Germany's largest solar company Q-Cells SE (OTCPK:QCLSF) said its business model will "change fundamentally" in 2010, as the company pushes ahead with a reorganization that began in August 2009.
In announcing 4Q09 preliminary results that continued a string of deep losses, Anton Milner, Chairman of the Executive Board of Q-Cells SE, said:
We are working intensively on enhancing our business model. Q-Cells will change fundamentally within a year. The actual shape of development will heavily depend on government plans for reductions in solar power subsidies on the key German market.
The changed market situation in the past year, with a drastic fall in prices, has led Q-Cells to adjust its investment portfolio. Miller continued:
We are focusing on our competitive core technologies in the area of crystalline silicon and thin-film modules made by Solibro. Other new technologies such as Calyxo need a little more time to become competitive.
The carrying values of three investments were written down to zero in 2009. In addition to Solaria Corp., these were Sovello AG (write-down in 4Q: EUR 12 million) and Sunfilm AG (write-down in 4Q: EUR 146 million). Both Sovello and Sunfilm are currently in financing negotiations with their principal banks. Due to existing obligations in relation to Sunfilm, Q-Cells posted a net outflow of funds of approximately EUR 42 million in 1Q10.
Excluding these adjustments, preliminary earnings before interest and taxes (EBIT) amounted to EUR -270 million (previous quarter: EUR -164 million).
For 2009 as a whole, Q-Cells posted EBIT of EUR -481 million (adjusted: EUR -77 million). As with EBIT, the provisional net result for 4Q was significantly influenced by impairment write-downs and totalled approximately EUR -411 million.
For the full year, a loss of EUR 1,356 million was generated: Book losses and write-downs on portfolio companies accounted for around EUR 952 million of that total.
Production Levels, Cash Position
Production of crystalline solar cells fell to 537 MW overall in 2009 (previous year: 570 MW). Including the thin-film modules of the subsidiary Solibro, annual production of 551 MWp was attained in 2009.
The situation for the entire market and Q-Cells improved slightly in 4Q09. For Q-Cells, 4Q was the strongest of the year with sales of approximately EUR 251 million, an increase of 36% on 3Q This does not include substantial revenues from the project business of Q-Cells International; although two major projects were completed in 4Q as scheduled, they have only partly been recognized as sales revenue in 2009.
The figures announced today are also subject to an ongoing review of 2008 figures by the German Financial Reporting Enforcement Panel (FREP). The review concentrates on two major issues: The balance sheet value of the company's stake in REC as at 31 December 2008 (sold in May 2009) as well as the revenue recognition for a project by Q-Cells International based on the Percentage-of-Completion method. This could lead to corrections of sales and adjustments in EBIT and net result of the year 2008, thus improving EBIT and net result in 2009, the company said.
At the end of the year, cash and cash equivalents totalled EUR 412 million, well above the forecast figure of EUR 250 million to EUR 300 million. This higher cash position is partly attributable to postponing investments to 2010. With these cash and cash equivalents, the company said it is sufficiently financed for the current year.
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