 34% revenue increase, narrows net loss

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German PV group Phoenix Solar AG’s operations in the U.S. and strong growth in the Middle East boosted overall revenue and narrowed the company’s net loss in the first half of the year.

Phoenix Solar on Thursday posted a 34.1% increase in first-half sales to €53.3 million ($59.3 million) while reducing its consolidated net loss from €6.3 million to €4.6 million year over year. The company, which expects to return to profitability this year, reduced its year-on-year operating loss (before interest and tax) from €4.6 million to €2.4 million — in line with its 2016 sales and earnings guidance.

In the first six months, Phoenix Solar’s Power Plants segment accounted for the lion’s share of the group’s total revenue, contributing €52.1 million, up from €36.8 million in the same period a year ago, while its Components & Systems unit experienced a drop in sales from €2.9 million to €1.2 million. Revenue from Power Plants made up 97.8% of total revenue compared to Components & Systems, which delivered just 2.2%.

The group’s total gross margin increased from 7% to 8.3%, which the company said was an indication of the progress made in improving overall operating efficiency and a focus on acquisition of profitable projects.

Following what it described as “a low base post restructuring,” Phoenix Solar reported increased investment in its global operations to drive growth, resulting in an increase in the number of employees. As of June 30, the company had 114 employees, up from 87 in the same period last year. Phoenix Solar added that improved internal processes had allowed it to better allocate operating personnel expenses to individual projects, thereby providing “a more accurate picture of project-level profitability.”

Personnel expense decreased from €4.7 million to €3.8 million, reflecting accounting changes to allocate project-related personnel costs directly to projects.

Second-quarter results

In the second quarter, Phoenix Solar generated revenues of €43.4 million, up from €34.8 million year on year. The company delivered 54.5 MW of module in the second quarter, up from 33.9 MW a year ago.

The group also reported a first half-year free order book position of €182.4 million, compared to €102.7 million last year. The company’s order book position including revenues already realized amounted to €293.3 million, up from €142.8 million.

In April, Phoenix Solar signed a deal with Danish firm Obton Solenergi Ninna, which specializes in PV power plant investments in Germany and France, to acquire 100% of its French PV plant subsidiary Batisolaire 3 SAS. Phoenix Solar did not disclose financial details of the deal but said it would use the proceeds of the transaction to repay debt. Since Phoenix Solar is not active as an independent power producer, it did not regard the plant — a 2 MW array of rooftop systems installed on agricultural buildings in the Auvergne region — as a core asset.

Outlook

Looking forward, the company is sticking to its full-year 2016 forecast and expects revenues to range between €180 and €210 million (compared to €119.4 million in 2015) and an operating profit of between €2 and €4 million, up from a 2015 loss of €1.6 million.

"In the second quarter of 2016, our operating results showed steady improvement,” said CEO Tim P. Ryan. “In the Middle East, we are now gaining momentum from our strong market position in Turkey and Jordan.” Ryan added that the group also continues to expand its presence in the U.S. and Asia Pacific.

“Our global supply chain efforts and internal efficiencies are showing hard results in the form of improved margins,” Ryan said, adding that the company was enjoying “healthy demand for our services – a sound basis for continued profitable growth in our core markets around the world."