Meyer Burger Announces 1H 2018 Results

Meyer Burger Technology Ltd.’s first half-year 2018 results marked the company’s successful return to profitability at the net earnings level. This achievement is mainly a result of various cost optimization programs and measures executed over the past 18 months and of coherent decisions to discontinue non-profitable business units and products.
 
Net sales amounted to CHF 232.3 million ($233 million), representing an increase of 9.4% compared to the previous year period. Positive currency effects on net sales were approximately CHF 15.2 million or 6.5%. Adjusted for foreign currency effects and the divested DMT operations, organic growth of the continuing business was 5.2%.
 
Over the past months, the market environment for PV equipment suppliers was heavily influenced by the intensifying trade crisis between the US and China, which included new import tariffs on PV modules and cells, as well as announcement of the Chinese government on May 31, 2018 regarding subsidy cuts in the solar industry. Both facts have led to a currently significant reluctance regarding new investments on behalf of Meyer Burger’s PV customers. In this difficult market environment, Meyer Burger achieved total incoming orders of CHF 137.9 million (H1 2017 CHF 308.5 million). The order backlog amounted to CHF 240.9 million at June 30, 2018 (Dec. 31, 2017 CHF 343.8 million).
 
The operating income after costs of products and services amounted to CHF 120.1 million (H1 2017 CHF 98.2 million), reflecting a margin of 51.7% for the first half of 2018 (H1 2017 46.3%). The margin improvement is mainly due to the discontinuation of non-profitable businesses.
  
EBITDA more than quadrupled compared to the previous year period and reached CHF 29.2 million for the first half of 2018 (H1 2017 CHF 6.9 million). The EBITDA margin was 12.6% for the first half of 2018 compared with 3.3% for the corresponding period in 2017.
 
Meyer Burger reached a profitable level again in its net result, reporting net earnings of CHF 8.3 million for the first half of 2018 (H1 2017 net loss of CHF 17 million).
 
The balance sheet remained solid and with a similar structure compared to year-end 2017. The balance sheet total amounted to CHF 456.7 million (31.12.2017 CHF 470.0 million). Cash flow from operating activities was CHF -16.4 million (H1 2017 CHF +3.5 million). The difference in the operating cash flow compared to the previous year period is mainly due to a temporary increase in inventories.
 
The reorganization of the production site in Thun/Switzerland, as announced on Nov. 2, 2017, is on track. In April 2018, Meyer Burger announced a preferred partnership agreement with Mondragon Assembly Group to collaborate on module equipment development and outsource the manufacturing processes for its SmartWire Connection Technology (SWCT) solution. Mondragon will start to produce SWCT™ equipment for Meyer Burger in January 2019.
 
In May 2018, the company announced the divestment of its Solar Systems business (MegaSlate products) to Dr. Patrick Hofer-Noser, a long-time and internationally respected specialist in the solar industry. As part of the transaction, 32 employees were transferred to the newly founded 3S Solar Plus AG. The final closing of the transaction took place in June 2018.
 
In Wafering, the company has signed a manufacturing services agreement with Flex to produce its PV diamond wire saws. Flex will start manufacturing the PV wire saws for Meyer Burger at their production facility at Suzhou, China, beginning in January 2019. As a result, Meyer Burger reconfirms that all manufacturing activities in Thun, as planned, are scheduled to be discontinued by year-end of 2018.
 
Meyer Burger achieved substantial improvements in profitability for the first half of 2018. However, in order to ensure its long-term profitability, the company will initiate additional structural measures during the second half-year.
 
In the short-term, the investment sentiment with the company’s PV customers has been dampened by the Chinese government decision to cut subsidies and by the US-China trade conflict. As mentioned above, this has led to a weaker than expected order intake for the first half of 2018. Based on this, Meyer Burger is reducing its guidance for 2018 net sales to CHF 400-440 million. The EBITDA margin guidance of about 10% for the full financial year 2018 remains intact.