As expected, Meyer Burger achieved a substantial increase in incoming orders during the first half of 2015, most importantly with photovoltaic technologies such as Heterojunction cell coating equipment, MB PERC technology on the MAiA 2.1 platform as well as with wafer and module measurement technologies. Incoming orders increased by 42% compared to the previous year period and amounted to CHF 222.6 million. At constant exchange rates, net sales slightly increased by 0.4%. The strong valuation of the Swiss Franc, especially against the Euro, led to negative currency effects of 3.9%. As a result, net sales amounted to CHF 124.4 million and were about 3.6% below the previous year's period. It should be mentioned that a large number of machines was awaiting acceptance by customers at the balance sheet date and will only become relevant in terms of sales during the coming months. With the increase in production capacities at the site in Hohenstein-Ernstthal and the planned increase in deliveries scheduled for the upcoming months, Meyer Burger expects substantially higher net sales during the second half of 2015.
- Incoming orders CHF 222.6 million; +42% compared to H1 2014
- Net sales at constant exchange rates at previous year's level (+0.4%); in Swiss Francs CHF 124.4 million compared to CHF 129.0 million in H1 2014
- EBITDA improved to CHF -32.7 million after CHF -55.2 million in H1 2014
- Operating cash flow substantially improved to CHF -28.0 million compared with CHF -98.7 million in H1 2014
- Targets for entire fiscal year 2015 confirmed
The operating expenses were 15% (CHF 17.7 million) lower than in the previous year period, which confirms that Meyer Burger is on track to reach the targeted CHF 30 million in cost savings for the full year 2015. The EBITDA amounted to CHF -32.7 million and reflects these cost savings. The operating cash flow reached CHF -28.0 million for the first half of 2015 and also improved substantially compared to the previous year period.
In 2015, Meyer Burger expects to clearly surpass the amount of CHF 326.0 million that it achieved in incoming orders in the previous year. The company also confirms its targets to reach net sales of about CHF 400 million and break-even at the EBITDA level for the entire year 2015.
Details to the results for the first half of 2015
Incoming orders and order backlog
The volume in new orders increased by 42% to CHF 222.6 million (H1 2014: CHF 156.8 million). Various large orders with a total amount of about CHF 82 million were received in the Photovoltaic segment during the first six months of this year (H1 2014: CHF 27 million). The Specialised Technologies segment also achieved the expected amount of incoming orders during the reporting period. The average run-rate of "normal business" stood at CHF 23.5 million or 9% above the corresponding period 2014 (H1 2014: CHF 21.6 million) and was stable if the entire twelve months 2014 are taken into consideration (FY 2014: CHF 23.8 million).
The order backlog was at CHF 260.7 million as at 30 June 2015 (31.12.2014: CHF 190.1 million). The book-to-bill ratio stood at 1.79 for the first half of 2015 (H1 2014: 1.21).
Meyer Burger reached a settlement agreement with GT Advanced Technologies Inc. ("GTAT"). The unsecured claim arising from this settlement agreement was assigned at a discount to Citigroup Financial Products Inc. Meyer Burger decided to execute this transaction in order to reduce further legal expenses and collection risks from the GTAT claim. The company received a cash settlement of USD 13.9 million for the unsecured claim. From the settlement and due to past valuation adjustments already taken in 2014, net sales in the amount of CHF 10.3 million and a book profit of CHF 5.7 million resulted for the first half of 2015.
Sales growth at constant exchange rates amounted to +0.4% for the first half of 2015. The strong valuation of the Swiss Franc, especially against the Euro, led to negative currency effects of 3.9%. As a result, net sales were about 3.6% below the previous year period and amounted to CHF 124.4 million (H1 2014: CHF 129.0 million). A large number of machines was awaiting acceptance by customers at the balance sheet date 30 June 2015 and will only become relevant in terms of sales during the coming months. With the increase in production capacities for MB PERC and MAiA technologies at the Hohenstein-Ernstthal site and the planned increase in deliveries scheduled for the upcoming months, we expect substantially higher net sales during the second half of 2015.
Operating income after costs of products and services
Operating income after costs of products and services increased by 7% to CHF 70.9 million (H1 2014: CHF 66.2 million). The margin stood at 57.0% in the reporting period (H1 2014: 51.3%). The change in margin is due to positive effects from recording net sales in conjunction with the GTAT claim, one-time positive cost effects on materials and a change in product mix. The normalized margin without these effects would be at about 48%.
The various measures executed in 2014 to reduce the operating cost base are showing the expected results. Personnel expenses during the first half of 2015 declined by CHF 15.3 million to CHF 80.6 million (H1 2014: CHF 95.9 million) and other operating expenses decreased by CHF 2.4 million to CHF 23.1 million (H1 2014: CHF 25.5 million). With CHF 17.7 million of lower costs by mid-year 2015, Meyer Burger is on target to reach the CHF 30 million of cost reductions for the entire year 2015, as forecasted in the Annual Report 2014.
