Meyer Burger Technology Ltd – Substantial improvement in financial results during the first half of 2016
Meyer Burger Technology Ltd achieved substantial improvements in its financial results during the first half of 2016. Incoming orders increased by 20.4% to CHF 267.8 million (H1 2015 CHF 222.6 million). Net sales rose by 75.0% to CHF 217.8 million (H1 2015 CHF 124.4 million). As a result of the higher net sales and lower operating expenses, the company achieved a turnaround at the EBITDA level with a profit of CHF 6.2 million (H1 2015 CHF -32.7 million). Cash flow from operating activities also improved substantially and amounted to a positive cash flow of CHF 15.4 million (H1 2015 CHF -28.0 million).
With the strong incoming orders, an order backlog of CHF 307.4 million and the improvements in the results for the first half of 2016, Meyer Burger is on track, to reach and actually exceed its targets of solid growth in net sales and to achieve break-even at the EBITDA level for fiscal year 2016.
Details on the half-year results 2016
Incoming orders, Order backlog
The volume in new orders rose compared to the previous year period by 20% to CHF 267.8 million (H1 2015 CHF 222.6 million). This substantial increase in incoming orders is a continuation of the trend that has already become apparent during fiscal year 2015 and reflects the high demand of wafer and solar cell manufacturers and their need to either renew existing production lines through upgrades or to assemble entirely new production capacities.
Overall, the monthly average run-rate of the “normal business” (without larger orders) amounted to CHF 29 million, representing an increase of 23% compared to the first half of 2015 (H1 2015 CHF 23.5 million). In addition, in the Photovoltaic segment, various larger orders were received for diamond wire saws, Heterojunction technology, SmartWire Connection and MB PERC / MAiA technologies for a total amount of about CHF 93 million (H1 2015 CHF 82 million). It is particularly pleasing that on both on the manufacturers’ as well as on the end-customers’ sides and following Meyer Burger’s success with Ecosolifer, CSEM and Genossenschaft Migros Aare in 2015, a further customer, Hevel LLC, has chosen Heterojunction technology and SmartWire cell connection technology for the production of high-performance solar modules. The Specialised Technologies segment also achieved important orders in different special markets addressed by this business segment.
The order backlog increased to CHF 307.4 million as at 30 June 2016 (31.12.2015 CHF 257.5 million), which provides a solid base for net sales in the second half of 2016. The book-to-bill ratio (incoming orders to net sales) was 1.23 for the first half of 2016 (H1 2015: 1.79).
Net sales increased by 75% to CHF 217.8 million for the first half of 2016 (H1 2015 CHF 124.4 million). Adjusted for some slightly positive currency translation effects and the divestment of the Roth & Rau Ortner companies in August 2015, the organic sales growth on a like-for-like basis was 84%.
Asia remained the most important market with 70% of net sales in the first half of 2016 (H1 2015 49%), whereas Europe accounted for 23% (H1 2015 27%) and America for 7% (H1 2015 24%) of net sales.
Operating income after costs of products and services
Operating income after costs of products and services increased by 51% to CHF 107.2 million (H1 2015 CHF 70.9 million). The margin for the first half of 2016 was 49.2% (H1 2015 57.0%). The exceptionally high margin in the previous year period was mainly due to positive one-time effects (net sales recorded in conjunction with GTAT and positive cost effects on materials). The normalised margin for both reporting periods stood at about 48%.
The various measures executed during the previous years to reduce the operating costs have shown their full effects as expected during the first half of 2016. Personnel expenses amounted to CHF 74.9 million, a decline of CHF 5.7 million compared to the first half of 2015 (H1 2015 CHF 80.6 million). With 1,547 people employed on a full-time basis, the staff level remained almost unchanged compared to year-end 2015, but was 98 FTEs below the comparable level at 30 June 2015 (31.12.2015 1,525 FTE; 30.06.2015 1,645 FTE).
