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March 14, 2014Solarworld goes on and on its frugal journey
Flamboyant CEO of Solarworld has failed to turn around the beleaguered German solar producer despite all his bravado. Solarworld has played an instrumental role in instigating USA for imposing anti-dumping and countervailing duties against the Chinese made solar cells and panels. The company also tried to do the same in Europe, but better sense prevailed. EU and China came to a compromise leading to volume and price constraints for Chinese made solar imports. Solarworld has been running large losses in the last 3 years and has failed to come out of the rut. While the top solar panel producers such as Canadian Solar (CSIQ), Trina (TSL), Jinko (JKS) etc. have started to make profits, Solarworld reported another massive loss even as its revenues have kept shrinking.
Solarworld has an unsustainable business model in which it manufactures high cost solar panels in Europe and USA. Its products do not have any quality advantage, which would allow it to offset the high cost. The company has a miniscule marketshare and has been running into liquidity issues. Only a large cash infusion by a Qatari fund helped stave off a bankruptcy. However, it led to a huge haircut for shareholders. The company remains a shadow of its former self, when it was the largest integrated solar panel maker in the world. It remains to be seen how long Solarworld can survive. The company is the only large panel maker left in Germany and recently bought the operations of Bosch for a negative sum. Manufacturing in Europe is no longer profitable, given the massive cost and scale advantages enjoyed by the Asian producers. The surviving Western solar producers such as First Solar (FSLR) and Sunpower (SPWR) also have their factories in Malaysia and Philippines respectively. REC Solar has also built a large integrated factory in Singapore after closing most of its operations in Europe. More than 50% of the global demand is now emanating from Asia so it also makes sense to build factories in Asia from a marketing and logistics view.
SolarWorld has reported preliminary 2013 financial results, highlighting its continued bankability issues in key historical markets such as Germany during its lengthy financial restructuring phase.
The company reported consolidated revenue of €456 million (US$631 million), down 25% from the previous year when revenue fell to €606 million (US$839 million). Revenue was over €1 billion (US$1.4 billion) in 2011.
SolarWorld reported a negative EBITDA of €192 million (US$266 million), down slightly from €203 million (US$281 million) in 2013. The company reiterated that it did not expect to return to profitability until 2015.
Sales in the fourth quarter of 2013 were around €110 million (US$152 million), down from around €144 million (US$199 million) in the prior quarter, its highest sales quarter for the year.
SolarWorld had cash totalling €163.7 million (US$226.6 million) at the end of 2013, down from €224.1 million (US$310.2 million) in 2012.
1 Comment
Sneha,
Wacker on Jan 29 announced that they will have a Euro 130 million windfall from readjustment of a long-term poly contract with a “name withheld” PV manufacturer. The rumors were that it was Solarworld on hook however you did not mention this in your article at all. Is your information different or it is instead another PV manufacturer?