The third quarter (Q3) financial results from Germany’s SolarWorld were released today, prefaced by a letter from company CEO Frank Asbeck that talked of a "year of two halves" for the firm.
From first half (H1) growth and a rapid improvement in sales, shipments and revenue to a summer slowdown, the impact of China’s H1 installation rush and subsequent belt-tightening has been keenly felt across the global solar landscape, lamented Asbeck.
In isolation, the figures posted by SolarWorld in Q3 appear strong enough. Revenue reached €204,491 ($220 million), which although the lowest quarterly figure for more than a year was not so dramatically reduced as to induce panic. Year-on-year it is a mere 3% contraction, and with shipments of 345 MW for Q3, SolarWorld has now surpassed the 1 GW mark for the year. At the same point in 2015, shipments stood at 784 MW.
However, despite this 33% growth globally, the price decline on average selling prices (ASPs) for modules served to drag down SolarWorld’s consolidated revenue for the quarter, bucking the upward trend that sees Q1-Q3 2016 enjoy a 20.1% revenue lead over the same period in 2015.
For the company, this tailing off of growth is cause for concern. SolarWorld called it an "unexpectedly sharp deterioration" in the market situation, due to the "abrupt collapse of domestic demand in the world’s largest solar market, China, in mid-2016.” Demand drooped following China’s FIT cut in June, and at the same time domestic producers placed additional production plants – many outside of China – into operation, said SolarWorld. This resulted in modules flooding the market at "dumped prices", the financial report said.
The company’s operating performance for the first nine months of the year showed an improvement on 2015, reaching €682.5 million as compared to €587.8 million last year. Higher revenue propelled this figure, and while personnel expenses also increased by €9 million, SolarWorld was able to slightly lower its personnel expenses ratio from 20.5% last year to 19% at the end of Q3 largely as a result of improved operating performance at its Hillsboro plant in the U.S.
EBITDA for the first three quarters totaled €6.5 million, which was more than 50% below the €14.5 million registered in Q1-Q3 2015. For Q3 alone, EBIDTA limped in at €-11.9 million, while EBIT was €-24.5 million.
By the end of Q3, SolarWorld had reduced its financial liabilities to €398.6 million – a €7.2 million reduction – thanks in the most part to a loan repayment made in Q3 of €28.1 million. Cash flow rose to €13.3 million at the end of Q3, primarily as a result of the build-up of inventories that had not been offset by any increase in trade payables.
The ongoing appeal against the Hemlock Semiconductor case was briefly mentioned in the results. SolarWorld could well be on the hook for more than $700 million in the U.S., but the company reiterated its belief that Hemlock will not be able to force any claims in Germany, thus ensuring that the assessment of the legal risk by SolarWorld AG remains unchanged.
"We will face our challenges with resolve throughout the remaining weeks of the year and beyond," said Asbeck. "Demand for our product is there, and will keep growing in 2017. ‘Quality made by SolarWorld’ will hold its position on the international solar market in the future. We will maintain our involvement in support of fair competition in Europe and the U.S. More than once, we have shown that we can fight successfully."
SolarWorld’s increasing reliance on the U.S. as a strong market was laid bare in the Q3 financials, which revealed that 51% of the company’s modules were sold there. In European markets outside of Germany, SolarWorld was able to increase its shipments by 31% for the nine months ended September, while further positive trends were recorded in Asia and Africa, the company confirmed.
Looking ahead to Q4, SolarWorld expects shipments to increase further, and projects 2016 to enjoy a 20% increase in shipments, surpassing last year’s 1,159 MW.