News Column

Meyer Burger Technology: Results 1st Half-Year 2014

August 12, 2014



The volume of small and mid-sized orders has increased noticeably compared to the first half of 2013 (+57%). In terms of large orders, a total order size of CHF 27 million was concluded, involving two contracts with leading wafer and module manufacturers in Asia for precision diamond wire cutting systems and innovative module equipment and a strategic contract for the delivery of industrial diamond wire-based cutting systems in specialised non-PV technologies.


Meyer Burger has put substantial preparatory efforts into certain projects and made considerable investments in inventories (esp. machines before acceptance) during the first half of 2014. Altogether, an amount of over CHF 40 million in cash was invested into net working capital. EBITDA for the first half of 2014 amounted to CHF -55.2 million. The balance sheet, with total assets of CHF 756.2 million and an equity ratio of 52.1%, continues to be solidly structured.


Details to the results for the first half of 2014


Incoming orders and order backlog


Meyer Burger Group recorded CHF 156.8 million in new orders for the first half of 2014, resulting in an increase of 90% compared to the previous year period (H1 2013: CHF 82.5 million). The average run-rate of "usual business" orders (without large orders) increased by 57% compared to the first half of 2013 (and by 49% compared to the second half of 2013). Large orders concluded in the first half of 2014 amounted to a total of CHF 27 million (H1 2013: 0). The book-to-bill ratio stood at 1.21 for the first half of 2014 (H1 2013: 0.91). The order backlog reached CHF 211.3 million as at 30 June 2014 (31.12.2013: CHF 190.3 million).


Overall, the broader base of incoming orders and net sales with equipment for existing and new photovoltaic markets, and for applications in the optoelectronic industry (e.g. screens) and other specialty markets is positive. It illustrates that Meyer Burger can maintain its leading market position in the PV industry and that the company is also succeeding in using its core competencies along the photovoltaic value chain to provide superior solutions to other specialised technology areas.


Net sales


Net sales amounted to CHF 129.0 million and were about 43% above the level for the first half of 2013 (H1 2013: CHF 90.4 million). Based on planned deliveries and customer acceptances of delivered equipment, this was in line with company expectations for the first half of 2014. The company's production output during the first half year was considerably above the percentage increase in sales. A larger number of machines were awaiting acceptance by customers at the end of the first half and will only become relevant in terms of sales during the following months. As several other project activities and deliveries are scheduled for the coming months, Meyer Burger expects substantially higher net sales during the second half of 2014.


Net sales per region were as follows: Asia 51% of net sales (H1 2013: 39%); Europe 28% (H1 2013: 35%), America 21% (H1 2013: 19%) and Middle East / Africa 0% (H1 2013: 7%).


Operating income after costs of products and services


Operating income after costs of products and services increased by 24% to CHF 66.2 million (H1 2013: CHF 53.3 million). Meyer Burger has put significant preparatory efforts into certain projects (test lines, show cases, etc.) and made considerable investments of around CHF 22 million in inventories (esp. machines before acceptance). The operating margin for the first half of 2014 came to 51.3% (H1 2013: 58.9%). The lower margin is mainly due to a change in the product mix and to the sale of some inventory.


Operating expenses


As a result of the incoming orders received during the second half of 2013 and the first half of 2014 as well as due to the above mentioned preparatory efforts, the workforce had to be increased, mainly in production areas, at Diamond Materials Tech, Inc. in Colorado Springs (USA) and at Meyer Burger Ltd in Thun (CH). The restructuring measures at the site in Hohenstein-Ernstthal (DE), which were announced in May 2014 and have already been initiated, will lead to a reduction of about 100 positions during the second half of 2014. The positive cost effects of these measures are neither reflected in the number of personnel as at 30 June 2014, nor in the operating expenses for the first half of 2014. Altogether, the additional measures will lead to a reduction of yearly personnel expenses at the Hohenstein-Ernstthal production centre of around CHF 5.5 million as of 2015.


Meyer Burger employed 1,951 people on a full-time basis as at 30 June 2014, an increase of about 10% compared to year-end 2013 (31.12.2013: 1,781 FTE; 30.06.2013: 1,842 FTE). In addition, the Group employed 188 temporary employees at the end of June 2014 (31.12.2013: 194; 30.06.2013: 36 temporary staff). Personnel expenses increased by CHF 9.3 million to CHF 95.9 million in the first half of 2014 (H1 2013: CHF 86.6 million).


