PV Crystalox Solar still in the shade

Despite a significant rise in pre-tax profit for the six months to 30 June, PV Crystalox Solar has decided not to declare a dividend because of "challenging market conditions". The solar power wafers manufacturer's pre-tax profit was up $14.5m to $15.9m after exploration write-off before tax of $6.9m, while revenue was up from $59.6m to $78.7m. The company suffered a dramatic drop in photovoltaic (PV) installations in Germany in the first half of the year, compounded by a reduction in sale prices. Dr Iain Dorrity, chief executive officer, said: "Looking ahead, industry volumes are expected to pick up in H2 but the pricing pressure seen recently is persisting and we are currently operating below breakeven. "We are taking measures to counteract these difficult conditions and we are hopeful that developments in a number of markets will lead to increased demand and more favourable trading conditions in the medium term." Demand for the company's wafers weakened during May and June, whilst its average sale price was down 6% on a like-for-like basis compared with the previous year. The company, which is currently operating below breakeven, blamed a weaker PV end-market demand, particularly in the two key markets of Germany and Italy but has remained in the black as a result of a net positive cash balance of €41.3m, down on the €54.8m at the end of 2010. The group said: "Uncertainty due to delays in finalising revisions to feed in tariffs froze demand in Italy in the first half of the year although recovery of the market is expected following the announcement in May and subsequent clarifications in late July. "As a result of sluggish growth in these two key markets, spot pricing of wafers and modules reduced from Q1 2011 levels by 45% and 25% respectively during May and June but has now stabilised." Broker Merchant Securities changed its rating on the company to "hold" from "buy" saying "the price has fallen far enough."The share price was up 8.86% to 21.50p at 09:09.NR