Other operating expenses were CHF 26.1 million (H1 2015 CHF 23.1 million) and only moderately increased by about 13% despite the growth in net sales of 75% and the substantially increased business volume.
Turnaround achieved at EBITDA level
With EBITDA of CHF 6.2 million for the first half of 2016, Meyer Burger achieved a positive EBITDA for the first time since 2012 (H1 2015 CHF -32.7 million). The substantial improvement in EBITDA is a result of the higher net sales and the optimised cost base mentioned above.
EBIT amounted to CHF -20.8 million (H1 2015 CHF -68.5 million). Depreciation and amortisation came to a total of CHF 27.0 million (H1 2015 CHF 35.8 million) and are divided as follows: CHF 9.0 million for scheduled depreciation of property, plant and equipment and CHF 18.0 million for scheduled amortisation of intangible assets, which resulted mainly from the M&A activities in 2011 and previous years.
Financial result, Taxes
The financial result, net, amounted to CHF -7.9 million for the first half of 2016 (H1 2015 CHF -25.3 million). The change compared to the first half of 2015 is mainly due to effects regarding the valuation of intercompany loans to foreign subsidiaries at each balance sheet date. For the first half of 2016 there was almost no effect on the income statement from these valuations, whereas in the first half of 2015 unrealized negative foreign currency translation effects of CHF -13.2 million were included due to the strong appreciation of the Swiss Franc at that time.
Taxes for the first half of 2016 amounted to a tax income of CHF 3.2 million (H1 2015 CHF 0.8 million). The tax income in the first half of 2016 is mainly due to a reduction of deferred tax liabilities on intangible assets.
The loss at net result level was also reduced considerably and amounted to CHF -25.6 million (H1 2015 CHF -93.0 million). The net result per share amounts to CHF -0.28 for the half-year period 2016 (H1 2015 CHF -1.03).
Total assets increased slightly during the first half of 2016 and were at CHF 585.8 million as at 30 June 2016 (31.12.2015 CHF 572.3 million). Cash and cash equivalents were CHF 113.5 million and have increased by CHF 12.1 million compared to year-end 2015. Inventories stood at CHF 128.0 million. Non-current assets mainly include property, plant and equipment of CHF 114.0 million, intangible assets of CHF 60.6 million and deferred tax assets of CHF 95.1 million.
Total liabilities amounted to CHF 435.7 million, of which trade receivables were CHF 50.9 million, customer prepayments CHF 68.9 million, provisions CHF 11.5 million and financial liabilities CHF 252.0 million. Equity amounted to CHF 150.1 million, which is mainly due to the net loss that still had to be accounted for in the first half of 2016 (31.12.2015 equity of CHF 175.0 million). The equity ratio as of 30 June 2016 was 25.6% (31.12.2015 30.6%).
The project to refinance the straight bond, which will mature in 2017, is moving at full speed. Meyer Burger is currently working on various alternatives and has intensive discussions with the relevant parties. Further information in this regard will be published, once the discussions and negotiations are finally concluded.
Positive cash flow from operating activities
With a positive cash flow from operating activities in the amount of CHF +15.4 million for the first half of 2016 (H1 2015 CHF -28.0 million), Meyer Burger achieved another important target in the turnaround of the Group. Cash earnings were CHF +0.17 per share (H1 2015 CHF -0.31 per share).
Cash flow from investing activities was CHF -2.9 million (H1 2015 CHF -2.9 million) and included normal conservative investments in non-current assets.
Cash flow from financing activities amounted to CHF -0.5 million (H1 2015 CHF -1.4 million) and included mainly the purchase of further shares in Meyer Burger (Germany) AG.
With the broadest and most cutting-edge technology and product portfolio, combined with a strong global sales and service organisation, Meyer Burger is very well positioned in the Photovoltaic growth market to profit from the long-term dynamics of this market.
With the strong incoming orders, the high order backlog and the substantial improvements in the results, Meyer Burger is on track, to reach and actually exceed its targets of solid growth in net sales and to achieve break-even at the EBITDA level for fiscal year 2016.