October 19, 2009

Munich, Germany: CentroSolar Reports Third Quarter 2009 Results

Centrosolar Group AG was able to report the best result in the history of the company for the third quarter of the current financial year. After one-off losses following the financial crisis in the first half, the company says that it can now demonstrate in the second half that its long-term financial strategy of concentrating on downstream segments without long-term upstream price commitments is paying off. The operating result for the quarter before interest and taxes (EBIT) amounted to EUR 7.4 million.

This represents an increase of 45% on the previous record quarter Q3/2008, which had been dominated by booming business in Spain. The EBIT margin showed an impressive improvement to 9.0% of revenue, compared with 5.6% in the prior-year quarter. The EBITDA operating result for the past three months, which excludes depreciation and amortisation, likewise climbed to a record level of EUR 8.7 million (EUR 1.0 million up on the prior-year quarter).

The EBITDA margin rose to 10.7% of revenue. The negative non-recurring effects from the first half were thus made good within the space of just one quarter. The full-year objective of posting a positive EBITDA over the twelve-month period was consequently already achieved after nine months.

The exceptionally positive result largely serves to confirm the two core tenets of the corporate strategy: focusing on the one hand on high-margin components, and on the other on integrated systems for roofs. Profitability is further boosted by the strategic decision to avoid low-margin, high-volume business.

In recent years, Centrosolar Group AG has put together a comprehensive range of services and products for fitters and wholesalers and developed a corresponding sales structure throughout Western Europe, with local roots at each location. The development of this area-wide micro network very early on now serves as a natural barrier to other competitors entering the market and thus protects its profit margins. Whereas competition for large open-site systems focuses above all on price, the priorities for local fitters of roof systems are good technical service and a product of reliable quality. The preliminary products required in the manufacturing of solar modules are mostly mass-produced articles; as an exclusively downstream operator not bound to any particular degree by long-term cell supply agreements, Centrosolar can currently command attractive purchasing terms throughout the industry and is even a beneficiary of the price war for solar cells.

Centrosolar Group AG has further expanded its sales network in the current quarter, bringing record unit sales as well as the positive result. Despite staying out of the market for open-site projects, sales of solar modules and systems were increased by around 27% compared with the prior-year quarter, and by 59% compared with Q2. Revenue of EUR 81.5 million was 35% up on the preceding quarter (EUR 60.4 million), though around 10% down on the previous year (EUR 91.0 million) due to the marked reduction in prices since last October. The export ratio for the first 9 months of the financial year was 52%. Above-average growth rates were achieved in particular in the French, Benelux and US markets.

Centrosolar's entire production output of glass and modules is already virtually sold out for the current financial year. For quality and precautionary reasons, however, Centrosolar will not be buying in modules for its distribution business and will stay out of the high-volume end of the market. Consolidated revenue of EUR 280 to 290 million is therefore forecast for the year as a whole. This nominally represents a fall on the prior-year figure (EUR 333 million), though the sales volume for solar modules will rise considerably (from approx. 70 MWp in the previous year to approx. 85 MWp in the current year). The profit margin per watt has nevertheless risen, with the result that the fourth quarter is once again likely to deliver a highly positive result. The year is expected to end with an operating result (EBITDA) of EUR 6 to 8 million.

With its highly automated solar module production plant in Wismar, the ingenious mounting systems for solar installations made in Cologne and the market's leading anti-reflective solar glass produced in Fürth, Centrosolar says the company will remain one of Europe's cost leaders in the coming year. General expectations of a further fall in solar cell prices will likewise be to Centrosolar's benefit, because unlike most of its competitors the company does not have its hands tied by long-term price commitments. The preferential subsidies available for roof systems and roof integration in France, but also Germany and Italy, give Centrosolar a further boost as a specialist in roofs. Centrosolar says that similar increases in market share to those achieved in France, where Centosolar is already the leading supplier of building-integrated solutions, can now likewise be expected in the other main sales markets. Profitable growth is consequently on the card for 2010 and the years beyond.