Leading German solar company Q-Cells SE (QCE.DE) released 3Q09 results and details regarding the state of its "Reloaded" reorganization plan.
Q-Cells increased group-wide sales by 30%, but reported significant loss of net income, due largely to reorganization costs. The company said it expects to see the first cost-saving benefits of reorganization in 1Q10.
Q-Cells said it has reached a labor agreement to reduce the
company’s workforce as of December 2009. The cutback of 500 employees
in production and administration is the first step in the
reorganizaiton plan announced in August.
The volume of cells sold to external customers rose by 87% in 3Q09 to 103 megawatts peak (MWp) compared with the previous quarter. A further volume of 21 MWp was delivered to the company’s own Q-Cells International project business. The total production volume in the third quarter was 119.4 MWp compared to 117.8 MWp in 2Q09.
Including project business, Group-wide sales revenues of EUR 184.1 million were achieved. This corresponds to a 30% increase compared with EUR 141.4 million in 2Q.
The figure for the first nine months of 2009 is EUR 550.3 million down from EUR 931.9 million in the same period of 2008. The sharp decline in sales year-on-year is mainly caused by the drastic fall in prices on the international market for solar cells and is reflected accordingly in the operating income, the company said.
Adjusted operating income excluding New Technologies (EUR -8.0 million) amounted to EUR 3.3 million (previous quarter: EUR 10.7 million). As a result, adjusted income was stabilized in 3Q despite the further fall in prices. During the past quarter, non-recurring costs and special effects connected with the ongoing reorganisation considerably impacted the reported EBIT, the company said.
Without these special effects, which include costs for the closure of the older production lines at the Thalheim location, reorganization costs for the planned workforce reduction as well as impairment losses on inventories and investments, Group EBIT amounted to EUR -4.7 million (Q2: EUR 1.8 million). Taking into account all non-recurring and special effects, the company is reporting EBIT of EUR -163.8 million (Q2: EUR -62.3 million). The corresponding result is EUR -248.2 million (Q2: EUR -305.0 million) for the third quarter and EUR -945.1 million for the first nine months of the year.
LDK Solar Deal Terminated
In a separate announcement, Q-Cells said it has terminated its wafer supply agreement with China’s LDK Solar. Q-Cells said in a release that LDK Solar "did not fulfil significant contractual obligations."
According to Q-Cells, the original agreement
specified the supply of solar wafers on the basis of a contractually fixed amount of silicon totalling
43,000 tons for the years from 2009 to 2018, with wafer supplies on the basis of approximately
1,000 tons of silicon relating to 2009. At the beginning of 2008, Q-Cells made a payment of US$244.5 million in the context of this agreement.
Q-Cells said this payment can be reclaimed in the event of
termination of the agreement and is secured by a bank guarantee at a German bank upon first demand.
The contractual parties have differing opinions concerning the validity of the termination of the
agreement. Direct discussions between the two companies and a parallel arbitration process at the
International Chamber of Commerce (ICC) in Paris have not resulted in an amicable settlement yet. An
application by LDK Solar for a temporary injunction to be issued against a drawing down of the bank
guarantee was refused by the District Court in Berlin.
Q-Cells said it will make use of the possibility
to draw down the bank guarantee linked to the payment.
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