PVCS.L Share News (PVCS)

LONDON (Alliance News) - PV Crystalox Solar PLC said on Thursday it intends to sell, or restructure its German wafer production operations in 2018 due to a drop in sales.

The manufacturer of silicon wafers reported a pretax profit of EUR12.0 million, up significantly from EUR1.7 million the year before, due to a EUR18.4 million gain in other income and reduction in expenses by EUR3.2 million.

However the gross margin for the year was EUR1.7 million, down from EUR8.1 million, due to the lack of one-off positive factors such as the rise in polysilicon spot prices in the first half of 2016 and excess inventory sold at prices around the 2015 year-end valuation.

PV Crystalox's revenue dropped by 54% to EUR26.4 million from EUR56.7 million the prior year, due to a decline in sales of excess polysilicon feedstock compared to 2016, despite the wafer shipments volume rising by 28%.

PV Crystalox said that following a strategic review which led to the closing of its production facilities in the UK, it will either sell or restructure its wafering operations at PV Crystalox Solar Silicon GmbH, in Germany.

Under the restructuring option, the group will focus on cutting non-silicon materials and focus on research and development activities. The restructuring is expected to lead to a substantially reduced wafer production output and significant job losses in Germany.

PV Crystalox noted that the current market conditions have remained tough, with prices continuing to decline in all sectors of the photovoltaic value chain, and industry overcapacity in China decoupling prices from production costs.

"After seven years the board has concluded that there is no real prospect of any change in market conditions which might permit a return to profitability for the group's wafering operation without further investment. Instead the board has concluded that it should instead seek a buyer who would be willing to develop the silicon wafering operation," said Chief Executive Officer Iain Dorrity.

"In parallel consultations will take place with the workers council in Germany to explore the merits of significantly restructuring the operation to focus on the cutting of non-silicon materials such as glass and quartz together with a continued focus on research and development activities," Dorrity added.

Shares in PV Crystalox Solar were up 2.7% at 20.53 pence on Thursday.