Bitterfeld-Wolfen, 29 March 2011, Q-Cells SE (QCE; ISIN DE0005558662), one of the world's leading photovoltaic companies, has successfully completed its 2010 fiscal year with sales growing by 70% to 1.35 billion Euros following the start of the company's strategic realignment in March 2010.
Realignment Dominated 2010
In March 2010, Q-Cells announced its strategic realignment to become an integrated provider of PV solutions in the mid-term. The product portfolio was considerably expanded beyond the production of solar cells and the realisation of greenfield projects. Sales of about EUR 363 million, or 27% of the total sales of EUR 1.35 billion, were already generated last year in the new strategic business segments Solar Modules and Systems Business for medium sized rooftop installations and small greenfield installations (the so-called 'Commercial&Industrial or C&I' segment), thanks also to a very strong market. These more profitable business segments offer Q-Cells more sales and profit potential.
In addition, the international expansion of sales and production was a company priority in the previous year. Last year, Q-Cells generated more than 50% of its sales from customers outside Germany.
Positive 2010 Results
Sales for the full year 2010 increased by 70% year on year to EUR 1.35 billion. With that, Q-Cells is one of the largest solar companies in Europe from a sales perspective. Profit before interest and taxes (EBIT) was EUR 82.3 million. Net income (from continuing operations) was EUR 90.9 million for the full year 2010; including discontinued operations, the full year net income was EUR 18.9 million.
Since last spring, Q-Cells has rigorously focused its investment portfolio. In the fall of 2010, the Company implemented a series of capital measures to refinance most of the convertible bond that will come due in 2012. Cash and cash equivalents were EUR 473.9 at the end of the fiscal year, 15% above the previous year figure.
In the fourth quarter of 2010, Q-Cell's net debt therefore went down by more than half to EUR330 million. The net debt to EBITDA ratio fell by 55% to 1.8 (end of Q3 2010: 4.0). Marion Helmes, CFO of Q-Cells, comments: 'Q-Cells has a solid balance sheet once again and has thus created room to manoeuvre in a difficult market environment.'
New Supervisory Board Member
In March 2011, Prof Dr Eicke R. Weber agreed to become a new member of the Q-Cells Supervisory Board. He will be appointed initially by court order and will be nominated for election at the General Shareholders' Meeting in June 2011. Eicke Weber succeeds the long time Supervisory Board member Marcel Brenninkmeijer, who resigned from his position at the end of November 2010.
Prof Dr Eicke Weber is Director of the Fraunhofer Institute für Solar Energiesysteme ISE in Freiburg, the largest solar research institute in Europe. In July 2008, he was appointed as Director to the SEMI (Semiconductor Equipment and Materials International) International Board of Directors. Eicke Weber has been awarded prestigious scientific awards during his professional career, and he received the Award of Merit (Bundesverdienstkreuz) from the President of Germany in 2006. Using his expertise, Eicke Weber will contribute to the further expansion of Q-Cells as a technological leader in the solar industry.
Flexible Production and Innovative Technology
In parallel with the expansion of its product portfolio, Q-Cells increased its production capacity for solar cells and CIGS thin-film modules from 830 megawatt peak (MWp) to 1,235 MWp as of the end of 2010. Q-Cells built up the production of crystalline solar cells during 2010 together with its processing partners: Flextronics in Malaysia and Hanwha SolarOne in China (previously: Solarfun). This module production should be expanded even further in 2011, mostly in partnership with selected international processing partners.
The company is building an in-house production line in Thalheim for its high-efficiency premium product Q.PEAK, in order to expand its technological expertise in modules using the close integration between research, development and production that exists at that location. Taken together, these steps by Q-Cells have made its production capabilities very internationalised and flexible.
In order to improve its product performance even further, Q-Cells intends to transition its entire production capacities for solar cells during the course of 2011 completely to the so-called 'next generation' technology. The new product generation will be introduced at the industry fair Intersolar in June 2011. It is based upon an optimization and design change of production processes and significantly increases, as a result, the efficiency of the manufactured cells: In the future, Q-Cells will produce multicrystalline solar cells in series with peak efficiencies of more than 17%.
The first prototypes of modules that are processed using these 'next generation' solar cells have already demonstrated their outstanding performance capabilities in tests conducted under extreme climatic circumstances at the Australian solar centre Desert Knowledge Australia in Alice Springs. (http://www.dkasolarcentre.com.au/).
As part of its quality offensive 'Q-Cells yield security', Q-Cells was the only solar company worldwide to establish production standards for unrivalled reliability of solar installations and thus secured again its position as quality leader. Solar cells and -modules of the new generation are now protected against possible voltage based loss of performance (so-called PID - potential induced degradation). Moreover, material defects (so-called Hot-Spots), which could lead to overheating and even fires, are ruled out by comprehensive quality inspections. In addition, solar cells are identified using a laser based coding procedure over the entire production process - from the wafer to the cell and the module to the system. Through these quality features Q-Cells increases the electricity output and yields for its clients.
Development of International Markets
In order to benefit from the growing international demand for photovoltaic- products and solutions, Q-Cells decided during the 2010 fiscal year to focus on the development of international photovoltaic markets. To that end, the Company secured market access in 15 countries that together comprise more than 80% of the world market and represent, therefore, the foundations of the Q-Cells international expansion strategy. The Systems Business should also contribute to the further successful expansion of international sales activities. For example, Q-Cells won projects in the North American market with a total capacity of about 130 MWp; one of these projects with a capacity of 22 MWp has already been realized. Here, Q-Cells will focus on the promising business segment for smaller industrial and commercial photovoltaic installations (C&I), primarily with the help of standardized solutions.
Continued Rigorous Implementation of the Strategy
'Our financial results show that our new strategic realignment in 2010 has begun successfully. With the creation of new business segments and the development of international markets, we have taken initial steps to position the company well for the challenges that are ahead of us,' says Nedim Cen, Chairman of Q-Cells SE. 'The photovoltaic market will be significantly more demanding this year. We will continue to implement our strategy rigorously so that we remain able to offer competitive products and innovative solutions in the medium term also in a more difficult market environment.'
Therefore, Q-Cells has established the following priorities for 2011:
continued rigorous focus on the strategic realignment;
further strengthening and internationalization of sales;
continuous innovation through new products and high quality applications;
further process optimization and ongoing cost reductions; and
supported by highly qualified and motivated employees.
Given this background, Q-Cells seeks to generate sales of around the level achieved in the previous year. The Company is planning for increasing volumes in the production of solar cells and CIGS thin-film modules. The portion of crystalline modules as a percentage of the total quantity sold, about 17% in 2010, should be increased significantly in 2011. However, the positive effects resulting from this increase will be reduced by expected declines in selling prices.
Q-Cells plans new investments in 2011 of up to EUR 120 million. The overwhelming portion of this amount will be used to invest in the complete transition of solar cell production to the 'next generation' technology and the expansion of an in-house crystalline module production line for the premium product Q.PEAK.
However, overall at the current moment it is not possible to assess the expected development for the financial year as a whole. On the one hand, the effects of cutbacks announced but not yet quantified by the respective governments in important European markets such as Italy, Germany, and France, cannot be estimated at this time. On the other, the current situation in Japan has opened a discussion regarding the future of nuclear power, which will have an impact on the energy mix. From today's perspective, what is clear is that the first quarter of 2011 has been characterized by very weak demand as a result of the regulatory situation and seasonal influences.