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PV Crystalox Solar Swings To Loss Due To Low Photovoltaic Prices

August 21, 2014

Hana Stewart-Smith

LONDON (Alliance News) - PV Crystalox Solar PLC swung to a loss in the half year to end-June despite seeing revenues rise, as it continued to weather challenging conditions in the photovoltaic silicon wafer market.

The solar-power technology company Thursday posted a pretax loss of EUR6.9 million, swinging from a pretax profit of EUR1.3 million the previous year, despite seeing revenue in the six months rise to EUR30.1 million from EUR28.3 million a year before, as operating expenses rose and it saw a hit from the strength of sterling.

The company blamed its swing to a loss on lower wafer pricing, a hit from an onerous contract provision, and a EUR1.7 million currency loss from the strength of sterling compared to a currency gain of EUR3.8 million in the previous year.

PV Crystalox said that pricing remains a major concern, as oversupply from weaker demand in China during the period and the resumption of international trade disputes have driven prices below industry production costs. The pressure on price in recent months has reversed, the company said, as there was modest recovery in wafer and cell prices during the first quarter.

Polysilicon, the key raw material of the products, has maintained most of its price increase and trades above its price at the end of 2013.

The company made progress in increasing its production output during the year, with shipments rising to 99 megawatts during the first half, compared to 84 megawatts in the previous year.

Wafer production progressively increased during the period, however, it remained cautious due to the unfavourable pricing, and maintained its cash conservation strategy, restricting production levels to around 30% of its 750 megawatt operating capacity.

The company amended one of its polysilicon supply contracts to reduce prices significantly and reschedule volumes. It will also receive a cash payment of EUR8.7 million during September 2014, as a result of a settlement with a former customer who has entered insolvency. It expects to receive a settlement with another customer in the next six to twelve months, but expects this payment to be "significantly lower."

It is progressing negotiations with its final remaining long-term contract customer with the aim of agreeing to resume the supply of wafers.

PV Crystalox noted that industry analysts forecast a sharp increase in demand for photovoltaic silicon in the remainder of the year, which it said should "at least half the wafer price decline".

"The board believes that its ongoing strategy will maximise shareholder value and position the group to take advantage of an eventual return of a more rational business environment," Chief Executive Iain Dorrity said in a statement.

Shares in PV Crystalox were trading down 12.5% at 17.50 pence Thursday morning.

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Source: Alliance News

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