The restructuring measures at Diamond Materials Tech Inc. in Colorado Springs to increasingly focus DMT on diamond wire solutions for highly specialised applications outside the PV industry will lead to another workforce reduction (46 FTE) at this site. Through this and earlier steps in Colorado Springs, the operating cost base at this site will decrease by more than USD 6 million in the 2016 financial year compared to the level at the beginning of 2015. With the optimized cost structure which has been adjusted to reflect its business volume, DMT should be able to achieve sustainable profitability.
EBITDA for the first half of 2015 amounted to CHF -32.7 million (H1 2014: CHF -55.2 million) and reflects the achieved cost savings. However, EBITDA at mid-year was somewhat below the company's expectations due to the slight delay in net sales recognition.
Depreciation and amortisation came to a total of CHF 35.8 million (H1 2014: CHF 33.0 million) and is divided as follows: CHF 8.4 million for scheduled depreciation of property, plant and equipment; one-time impairment of CHF 7.7 million on technology and production equipment at DMT; CHF 19.7 million for scheduled amortisation of intangible assets, which resulted mainly from M&A activities in previous years. At EBIT level, Meyer Burger posted a result of CHF -68.5 million (H1 2014: CHF -88.1 million).
Financial result, taxes
The financial result, net, was CHF -25.3 million in the first half of 2015 (H1 2014: CHF -6.5 million). The variation in the financial result is mainly due to the valuation of intercompany loans to foreign subsidiaries, which led to unrealised negative currency translation effects of CHF 13.2 million due to the substantial currency appreciation of the Swiss Franc (H1 2014: unrealised negative currency translation effects of CHF 0.9 million).
The taxes for the first half of 2015 amounted to a tax income of CHF 0.8 million (H1 2014: CHF 6.6 million). The tax income for the first half of 2015 is mainly due to the capitalisation of further loss-carry forwards in the amount of CHF 6.9 million on one side, and to the impairment of tax assets at DMT in the amount of CHF 7.9 million on the other side.
The net result for the first half of 2015 was CFH -93.0 million (H1 2014: CHF -88.0 million). Out of this amount, CHF -92.5 million are attributable to the shareholders of Meyer Burger Technology Ltd (the remaining CHF -0.5 million are attributable to the minority shareholders of Roth & Rau AG).
Total assets were CHF 651.6 million as at 30 June 2015 (31.12.2014: CHF 755.9 million). Cash and cash equivalents amounted to CHF 133.9 million, inventories to CHF 135.0 million. Long-term assets mainly include property, plant and equipment of CHF 121.6 million, intangible assets of CHF 96.1 million and deferred tax assets of CHF 102.4 million.
Total liabilities amounted to CHF 416.3 million, of which trade receivables were CHF 35.9 million, customer prepayments CHF 65.1 million, provisions CHF 20.2 million and financial liabilities CHF 249.0 million. Equity declined to CHF 235.3 million due to foreign currency translation effects of CHF 16.0 million directly charged to equity in conjunction with long-term intercompany loans and due to the loss of the first half of 2015. The equity ratio at balance sheet date was 36.1% (31.12.2014: Equity of CHF 352.4 million and 46.6% equity ratio).
Cash flow from operating activities was CHF -28.0 million and showed a substantial improvement compared to the first half of 2014 (H1 2014: CHF -98.7 million). The reduction of the cash drain in operating activities is mainly due to the facts that the cash-related losses were substantially reduced and that preparatory investments in inventories as a result of the higher order backlog were mainly financed through customer prepayments. Therefore, net working capital could be reduced by CHF 7.3 million (cash related investments in NWC) in the reporting period 2015, whereas in the previous year period, cash related investments of about CHF 40 million had to be made into the net working capital.
Cash flow from investing activities amounted to CHF -2.9 million (H1 2014: CHF -6.0 million) and included normal conservative investments in CAPEX.
Cash flow from financing activities was CHF -1.4 million (H1 2014: CHF +71.0 million) and includes mainly the purchase of further shares in Roth & Rau AG in the reporting period.
For incoming orders regarding the entire year 2015, Meyer Burger expects to clearly surpass the amount of CHF 326.0 million achieved in fiscal year 2014. The improving situation in the PV industry and our project activities with regards to larger orders are stimulating. In addition, the company expects a stable situation to slightly increased order volumes for the small and mid-sized orders and for orders in the Specialised Technologies segment.
The high amount of incoming orders in the first half of 2015 has also created the base to reach the targets in terms of net sales for 2015. From today's point of view, Meyer Burger confirms its targets to reach net sales of about CHF 400 million and break-even at the EBITDA level for the entire year 2015.