Other operating expenses declined to CHF 25.5 million (H1 2013: CHF 26.5 million). The reduced cost base that was achieved in the pascould be continued during the reporting period.


EBITDA, EBIT


EBITDA for the first half of 2014 amounted to CHF -55.2 million (H1 2013: CHF -59.9 million). This small reduction of the loss by approximately 8% reflects the high level of preparatory works and the capacity adjustments in terms of production.


Depreciation and amortisation totalled CHF 33.0 million (H1 2013: CHF 36.6 million). Out of this amount, CHF 9.6 million was for depreciation of property, plant and equipment and CHF 23.3 million reflects scheduled amortisation of intangible assets, which resulted mainly from the M%7EA activities of previous years. At EBIT level, Meyer Burger posted a result of CHF -88.1 million (H1 2013: CHF -96.5 million).


Financial result, Taxes


The financial result, net, amounted to CHF -6.5 million in the first half of 2014 (H1 2013: CHF -0.4 million). The variation in the financialresult is mainly due to the valuation of intercompany loans to foreign subsidiaries, which led to unrealised negative foreign currency translation effects of CHF 0.9 million for the first half of 2014 compared to unrealised positive foreign currency translation effects of CHF 4.8 million for the corresponding period in 2013.


The taxes for the first half of 2014 amounted to a tax income of CHF 6.6 million (H1 2013: CHF 16.7 million). The tax income for the first half of 2014 is mainly attributable to the reduction of temporary differences and related deferred taxes. Meyer Burger did not capitalise loss carry-forwards any further during the first half of 2014, as results on an EBITDA level have not fundamentally improved yet.


Net result


The net result for the first half of 2014 came to CHF -88.0 million (H1 2013: CHF -80.6 million), of which CHF -86.5 million are attributable to the shareholders of Meyer Burger Technology Ltd (the remaining CHF -1.5 million are attributable to the minority shareholders of Roth %7E Rau AG). The net result amounts to a loss of CHF 0.99 per share (H1 2013: loss of CHF 1.36 per share).


Balance sheet


Total assets were CHF 756.2 million as at 30 June 2014 (31.12.2013: CHF 784.0 million). Altogether, over CHF 40 million in cash were invested into net working capital during the first half of 2014. Cash and cash equivalents were CHF 139.4 million and inventories CHF 169.7 million as at 30 June 2014. Long-term assets mainly include property, plant and equipment of CHF 137.6 million, intangible assets of CHF 154.2 million and deferred tax assets of CHF 90.5 million.


Total liabilities amounted to CHF 362.0 million. Due to the maturity date of the CHF 30 million loan secured by mortgage certificates on the company building in Thun (loan matures on 18 April 2015), the amount of CHF 30 million changed from non-current liabilities to current liabilities. Trade payables were CHF 59.1 million, customer prepayments CHF 57.3 million, provisions CHF 32.7 million and financial liabilities totalled CHF 162.3 million. Equity stood at CHF 394.2 million with a solid equity ratio of 52.1% (31.12.2013: CHF 408.6 million and 52.1% equity ratio).


Cash flow


Cash flow from operating activities was CHF -98.7 million in the first half of 2014 (H1 2013: CHF -82.3 million). The effects of the preparatory works and investments in net working capital as described above had a strong impact on cash flow from operating activities. Excluding these preparative investments of over CHF 40 million, the real "cash burn" for the first six months of 2014 amounted to CHF -58.3 million. This compares to CHF -74.6 million for the first half of 2013 (excluding investments into NWC of about CHF 8 million).


Cash flow from investing activities was CHF -6.0 million (H1 2013: CHF -3.7 million) and included mainly investments in property, plant and equipment of CHF -5.5 million net, which represents the usual investments in CAPEX (H1 2013: CHF -3.5 million).


Cash flow from financing activities was CHF +71.0 million (H1 2013: CHF +175.0 million). The capital increase out of authorised capital in March 2014 resulted in net proceeds of CHF 75.6 million for the company during the first half of 2014. An amount of CHF 3.8 million was invested for the purchase of further shares in Roth %7E Rau AG. Although Meyer Burger holds a participation of 95.11% in Roth %7E Rau AG as at 30 June 2014, the company will currently not pursue a squeeze-out proceeding for Roth %7E Rau, taking into consideration the gradual recovery of the PV market and Meyer Burger Group's long-term financial plans.



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Source: Global Data Point


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