PVCS.L Regulatory News (PVCS)

15 May 2009 07:00



15 May 2009

PV Crystalox Solar plc

Interim Management Statement

PV Crystalox Solar plc (or "the Group", PVCS.L), one of the world's leading providers of photovoltaic ('PV') silicon wafers, provides an Interim Management Statement for the period from 1 January 2009 to the date of this announcement.

The Group continues to operate in a challenging trading environment and as a result expects to generate H1 revenues approximately 10% below the prior year (H1 2008: €126m).  

Since announcing our preliminary results at the end of March, demand from our customers has slowed. High customer inventory levels have led to a number of additional requests for order deferrals which are now expected to reach 30 - 35MW by the end of H1, with total shipments for the period expected to be in the region of 90 - 95MW (2008: 110MW).  However, the drop in shipment volumes has been partially offset by the strength of the Japanese Yen and its positive impact on average wafer prices.

Although there are early signs of an improvement in the level of PV installations, the tightening of the credit markets has impacted the financing and implementation of major PV projects. This market weakness has led to oversupply and downward pricing pressure in all parts of the value chain and currently spot wafer prices are below our contract levels. In view of the challenging market circumstances, we have agreed temporary price flexibility with some of our customers. We believe this supports our relationship with our customers and we would expect to benefit when the PV markets strengthen and in some cases we have been able to obtain a certain commitment on contracted shipment volumes during the second half of the year. In parallel we have undertaken discussions with our suppliers and have already achieved some concessions on short term pricing.

The commissioning of our polysilicon production facility in Bitterfeld is proceeding to schedule and is currently in its final stages. Initial polysilicon production is expected to start later this month with a projected output of 450 metric tonnes in 2009 in balance with our current wafer production requirements. 

The Group's balance sheet remains robust and its financial position strong with continued positive cash flows increasing our net cash position at the end of the first quarter of 2009 from the €81.1m cash balances as at 31 December 2008.

Outlook

Due to the current global economic recession and market weakness, levels of activity in the second half of the year remain difficult to predict. Although we have contracts for the supply of 275MW wafers in 2009 as a whole, there is greater uncertainty that our forecast shipment volumes will be achieved. There is, however, some expectation of a better solar market environment, driven by growth in Germany, which is traditionally stronger in the second half of the year, and in Japan, where the Government plans further incentives for the PV market as part of its 4th economic stimulus package of JPY15 trillion announced on 8 April 2009.

The mid-term market drivers for the PV industry remain positive with the US economic stimulus bill providing significant funding for renewable energy projects (including solar energy development) and with the recent renewed commitment of the EU to meet its 2020 climate change goals and boost the share of renewables in the total energy mix to 20%. Although timing and visibility for 2009 is uncertain, the Group with its strong balance sheet remains well positioned for the upturn in global PV markets.

The Group will report its interim results for the six month period ending 30 June 2009 on 19 August 2009.

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