Meyer Burger and 3S Industries: strong results in 2009
22/03/10
Meyer Burger was able to compete well during the most severe recession seen for decades. In fiscal year 2009, the company generated net sales in the amount of CHF 420.9 million (2008: CHF 448.4 million). The gross margin came to 40.4%, only slightly below the previous year's margin, and the operating margins remained at attractive levels. EBITDA for fiscal year 2009 reached CHF 63.3 million, corresponding to a margin of 15.0%. EBIT amounted to CHF 41.3 million, reflecting a margin of 9.8%. Meyer Burger closed fiscal year 2009 with group earnings of CHF 29.2 million (2008: CHF 35.0 million). The company is financially sound with total assets as of 31 December 2009 amounting to CHF 460.2 million, and equity ratio of 42.7% (previous year 31.5%). Through the acquisition of Diamond Wire Technology, Inc. in September 2009 and the merger with 3S Industries Ltd in January 2010, Meyer Burger Group is now a full system provider offering integrated product solutions along the entire value chain of the solar industry.
Meyer Burger Technology Ltd (SIX Swiss Exchange: MTBN) generated strong results in 2009. Despite the global economic crisis and very limited credit availability that affected the financing of large projects in the solar industry, the company recorded only a moderate drop in sales of 6% to CHF 420.9 million and its operating margins remained at attractive levels.
These results underline Meyer Burger Group's robust state and strong market position. Through the acquisition of Diamond Wire Technology, Inc. in September 2009, and the merger with 3S Industries Ltd in January 2010, the company has been able to expand its range of products and services considerably while also significantly strengthening its position. Today, Meyer Burger Group serves its customers as a full system provider offering them integrated product solutions along the entire value chain of the solar industry.
'Our market position is unique in the industry', says Peter Pauli, CEO of Meyer Burger Technology Ltd. He adds: 'Our technologies and our comprehensively aligned systems enable processes along the value chain to be optimised, efficiencies to be increased and, as a result, the costs of producing solar modules and, ultimately, solar electricity to be reduced. Our company makes a key contribution to the goal of reaching grid parity for solar power.'
Incoming orders and sales During the first half of 2009 the tight credit situation, which had already intensified towards the end of 2008, made it very difficult for many solar cell manufacturers to obtain financing for their planned infrastructure projects. As far as Meyer Burger was concerned, this meant delays with regard to the delivery of machinery for which orders had already been placed and, more generally, fewer new orders were received. The situation has stabilised during the second half of the year and a remarkable increase in demand was seen toward the end of 2009. Meyer Burger recorded a total volume of CHF 193.7 million in new orders during 2009. As of 31 December 2009, the order backlog amounted to CHF 516.4 million, which continues to provide a sound basis for the company's performance for the current fiscal year. Meanwhile, there are signs of an improvement in the financing situation with regard to some large projects that involve a substantial expansion of capacity among solar cell producers over the next two to three years.
Overall, net sales declined by CHF 27.4 million to CHF 420.9 million in 2009. 34% of these sales were generated with customers in Europe and 60% with Asian customers.
Results of operations
Due to the lower sales number, gross profit was reduced by CHF 13.7 million to CHF 170.1 million. The gross margin for 2009 was 40.4%, compared with 41.0% for the previous year. The minimal change in the margin is due to a slightly different product mix.
Personnel expenses increased by CHF 4.3 million year-on-year to CHF 66.8 million. The higher expenses are primarily due to the acquisition of Diamond Wire Technology, which has been consolidated since September 2009. As a result of the acquisition, the workforce increased by 104 full-time employees (FTEs), to reach a total of 738 full-time positions by year-end of 2009, compared with 630 FTEs as of 31 December 2008. Operating expenses increased by CHF 1.3 million to CHF 40.0 million. Meyer Burger continued to invest into its future during 2009, mainly through Research and Development activities in conjunction with product optimisation, further applications in the area of wire saws, and the development of a process management system for the wafer fabrication process in the solar industry. Other factors that lead to an increase in operating expenses were the expansion of the Group structure, and one-time costs associated with the transition to IFRS financial reporting, as well as for the M&A transaction with 3S Industries.
EBITDA for fiscal year 2009 reached CHF 63.3 million, corresponding to a margin of 15.0%. At EBIT level, Meyer Burger recorded a profit of CHF 41.3 million and a margin of 9.8%. Group earnings came to CHF 29.2 million.
Strong balance sheet
Meyer Burger Group has a very solid financial position. Total assets as of 31 December 2009 amounted to CHF 460.2 million. Equity stood at CHF 196.3 million, which corresponds to an equity ratio of 42.7%.
Strategic growth along the value chain
The takeover of the business activities of Diamond Wire Technology (nowadays Diamond Material Tech, Inc. - DMT) in September 2009 enabled Meyer Burger to complete a key strategic acquisition in the area of diamond wire technology. DMT is the world leader in the development of diamond wire for use in shaping, slicing and wire saws. Through the marketing and sales cooperation with Solaris (product of Oerlikon Systems), a coating system for crystalline solar cells, Meyer Burger has broadened its offerings by another core technology within the cell manufacturing during December 2009.
In January 2010, the merger with 3S Industries Ltd has further strengthened the company's position in the area of cell and module production. 3S is a world leader in the supply of production lines and equipment used to manufacture solar modules and, through its companies Somont, 3S Swiss Solar Systems and Pasan, covers the entire value chain of solar module production.
Outlook
It is still relatively difficult to assess how the economic situation will develop. There are signs of recovery and from discussions with customers and with the new orders received during the last previous weeks, Meyer Burger is confident that further expansion phases to increase capacity among solar cell and solar module producers are planned and that the industry is preparing itself for the next phase of growth. Based on its high order backlog of currently (March 2010) over CHF 900 million, Meyer Burger expects to achieve solid results in 2010.
On a long-term perspective, Meyer Burger firmly believes that solar technology will be used to meet a high proportion of the world's energy needs in future, as an efficient and environmentally sound source of energy. Both the solar industry and Meyer Burger Group are expected to enjoy strong and sustainable growth over the coming years.
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